Xeni Investments Pty Ltd v A and J Aoun Pty Ltd

[2015] NSWSC 812

Supreme Court

New South Wales

Medium Neutral Citation:

Xeni Investments Pty Ltd v A & J Aoun Pty Ltd [2015] NSWSC 812

Hearing dates:

18 June 2015

Date of orders:

18 June 2015

Decision date:

18 June 2015

Jurisdiction:

Common Law

Before:

Harrison AsJ

Decision:

The Court orders that:

(1) Leave to appeal is refused.

(2) The appeal is dismissed.

(3) The decision of her Honour Magistrate Mary Ryan dated 17 June 2014 is affirmed.

(4) The amended summons filed 26 September 2014 is dismissed.

(5) The third defendant is to pay the defendant’s costs on an ordinary basis as agreed or assessed.

Catchwords:

APPEAL FROM LOCAL COURT – whether Magistrate erred in refusing to set aside default judgment – whether any person legally competent to prosecute the appeal - whether defence arguable

Legislation Cited:

Civil Procedure Act 2005 (NSW)
Powers of Attorney Act 2003 (NSW)

Category:

Principal judgment

Parties:

Xeni Investments Pty Ltd (First Plaintiff)
Steven Kourgialis (Second Plaintiff)
Bill Fountas (Third Plaintiff)
A & J Aoun Pty Ltd atf JJBF Family Trust (Defendant)

Representation:

Counsel:
S Kourgialis (Self Represented)
V Tannous (as agent for Defendant)

Solicitors:
Stacks Law Firm (Defendant)

File Number(s):

2014/231254

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Local Court, Moss Vale

Jurisdiction:

General Division

Date of Decision:

17 June 2014

Before:

Mary Ryan LCM

File Number(s):

2013/204419

EX TEMPORE Judgment

1. HER HONOUR: Mr Kourgialis appears today seeking to appear for Xeni Investments Pty Limited, himself and Bill Fountas at the hearing of the appeal against a decision made in the Local Court.

2. The first, second and third plaintiffs in this Court are Xeni Investments Pty Ltd, Steven Kourgialis and Bill Fountas respectively, who were the first second and third defendants in the Local Court proceedings. The defendant in this Court is A & J Aoun Pty Ltd atf JJBF Family Trust who was the plaintiff in the Local Court proceedings (“Aoun”). For convenience, I shall refer to the plaintiffs as Xeni Investments, except where it is necessary to mention the second and third defendants by name.

3. Xeni Investments relied on the affidavit of Steven Kourgialis sworn 6 August 2014. The defendant relied on the affidavit of its solicitor Christina Margaret Byrne sworn 17 June 2015.

4. The difficulty I have today is that Mr Kourgialis has no right to appear. Mr Kourgialis does not dispute that he is an undischarged bankrupt following a sequestration order being made against him on 15 May 2014 (Byrne Aff [5], 6 August 2014). Also there are two further problems. The company’s previous sole director was Mr Kourgialis, and so now the company has no director, so it cannot appear.

5. The third defendant is Bill Fountas. Mr Kourgialis says that he has a Power of Attorney of Mr Fountas. In the Local Court proceedings Mr Kourgialis’ deposed (Kourgialis Aff [3]), 16 May 2014) that “I am the Power of Attorney for the third defendant”. The only difficulty with this is s 5(d) of the Powers of Attorney Act2003 (NSW) relevantly says there is a vacancy in the office of an attorney if the attorney becomes bankrupt. Mr Kourgialis, the attorney, is bankrupt so he has no right to appear for Mr Fountas.

6. Hence, there is no one legally competent to prosecute this appeal on behalf of the plaintiffs.

7. Mr Kourgialis has sought an adjournment firstly, to obtain permission from his trustee to get an assignment of this cause of action so he can prosecute it; and secondly, so that Mr Fountas can be advised that Mr Kourgialis cannot act for him; and thirdly, so Mr Fountas can prosecute this appeal and maybe employ the services of a solicitor. In deciding whether or not an adjournment should be granted, I have also taken into account the history of the proceedings in the Local, this Court and the prospects of success of the appeal and the costs incurred to date.

The Local Court proceedings

8. The proceedings in the Local Court were extraordinarily long and tortured (as set out at paras [9] to [22] of the affidavit of Ms Byrne). In short, on 5 July 2013 the proceedings were commenced in the Local Court at Moss Vale. On 27 August 2013, the defendants, that is Xeni Investments, Steven Kourgialis and Bill Fountas, filed a defence. On 21 October 2013, there was no appearance by Xeni Investments and the proceedings were adjourned to 18 November 2013.

9. On 18 November 2013, there was no appearance for Xeni Investments so the Court struck out the defence and entered default judgment. On 22 November 2013, Xeni Investments filed a notice of motion seeking to set aside the default judgment. It was listed on 12 December 2013 and adjourned until 20 January 2014. On 20 January 2014, the motion was adjourned to 4 March 2014, Xeni Investments informed the Court that it was instructing solicitors to represent Xeni Investments. On 4 March 2014, there was no appearance for Xeni Investments. Mr Kourgialis, cited medical reasons for the non appearance and the motion was again adjourned to 18 March 2014.

10. On 18 March 2014, the Court made orders setting aside the default judgment. Xeni Investments was ordered to file its defence and any cross claim by 1 April 2014. This was the first time that default judgement was set aside. Xeni Investments did not comply with those directions and the solicitors for Aoun requested it to be relisted before the Court.

11. On 4 April 2014, Mr Kourgialis had a conversation with Aoun’s solicitor, advising her that he was meeting with Xeni’s solicitors, and requested further time to file a defence and instruct solicitors to appear on 22 April 2014. When the matter came before the Court on 22 April 2014, neither Mr Kourgialis nor his solicitor appeared. Mr Kourgialis sent an email requesting a further adjournment. The adjournment, not surprisingly, was refused and the Court re-entered judgment against Xeni Investments

12. On 20 May 2014, Xeni Investments filed a second notice of motion to set aside the default judgment. On 17 June 2014, the matter came before the Local Court. Mr Hanrahan appeared for Xeni Investments. He informed the Court that he had no instructions as to the basis for the second motion, had instructions to apply to the Court for an adjournment only, and that Mr Kourgialis could not attend court on that day and tendered a WorkCover certificate. The Magistrate refused the adjournment sought by Xeni Investments and dismissed the second motion. There is no Local Court transcript available. The solicitor acting for Aoun has set out in her affidavit (at [22]) the reasons why the Magistrate refused to set aside the default judgment. The Magistrate’s reasons were that there were no valid grounds of defence disclosed in the second motion, and no valid grounds of defence disclosed since the matter was commenced.

13. I have read the notice of grounds of defence. The statement of claim concerns the repayment of a loan in the sum of $55,000.

14. The defence that was filed on 22 August 2013 pleads:

(1)   The defendants deny the allegations set out in cl 15 of the plaintiffs’ statement of claim.

(2)   The items set out in Annexure B of the agreement were and are not of merchantable quality.

(3)   The items set out in Annexure B of the agreement were and are not fit for the purpose that they were intended.

(4)   The plaintiff made representations to the first and second defendants and the representatives thereof that were misleading and deceptive and to the detriment of the defendants.

(5)   The defendants suffered severe financial loss as a direct result of the conduct of the plaintiff.

15. Today Mr Kourgialis stated that his defence is that allegedly, the signature of Bill Fountas was forged. In my view, the defence as drafted is not an arguable defence and would not form a basis for setting aside the default judgment.

16. Next there were proceedings commenced in the District Court and dismissed because they were in the wrong jurisdiction.

17. At para 24 of Aoun’s solicitor's affidavit, she says that the costs the defendants have incurred so far are at least $35,000, none of which has been paid. There has been an attempt to serve a bankruptcy notice on Mr Fountas, but so far he has not been located.

The proceedings in this Court

18. On 6 August 2014, the summons to appeal was filed together with an affidavit of Mr Kourgialis. On 26 September 2014, the amended summons was filed. As the Local Court file had not been obtained, my associate made efforts yesterday to get a facsimile copy of the Local Court file so the appeal would be able to proceed today.

19. I now turn to the chances of success of the appeal.

20. The amended summons seeks leave to appeal and to appeal from the decision of the Magistrate dated 17 June 2014 where the notice of motion seeking to set aside the default judgment (for the second time) was dismissed or struck out.

21. The grounds of appeal are:

“(1)   That the court made an error which it disregarded in the letter which it had sent to the parties advising that the matter was listed for mention.

(2)   That the court did not take into account the medical evidence provided to the court as to the fitness of the defendant and or its representatives to attend court.

(3)   That the defendants were not afforded natural justice while making the decision in absence of the parties.

(4)   That the defendants were not provided with the opportunity to be heard in this matter.

(5)   That the magistrate erred in law in not setting the matter down for hearing or otherwise adjourning the matter in the above circumstances.

(6)   There is serious question as to the legality of the agreements from which the said debt relates.”

22. However, these grounds of appeal contradict what occurred in the Local Court. On 17 June 2014, Xeni Investments had a solicitor, Mr Hanrahan, appearing for them when the second notice of motion seeking to set aside the default judgment was struck out. However, he was only instructed to appear on the adjournment application.

23. So far as these appeal proceedings are concerned, it has been before the Court no less than eight times for directions, and it is still not ready for hearing today with no proper explanation being given by Xeni Investment. I have taken into account ss 56, 57 and 58 of the Civil Procedure Act 2005 (NSW).

24. These proceedings have had an extraordinarily long delay, have been expensive, the grounds of appeal are weak, the defence in the Local Court proceedings is not an arguable defence and currently there is no one here who is legally competent to represent the plaintiffs.

25. Taking all of these matters into account, in the exercise of my discretion, I refuse to grant the adjournment. I consider that there is no utility standing the matter over because I am not confident anything else will happen, and Xeni Investments have had plenty of opportunity to do something about it. The result is that the application for leave to appeal and the appeal are dismissed. The third plaintiff is to pay defendant’s costs on an ordinary basis as agreed or assessed.

The Court orders that:

(1)   Leave to appeal is refused.

(2)   The appeal is dismissed.

(3)   The decision of her Honour Magistrate Mary Ryan dated 17 June 2014 is affirmed.

(4)   The amended summons filed 26 September 2014 is dismissed.

(5)   The third defendant is to pay the defendant’s costs on an ordinary basis as agreed or assessed.

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Decision last updated: 24 June 2015