Arambatzis v Foundas; Foundas v Wengel

Judgment (ex tempORE)

1. On 14 June 2018, Peter Arambatzis commenced proceedings 2018/184682 in the Equity Division, by summons seeking, relevantly, an order for the appointment of trustees for sale pursuant to (NSW) Conveyancing Act 1919, s 66G, in respect of a property in Magee Street, Ashcroft, the title to which was held in the names of him and the defendant whom he sued, Cassiani Foundas, as tenants in common. In due course, orders were made for substituted service of those proceedings on Mrs Foundas. On 15 October 2018, the matter proceeded by way of an undefended hearing, following which an order pursuant to s 66G was made for the appointment of Sean Magnus Wengel and Robert William Whitton as trustees to sell the property.
2. On 24 April 2019, Mrs Foundas applied by notice of motion to set aside that order, it having been made in her absence. Following a hearing on 6 September 2019, Darke J dismissed that application. In the course of his Honour's reasons for judgment, he referred to the well‑known discretion of the Court as to whether or not to make an order appointing trustees under s 66G, while noting that the grounds on which the Court might decline to do so were limited. [1]
3. His Honour also referred to evidence adduced by Mrs Foundas of certain text messages that passed between the parties in November 2013, which his Honour said: [2] "…do seem to indicate that at that time the plaintiff may have been willing to transfer his interests in the properties to the defendant. However, the text messages go no further than to say that any such transfer would be effected by solicitors changing the paperwork. There is no evidence that solicitors were subsequently engaged to effect any such transfer, and it moreover appears that any such transfer would be voluntary. In the circumstances, I do not think this evidence goes any distance towards undermining the plaintiff's title as a co-owner of either of the properties."
4. His Honour concluded that the evidence did not disclose a reasonably arguable defence to the claim for s 66G relief.
5. In making orders on that occasion, his Honour also made an order that the defendant deliver vacant possession of the property to the trustees for sale by 15 November 2019, and granted leave to issue a writ for possession, such writ not to be executed before that date.
6. Mrs Foundas appealed to the Court of Appeal unsuccessfully. [3] In a judgment delivered on 24 March 2020, the Court again held that there was no evidence for the appellant's assertion that Mr Arambatzis held his interest in the property on trust for her. In doing so, White JA referred to the text messages of November 2013, and continued: [4] "These text messages demonstrate that at that time the respondent was content to make a gift of his interest in the properties to the appellant. But nothing was done to give effect to that intention. The appellant's response to the respondent's first statement is inconsistent with her believing that she was the beneficial owner of the whole of either property."
7. Elsewhere, his Honour referred to the only arguable defence to the making of a s 66G order identified in the appellant's evidence and submissions, being that the respondent held his 50% interest on trust for her. But, his Honour said, there was no evidence to support that contention. [5]
8. In dismissing the appeal in substance (subject to a minor variation of the judgment below), the Court also made an order that the appellant deliver vacant possession of the property to the trustees for sale within 21 days, and granted leave to issue a writ for possession, such writ not to be executed before the expiry of 28 days.
9. Mrs Foundas applied for extensions of the time to give possession on various grounds, including the impact of the COVID-19 pandemic. An extension of the time for vacation was granted by agreement to 28 May 2020. [6] A further extension of time was refused. [7] On 24 December 2020, the trustees applied to the Court for the issue of a writ for possession. An order was made for issue of a writ for possession on 7 January 2021. The Sheriff issued notices to vacate dated 21 January 2021, appointing tomorrow, 2 March 2021, as the time for eviction.
10. Meanwhile, on 11 December 2020, Mrs Foundas' husband, Mr Bill Foundas, applied to the Equity Division, by summons commencing proceedings 2020/234084, for an order extending the operation of a caveat which he had lodged in respect of the subject property. When that matter came before the Court, the caveat had already lapsed. The claim was reformulated, apparently as one for a constructive trust arising from contributions and improvements said to have been made by Mr Foundas to the property. On 11 February 2021, Darke J made an order pursuant to Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") r 7.36, referring Mr Foundas to the Registrar for a pro bono referral. Those proceedings were otherwise adjourned to 19 March 2021.
11. On 23 February 2021, Mrs Foundas filed a notice of motion in proceedings numbered 2018/184682 in the Equity Division, although for some reason entitled in the Common Law Division Possession List, seeking a stay of execution. On 25 February 2021, Mr Foundas filed a notice of motion, seeking a stay. His motion was also entitled in the Common Law Division Possession List, but bore the proceedings number of the proceedings he had commenced in the Equity Division. Because the order for possession was ultimately one made by the Court of Appeal and not by a judge in a division, the Common Law Duty Judge to whom the applications were first referred, referred them to me to be dealt with as if in the Court of Appeal.
12. Mrs Foundas' motion is supported by an affidavit of 23 February 2021. Fundamentally, it annexes a letter dated 3 December 2013 from the law firm Currie & Cabarrus to Mr and Mrs Foundas, apparently attaching a draft deed which was proposed to be sent to Mr Arambatzis. It also annexes a document entitled Deed of Acknowledgment, apparently dated 3 December 2013 and apparently signed by Mrs Foundas and Mr Arambatzis, which recites relevantly that they are the registered proprietors as tenants in common in equal shares of the subject property; that Mr Arambatzis contributed no money towards the acquisition; that Mrs Foundas has been paying the mortgage debts without any contribution by Mr Arambatzis; and that Mr Arambatzis had agreed to enter into the deed to clarify and confirm that he had no financial or beneficial interest in the properties. He also undertook to do all things necessary and sign all relevant documents as required by Mrs Foundas to enable her ownership of the property.
13. Those representing Mr Arambatzis and the trustees have had very limited opportunity to consider this evidence and obtain instructions on it. There may potentially be many explanations for it. Amongst other things, it is unstamped and on a substantive hearing, that of itself may pose obstacles to its reception. It does, however, bear some indicia of authenticity, from its apparently accompanying the covering letter from Currie & Cabarrus, and also from the circumstance that it appears that Mr and Mrs Foundas were referred to Currie & Cabarrus by the Law Society on 18 November 2013 for assistance. I have also taken the opportunity of comparing the signatures which appear on the deed of acknowledgement with a signature of Mrs Foundas on her notice of motion and with a signature of Mr Arambatzis on his affidavit sworn 25 September 2018, and such a comparison does not suggest any prima facie reason to doubt the authenticity of the signatures that appear on the deed of acknowledgment.
14. As will be apparent from the references I have made to the judgment of Darke J, and more particularly to the judgment of White JA in this Court, this material, if authentic, could cast serious doubt on the finding on which Mrs Foundas' defence to the s 66G allegation was rejected. If this material is authentic, it could have resulted in a completely different result in this Court, namely that it might have been found that Mr Arambatzis had no beneficial interest in the Magee Street property, and therefore was not entitled to the appointment of trustees for sale.
15. As this has emerged not even at the heel of but effectively after the hunt is over, there are of course serious obstacles in the way of relying upon it now. The decision of the Court of Appeal might be impugned on further appeal to the High Court of Australia, but only with a grant of special leave to appeal and an extension of time in which to seek that. It is just conceivable that in the absence of a question of principle the High Court might grant leave on the basis of the requirements of justice in the individual case, but it is at first sight a remote prospect.
16. It might be that further investigation would show some basis for applying to set aside the judgment of the Court of Appeal or the judgment at first instance on the basis of the absence of relevant evidence, but that is not presently apparent. Ordinarily at least, that course would be adopted only if fraud could be brought home to Mr Arambatzis.
17. It might also be possible that the Court as a matter of discretion would, in the face of new evidence, decline to enforce the existing order. That too would be an unusual, though not impossible, course.
18. However, the present force of this material, untested and unexamined as it is, is nonetheless such as to raise a serious question as to whether the earlier judgments might have resulted in a miscarriage of justice. Notwithstanding the very late stage at which it is raised, it seems to me that the balance of justice clearly requires that an opportunity be afforded to explore the matters raised by Mrs Foundas' affidavit, and more particularly the documents attached to it, before the irrevocable step of ejecting her and her husband from their home is taken. Such assistance might be provided to her through the pro bono scheme.
19. Turning to Mr Foundas' motion, he demonstrates nothing which would entitle him to remain in possession of the property. He is not a registered proprietor and the claim apparently advanced in his affidavit, so far as it goes, to a constructive trust arising from contributions and improvements, would be satisfied by a charge on the proceeds of sale, as distinct from any beneficial interest in the property. The matters raised by Mr Foundas are not such as of themselves would incline me to stay execution of the writ.
20. For those reasons, the orders of the Court in respect of proceedings 2018/184682 in the Equity Division are that: 1. Execution of the writ for possession, issued under the order made on 7 January 2021, be stayed until 2 June 2021 or earlier further order; 2. Pursuant to UCPR r 7.36, the Court refers Mrs Foundas to the registrar for referral to a barrister or solicitor on the pro bono panel for legal assistance generally in relation to the proceedings; and 3. The proceedings be adjourned to the Court of Appeal registrar's list on 3 May 2021.
21. In respect of proceedings 2020/351791 in the Equity Division, the Court orders that the notice of motion filed on 25 February 2021 be dismissed. Those proceedings will remain listed on 19 March 2021 before the Real Property List Judge.
22. In making the orders I have in Mrs Foundas' proceedings, it will be noted that the stay has been granted until 2 June, with the matter to return before the Court on 3 May. On 3 May, those representing Mrs Foundas will need to be in a position to persuade the Court as to whether there should be any extension of the stay. That will self-evidently depend on the course of action they propose, on the causes of action they may have formulated, and on the apparent merits of any such course.
23. [Counsel applied for an order for production of the original document].
24. The Court further orders that the defendant Cassiani Foundas produce to the Registrar by 18 March 2021 the original of the documents which comprise pages 1 through 7 of annexure A to her affidavit of 23 February 2021.

Endnotes

1. Arambatzis v Foundas (Supreme Court (NSW), Darke J, 6 September 2019, unrep) at 7.
2. Arambatzis v Foundas (Supreme Court (NSW), Darke J, 6 September 2019, unrep) at 7.
3. Foundas v Arambatzis [2020] NSWCA 47.
4. Foundas v Arambatzis [2020] NSWCA 47 at [31] (White JA).
5. Foundas v Arambatzis [2020] NSWCA 47 at [64] (White JA).
6. Foundas v Arambatzis (No 3) (2020) 19 BPR ¶40-357; [2020] NSWCA 87 at [21] (White JA).
7. Foundas v Arambatzis (No 4) [2020] NSWCA 100. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 May 2021