Eliopoulos v Sher

Ms Sher's affidavit of 30 July 2024

1. In her affidavit filed on 30 July 2024, Ms Sher claims she did not appear nor file a defence because of "personal health and financial reasons". She claims she suffered from "physical, mental and financial, issues, anxiety and necessitousness at the times relevant to the Supreme Court claim and had been the subject of threats by the plaintiff in relation to the debt owed purportedly by [her]." She claims she has "a genuine defence to the default judgment entered against [her] relevant to the Supreme Court claim" and that she "is not personally indebted in the sum alleged to the Plaintiff, or in any sum at all".
2. Ms Sher is the 71-year-old sole director and shareholder of two companies which own properties at Bondi Junction in Sydney, U & G Properties Pty Ltd ("U & G Properties") and Aharon Investments Pty Ltd ("Aharon Investments"). These companies will together be referred to as "the property companies". Each generated earnings from leases to residential tenants.
3. Ms Sher claims that the COVID-19 pandemic, in 2020 and 2021, put her business under severe stress as tenants struggled to pay rent while her businesses still had to pay mortgages. Further hardship occurred in mid-late 2022 when interest rates began to rise. On 4 March 2023, receivers and managers were appointed to U & G Properties and Aharon Investments. As a result, Ms Sher says she suffered physical health and psychological impacts "namely acute anxiety and chest pains that led [her] to have diminished mental capacity to deal with the new set of problems". On 29 January 2024, another receiver and manager was appointed to Aharon Investments.
4. Ms Sher stated that as the assets of the companies produced her only income, she had insufficient money to support herself following the appointment of the receivers and managers in 2023. She states: "In the result I did not have the means or the mental stability to consider taking the proper steps to appear in Court, [defend] myself from the Supreme Court Claim nor to finance any litigation at the time. I do not recall any time (or date) that I became aware (got served) of the proceedings in the Supreme Court claim, but I accept that I was served with the documentation relevant to the claim. My lawyer has presented to me an email dated 6 April 2023 to my email address with the statement of claim attached, but which I do not recall receiving, but I recall during mid 2023 I knew about the proceedings, and the feeling of not being able to deal with them at the time. Part of those feelings were caused by the Plaintiff threatening me and causing me to be fearful of him. The behaviour aggravated the circumstances I have outlined [above]."
5. In relation to her contended defence, she claims that she first met Mr Eliopoulos, a solicitor, in a professional capacity in about August 2016 when he acted for her as a lawyer in relation to a personal matter. After that, they would meet in Bondi Junction from time to time and he would assist with legal tasks, including the witnessing of documents as well as providing Ms Sher, on at least one occasion, with a lawyer's certificate in relation to Ms Sher's role and responsibilities for one of her companies.
6. She claims that over the years, Mr Eliopoulos became familiar with the substantial asset holdings of her companies and the location of those assets, namely, in Bondi Junction.
7. Ms Sher deposes that she believes she has a genuine defence, claiming that: 1. Mr Eliopoulos knew her dealings were with property as a company director. 2. The funds borrowed from Mr Eliopoulos were borrowed by her companies, the company received them, and the company used them to benefit from the use of them by investing in property. 3. The funds were transferred from the company accounts to vendor accounts that related to the purchase of properties relevant to the funds borrowed by the company. 4. Mr Eliopoulos knew the extent of the property holdings of the companies and acted in a way consistently with his knowledge in investing in the ambitions of the companies. 5. The funds were utilised to purchase assets registered to the companies. 6. The debts were recorded on the records of the company [sic]. 7. Mr Eliopoulos pursued the company for the debts in the first place (shown by messages produced by Ms Sher). 8. Ms Sher did not personally guarantee or offer any principal liability relevant to the use of the funds.
8. There is some objective evidence including the following: 1. Australian Securities and Investment Commission ("ASIC") Company extracts setting out details of the companies including the date of appointment of receivers and managers. 2. A letter dated 14 March 2023 which indicates Ms Sher had informed the receivers and managers by way of email on 13 March 2023 (that is, before the Statement of Claim was filed on 4 April 2023) that she had failed to provide requested information to them on the basis that she was unwell. 3. An email sent to ASIC on 24 April 2023 from Ms Sher stating that she was struggling to "get the records the receiver wants" and that she was "dealing with anxiety, high blood pressure, and difficulty with concentration", and that her "lawyer will contact the receiver today". 4. Three medical certificates (prepared for an unnamed recipient): 1. The first dated 8 March 2023 stating Ms Sher was "unable to work" from 6 March 2023 to 16 March 2023 inclusive due to a "medical condition". 2. The second in similar terms dated 15 March 2023 stating Ms Sher was "unable to work" from 15 March 2023 to 17 March 2023 inclusive due to a "medical condition". Again, it can be noted these medical certificates are dated prior to the Statement of Claim being filed on 4 April 2023. 1. The third medical certificate in similar terms to those above dated 12 April 2023 stating Ms Sher was "unable to work" from 11 April 2023 to 17 April 2023 inclusive due to a "medical condition". 1. Title searches in relation to Bondi and Bondi Junction properties indicating registered proprietors of those properties as either U & G Properties or Aharon Investments. 2. Documentary evidence by way of copies of email correspondence which shows Mr Eliopoulos had certified an independent legal advice declaration in relation to one of her companies in 2021. 3. Bank statement for U & G Properties, including entries to the following effect: Withdrawal Deposit 7 Oct 2021 $100,000.00 OSKO PAYMENT FROM CHRIS ELIOPOULOS Loan on purchase of property. REFERENCE Loan on purchase of property REF NO 82897552 9 Oct 2021 $100,000.00 OSKO PAYMENT FROM CHRIS ELIOPOULOS Loan on property purchase 2nd Transfer. REFERENCE Loan on property purchase REF NO 50497900 10 Oct 2021 $100,000.00 OSKO PAYMENT FROM CHRIS ELIOPOULOS Loan on property purchase. REFERENCE Loan on property purchase REF NO 78376662 12 Oct 2021 $100,000.00 OSKO PAYMENT FROM CHRIS ELIOPOULOS Loan on property purchase. REFERENCE Loan on property purchase. REF NO 59423450 20 Oct 2021 $50,000.00 INTERNET EXTERNAL TRANSFER TO [Redacted] REF NO 1153302 Helen 75 Deposit 21 Oct 2021 $100,000.00 OSKO PAYMENT FROM CHRIS ELIOPOULOS Loan on property purchase. REFERENCE Loan on property purchase REF NO 36024900 22 Oct 2021 $50,000.00 INTERNET EXTERNAL TRANSFER TO [Redacted] REF NO 96684622 Helen 75 Deposit 23 Oct 2021 $50,000.00 INTERNET EXTERNAL TRANSFER TO [Redacted] ref no 75794422 Helen 75 Deposit 24 Oct 2021 $50,000.00 INTERNET EXTERNAL TRANSFER TO [Redacted] ref no 23008620 Helen 75 Deposit 25 Oct 2021 $50,000.00 OSKO PAYMENT FROM CHRIS ELIOPOULOS Loan on property purchase REFERENCE Loan on property purchase REF NO 99873451 25 Oct 2021 $100,000.00 DIRECT CREDIT CHRIS ELIOPOULOS Loan on property p 25 Oct 2021 $50,000.00 INTERNET EXTERNAL TRANSFER TO [Redacted] ref no 73976540 Helen 75 Deposit

1. A copy of a Transfer instruction dated 12 January 2022 from "AHARON IMVESTMENTS [sic] PTY LTD" to the Bank Account of Chris Eliopoulos, Reference "ELIPOULOS [sic] LOAN". 2. Bank statements for "ELIOPOULOS LAWYERS BUSINESS ACCOUNT" with entries to the following effect: Date Transaction Description Debit Credit 11 NOV 2021 TELEGRAPHIC TFR (RTGS) $150,000.00 "Rasko" (handwritten) - 11 JAN 2022 SHER HALINA GILL Loan Eliopoulos - $50,000.00 13 JAN 2022 SHER HALINA GILL ELIPOULOS LOAN - $200,000.00

1. A copy of text messages between Mr Eliopoulos (on a date which is not clear) and Ms Sher including one from Mr Eliopoulos stating "Winding up application lodged tomorrow" (Emphasis in original); and "I'll keep going with litigation until you pay me. I'm not waiting anymore. I've waited 12 months I need this money back desperately". Ms Sher's responses include "I have an offer for a loan. I am waiting for the offer to be unconditional. I have had such offers before, but nothing happened. So I am waiting for confirmation before I tell you what I can do".
2. Also included in the material relied upon by Ms Sher is a copy of the proposed Defence.

Mr Eliopoulos' evidence

1. In addition to Mr Eliopoulos's affidavit of 13 September 2024 summarised below, Mr Eliopoulos also relied upon an affidavit in relation to service of the Statement of Claim affirmed by Rebecca Salib on 15 May 2023. As noted above, it is not in issue that Ms Sher became aware of the existence of the Statement of Claim during mid-2023.

Mr Eliopoulos' affidavit of 13 September 2024

1. Mr Eliopoulos relied upon an affidavit affirmed by him on 13 September 2024 setting out, to the best of his recollection, conversations with Ms Sher, as well as SMS text messages and email correspondence.
2. He set out his account of the loan discussion in late September 2021 which included that Ms Sher wanted to discuss a "new matter". Ms Sher asked Mr Eliopoulos to lend her $400,000 on the basis that he would receive $430,000 back at the end of October 2021. The account included the following: "I promised I would lend her $400,000 on the basis that I would receive $450,000 back at the end of October 2021. […] I specifically recall Ms Sher saying 'I promise I will pay you back. Don't worry I guarantee it.' I said 'Ok, please don't let me down.'" (Emphasis in original.)
3. On or about 19 October 2021, Mr Eliopoulos received a call from Ms Sher asking to borrow a further $250,000. They agreed verbally as to the loan of this amount such that the total principle became $650,000 and she would pay this plus $120,000 in interest by no later than 3 December 2021.
4. This was confirmed by an SMS message sent from Mr Eliopoulos to Ms Sher on 21 October 2021.
5. There was a further oral request from Ms Sher to borrow an additional $150,000 from Mr Eliopoulos. That was agreed such that the total principal became $800,000 and interest would be $135,000 with the total of $935,000 to be paid on or before 3 December 2021. Mr Eliopoulos sought confirmation of the total amount by text on 11 November 2021.
6. Accounts of further interactions were set out by Mr Eliopoulos, setting out details of delays and Mr Eliopoulos' requests for repayment.
7. Included in the SMS messages was one from Mr Eliopoulos to Ms Sher on 24 March 2022 asking: "Do I have to sue you Gilla?" She responded later that day by SMS stating: "There is no need to panic. I cant come out I am still sick" and "So far we have had 3 serious interested parties with plenty of money".
8. In response to an SMS message relating to potential legal action Ms Sher replied: "I wasn't worried about you suing me. You have no written agreement. You would loose [sic]".
9. Included in the correspondence was an SMS message on 11 January 2023, in the course of Ms Sher attempting to refinance the loan, requesting Mr Eliopoulos to write up a formal loan agreement showing the total amount she had borrowed and the total amount owing. She sent a further message asking him to keep the loan agreement clean, with today's date (being, at that time, 11 January 2023) and added that the lawyers knew the loan was "a hand shake agreement". Mr Eliopoulos drafted and sent such a loan agreement by email to Ms Sher, and she confirmed she had received it and forwarded it to the proposed lender. It was never signed by either party as Mr Eliopoulos said that Ms Sher informed him that it did not need to be signed. The draft loan agreement was between Mr Eliopoulos and Ms Sher personally.
10. Following the filing of the Statement of Claim, amongst the messages exchanged was one by Ms Sher sent by SMS message on 24 June 2023 stating "I cant talk about your loan, as you are a lawyer and I am not, and you initiated proceedings in the supreme court" and "It has always been my intention and still is to pay you back".
11. On 3 August 2023, Mr Eliopoulos sent Ms Sher an SMS message that he was going to serve her with a bankruptcy notice the following day and an image of the default judgment obtained in these proceedings. Ms Sher responded that she felt sad and that she would pay him back.
12. On 1 September 2023, after being served with the bankruptcy notice, Ms Sher sent an email to Mr Eliopoulos' lawyers stating that her properties were in the hands of the receiver and that she did not have any other assets that could satisfy the debt if he proceeded to bankrupt her. The letter includes the following: "Thank you for your letter, and mentioning 2 possible options. I would like you to look at a third option. My properties are currently in the hands of the receiver, and I do not have any other assets that could satisfy the debt. I am negotiating various options to release the properties from the receiver. Once this is achieved I will be in a position to make arrangements with Chris Eliopolous [sic]. If Chris insists on pursuing to bankrupt me, The receiver will get all the proceeds from the assets, and Chris will get nothing. I think it is better to wait a bit longer, so that Chris can get some payout."
13. Mr Eliopoulos contends that Ms Sher has always maintained that the debt was owed personally and at no time contested that the debts were that of her companies. Further, he contends that in all correspondence with him and his solicitors, she has made representations that the properties owned by U & G Properties were her properties and her assets, not that of the company.

Criminal proceedings against Mr Eliopoulos involving threats to Ms Sher

1. Mr Eliopoulos also provided information about criminal proceedings against him which arose out of his interactions with Ms Sher. On 9 October 2023, Mr Eliopoulos was charged by police with an offence of use carriage service to menace/harass/offend between 1 January 2022 and 18 August 2023, with the victim named as Ms Sher. The police facts included: "[…] late 2021 where the accused lent the victim a large sum of money. The victim partly paid her debt to the accused but had an outstanding amount of approximately $500,000. A legal process between the victim and accused has ensued in relation to the outstanding debt with the Supreme Court granting a judgment in the accused's favour in relation to the debt. Around May 2023, the accused has started to send the victim texts demanding the victim pay him back the money owed. The victim is not in a position to repay the debt and has made this known to the accused, stating she intends on repaying the accused once her affairs are in order. Beginning at 10:50am on Wednesday the 15th of August 2023 and ending about 3:20pm on Thursday the 17th of August 2023, the accused has texted the victim from his mobile number […] in excess of 50 times without response. The accused has used explicit language, calling the victim names and berating her whilst demanding the money be returned. The barrage of texts sent by the accused occurred constantly throughout both days spanning multiples on each day respectively. The victim has been left feeling nervous, upset, threatened and intimidated by the accused and has sent the accused a text asking him to stop messaging her at 3:20pm on Thursday the 17th of August 2023. The accused has responded by sending the victim a further 10 texts in the space of approximately 10 minutes in which he calls her a 'cunt' amongst other slurs. The accused sent approximately 20 more texts before the victim once again texted him 'Stop harassing me.' to which the accused sent a further barrage of texts. The victim has again texted the accused asking him to stop saying 'I am unwell because of the ongoing stress. I have been to hospital several times. Don't threaten me, stop harassing me.'. The accused has responded saying 'I dont give a shit about your fucken health. I hope you die. The world would be a better place.' The accused has sent the victim a further 10 texts before stopping around 6:40pm on Friday the 19th of August 2023. […]"
2. In Ms Sher's police statement dated 17 August 2023, she states that Mr Eliopoulos "lent me a large amount of money which I partly paid back leaving a balance [of] $500,000 owed by myself to him", and other statements indicating the loan was to Ms Sher personally.

Ms Sher's affidavit of 8 October 2024

1. This affidavit was prepared following receipt of Mr Eliopoulos' affidavit. She provided further detail and clarified certain matters, some of which are now set out.
2. Ms Sher clarified that after the property companies were put into receivership, the leases with the residential tenants were terminated by the receivers.
3. She used the U & G Properties bank account to receive income from each of the tenancies and always ran the financial side of the companies using this account. Mr Sher explained that the Aharon Investments bank account does not really operate. She only used that account when there are very large transactions related to the company such as loans and loan repayments, which occurred in this case.
4. The portfolio of property owned by her companies is valued at $60 million including all the family titles. Other properties in the same precinct as her properties are owned by her family members.
5. As to Mr Eliopoulos' contention that he had only certified one document for her in March 2021, Ms Sher believes that occurred more often in respect of loans to her companies. She contended: "One of the reasons for this had been that I live in Bondi Junction and from time to time he stopped through at Westfield so it was convenient for him to certify a document for me. Currently I am trying to locate mortgage documents I believe Mr Eliopoulos certified and I intend to provide those to the Honourable Court."
6. Ms Sher also produced SMS messages between her and Mr Eliopoulos indicating he was available to assist her son with loan documentation or financials.
7. Ms Sher strongly disagreed that Mr Eliopoulos did not know the extent of the holdings of her companies. She stated that they had spent a lot of time together when he acted for her on a personal matter in 2018. She talked about her family history and her business interests. Prior to the loans they had a close professional and personal relationship.
8. As to the first loan agreement, Ms Sher stated that "at a later stage" she sent Mr Eliopoulos a copy of a document called a Term Sheet she received from Merricks Capital listing the properties and the companies related to them. Ms Sher claimed she asked him "How much do you want for the loan?" and "What security do you want?" She recalls that he knew the properties. Ms Sher annexed to her affidavit an email sent to Mr Eliopoulos dated 11 November 2021, attaching a copy of the Term Sheet on a "Merricks" letterhead and addressed to "Gilla Sher, U&G Properties, Aharon Investments Pty Ltd, Via Email" with the "Borrower" listed as U&G Properties Pty Ltd and Aharon Investments Pty Ltd ATF Aharon Investments Family Trust.
9. She denied stating that she would guarantee the loan from Mr Eliopoulos.
10. Ms Sher set out that the transfers out of the U & G Properties bank account set out above at [15(g)] were to Rasko Investments, the vendor of the property she was purchasing, for the deposit, and that the purchaser of the property was Aharon Investments.
11. Ms Sher also stated she asked Mr Eliopoulos to direct payment of the second loan of $150,000 to the vendor Rasko Investments Pty Ltd.
12. Ms Sher annexed the text of the SMS exchanges from the beginning of the negotiations in 2021 to up to the messages apparently the subject of the criminal charge in 2023. There are many. I have included those which appear most relevant to the purported defence.
13. Amongst them include a message on 28 November 2022 from Mr Eliopoulos: "I have started the process to wind up the company like in 2021. I'm sorry but you give me no choice." There is a further message on 30 November 2022: "Gilla I'm letting you know I'm going to wind up the company. I can't wait any longer and you are ignoring me as usual. This won't be good for you". As well as the following extracted messages: "[…] I'm over this. I'll see you in the federal court […] I'm giving you every opportunity before I [commence] federal court proceedings".
14. On 2 December 2022, Mr Eliopoulos sent a message including the following: "Gilla, I'm not threatening you. Nice try trying to set me up. You are bankrupt I'm telling you what I'm going up do. It's not a threat. I want my money back. And I'm sorry but it's not how much you can pay me - it's what you owe me. Are you telling me that if you can only pay 200k that will be the end of it? You are treating me like an idiot. If I wind up your company and sue you and tell your lenders what is happening you will be finished. […]"
15. On 5 December 2022, Mr Eliopoulos sent a message: "Gilla this morning I have notified one of your creditors that you owe me money and that I'm going to wind up your company."
16. On 8 December 2022, Mr Eliopoulos sent the following messages: "Gilla I sent you an email. Please Read it. Next step is court and winding up. […] Winding up application lodged tomorrow". (Emphasis in original.)
17. On 10 December 2022, Mr Eliopoulos sent a message: "[…] Now if I lodge caveats or litigate or wind up it will stuff you […]".
18. On 15 December 2022, Mr Eliopoulos sent a message: "[…] If you don't respond I'll lodge a caveat. I'm not messing around anymore Gilla. I have a winding up order ready to go also. I was very close to lodging it […]".
19. On 22 December 2022, Mr Eliopoulos sent a message: "I'll tell you when I wind up your company in the new year and appoint a liquidator".
20. On 17 January 2023, Mr Eliopoulos sent a message: "I'll lodge winding up notice and when you get finance I'll withdraw it".
21. On 18 January 2023, Mr Eliopoulos sent a message: "Gilla you understand if I file this winding up notice you won't be able to refinance? You know that. I need my money back". Followed by: "It's ready to lodge. I've had enough of all the lies".
22. On 2 February 2023, Mr Eliopoulos sent the following extracted messages: "Gilla you guys are gone. […] Bankrupt".
23. On 3 February 2023, Mr Eliopoulos sent a message: "Gilla what is happening other than you guys going under".
24. On 9 February 2023, Mr Eliopoulos sent a message: "[…] I'm going to email your creditors and then sue you. Simple. It's the only way something will happen. Served me right for helping you".
25. On 12 February 2023, Mr Eliopoulos sent a message: "I'm speaking with Justin tomorrow. And Brenda and George Fleming. I need to act. After they know I'm lodging winding up. I need to take action. If it means you lose the lot so be it. […]" (Emphasis in original.)
26. In reply to a request from Ms Sher for an itemised statement of money she was lent, amount repaid, and the balance of the principal loan, Mr Eliopoulos sent a message on the same day: "You know what it is. It went into your bank account. You have the deed also. Balance of principle is 550k. After I speak with your creditors I'm winding you up. Or they can give me $850k."
27. Following a series of further messages, in response to Ms Sher stating she was "very close to a solution", Mr Eliopoulos sent a message later that day asking: "How close because I'm literally going to lodge a winding up."
28. On 15 February 2023, Mr Eliopoulos sent a message stating: "But I need it now desperately and I've just paid a barrister $15000 deposit to wind you up. […]".
29. On 20 February 2023, Mr Eliopoulos sent a message stating: "Statutory demand coming your way."
30. On 24 February 2023, Mr Eliopoulos sent a message stating: "[...] I've helped you as a lawyer and as a friend for a long time. […]".
31. On 16 August 2023, Mr Eliopoulos sent a message stating: "You liar. You are not working on an offer. The receiver is. You are in receivership. […]"
32. Later that day, Mr Eliopoulos sent a message stating: "[…] I'm going to the police after I bankrupt you. You have been deceiving people".

Mr Cerne's affidavit of 21 November 2024

1. Mr Cerne updated some details relating to the current status of the property companies. He stated that at the time of swearing her affidavits dated 30 July 2024 and 8 October 2024, Ms Sher understood that all titles owned by the property companies were under the external control of receivers, managers and controllers. Relevantly, a review of the documentation showed that no receivers or controllers were currently registered in relation to two of the properties owned by Aharon Investments. Ms Sher has now retaken possession of one of those properties and was leasing rooms, thus generating income for the companies.
2. Mr Cerne also annexed medical records recently located by Ms Sher which indicated that on 15 March 2023, a mental health treatment plan was prepared by a General Practitioner noting she was suffering from "[g]eneralised anxiety/stress", that she "needs stabilisation" and that she would be referred to a psychologist.
3. Mr Cerne stated that Ms Sher received an income of approximately $1000 a month from a relative for whom she manages tenants, and that she does not have assets in her name.
4. Mr Cerne also attached the court record from Waverley Local Court in relation to the criminal case against Mr Eliopoulos indicating that he pleaded guilty to the charge against him and received a good behaviour bond without conviction on 25 October 2024. I note that the facts upon which the plea of guilty was entered are not within the material produced.

Whether there is a bona fide defence on the merits

1. Not only are the rights and liabilities to a contract to be determined according to the principle of objectivity, so too is the identification of the parties to a contract which is the issue underpinning the proposed defence in this case.
2. The New South Wales Court of Appeal in Hadden v Inline Partners Pty Ltd [2024] NSWCA 42 (Gleeson JA, White and Stern JJA agreeing) at [40] endorsed as correct the following statement of principle: "The identity of contracting parties is to be determined objectively, by examining and construing any relevant documents in the factual matrix when they were created and ascertaining between whom the parties objectively intended to contract: Air Tahiti Nui Pty Ltd v McKenzie (2009) 77 NSWLR 299 at [28]. Where documents are silent or ambiguous (or, it may be added, non-existent), but there is undoubtedly a contract, the identity of the parties must be determined objectively from the surrounding circumstances: Air Tahiti Nui at [28], Barroora Pty Ltd v Provincial Insurance Ltd (1992) 26 NSWLR 170 at 174. See also the comments of Kourakis CJ in Davies v Apted [2013] SASCFC 92 at [4] and [5]. Post-contract conduct can be considered to ascertain the identities of the parties, as the issue is one of contractual formation, rather than construction: Dennis Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154 at [59], Lederberger v Mediterranean Olives Financial Pty Ltd (2012) 38 VR 509; [2012] VSCA 262 at [31]. The legal onus is on the party asserting that a particular party is, in fact and law, a party to the contract: Dennis Pethybridge at [59]."
3. Having set out above a summary of the material to be relied upon by Ms Sher (including, as permitted, evidence of post-contract conduct), I am of the view that there is a bona fide defence on the merits. Whilst I acknowledge there is evidence going both ways in terms of who is the appropriate defendant, there is sufficient evidence to sustain a bona fide submission that the defendant is properly Ms Sher's company or companies, rather than her personally. This evidence (of varying weight) includes: 1. the multiple references by Mr Eliopoulos to commencing winding up proceedings; 2. that the loan monies were mostly paid into the U & G Properties bank account and were then paid out to the vendor of the property being purchased (Rasko Investments), and in relation to the $150,000 sum, that sum was paid directly to the vendor; 3. the length and nature of the relationship between Mr Eliopoulos and Ms Sher is consistent with Ms Sher's contention that Mr Eliopoulos knew about the structure of her business interests, and relatedly, on at least one occasion Mr Eliopoulos certified a document for Ms Sher relating to one of her companies; and on at least one occasion a terms sheet was sent to Mr Eliopoulos which listed the companies as the borrowers; and 4. that Aharon Investments made two repayments to Mr Eliopoulos (of $50,000 and $200,000 on 11 and 13 January 2022 respectively).
4. As noted, there is evidence pointing the other way. This includes the evidence, as well as an acknowledgement by Ms Sher, that she habitually used the first person pronoun (that is, "I", "my", "me" and the like) when discussing the loan and her liability to repay the loan monies, including in her statement to the police in 2023. There is also evidence of the bankruptcy proceedings taken against Ms Sher. That the evidence points in both directions is not novel in this kind of factual scenario: see, for example, Davies cited in the extract above at [70].
5. Further, I also acknowledge the additional argument, as submitted on behalf of Ms Sher, that the allegation (which is denied) that she agreed to guarantee the loaned monies implicitly admits that Ms Sher was not the borrower in the mind of Mr Eliopoulos. In any event, it is pointed out that the Statement of Claim does not plead a guarantee.
6. In short, I am of the view that there is a bona fide defence available on the merits.

Delay

1. It is then necessary to turn to the reasons proffered by Ms Sher to account for her default in filing a defence, and to consider the length of the delay, keeping in mind any prejudice to be suffered by Mr Eliopoulos if the default judgment were to be set aside.
2. Ms Sher acknowledges there has been substantial delay by noting the Statement of Claim was filed on 4 April 2023 and the default judgment was obtained on 3 August 2023. Ms Sher acknowledges she became aware of the Statement of Claim in mid-2023. She also acknowledges that the more egregious the delay in seeking to set aside an undefended judgment, the greater the burden of persuasion required of the applicant: Pham at [98].
3. Ms Sher points to a combination of factors including the companies' financial difficulties and the flow-on effects to her physical and psychological health, as well as its adverse effect on her ability to afford legal assistance. She also points to the threatening, harassing and aggressive conduct of Mr Eliopoulos which she claims exacerbated her stress and caused withdrawal from engagement with him and communications generally. Ms Sher claims there is evidence that Mr Eliopoulos sued her personally for a "vengeful purpose", pointing to some of the text messages in which he expected Ms Sher to obtain family assistance to repay the debt "and thus in some sense use the proceedings to exert collateral pressure to secure payment or to ruin [her] with bankruptcy." Ms Sher submits that if Mr Eliopoulos "was truly sincere about debt recovery he would have sued the Property Companies as well."
4. Mr Eliopoulos urges the Court to dismiss the Notice of Motion. He submits that Ms Sher was aware of a Bankruptcy Notice issued in reliance on the default judgment by no later than 1 September 2023. Further, he submits that on 1 February 2024, he caused a Creditor's Petition to be presented in respect of Ms Sher and obtained orders for substituted service of the Creditor's Petition on Ms Sher on 4 June 2024. He claims that it was only after service was effected (and it can be inferred, because of the service), that Ms Sher engaged with any of the curial processes commenced by Mr Eliopoulos and for "the very first time" alleged that the contract had been with the corporate entities rather than herself personally.
5. Mr Eliopoulos points to Ms Sher's correspondence with him up to at least mid-July 2023 and further contends that it is "frankly devastating" to Ms Sher's assertion of being unable to conduct her affairs at the relevant time that she sent "cogent and informed correspondence" to his solicitors on 1 September 2023 set out above at [29]. He contends that there is no evidence in support of Ms Sher's "bare assertion" that there were physical and psychological impacts of the difficulties the companies were in at the time.
6. The written submissions on behalf of Mr Eliopoulos also included this: "Likewise, the issue of the alleged 'threatening, harassment and aggressive conduct' of the Plaintiff (which is denied) did not come about until after the entry of the Judgment. Again, the Defendant was corresponding with the solicitors for the Plaintiff on 1 September 2023 and, to use the vernacular, trying to do a deal." (Emphasis in underline added.)
7. Mr Eliopoulos further submits that there is no explanation for the length of the delay, and further that he will be prejudiced by an order setting aside the default judgment because he has incurred substantial costs in commencing perfectly valid bankruptcy proceedings in relation to a judgment debt of which Ms Sher was aware, to which she proffered no defence or objection and stated that she could not meet.
8. In considering the rival submissions of the parties, certain matters can be noted.
9. There is undisputed evidence that Ms Sher represented to an unrelated party that she was unwell prior to being served with the Statement of Claim (as set out at [15(c)]). In addition, the mental health treatment plan referred to by Mr Cerne in his affidavit was dated 15 March 2023; a date prior to the filing of the Statement of Claim on 4 April 2023. This undermines Mr Eliopoulos' contention that there is no evidence to support Ms Sher's "bare assertion" of her physical and mental struggles. Further, such evidence cannot be said to be manufactured as a result of her being served with the Statement of Claim.
10. Further, as to the length of delay, although the statement made to the police leading to Mr Eliopoulos being charged was made after the entry of the default judgment, Mr Eliopoulos has now admitted, (notably previously denied in written submissions filed on his behalf) by his plea of guilty, to a course of harassing conduct against Ms Sher (albeit the details of the facts on which he was sentenced is not known, and it is noted that the plea of guilty was entered on "an amended indictment" so that the dates of the charge as pleaded is not known). It can also be noted that the tone of some of the communications from Mr Eliopoulos even prior to the filing of the Statement of Claim, (not all of which have been reproduced in this judgment), would have compounded the stress Ms Sher was already under. A plea of guilty to a criminal harassment charge involving Ms Sher (together with the text messages which are also before the Court) is also evidence the Court can properly take into account in assessing the length of the delay and Ms Sher's claim that for a period of time she withdrew from her engagement with Mr Eliopoulos because of his conduct towards her.
11. As to prejudice to Mr Eliopoulos from setting aside the default judgment, whilst he would suffer from the prejudice of additional costs, in my view, that is insufficient to outweigh the other matters which point in Ms Sher's favour.
12. Accordingly, I am of the view, on the basis of the evidence before me, that Ms Sher has a bona fide defence. Even though, as noted, there is some evidence that Ms Sher was apparently well enough to compose certain business-related correspondence on at least some occasions, on balance I accept Ms Sher's explanation for her failure to file a defence based on stress and ill health arising from her financial problems, together with her lack of funds. Further, these factors, together with the deteriorating relationship with Mr Eliopoulos which culminated in a criminal charge of harassment, provide a sufficient reason to account for the length of the delay.
13. In all of the circumstances, I am of the view that it is in the interests of justice to set aside the default judgment.
14. As to the question of costs, there are a number of factors to consider in the exercise of my discretion. I acknowledge the prejudice to Mr Eliopoulos in having the default judgment set aside. However, Ms Sher currently claims to be impecunious, although there are indications in the material before me that her situation may improve. I also note the allegations of lack of good faith on both sides. In all of the circumstances, I consider it appropriate to order that Ms Sher pay the costs of Mr Eliopoulos obtaining the default judgment, but that those costs should not be recoverable until the completion of the whole proceedings. As to the costs of the Notice of Motion to set aside the default judgment, I am of the view that they should be costs in the cause.

Orders

1. Accordingly, I make the following orders: 1. The default judgment entered against the defendant on 3 August 2023 be set aside. 2. The defendant is to file and serve her defence on or before 7 March 2025. 3. The defendant is to pay the plaintiff's costs of his application for default judgment. 4. The costs referred to in Order 3 are not recoverable until the completion of the whole proceedings. 5. Costs in respect of the notice of motion filed by the defendant to set aside the default judgment be costs in the cause.

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