Foundas v Arambatzis

Court of Appeal (NSW)|2024-09-17|Before: Ward P, White JA, Kirk JA, Rees J, Kunc J

Solicitors: Not applicable (Applicants) Cutri & Associates (First Respondent) William Roberts Lawyers (Second and Third Respondents) File Number(s): 2024/4529 Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity - Commercial List Citation: Foundas v Arambatzis (No 3) [2023] NSWSC 1513; Foundas v Arambatzis (No 4) [2023] NSWSC 1648; Arambatzis v Foundas [2024] NSWSC 400 Date of Decision: 6 December 2023; 22 December 2023; 15 April 2024 Before: Rees J; Kunc J File Number(s): 2021/297960; 2018/184682

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Principles

The Court has a discretion to stay execution of the writ of possession pending the determination of the appeal. The onus is on the applicants to persuade the Court that a stay would be the fairest outcome and the outcome least likely to be productive of injustice (Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 at 695; Vaughan v Dawson [2008] NSWCA 169 at [17]).
In Yeshiva Synagogue Inc v Karimbla Properties (No10) Pty Ltd [2017] NSWCA 331 Basten JA said: "15 The established basis upon which this Court may intervene to grant such relief pending an appeal is, in broad terms, to prevent the subject matter of the appeal being destroyed or substantially impaired in such a way as to render a successful appeal nugatory. A common example may be found in cases where an appellant resists payment of a sum in accordance with the judgment under appeal on the basis that the money will probably be irrecoverable notwithstanding success on the appeal. 16 More broadly, the Court is exercising a discretionary power and will need to weigh the hardship and inconvenience likely to be caused to each party by granting or not granting the order sought. The relevant circumstances are likely to include the period for which the relief will need to operate, the promptness with which the applicant for relief has come to the Court and the strength of the proposed appeal. 17 So far as the last matter is concerned, the inquiry is usually constrained to a determination whether the appeal is reasonably arguable. …"
Account is to be taken of the various factors in favour of and against the granting of a stay including whether it can be granted on terms that fairly take account of the competing interests of the parties (Alexander v Cambridge Credit Corporation Ltd at 694; Bobolas v Waverley Council [2014] NSWCA 131). The strength of the proposed appeal can also be a relevant factor if an assessment about the appellant's prospects of success can be assessed having regard to the necessary attenuation of argument on an application for a stay. In Alexander v Cambridge Credit Corporation Ltd this Court said (at 695): "… Secondly, although courts approaching applications for a stay will not generally speculate about the appellant's prospects of success, given that argument concerning the substance of the appeal is typically and necessarily attenuated, this does not prevent them considering the specific terms of a stay that will be appropriate fairly to adjust the interest of the parties, from making some preliminary assessment about whether the appellant has an arguable case. This consideration is protective of the position of a judgment creditor where it may be plain that an appeal, which does not require leave, has been lodged without any real prospect of success and simply in the hope of gaining a respite against immediate execution upon the judgment. …"
The applicants' prospects of success on the appeal is a relevant factor in this case, particularly as Kunc J has assessed their appeal as being not reasonably arguable. It is only one of the relevant factors, and consideration of that factor must take account of the fact that Ms Foundas is now facing criminal prosecution and faces the prospect that her defence of the charge could be prejudiced if she sought to address the merits of the appeal in any detail.
Nonetheless she has included a document entitled "Draft Summary of Argument" and a draft notice of appeal in her White folder and made submissions at trial and before Kunc J, which this Court can consider.

Prospects of success

In support of their application for leave to appeal against the orders of Rees J of 6 December 2023 (for which leave is not required because an appeal from those orders lies as of right), the applicants submitted that Mr Arambatzis had failed to produce the facts and evidence to establish that he had a beneficial interest in the property. That submission ignores the fact that this Court held that Mr Arambatzis had a 48.7% beneficial interest and that question is finally concluded unless the orders of 15 October 2018 can be set aside on a ground provided for by r 36.15 or for fraud.
The applicants' written submission appears to contend that Mr Arambatzis had no understanding of the matter and no scope to give instructions to his counsel, had shown no interest in the matter and had committed fraud. It was also submitted that answers he gave at the trial before Rees J contained lies.
There has been no challenge to the retainer of Mr Arambatzis' solicitors. The submissions provide no basis for inferring that the applicants could satisfy the criteria for appellate review of a trial judge's assessment of the credibility of a witness (Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [28]-[29]).
By reference to [15] of Rees J's reasons the applicants submitted that the judge displayed apprehended bias.
The primary judge there referred to background facts including assertions made by Ms Foundas' father. Her Honour expressed no view about the truth Ms Foundas' father's assertions. The allegation of apprehended bias is untenable.
There were other allegations of actual bias and denial of procedural fairness but the applicants point to nothing specific which would suggest that any such claim would have a material prospect of success.
The applicants also submitted, by reference to the transcript of the hearing before Darke J on 15 October 2018 that counsel appearing for Mr Arambatzis before Darke J claimed that no defendant was present when "they all knew full well [Ms Foundas] was in Adelaide at a funeral". They submitted that Mr Cutri and counsel lied to Darke J to take an unfair opportunity of proceeding with fake affidavits and fake substituted services (sic) and with fake submissions that they knew would not be contested.
The applicants did not identify any evidence adduced either at the hearing on 6 September 2019, or before the Court of Appeal in 2020, or before Rees J, that when proceedings were commenced and the order for substituted service was obtained Mr Cutri or Mr Arambatzis knew that she was in Adelaide, or knew how she could be contacted.
The statement of claim filed on 15 August 2022 in the proceedings in which Ms Foundas sought to have the orders of 15 October 2018 set aside on the grounds that they were entered illegally or against good faith or by fraud makes no such allegation. It is alleged that Mr Arambatzis filed a summons without providing notice to Ms Foundas and that she was not present during the hearing of the proceedings up to the making of orders. That is common ground. It was not alleged that Mr Arambatzis or his solicitor knew where Ms Foundas was living and could be served and suppressed that information from the Court. If such evidence exists, it should have been adduced at the hearing on 6 September 2019 before Darke J on Ms Foundas' application to set aside the orders of 15 October 2018. As it was not an issue before Rees J, there is no prospect of the appeal being allowed on this ground.
In their written submissions the applicants submitted: "8) I object to the idea that the Deed of Acknowledgement was a fraud and fake. It was authored by a registered legal professional. It was constructed by a legal professional. It was signed by Peter Arambatzis but refused to acknowledge that in the witness box on trial of the 6th November before Justice Rees. Peter Arambatzis preferred to lie as his legal team has done all along. With-hold information relevant to the matter just to manipulate and obscure a decision maker's views. The expert only provided an opinion. Not a professional opinion nor a forensic opinion But just a manipulated and coerced by Mr Cutri opinion. Afterall it was Mr. Cutri who paid the Expert from his own private bank account so he had the say how the report of an opinion should be constructed and authored. Not use valid and proper unbiased methods to come to her own (examiner) conclusion. No other signature was used as a reference to prove her findings. Nothing of the sort. Just what Mr. Cutri wanted to be written."
The submission does not grapple with the reasons for Rees J's finding that the document relied on was a forgery.
Ms Holt was cross-examined to establish that her invoices for the preparation of her report and attendance at court and in conference were paid by Mr Cutri's firm. That fact is unsurprising and connotes no impropriety. It was not suggested to Ms Holt in cross-examination that the opinions she expressed were not her own, or that she had been manipulated or coerced by Mr Cutri. There is no proper basis for the submission that the methods Ms Holt used were not valid or were biased. No such proposition, or any basis for such a proposition, was put to the witness.
The Draft Notice of Appeal does not take the matter further.
Some of the grounds in the Draft Notice of Appeal seek to reagitate issues resolved by this Court in 2020 independently of the grounds upon which the orders of 15 October 2018 were challenged in the proceedings before Rees J (for example, grounds 1 and 2). The Draft Notice of Appeal contains unparticularised allegations of denial of natural justice, professional misconduct on the part of the respondents' lawyers and apprehended bias "by the respondents (sic)". One ground complains that Mr Arambatzis has not paid his lawyers who are waiting to be paid their fees from the proceeds of sale. That complaint was agitated in oral submissions but is groundless. There is nothing improper in a solicitor or barrister accepting a retainer from a client to act on the basis that his or her fees will only be paid from a successful outcome of the proceeding. Another ground (ground 12) complained that Rees J delivered her judgment too quickly. The applicants contend that it should be inferred her Honour did not take all details into consideration, but rather her judgment was biased to assist legal counsel for the respondents. No such inference could be drawn from the promptness with which her Honour delivered judgment. There is no basis for the allegation of bias and desire to assist counsel for the respondents. No such allegation should be made without a proper basis, even by self-represented litigants who consider they have a legitimate grievance.
One ground is that Mr Arambatzis did not adduce proof of his whereabouts at the relevant time in December 2013, that he did not "deny the Deed" and was not sure if he signed it or not.
In cross-examination Mr Arambatzis said that he agreed with the contents of the deed. That was consistent with his text messages considered in this Court's judgment of 24 March 2020 in which he stated to Ms Foundas in November 2013 that Ms Foundas could have the houses (Foundas v Arambatzis [2020] NSWCA 47). But the critical question was whether Mr Arambatzis did sign the deed. The primary judge found that he did not. Nothing in the submissions advanced by the applicants suggests that there are reasonably arguable grounds for this Court to overturn that decision.
In her affidavit in support of the application for a stay of execution of the writ of possession Ms Foundas deposed: "3 … (i) I am a Freeman and have the inalienable, constitutional and inherited Right to Trial by Jury, as guaranteed by the Constitutional Enactments of Magna Carta 1297, The Petition of Right 1627, The Habeas Corpus Act 1640, and The Bill of Rights 1688, which are listed in the Second Schedule Part 1 of the NSW Imperial Acts Application Act 1969 No. 30 as having come into force in New South Wales on the 25th day of July, 1928 by virtue of the Imperial Act 9 George IV Chapter 83."
She also deposed, by way of submission, that: "5 Once the Jurisdiction of the Court is Challenged there is an immediate and peremptory Stay of Proceedings until the Jurisdiction of the Court is determined by a Special Jury."
There is no substance to this submission. Even if the Imperial Acts to which Ms Foundas refers enshrined a right to trial by jury (which they do not) they are subject to amendment or repeal by later legislation. Section 85 of the Supreme Court Act 1970 (NSW) deals with parties' rights to a jury in civil cases. Section 85 relevantly provides: "85 Trial without jury unless jury required in interests of justice (1) Proceedings in any Division are to be tried without a jury, unless the Court orders otherwise. (2) The Court may make an order under subsection (1) that proceedings are to be tried with a jury if - (a) any party to the proceedings - (i) files a requisition for trial with a jury, and (ii) pays the fee prescribed by the regulations made under section 18 of the Civil Procedure Act 2005, and (b) the Court is satisfied that the interests of justice require a trial by jury in the proceedings. …"
Ms Foundas did not file a requisition for the proceedings to be tried with a jury.
In oral submissions Mr Foundas contended that the purported witness to Mr Arambatzis' signature, Ms Christine Cox, was unfairly discredited. He complained that when Ms Foundas advised the judge that she would be relying on evidence from Ms Cox, Mr Cutri had a private conversation with Ms Cox after which she "magically" changed her story. The suggestion, as we understood it, was that she was somehow induced or coerced into changing her evidence. Mr Foundas complained that Mr Cutri spoke to Ms Cox "privately without not only our consent but without us being present".
There is nothing in that complaint. No party has property in a witness. The hearing before Rees J commenced on 6 November 2023. On 3 November 2023, the Friday before the hearing started, Ms Foundas served an affidavit to which she annexed a statutory declaration sworn by Ms Cox dated 3 November 2023. In that statutory declaration Ms Cox affirmed that she "did willingly witness the attached document Deed of Acknowledgment for Cassiani Foundas and Peter Arambatzis in the area of Liverpool while discharging my duty as a Justice of the Peace".
Mr Cutri attempted to contact Ms Cox on Monday but her mobile phone did not answer. On Tuesday, 7 November after court he called Ms Cox and she answered. They had a telephone conversation in the presence of junior counsel for Mr Arambatzis. Mr Cutri made a file note of the conversation. There was nothing improper about the conversation. In essence Ms Cox said that she did not have any recollection of witnessing the Deed of Acknowledgement but she recognised her signature. She did not see an original with her signature.
Ms Cox was called. Rees J took her evidence into account. Mr Cutri's affidavit was tendered by Ms Foundas. There was no impropriety.
For these reasons we consider that the applicants have not demonstrated reasonably arguable grounds for an appeal.

Balancing competing interests

The lack of apparent merit of the appeal is one of the factors to be taken into account in determining where the lower risk of injustice lies if a stay of execution of the writ of possession is granted or denied.
The applicants did not give evidence of hardship they would suffer if execution of the writ of possession is not stayed. However they submitted that if they were evicted they would have nowhere to stay and would not be able to deal with legal matters, and in particular the criminal proceedings instituted against Ms Foundas, without a place of residence.
The summons seeking leave to appeal filed on 22 March 2024 gives an address for Mr Foundas in South Australia. In response to questions from the Bench he said that Ms Foundas was his 24-hour carer and that he sleeps outside her house in his motor vehicle. He said that was a decision they made because the trustees wanted to charge him for occupancy. To reduce costs, he stays outside the house.
Assuming this statement to be true (and it was not given on oath or affirmation) it can be accepted that Mr and Mrs Foundas would both suffer hardship if the writ of possession is executed.
But it must be borne in mind that orders were made more than four years ago requiring Ms Foundas to surrender possession of the property to the trustees. For a considerable period that order was stayed. The stay was granted only because of the production by Ms Foundas of what purported to be a copy of the Deed of Acknowledgement signed by Mr Arambatzis which Rees J found to have been forged.
The effect of Ms Foundas' opposition to the orders sought by Mr Arambatzis and her institution of proceedings seeking to set aside the 2018 orders pursuant to r 36.15 or for fraud has been that Mr Arambatzis has incurred substantial legal costs. It does not appear that the costs the subject of costs orders made in the proceedings before Darke J, or in this Court, or before Brereton JA have been assessed. The costs of the proceedings commenced by Ms Foundas have been assessed in the sum of $210,000.
The trustees have incurred substantial legal costs. To the extent those costs have been properly incurred the trustees will be entitled to indemnity out of the proceeds of sale of the Magee Street property which they hold on trust for Mr Arambatzis and Ms Foundas. There is evidence that on a solicitor and client basis the legal costs incurred by the trustees to date exceed the estimated value of the property. The trustees are also entitled under the orders for sale to recover commission and other expenses including expenses which will be incurred for agent's commission and other expenses to be incurred in the future in actually obtaining possession of the property and marketing it for sale. As at 11 September 2024 the trustees advised that their approximate "administrative costs" were some $246,000.
In addition, as the trustees are now the registered proprietors of the property, the Liverpool City Council and Sydney Water claim that they are personally liable for the payment of council rates and water rates. The outstanding council rates as at 12 July 2024 were asserted by the Liverpool City Council to amount to $24,923.10. The Council has threatened to exercise its power of sale of the property for non-payment of rates. Sydney Water is owed over $6,500 in water rates.
In the meantime, Ms Foundas has been living on the property without paying an occupation fee to the trustees. The order of this Court on 24 March 2020 included an order that "… in accounting for the balance to be paid to the first respondent and the appellant in accordance with the orders of 15 October 2018, as varied by these orders, the second respondents charge the appellant with a reasonable market rent for her occupation of the property from 29 October 2018 to the date of her delivering vacant possession". It appears there will be no balance to be paid either to Mr Arambatzis or Ms Foundas. Ms Foundas can be seen to have enjoyed free occupation of the property for more than five years.
The fact that the trustees are under a continuing personal obligation for unpaid rates is a factor that heavily weighs against staying execution of the writ.
Subject to the possible moderation of the costs and fees claimed by the trustees, it may well be that the appeal would be nugatory whether the appeal is allowed or dismissed. Subject to the Council's charge, the trustees would have priority for their proper costs, expenses and remuneration. Even if the appeal were to succeed, and the orders of 15 October 2018 were set aside, prima facie that would not affect the validity of the trustees' appointment up to the date on which the orders were set aside. As orders of a superior court of record made in the exercise of judicial power they are valid until set aside (Kable v State of New South Wales [2012] NSWCA 243 at [139], [141] and cases cited). Prima facie the trustees will be entitled to their costs, expenses and remuneration whatever the outcome of the appeal. This is an additional factor that weighs against staying execution of the writ.
Weighing all these matters we considered that the course least likely to lead to an injustice, considering the interests of all parties, was to refuse a stay of execution of the writ.

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: 26 September 2024

(Uniform Civil Procedure Rules 2005(NSW)r 36.16(2)(b)).

At a glance

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Judgment (7 paragraphs)

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Legislation Cited (5)

Cases Cited (16)

Cited By (2)