Kyriacou v Raphis Securities Pty Ltd

Supreme Court of NSW|2022-02-02|Before: Ward CJ

Raphis Securities Pty Ltd (Fourteenth Respondent to the Notice of Motion) Somersby Aust Pty Ltd (Fifteenth Respondent to the Notice of Motion) Shoebill Pty Ltd (Sixteenth Respondent to the Notice of Motion) Sam Cassaniti (Seventeenth Respondent to the Notice of Motion) CB Cuckoo Pty Ltd (Eighteenth Respondent to the Notice of Motion) VHM Asset Holdings Pty Ltd (Nineteenth Respondent to the Notice of Motion) Representation: Counsel: A McInerney SC and J Simpkins (Plaintiffs/Applicants on notice of motion) A Bailey (1st and 16th Respondents to notice of motion) A Duc (3rd Respondent to notice of motion) M Castle (9th and 10th Respondents to notice of motion) U Zafiris (11th Respondent to notice of motion) DL Cook SC with Ms M Dolenec (14th, 15th, 17th and 18th Respondents to notice of motion)

Solicitors: KDA Legal (1st and 2nd Plaintiff to the Notice of Motion) Swaab (1st and 16th Respondent to the Notice of Motion) MDW Law (9th, 10th, 14th, 15th, 17th and 18th Respondent to the Notice of Motion) File Number(s): 2021/00211226 Publication restriction: Nil

Background

It is convenient briefly to set out at this stage the background to the respective proceedings and the issues that have been raised in those proceedings, as gleaned from the submissions on the present application.
Until about mid-2020, Filomina Kyriacou and Angelo Russo operated, in partnership together, a group of companies referred to as the "Wentworth Williams Group". Filomina Kyriacou was the principal of a private accounting firm for 20 years, was a registered tax agent, had worked as an accountant for 30 years, held an advanced diploma in accounting and had been engaged in a number of business interests outside accounting.
In early 2019, Filomina Kyriacou and a number of entities within the Wentworth Williams Group were subject to a tax audit.
In about April 2019, Filomina Kyriacou and Angelo Russo met with Mr Sam Cassaniti, an accountant operating through Accolade Advisory Pty Ltd (Accolade), seeking his assistance in responding to the tax audit. (George and Filomina Kyriacou submit that evidence in relation to the April 2019 meeting with Sam Cassaniti and his subsequent involvement in matters relating to the Wentworth Williams Group will be critical to each of the associated proceedings; however, this is not accepted by various of the respondents to the motion.)
The professional partnership between Filomina Kyriacou and Angelo Russo came to an end by mid 2020, by which time it seems that Sam Cassaniti (himself or through one or more entities he controlled) had taken control over certain assets of the Wentworth Williams Group, including two properties which are the subject of the Raphis Proceeding (the Pitt Street Property and the Somersby Property). George and Filomina Kyriacou assert that the various individuals subsequently appointed as directors and shareholders of a majority of the companies within the Wentworth Williams Group were nominees of Sam Cassaniti, so that he could control those companies. Further, they contend that Sam Cassaniti is the controlling mind of the following parties in the associated proceedings: Wentworth Williams Auditors Pty Ltd (WW Auditors); Reliance Financial Services Pty Ltd (Reliance); Shoebill Pty Ltd (Shoebill); Somersby Aust Pty Ltd (Somersby Aust); Marginata Securities Pty Ltd (Marginata); and Raphis Securities Pty Ltd (Raphis).
In summary, George and Filomina Kyriacou contend that the associated proceedings arise out of the same transaction or transactions, namely, the breakdown of the business relationship between Filomina Kyriacou and Angelo Russo and their engagement of Sam Cassaniti following the tax audit.

Parties

The parties to the present notice of motion are as follows.
Filomina and George Kyriacou, who as noted are mother and son, are the plaintiffs in the Raphis Proceeding. They are defendants in the remaining proceedings. They were represented on this application by Mr McInerney SC with Mr Simpkins of Counsel.
Angelo Russo is the first respondent to the notice of motion (and the sole director of Shoebill). Angelo Russo and Shoebill (the sixteenth respondent to the notice of motion) were represented by Mr A Bailey of Counsel.
WW Auditors, the third respondent to the notice of motion (and plaintiff in the WW Auditors Proceeding) was represented by Mr Duc of Counsel.
Reliance Finance and Accolade (the ninth and tenth respondents to the notice of motion and plaintiffs in the now consolidated Reliance/Accolade Proceedings) were represented by Ms Castle of Counsel.
Mr John Kyriacou (Filomina Kyriacou's ex-husband and George Kyriacou's father), the eleventh respondent to the notice of motion and defendant to one or more of the proceedings, was represented by Ms Zafiris. (John Kyriacou took no position on the consolidation application, neither opposing nor consenting thereto.)
Raphis, Somersby Aust, Sam Cassaniti and CB Cuckoo Pty Ltd (CB Cuckoo), the fourteenth, fifteenth, seventeenth and eighteenth respondents respectively, to which I will refer as the Cassaniti Parties were represented by Mr DL Cook SC with Ms Dolenec of Counsel.

Proceedings

As to the respective proceedings, I note as follows.

Raphis Proceeding

The plaintiffs in the Raphis Proceeding are George and Filomina Kyriacou. The defendants to this proceeding include Sam Cassaniti (as noted above, the tax consultant from whom Angelo Russo and Filomina Kyriacou sought advice from about April 2019 in the context of the tax audit).
The Raphis Proceeding relates to George and Filomina Kyriacou's interest in two commercial properties (the Pitt Street Property, a caveat dispute in relation to which was before me last year - see CB Cuckoo Pty Ltd v Kyriacou [2021] NSWSC 991; and the Somersby Property), of which it is said that Sam Cassaniti took control following his engagement by Filomina Kyriacou and Angelo Russo.
Among other things, relief is sought to set aside a registered mortgage over the Somersby Property, it being alleged that the mortgagee (Marginata) is and has at all relevant times been controlled by Sam Cassaniti and knowingly participated in the dishonest and fraudulent design of Angelo Russo to strip the assets of the Somersby Investment Holding Trust with the consequence that Filomina Kyriacou's beneficial interest in the trust was reduced to nil or substantially reduced. It is alleged that, in purporting to exercise the appointor power under the Somersby Investments Holding Trust Deed, without Filomina Kyriacou's consent, Angelo Russo acted in breach of the fiduciary duties he owed to the trust, and to Filomina Kyriacou as an appointor/beneficiary of the trust and that Shoebill (a company associated with Angelo Russo) is liable as a knowing participant to Angelo Russo's breach.
It is also alleged that there was an agreement between Angelo Russo, Sam Cassaniti and Mr Teddy Panella (identified as a nominee director of one or more of the companies) to remove the Somersby Property from the control of the trust, and thereby deprive Filomina Kyriacou of any beneficial interest in the Somersby Property. Further, it is alleged that at all material times following the appointment of another alleged nominee director (Mr Bill Psaroudis) as a director of VHM Asset Holdings Pty Ltd (VHM), Sam Cassaniti was a shadow director, or de facto director, of VHM.

WW Auditors Proceeding

The WW Auditors Proceeding relates to a complaint made as to transactions conducted by George and Filomina Kyriacou on a Commonwealth Bank account in the name of WW Auditors from about 30 July 2019 through to 2020.
WW Auditors is the plaintiff to this proceeding, that being a company formally controlled by Angelo Russo and one of the companies through which the Wentworth Williams Group practice was conducted. It is now a company controlled by Sam Cassaniti.
It is alleged by WW Auditors, inter alia, that George and Filomina Kyriacou misappropriated money from WW Auditors' bank account; whereas George and Filomina Kyriacou contend that the transactions were authorised by Angelo Russo (at a time when he was still the controller of that company). As I understand it, the allegation is that the authorisation was conferred orally (hence the importance of Angelo Russo's evidence in this proceeding). Sam Cassaniti now controls WW Auditors.
George and Filomina Kyriacou say that the background to those transactions relates to the understanding which had been made with Sam Cassaniti back from about April 2019 (from which time there was a restructuring in respect of a number of companies which had previously been controlled by Angelo Russo or Filomina Kyriacou) and hence there is an overlap with or connection between the issues in the Raphis and WW Auditors Proceedings.

Reliance Proceeding

The Reliance Proceeding involves two companies (Reliance and Accolade). Mr Miller and Mr Carmelo Duardo are the directors of the companies. Sam Cassaniti is the authorised officer of each of those companies (and verified the pleading in this and the Accolade Proceeding). The Reliance Proceeding relates to a dispute between Sam Cassaniti (and entities he controls) and Filomina Kyriacou (it is said as a result of the underlying dispute and breakdown of the relationship between Filomina Kyriacou and Angelo Russo). Reliance and Accolade allege, inter alia, that Filomina Kyriacou is indebted to them pursuant to a number of (disputed) agreements.
In the Reliance Proceeding, Reliance and Accolade sue Filomina Kyriacou in respect of money either alleged to have been lent to her (in the case of Reliance) or due under fee agreements for accountancy and advisory services and a guarantee given by her (in the case of Accolade), each on the security of her interest in two properties (one at Kingsford and one at Sans Souci). Reliance and Accolade claim unpaid moneys and fees; in addition to other ancillary relief.
The other defendants to the Reliance Proceeding are said to have been joined due to the nature of the ownership of the secured properties and were not involved in the transactions which give rise to the dispute between Reliance, Accolade and Filomina Kyriacou.
John Kyriacou, the second defendant in this proceeding, is (as noted above) Filomina Kyriacou's ex-husband and is an equal tenant in common with Filomina Kyriacou in respect of the Kingsford property and a tenant in common with a 49/100 share of the Sans Souci property. John Kyriacou's late mother, Leonie Marie Kyriacou (the deceased), is listed on title as having a 50/100 share of the Sans Souci property, as a tenant in common with George Kyriacou and Filomina Kyriacou, who is recorded on title as having a 1/100 interest in Sans Souci. The deceased died on 15 September 2020. As no grant of probate had been made when the Reliance Proceeding was commenced, the NSW Trustee and Guardian is named as the third defendant (on the basis that absent a grant of probate, the deceased's property has vested in the NSW Trustee and Guardian under s 61 of the Probate and Administration Act 1898 (NSW)). Perpetual Trustee Company Limited, the mortgagee of the Sans Souci property, is the fourth defendant.
The Reliance Proceeding is based on five agreements, referred to in the pleadings as: (i) the Reliance August Deed dated 24 August 2019, under which Reliance agreed to advance a principal sum of up to $200,000 to Filomina Kyriacou (the parties to which Deed being Reliance, Accolade and Filomina Kyriacou); (ii) the Reliance October Deed dated 8 October 2019, which granted a loan facility of up to $800,000.00 (the parties to which Deed being Reliance and Filomina Kyriacou); (iii) a fixed fee agreement in the sum of $550,000 (the Principal Accolade Fee) dated 15 April 2019, between Accolade and Filomina Kyriacou; (iv) a Deed of Loan and Fee Agreement dated 15 April 2019, between Filomina Kyriacou, Accolade and Reliance, which treated liabilities under the first fixed fee agreement as being liabilities under this Deed; and (v) a Deed of Further Guarantee dated 10 July 2019 (Guarantee) between Filomina Kyriacou, Accolade and Reliance, in which Filomina Kyriacou guaranteed in favour of Accolade the performance of certain corporate clients who had entered into fees agreements with Accolade.
Filomina Kyriacou admits having entered into the Reliance April Deed but does not recall whether she entered into the Reliance October Deed or the two fee agreements (though not denying that the signatures are hers) and says she is not a party to the Guarantee. It is noted that Filomina Kyriacou admits to some of the advances under the Reliance April Deed. It is said that the gravamen of Filomina Kyriacou's defence is that, if she did enter into the agreements, they were procured by Sam Cassaniti (who is not a party to the proceeding) in breach of his fiduciary duty; and that she did not authorise all of the advances made. Filomina Kyriacou also pleads Contracts Review Act 1980 (NSW) relief and claims unconscionability in respect of the transaction (under s 20 of the Australian Consumer Law).

Accolade Proceeding

The Accolade Proceeding is brought against George Kyriacou. The Accolade Proceeding relates to an alleged guarantee from George Kyriacou, securing the debts that are the subject of the Reliance Proceeding.
In the Accolade Proceeding, Accolade sues George Kyriacou for fees rendered for accounting services ($16,500.00) and on his guarantee of the obligations of Filomina Kyriacou, given in a Deed of Engagement made between Accolade and George Kyriacou on 22 May 2019, secured by charge over real property in Sans Souci of which George Kyriacou is the registered proprietor. Accolade seeks declaratory relief, orders that Harris Street be sold, and other ancillary relief.
Accolade alleges that George Kyriacou executed the Deed in the presence of Cong Hoang, an employee of Accolade, and delivered it to Accolade by handing it to Sam Cassaniti. George Kyriacou's defence is that he did not execute the Deed and did not enter into the Deed.

Legal representatives

KDA Legal acts in all four proceedings in the interests of Filomina and George Kyriacou.
Mr Webb of MDW Law is the solicitor acting for a number of the entities in each of the proceedings (the plaintiffs contend in the ultimate interests of Sam Cassaniti). In the Raphis Proceeding, Mr Webb acts for Raphis, Somersby, Sam Cassaniti, CB Cuckoo and VHM. In the WW Auditors Proceeding, Mr Webb acts for WW Auditors. In the (now consolidated) Reliance and Accolade Proceedings) Mr Webb acts for Reliance and Accolade (two companies said to be controlled by Sam Cassaniti).

Key issues

George and Filomina Kyriacou say that one of the key issues in the Raphis Proceeding is whether Sam Cassaniti owed a fiduciary duty to Filomina Kyriacou and Angelo Russo (if so, whether he breached that duty). George and Filomina Kyriacou say that the same issue arises in the Reliance Proceeding namely, as to whether Sam Cassaniti, Accolade and/or Reliance owed Filomina Kyriacou fiduciary duties in relation to the execution of the relevant agreements relied upon by the respective plaintiffs, or procured breach of such duties, and whether entry into the agreements was unconscionable.
George and Filomina Kyriacou say that the background to those allegations (concerning Sam Cassaniti's involvement from about April 2019 in the meetings, conversations and electronic communications between those parties from April 2019 through until the commencement of the proceedings) will be directly relevant to, and underpins, the allegations and disputes between the parties in respect of all four proceedings.

Witnesses

As to current and potential witnesses, George and Filomina Kyriacou say that in each of the four proceedings it is likely that they, Sam Cassaniti and Angelo Russo will give evidence; and that in at least in three of the four proceedings it is likely that nominee directors (including Mr Panela, Mr Psaroudis, and Mr Duardo) will give evidence. George and Filomina Kyriacou say that (with the exception of various Wentworth Williams Group employees) these people were acting at the behest of Sam Cassaniti.

Relevant Principles

There was no dispute as to the principles applicable in relation to the joinder or consolidation application. Rule 28.5 of the UCPR provides that: If several proceedings are pending in the court and it appears to the court: (a) that they involve a common question; or (b) that the rights to relief claimed in them are in respect of, or arise out of, the same transaction or series of transactions; or (c) that for some other reason it is desirable to make an order under this Rule; the court may order those proceedings to be consolidated, or to be tried at the same time or one immediately after another, or may order any of them to be stayed until after the determination of any other of them.
In Marzol v Joubert; Marzol v Killen [2018] NSWSC 586, Harrison J said (at [9]): It is highly desirable but also "desirable" within UCPR r 28.5, and in the interests of the parties and also the public interest, in "having all matters in controversy arising out of related facts determined at the one time": Sanderson Motors Pty Ltd v Kirby [2000] NSWSC 294 at [7]: Southwest Helicopters Pty Ltd v Country Energy [2009] NSWSC 1376 at [8]- [9] and [11]. The desirability stems, at least in part, from the need to avoid conflicting results if the proceedings are heard separately by different judges, but also to fulfil the objectives in s 56(1) of the Civil Procedure Act 2005.
Reference is made to the summary of principles by Austin J in Ghose v CX Reinsurance Company Ltd [2010] NSWSC 110 at [26]-[32] (see also Fitzgerald (as Admin of Estate of Late Lesley Provan) v Cooper [2020] NSWSC 451 at [8]-[10]), his Honour endorsing (at [26]-[27]) (as applicable also to joint hearings) the statement in Cousins v Cousins (1948) 51 WALR 57 at 60 to the effect that consolidation is desirable and should be allowed where the issues are substantially the same and the evidence is to all intents and purposes identical. Austin J there said (at [27]) that: … the Court's essential task is to work out pragmatically whether the most efficient course consistent with the requirements of fairness would be consolidation, a joint hearing, immediately sequential hearings, entirely separate hearings, or something else (such as determination of separate questions prior to or after the hearing of the remainder of the proceedings). A pragmatic approach requires close attention to the nature of the claims in each set of proceedings and the likely course of the litigation if the proceedings are consolidated or jointly heard, compared with the course of litigation if the proceedings remain separate. A pragmatic approach involves the Court bringing to bear its experience in the conduct of hearings and case management, taking into account such matters as the potential savings of time and expense of one outcome compared with the other, and also the basic imperative that every litigant is entitled to a fair opportunity to present his or her case to the Court. I was referred to s 56(1) of the Civil Procedure Act 2005 (NSW), but in my view the articulation of the overriding objective of facilitating the just, quick and cheap resolution of the real dispute between the parties simply confirms the approach to be taken to such matters as consolidation or joint hearing of proceedings.
As to the factors relevant to be taken into account (see at [29]-[32]), these include those articulated by Besanko J in Humphries v Newport Quays Stage 2A Pty Ltd [2009] FCA 699 at [11], namely: whether the proceedings are broadly of a similar nature; whether there are issues of fact and law common to each proceeding; whether lay and expert witnesses in one proceeding will be witnesses in one or more of the other proceedings; whether there has been an alternative proposal (that there be a test case with agreement by the parties agreed to abide the outcome or at least the determination of common issues of fact and law); whether there is a prospect of multiple appeals with substantial delays if the proceedings are not tried at the same time; whether there will there be a substantial saving of time if the proceedings are tried at the same time, compared with each proceeding being tried separately; whether an order that the proceedings be tried at the same time will create difficulties in terms of trial management, complexity of procedural issues and difficulties in determining cross-admissibility of evidence; whether one proceeding is further advanced in terms of preparation for trial than the others; and whether there are parties to one or some only of the proceedings who will be inconvenienced if all of the proceedings are tried at the same time.
Further, it should be noted that the discretion must be exercised having regard to the overriding statutory mandate pursuant to s 56 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act) for the just, quick and cheap resolution of the real issues in dispute.

Submissions of George and Filomina Kyriacou

George and Filomina Kyriacou say that the following factors favour the consolidation of the respective proceedings: that the associated proceedings are broadly of a similar nature in that each has its genesis in the breakdown of the business relationship between Filomina Kyriacou and Angelo Russo, and their engagement of Sam Cassaniti; that there are common issues of fact and law in each of the associated proceedings; that there are common parties and witnesses in each of the associated proceedings; and that none of the associated proceedings is substantially further advanced than the others. They say that there are four witnesses common to each of the proceedings, where there are disputed questions of fact (arising out of the same series of transactions including disputed conversations) which turn on the credit of each of the witnesses (those being Filomina Kyriacou; George Kyriacou; Sam Cassaniti; and Angelo Russo). It is noted that no alternative proposal has been put forward that there be a test case or the determination of common issues of fact or law.
George and Filomina Kyriacou say that the predominant issue driving this application is the commonality of parties, witnesses and evidence and the importance of credit findings in relation to key witnesses. (The various respondents to the motion, or at least the Cassaniti parties, suspect that there is a more cynical reason for the consolidation application - suggesting that it is to delay the determination of the WW Auditors Proceeding, in which a sum of over $1 million is sought to be recovered from George and Filomina Kyriacou, which might otherwise be determined in advance of their own claims and which it is suggested might be dispositive in a practical sense of other proceedings.)
George and Filomina Kyriacou take issue with the submission by the Cassaniti parties to the effect that the only commonality in the issues in the various proceedings is one meeting in April 2019. George and Filomina Kyriacou say that there were various dealings between Filomina Kyriacou, Angelo Russo and Sam Cassaniti from April 2019 (both in terms of restructuring a number of companies both in terms of shareholding and appointment of new directors, entries into various agreements alleged to have occurred on the part of Angelo Russo and Filomina Kyriacou) which continue through until the commencement of the proceedings in 2021.
George and Filomina Kyriacou say that, having regard to that background, it can be seen that the WW Auditors Proceeding is not a straightforward claim concerning bank accounts (i.e., that, in context, each of the transactions the subject of the dispute occurred during the period of the undertaking and communications between Angelo Russo, Sam Cassaniti and Filomina Kyriacou; and that this puts an entirely different complexion on that case). It is submitted that the claims in the WW Auditors Proceeding will turn on the issue of authority with respect to the transactions (and it is said that this will turn on the contemporaneous communications between each of Sam Cassaniti, Filomina Kyriacou and Angelo Russo).
It is said that this then links to the defence in the Reliance Proceeding, pointing to the dates of the agreements alleged to have been entered into (from about 15 April 2019 to 8 October 2019) and to the various corporate changes (or restructuring) that took place from around 26 April 2019 (by which Filomina Kyriacou was removed from the directorship of various companies and Sam Cassaniti or nominee directors took control) (described by George and Filomina Kyriacou as the "magic date" in this context). It is said that the intricacies of the separation of the professional relationship between Filomina Kyriacou and Angelo Russo from April 2019 is an issue of relevance to the WW Auditors Proceeding. It is submitted that there will be evidence about the communications in and around that period (including whatever meetings, conversations and electronic communications there were) as to whether or not the transaction was authorised; and that this will be against the background of what was happening with Sam Cassaniti and the restructuring of these various corporate entities from April 2019.
George and Filomina Kyriacou submit that, having regard to the commonality in parties, legal representation, witnesses, and the evidence those witnesses will give, there will be a substantial saving of time if the associated proceedings are tried at the same time, compared with each proceeding being tried separately; and for the same reason there is a prospect of multiple appeals with substantial delays if the associated proceedings are not tried at the same time.
Finally, George and Filomina Kyriacou say that they are not aware of any difficulties that may be created if the associated proceedings are tried at the same time in terms of trial management, complexity of procedural issues or difficulties in determining cross-admissibility of evidence. It is noted that there are two parties (John Kyriacou, a defendant in the Reliance Proceeding and Shoebill, a defendant in the Raphis Proceeding) who have separate representation. However, George and Filomina Kyriacou say that any inconvenience that may arise to either of those parties could be minimised (if not entirely overcome) through appropriate trial management orders.
Insofar as complaint is made as to delay on the part of George and Filomina Kyriacou (and complaint as to compliance by them with directions made to date in one or more of the proceedings), George and Filomina Kyriacou blame this on the difficulty in obtaining access to email communications (which was the subject of the orders for production made on 2 February 2022). Further, it is said that this must be seen in the context that there have been various interlocutory applications (for example, in the Raphis Proceeding) to date.

Submissions for Cassaniti parties (Sam Cassaniti, Raphis, Somersby, and CB Cuckoo)

Insofar as the case put by George and Filomina Kyriacou for consolidation is centred on the proposition that, but for the April 2019 meeting, none of the disputes the subject of the associated proceedings would have arisen and hence all those disputes should be heard together, the Cassaniti parties submit that the commonality of one meeting in the factual matrix underpinning the different causes of action constituting the associated proceedings is a tenuous basis for a consolidation.
The Cassaniti parties submit that the Raphis Proceeding is more complex than the Reliance and Accolade Proceedings (noting that the allegations of breach of fiduciary duty are hotly contested, as is George Kyriacou's standing to bring the claims in circumstances where George contends that he is the beneficiary in a discretionary trust and the Cassaniti parties say that the proceeding is essentially a derivative proceeding). It is noted that the Raphis Proceeding also involves issues as to the alleged sale of property at an undervalue.
The Cassaniti parties submit that the real mischief of the present application arises in relation to the WW Auditors Proceedings (that being, as noted above, a claim against George and Filomena Kyriacou for an accounting of unauthorised withdrawals from a company's bank account held by a corporation of which Angelo Russo was the sole director and shareholder). The Cassaniti parties say that not only are the issues relating to the WW Auditors Proceeding completely different to the allegations in the other proceedings but they also emphasise that the WW Auditors Proceeding is procedurally the most advanced (indeed it is said that it could be allocated a hearing date shortly after reply evidence is filed).
The Cassaniti parties (as do WW Auditors) criticise the fact that Filomena and George Kyriacou obtained a sum of $125,000 by way of security paid in the WW Auditors Proceeding before announcing their intention to seek a consolidation of the associated proceedings (pointing out - and I agree - that this would undoubtedly have been a material matter for consideration in making such an order for security). Indeed it is submitted in effect that if there was such a degree of commonality with the evidence and issues in the Raphis Proceeding and those in the WW Auditors Proceeding or Reliance Proceeding, then the decision to commence fresh proceedings (the Raphis Proceeding) is not readily explicable.
The Cassaniti parties are sceptical (to say the least) that a significant, if not dominant, consideration in George and Filomina Kyriacou's now desire for the consolidation is that, if granted, the effect of the consolidation will be to delay, significantly, the hearing (and determination) of the WW Auditors Proceeding. It is said that this apprehension is well-founded given the repeated failures by George and Filomena Kyriacou to comply with directions in the various proceedings.
The Cassaniti parties submit that delay in the WW Auditors Proceeding would prejudice Angelo Russo, the sole director and shareholder of WW Auditors (who is a material witness in the case); and it is emphasised that Angelo Russo's evidence will be critical to that case. There is concern that not only would consolidation delay the determination of the WW Auditors Proceeding but it would also increase the risk that the evidence of a key witness may be lost. Further, it is submitted that consolidation would introduce considerable complexity to the hearing of the proceedings, increased cost, and delay in delivery of judgments (as well as difficulty arising on any subsequent appeal).

Submissions of WW Auditors

WW Auditors is the plaintiff in the WW Auditors Proceeding (it is not a party to the Raphis Proceeding). The WW Auditors Proceeding was commenced by way of a summons before Parker J sitting as duty judge, with WW Auditors seeking asset preservation orders. WW Auditors says that it is ready to proceed with the claim in its proceeding (against George and Filomina Kyriacou for moneys allegedly misappropriated from WW Auditors' former trading office account) once the reply evidence has been filed (with a present estimate for the hearing of five days). WW Auditors points out that it has complied with orders to provide security for costs that were made before the present notice of motion was foreshadowed (having agreed to do so on 27 September 2021).
WW Auditors submits that it is inappropriate to hear the matters together, for several reasons, including that the WW Auditors Proceedings do not have relevant common questions of fact or law.
It is submitted that it is inefficient for the Court and the parties to proceed in this manner. It is said that all four proceedings are at a different point in their litigation, with the WW Auditors Proceeding being most advanced and ready for listing.
Second, it is said that the matters are distinct and separate. The WW Auditors say that the questions required to be answered in the WW Auditors Proceeding are: the extent to which the transactions from WW Auditors' bank account were affected by George and Filomina Kyriacou; the extent to which George or Filomina Kyriacou benefited from those transactions; and the extent to which George or Filomina Kyriacou was authorised to effect the impugned transactions. It is said that the other proceedings do not involve an assessment of the issues in the WW Auditors Proceedings.
Third, WW Auditors argues that, while the parties or dramatis personae in some matters are the same, that is not a reason to have the matters heard together. It is said that the requirement to have relevant common questions of fact or law is not here met; and that consolidation of the proceedings is not in accordance with the statutory mandate for the just, quick and cheap resolution of " provisions of s 56 of the Civil Procedure Act. It is submitted that consolidation would disadvantage WW Auditors by causing its proceeding to be delayed while the other matters are consolidated.
WW Auditors says that the fact that Sam Cassaniti is now a director of the company has no bearing on the assessment of the misappropriations that occurred earlier. Further, it is said that nothing about the meeting of Angelo Russo and Filomina Kyriacou with Sam Cassaniti in April 2019 has any bearing on the decision by George or Filomina Kyriacou to effect any of the impugned transactions or their (lack of) authority to do so.
In contrast, WW Auditors says that the Reliance Proceeding involves claims for the recovery of contractual debts; and that the Raphis Proceeding relates to George Kyriacou's claim to be a beneficiary of a trust in respect of the Somersby Property, which it is alleged was sold for less than market value; and his allegation that Sam Cassaniti breached his fiduciary duties in selling the Pitt Street Property to a related party for less than market value. It is said that these allegations are very different from the claims made in the WW Auditors Proceeding.
Complaint is made that there have been several failures by George and Filomina Kyriacou to comply with directions in the various proceedings. WW Auditors emphasises its concern that there will be continuing non-compliance by George and Filomina Kyriacou in the other proceedings (to the disadvantage, if the matters are consolidated, of the progress of its case). Particular concern is raised that Angelo Russo, who was the sole director and shareholder of the plaintiff company, is a significant witness in the case; and that WW Auditors' claim will be prejudiced should Angelo Russo be unavailable to give evidence.
Concern is also raised as to the increase of time and expense if the matters are joined or consolidated.

Submissions of Angelo Russo and Shoebill

Shoebill is only a party to the Raphis Proceeding. Angelo Russo is a party to the Raphis Proceeding and deposes to being a witness of fact in each of the other proceedings mentioned. In essence, Shoebill and Angelo Russo adopted the submissions put forward by Mr Cook SC (appearing for the Cassaniti parties) on this application.
Shoebill's main prejudice arising out of a joinder or consolidation of the proceedings is identified as being twofold. It is anticipated that arrangements would need to be made to accommodate Angelo Russo's ill-health (it being said that this is something probably best done in separate proceedings when each is separately ready for hearing); and it is said that Shoebill does not trade, has no immediate funds and would need to borrow to pay what could be expected to be increased legal costs for a consolidated hearing of all matters, as opposed to legal costs of the Raphis Proceeding alone.
Further, it is submitted that, where the various proceedings are at various stages of progression to conclusion (with some being closer to a hearing date than others), the possibility of some being determined early rather than all being delayed is a strong reason to decline to order joinder or consolidation with orders for evidence in one proceeding being evidence in another.

Submissions of Reliance/Accolade

Reliance and Accolade say that none of the five agreements sued upon in the Reliance Proceeding is the subject of the WW Auditors Proceeding or the Raphis Proceeding; that neither of the secured properties is the subject of any claim, or relevant to any issues in the other proceedings; and that none of the defendants in the Reliance Proceeding (other than Filomina Kyriacou) is a defendant in any other proceeding. Though George and Filomina Kyriacou are plaintiffs in the Raphis Proceeding, it is said that this proceeding involves different disputes, different properties, different parties and different causes of action.
Reliance and Accolade say that the Reliance Proceeding involves in essence simple debt claims (albeit that it is accepted that there is some factual complexity in relation to ownership of the Sans Souci property, the resolution of which is necessary due to the orders sought for sale). Reliance and Accolade do not accept that Filomina Kyriacou's share is 1% and it is noted that the resolution of that issue will involve evidence of conversations between Filomina Kyriacou, Angelo Russo and Sam Cassaniti, evidence of financial contributions (including extensive renovations to the Sans Souci property), as well as evidence from John Kyriacou (and perhaps others) in relation to the deceased's contributions and intentions in respect of the Sans Souci property.
As to the Accolade Proceeding, again it is said that this involves relatively simple claims in debt, with related relief in relation to securities provided. It is said that the factual dispute is narrowly confined, namely, whether or not George Kyriacou entered into the Deed. Reliance and Accolade say that the Deed of Engagement is not the subject of dispute in any of the other proceedings, the Sans Souci property owned by George Kyriacou is not the subject of other proceedings, and that there are no other common parties beyond George Kyriacou.
Reliance and Accolade submit that the fact that some of the parties are the same (or that some of the parties had different dealings with each other) is not a meaningful enough connection to warrant joinder of otherwise disparate proceedings.
Reliance and Accolade did not oppose orders for the joint hearing or consolidation of the Accolade Proceeding and the Reliance Proceeding (as promoting the efficient use of court and party resources and in keeping with the guiding principles of case management contained in ss 56-60 of the Civil Procedure Act). However, they do oppose the joinder application insofar as it relates to the Raphis Proceeding and the WW Auditors Proceeding being heard with the Accolade and Reliance Proceedings.
This opposition is on the basis, first, that the transactions at the heart of the dispute in the Raphis Proceeding and WW Auditors Proceeding are distinct to each of those proceedings and entirely different to the transactions at the heart of the Accolade and Reliance Proceedings. Second, it is said that, at the heart of the Accolade Reliance Proceedings are claims: as against Filomina Kyriacou, in respect of lending and personal services transactions in the course of which Filomina Kyriacou gave security over her two properties; and, as against George Kyriacou, in respect of personal services transactions in which George Kyriacou gave security over his own Sans Souci property. It is noted that those properties do not feature at all in the other proceedings; that the properties that feature in the Raphis Proceeding are not part of the Accolade and Reliance Proceedings; and that any business(es) operated at one time by Angelo Russo and Filomina Kyriacou (which appear to be at the centre of the WW Auditors Proceeding) form no part of the Accolade and Reliance Proceedings. It is said that that dispute appears to relate to an allegation of unauthorised transactions that are of no relevance to the Accolade and Reliance Proceedings and appear to involve a larger number of witnesses, some of whom have no involvement at all in the Accolade and Reliance Proceedings.
Thus it is submitted that an order that all the proceedings be heard together will cause Accolade and Reliance to incur disproportionate costs in a hearing that involvers issues which do not involve them (and that those costs will be disproportionate to the relatively simple nature of the proceedings in which they are parties).
Reliance and Accolade cavil with the proposition put for George and Filomina Kyriacou that each of the claimed causes of action in the various proceedings arises out of the same transaction (namely, entry into an arrangement by Filomina Kyriacou and Angelo Russo with Sam Cassaniti in April 2019) and that "but for" the meeting the proceedings would not exist or not in the current form. Apart from criticism of "but for" reasoning in this context, Reliance and Accolade point out that in the Reliance and Accolade Proceedings no "arrangement" with Sam Cassaniti is pleaded and that the written agreements sued upon by Reliance and Accolade do not have Sam Cassaniti as a party. It is noted that the defence filed in the Reliance Proceeding is largely one of procurement of agreements through breach of fiduciary duty, while the defence in the Accolade Proceeding is essentially one of non est factum.
Reliance and Accolade submit that, were these disparate proceedings ordered to be heard together, there is the potential for prejudice and difficulty for parties in relation to the relevance of evidence, cross-examination and the like. Further, they say that the Accolade and Reliance Proceedings, though relatively simple in terms of principle, contain factual disputes as to whether agreements were entered into and the like which are likely to be time-consuming and to lead to a lengthy trial on their own; and they submit that they ought not be burdened by additional hearing time in matters involving different disputes between different parties.

Determination

I have set out above the factors that are generally taken into account when determining whether to make an order for the consolidation of proceedings pursuant to r 28 of the UCPR. As to those factors (and accepting that at this stage the evidence of George and Filomina Kyriacou has not been filed and hence the impact of that evidence on these factors is not known) my view (which was my view at the conclusion of the hearing of the consolidation application and has not changed upon further consideration) is as follows.
First, as to whether the proceedings are broadly of a similar nature, it seems to me that, while there may be some overlap in the chronology of events, conceptually the respective proceedings raise different issues - most obviously, the debt and guarantee claims in the Reliance/Accolade Proceedings are of a different nature from the unauthorised transaction claims made in the WW Auditors Proceeding and very much different in nature to the claims raised in the Raphis Proceeding (as to breach of fiduciary duty and the like).
Second, as to whether there are issues of fact or law common to the respective proceedings, it seems to me that the area for overlap arises as to the factual circumstances in which the various transactions occurred (in particular, there seems to me to be scope for evidence as to advice given by Sam Cassaniti or steps taken in April 2019 as to any restructuring of the partnership entities or companies or as to the separation of the business entities to overlap across at least the Raphis Proceeding and the WW Auditors Proceeding). It is not so obvious that there will be any great overlap of that kind with the Reliance/Accolade Proceedings. I accept that overlap or commonality of issues or factual disputes is a factor that would point towards consolidation of at least the Raphis and WW Auditors Proceeding (although I consider that there is much force to the submission that if there was indeed such an overlap then it might have been expected that George and Filomina Kyriacou would have brought their claims by way of cross-claim rather than commencing fresh proceedings).
Third, as to the commonality of witnesses, there is obviously a degree of overlap insofar as the main protagonists might be expected to give evidence in more than one of the proceedings (i.e., there is likely to be overlap between the evidence of Angelo Russo and at least Filomina Kyriacou, if not also George Kyriacou). There may or may not be as much overlap with the evidence of Sam Cassaniti (there being dispute between the respondents on that issue) although his advice during the period from April 2019 as to restructuring may well be of relevance to claims made as to transactions even before he obtained control of the companies. That, of course, raises the spectre of inconsistent credit or factual findings (a factor that would tend in favour of consolidation) though until the evidence is filed the real scope for such overlap cannot fully be assessed. Nevertheless, it may well be that the risk is more apparent than real if the evidence relevant to one particular proceeding goes to a separate set of issues than that which is relevant to another. Certainly, the submissions put on the application before me suggest that there may not be a real problem of overlap in the evidence that Angelo Russo will give in the respective proceedings (his evidence seeming to be most critical for the WW Auditors Proceeding since it is in that proceeding that the issue of oral authorisation of transactions in relation to the company bank account will arise); and, conversely, the issue of expedition arises most starkly in relation to Angelo Russo's evidence since he is in the advanced stages of cancer.
Fourth, as to whether there has been any alternative proposal to consolidation, there has certainly been no suggestion of some kind of test case (and it is hard to see how that would be practicable given the disparate issues involved in the respective proceedings). I did, however, attempt to explore during oral submissions some alternative ways of case management that might enable the competing issues of expedition and minimisation of costs and inconvenience might be addressed. I will return to this shortly.
Fifth, as to the prospect of multiple appeals with substantial delays if the respective proceedings are not tried at the same time, there must be at least the prospect of multiple appeals if the matters are dealt with separately but whether that would give rise to substantial delay beyond that which would be occasioned from an appeal from consolidated proceedings seems to me to be a moot point. In that regard, I note that concern raised in the course of submissions as to the difficulty in an appellate context of disentangling evidentiary and other issues arising in separate proceedings that were heard together. It seems to me that, overall, this factor points both ways.
Sixth, as to whether there would be a substantial saving of time if the proceedings were tried at the same time, I have some doubts about this. I accept that there would not be the risk of duplication of evidence. However, if the proceedings were to be consolidated this would be likely to lead to delay in obtaining a final hearing date - hence any saving of time would have to be balanced by the likely delay in having any of the proceedings determined. I think it inevitable that consolidation would considerably delay the matters being listed for hearing (noting that the fairly short time frame estimated for, say, the WW Auditors Proceeding would mean that it would be possible for it to be heard relatively soon compared to a much longer combined hearing). That issue is of considerable concern to me having regard to the position of Angelo Russo.
Seventh, whether an order that the proceedings be tried at the same time will create difficulties in terms of trial management, complexity of procedural issues and difficulties in determining cross-admissibility of evidence. I have already broadly touched on these issues in my comments above. I have no doubt that consolidation of the proceedings would make more complicated the case management of the matter towards final hearing, including an increase in procedural complexity, though if I were otherwise of the view that the proceedings should be consolidated at this stage then I would not have considered that this factor was determinative against such an order.
Eighth, as to whether one proceeding is further advanced in terms of preparation for trial than the others, there can be little doubt that the Raphis Proceeding is the least advanced (and the timetable set on 2 February 2022 reflects that). However, George and Filomina Kyriacou blame this at least in part on difficulties in obtaining access to the email communications the subject of orders made on the last occasion; and to the extent that they seek consolidation they would have an incentive to expedite preparation of their evidence in all of the matters.
Finally, as to whether there are parties to one or some only of the proceedings who will be inconvenienced if all of the proceedings are tried at the same time, this factor to my mind weighs heavily against consolidation of the proceedings at least at this stage. That is because I accept that it is likely to be critical to the WW Auditors Proceeding that evidence be able to be taken from Angelo Russo, whose health is of much concern. It must be to the prejudice of WW Auditors (and any other parties likely to be dependent on Angelo Russo's evidence) if consolidation of the proceedings caused delay (and potential loss) of that evidence.
Balancing the above matters, had I made a decision on 2 February 2022 on the consolidation application, I would have declined to make such an order. As it was, I considered that a middle course would be warranted and made orders for the filing of evidence in order to be in a position at that stage to assess more fully the relevant overlap of issues and evidence. I had in mind (and explored with Counsel) the possibility that what might best achieve the objectives of the parties (all of whom agreed that expedition of matters in which Angelo Russo was expected to give evidence would be warranted) would be to expedite the hearing of the matters but that they might not necessarily need to be consolidated. I considered the possibility that the proceedings might be able to be heard in effect consecutively (though not necessarily immediately after each other). In other words, listing a series of shorter hearings was more likely to enable them to be heard quickly than listing a much longer composite hearing. I also considered that case management orders would be able to be made to minimise potential prejudice from delay and I contemplated that it was likely that the WW Auditors proceeding would be heard first while Angelo Russo was able to give evidence.
I therefore reserved judgment on the consolidation application (the only remaining issue in the amended notice of motion to be determined) pending the filing of evidence in the respective proceedings (scheduled for a time after it was anticipated that the production of the email communications would have taken place). However, since then, as adverted to above, events have meant that I will not be continuing the case management of the proceedings; and I have referred the matter to the expedition list judge for case management. I do not consider it appropriate in those circumstances to leave the consolidation issue unresolved (not least because it would be invidious for case management to be proceeding by the expedition list judge at a time when there was a reserved judgment from me as to consolidation lurking in the background which might impact on that ongoing case management).
Accordingly, at my request, my associate advised the parties of my intention to publish my judgment prior to the evidence having been filed. The parties were advised that the matter would be listed for submissions if there was any issue in so doing. No such issue was raised other than that George and Filomina wished that, if that course be adopted, it be on the basis that it did not prejudice them later raising the issue of consolidation before the expedition list judge. I see nothing to stop any further such application being made once the evidence has been served. I do not consider that an issue estoppel would arise if any future application for consolidation was based on the circumstances appertaining at the time (such as the filing of the evidence then having been completed).
Accordingly, I have proceeded to determine the extant application so as to finalise the disposition of the amended notice of motion. I am of the view that it is not appropriate to consolidate the Raphis Proceeding with the other proceedings at this stage. I consider that the respective proceedings raise issues of a conceptually discrete nature and I am not persuaded that it is in the interests of the just, quick and cheap resolution of the real issues in dispute to make such an order because of my concern not only as to the increased procedural complexity that this would entail but principally because I consider that it would inevitably delay the hearing and determination of the WW Auditors Proceeding and that this has the potential for real prejudice to the parties in that proceeding because of Angelo Russo's state of health and the importance of his evidence where the issues turn on the disputed oral authorisations.
Moreover, it is not insignificant that George and Filomina Kyriacou appear to have chosen to commence a separate proceeding (the Raphis Proceeding) rather than to bring any cross-claim in the WW Auditors Proceeding (and obtained security for costs as defendants in the WW Auditors Proceeding without, apparently, foreshadowing any separate proceeding in which they might be seen as going onto the offensive). In that regard, to the extent that they were in the position of bringing their own cross-claim in the context of the defence of the WW Auditors Proceeding that would indeed have been a relevant factor in the determination of the security for costs application (see for example the discussion in Green Camel Pty Ltd v Urban Ecological Systems Ltd [2017] NSWSC 362 at [50]-[53], there referring to the judgment of Smart J in Sydmar Pty Ltd v Statewise Developments Pty Ltd [1987] 11 ACLR 616 at 626-627). Be that as it may, ultimately I have concluded that the application for consolidation should not be granted because of the very real risk of it causing delay in the determination of the WW Auditors Proceeding to the prejudice of the other parties in that proceeding.
As to costs, I do not recall making costs in relation to the matters that were determined on 2 February 2022 (i.e., for production of the email communications and for leave to amend the statement of claim). It may be that separate costs orders should be made to reflect the outcome of those applications (in which case I would be inclined to order that the first and second respondents pay the plaintiffs' costs of the motion for production of the email accounts the subject of the order made on 2 February 2022); and the costs of the application for leave to amend the statement of claim (but that the plaintiffs should pay any costs thrown away by the amendment) but I will seek the parties' response to such an order. As to the costs of the consolidation application, I consider that they should follow the event but again I will seek the parties' submissions on that issue. Meanwhile the matter has been referred to the expedition list judge for directions.

Conclusion

For the above reasons I make the following orders: 1. Dismiss the application by the plaintiffs, pursuant to the amended notice of motion dated 25 January 2022 and filed in Court on 2 February 2022, for an order pursuant to r 28.5 of the UCPR that this proceeding and three other sets of proceedings (namely, 2021/00168744 on the one hand and 2021/00169193/2021/00228163 on the other hand, those last two proceedings now already having been consolidated) be heard together, with evidence in each proceeding to be evidence in each of the other proceedings. 2. Direct the parties to file any brief submissions on costs within 14 days, with a view if possible to determining the issue of costs on the papers. 3. Note that, other than costs, this disposes of the amended notice of motion dated 25 January 2022.

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: 03 March 2022

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Judgment (22 paragraphs)

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