Sam Pambris Super Fund Pty Limited v Emelie Kallidis

Background

1. HIS HONOUR: By Amended Statement of Claim filed on 23 March 2022, the Plaintiff seeks damages for breach of a lending agreement made between the Plaintiff and the Defendant. An alternative way of describing the Plaintiff's claim is that it seeks to enforce a deed entered into between the Plaintiff and the Defendant on 7 February 2015.
2. The Plaintiff company is Sam Pambris Super Fund Pty Ltd. Mr Sam Pambris is the director, the secretary, and the principal shareholder of the Plaintiff. The minority shareholder in the Plaintiff company is Mr Pambris' wife. In essence, the Plaintiff company is an alter ego of Mr Pambris. The Defendant is Emelie Kallidis, an Australian born lady of Greek heritage. To understand the nature of the arguments before me, it is important to bear in mind the background and history of both Mr Sam Pambris and the Defendant.
3. Mr Pambris was born on the island of Cos in May 1954. He came to Australia in or about 1964 when he was nine or ten years old. He has lived in Australia ever since. He gave his evidence in English and there has been no problem in his communicating in the English language, both with the Court and with the Defendant.
4. In 1993, Mr Pambris had a number of businesses. One of them was manufacturing and dyeing fabric. Another of his businesses involved bringing out to Australia Greek entertainers from Greece to entertain the local Greek community here in Sydney. In or about 1993, Mr Pambris hired the Defendant to work for him, essentially as a junior office assistant at his business, which was then being carried out in Alexandria.
5. In 1993, the Defendant was about 17 years old. She worked for Mr Pambris for a number of years. They became acquaintances and a friendship ensued. The Defendant is the mother of two daughters. Her second child was born in October 1997. The evidence does not give me the date of the birth of the Defendant's first child. However, it would appear that the Plaintiff worked for Mr Pambris at Alexandria from 1993 until sometime prior to the birth of her second child.
6. She ceased working for Mr Pambris sometime prior to the birth of her second child and then she did not return to the workforce until well after the birth of her second child. Obviously, being required to look after two young children was quite inconsistent with performing paid work.
7. Her first job after ceasing to be a full-time mother and carer was part-time work with Mr Peter Kay. She explained that Mr Kay was involved with a company called Hock-A-Car Pty Ltd. At transcript 92.14, Ms Kallidis said this: "He was the manager. Yeah, so I worked for him in 2004 on a part time basis for four hours a day, three days a week because I had a small child and another older child so I was only working on a part-time basis."
8. A search of Hock-A-Car Pty Ltd can be found on p 84 of the court book. That company was incorporated on 3 February 2004 and was deregistered on 29 July 2012. Its initial directors were Mr Peter Kay and Mr Ignatios Hilellis. Mr Kay ceased to be a director on 21 January 2006. However, he appears to have been "replaced" by the Defendant on 22 September 2008.
9. But for two days in December 2008, the Defendant remained a director of Hock-A-Car Pty Ltd until 28 September 2010. She did so because there was a dispute between Mr Kay and Mr Hilellis and the Defendant took the director's position to protect the interests of Mr Kay. Later, the Defendant ceased to work for Hock-A-Car Pty Limited being replaced as director by Mr Kay, but that gentleman later on the evidence before me, committed suicide.
10. The significance of this work that the Defendant did for Hock-A-Car Pty Ltd is to show how she became involved with companies bearing similar titles subsequently. It also shows that the Defendant became involved in a company which was in fact a pawnbroker where the goods that were pawned to the pawnbroker were in fact motor vehicles.
11. According to Ms Kallidis' evidence not only was Hock-A-Car Pty Ltd involved in pawnbroking where the securities were in fact motor vehicles, but it also had attached to it a motor dealership. The name "Hock-A-Car" used the slang word for pawning chattels, namely the verb "hock". Not only did Hock-A-Car Pty Ltd take possession of any motor vehicles pawned to it, but it also took possession of motor vehicles and jewellery and whatever else may have been offered to Hock-A-Car Pty Ltd as some form of security.

Defendant's business

1. Having learnt this business from Hock-A-Car Pty Ltd, the Defendant herself became involved in a similar business. On 15 March 2013 a company was incorporated under the name of A1 Hock-A-Car Sydney Pty Ltd. Its director from the time of incorporation on 15 March 2013 was the Defendant. She ceased to be a director on 1 August 2021. A receiver/manager was appointed to that company on 26 July 2016 and the company was deregistered on 1 March 2022.
2. Also on 15 March 2013, another company called A1 Hock-A-Car Sydney No. 1 Pty Ltd was incorporated. Its original director and secretary were the Defendant. It was deregistered on 15 March 2017. On 11 December 2012, A1 Hock-A-Car Sydney No. 2 Pty Ltd was incorporated. From 15 March 2013, the Defendant was the secretary and director of that company. She ceased to hold those positions on 7 May 2017. On 15 March 2013, A1 Hock-A-Car Sydney No. 3 Pty Ltd was incorporated. From the date of incorporation, the Defendant was the director and secretary of that company. It was deregistered on 7 August 2016.
3. Also were incorporated a number of companies bearing the names A1 Hock-A-Car Sydney Investments No. 1 Pty Ltd and A1 Hock-A-Car Sydney Investments No. 2 Pty Ltd. The original director and shareholder of each of those companies was also the Defendant. On 28 January 2014, a company was incorporated in the Australian Capital Territory called Local Logistics (NSW) Pty Ltd. That company was eventually deregistered on 29 November 2020. The Defendant was a director and secretary of that company from 28 January 2014, the date of incorporation, until 29 November 2020.
4. It can be seen from the corporations that were commenced and how they were named that sometime after the death of Mr Kay, the Defendant herself took up the mantle of Hock-A-Car and maintained that business for a number of years. In oral evidence, the Defendant said that she took over the directorship of Hock-A-Car Pty Ltd after Mr Kay ceased to be the director on 22 September 2008. She took on the directorship on behalf of Mr Kay because there had been a falling out between Mr Kay and Mr Hilellis, and there was a trust deed between Peter Kay and the Defendant that had been prepared for them by Mr James Jordan.
5. That trust deed is annexed to the affidavit of the Defendant of 5 May 2022, which is Exhibit 4 in these proceedings. The trust deed may be found commencing at p 492 of the court book. This evidence was given at T.100: "Q. You've said in your affidavit that you were involved not personally but you were involved through the company that you've got in the business of pawnbroking. That's correct, isn't it? A. Correct."
6. On the following page of the transcript, the Plaintiff said that she resigned sometime in 2010 before Mr Kay committed suicide. She then went on to agree that, subsequently, she had registered several companies, those companies included A1 Hock-A-Car Sydney Pty Ltd. Annexed to Exhibit B, an affidavit of Mr Pambris sworn on 7 February 2022, is an A1 Hock-A-Car Sydney Pty Ltd business document. It can be found at p 245 of the court book.
7. Beneath the title of the company and its details are the words "Pawn ticket." This, which is common ground, was a business record of A1 Hock-A-Car Sydney Pty Ltd. I need not recite the name of the owner of the vehicle in question other than to point out it was as lady living in Greenacre. She is identified by her driver's licence number. The chattel was a Toyota Corolla SIL. The terms of the pledge are the payment of interest at the rate of 20% per month or part thereof. The amount lent was $2,000. The minimum interest charge was $250 per month or any part thereof. The amount which the pledgor agreed to pay was $400 per month.
8. When cross-examined about that document, the Plaintiff agreed that the interest rate amounted to an annual interest rate of 240%. This evidence was then given at T.105: "Q. In those circumstances, is it fair to say that you are familiar with the charging of, if I can call it that, high interest in relation to pawnbroking arrangements? A. Okay, a pawn ticket is a standard ticket, all pawnbrokers have the same ticket. Pawnbroking contracts are no longer than three months, they don't go into 12 month contracts, so therefore that's only there as a basis to give them a guide, so we don't charge 240% per annum because the contract expires in three months time unless the client wants to recontract their car which is very unlikely. And it's a standard pawn ticket, all pawnbrokers New South Wales wide have this amount of interest and that's how it works. Q. The question I asked you was do you accept the 20% interest per month is high interest? A. I accept that it's high interest but it's governed by the Department of Fair Trading and pawnbroking has been around for a long time and it's short term lending and it's licensed."

The relevant lending agreement

1. Mr Pambris' affidavit of 7 February 2022, Exhibit B, contains this matter: "18. I have known the Defendant personally for a period of approximately 28 years, since approximately 1993 when she started working for me as my assistant / bookkeeper and for several years. The Defendant was aware of my financial position and assets as she used to deal with all my personal and business matters. 19. Following the Defendant's employment with me, I am aware that she became involved in the business of pawnbroking, which is addressed in more detail below. 21. I seek leave to refer to my previous Affidavit sworn on 19 November 2021, and in particular paragraph 15. I wish to clarify that part of that discussion was held with the Defendant in April 2015 and not September 2015. 22. On or about late April 2015 the Defendant approached me for a loan where we had a discussion with words to the effect of: Emelie: 'Sam, are you able to lend me some money as I can hock some more cars because I have run out of cash. I usually charge 20% per month on the money that I lend out and I am happy to give you half of that.' Me: 'Look, that's a lot of interest.' Emelie: 'But I charge 20% per month so I am happy to give you half of it.' Me: 'Yes but you have an office to run as well and you should have more than half to at least put some of that interest towards the running of your office' Emelie: 'Would you be happy with 7.5% per month?' Me: 'Yes I am because that way I feel like I am at least contributing to some of the expenses of your office. We would need to draw some sort of an official loan agreement to confirm the arrangement.' Emelie: 'Ok if you can draw it up and we can both sign.' Me: 'Where do you want the money paid to?' Emelie: 'I'll give you the details of my personal account, you can put it in there.' 23. On or about 1 May 2015, a Deed of Loan was entered into between the Defendant and myself whereby I lent to the Defendant the sum of $40,000.00. Appearing at pages 50-52 of Exhibit 'SP-1' is a true copy of the Deed of Loan dated 1 May 2015... 24. On or about 23 July 2015, a further Deed of Loan was entered into between the Defendant and myself whereby I lent the Defendant the sum of $40,000.00. Appearing at pages 53-55 of Exhibit 'SP-1' is a true copy of the Deed of Loan dated 23 July 2015... 25. On or about 7 August 2015, a further Deed of Loan was entered into between the Defendant and myself whereby I lent the Defendant the sum of $27,000 to assist with the running of the Defendant's business. Appearing at pages 56-58 of Exhibit 'SP-1' is a true copy of the Deed of Loan dated 7 August 2015..."
2. The three loans just referred to were loans made by Mr Pambris personally to the Defendant. They are not the subject of these proceedings. The total of those loans, if my mathematics be correct, was $107,000.
3. The affidavit from which I have just quoted then has a heading: "The September Loan Agreement". That loan agreement is between the Plaintiff and the Defendant and is the subject of these proceedings. I shall quote from the same affidavit from which I was just recently quoting: "26. On or [sic] September 2015 the Defendant again approached me for a further loan on the same terms as the previous loans and we had a conversation in words to the following effect: Emelie: 'Sam, have you got any more money to give me. There is a Greek person who has an expensive car that wants money and I have run out of cash.' Emelie: 'As you know I charge 20% per month.' Me: 'Yes I remember from our precious [sic, scilicet. "previous"] conversation when we did the May Loan.' Emelie: 'Ok if you can draw it up like the other ones and we can both sign it' Me: 'Where do you want this money paid to?' Emelie: 'You can just put it in my personal account like we did before.' 27. On 7 September 2015, the Plaintiff and the Defendant entered a Deed of Loan for the advance of money on the same terms as the previous loans referred to above. Appearing at pages 59-61 of Exhibit 'SP-1' is a copy of the Deed of Loan dated 7 September 2015…"
4. According to Exhibit C, $40,000 was advanced to the Defendant on 2 September 2015, and a further $20,000 was advanced to the Defendant on 5 September 2015. Clearly, the deed bearing date 7 September 2015 was executed after the advances were made. The deed of loan bears a cover sheet which lists the parties to the deed as Sam Pambris Super Fund Pty Ltd, which is identified as the lender, and Emelie Kallidis, who is identified as the borrower. The date given on the cover sheet is 7 September 2015. The cover sheet has been signed by both Mr Pambris and the Defendant. The deed itself appears over two pages. Each of the two pages has been signed by Mr Pambris and Ms Kallidis. The signature of Mr Pambris has been witnessed by Ms Ourania Apostolidis, and the signature of the Defendant has been witnessed by Ms Angela Hall. Each of the borrower and the witness has dated the document 7 September 2015.
5. The body of the document is this: "INTRODUCTION The Borrowers have requested the Lenders to lend the Borrowers the sum of $60,000.00 which the Lenders have agreed to do upon having the repayment of the sum secured in the following manner. IT IS AGREED that in consideration of the premises and of the sum of $60,000.00 now lent to the Borrower by the Lender being various advances (the receipt of which is acknowledged): 1, The Borrower covenant with the Lender: 1.1 Borrower will repay to the Lenders so much of the sum of $60,000.00 as shall remain outstanding by 7th of March 2016 unless a time extension is requested by the borrower for a further one month. 1.2 Borrowers will pay interest on the sum of $60,000 and Interest will accrue from day to day on the sum of $60,000 at a rate of 90.0% per annum paid monthly. In the event that there is a default in making the payment referred to above and whilst the default continues, without limiting the rights of the Lender to recover same from the Borrower, the Borrower agree to pay the Lender interest being interest calculated at the rate of 90.5% per annum however the Lender will accept interest at 90.5% per annum if interest is paid on or before the 1st day of each month for which interest is due. Any unpaid interest shall be added to the principal due to the Lender from the Borrower unpaid interest shall be added to the principal due to the Lender from the Borrower and interest will thereafter be due on the 1st day of each month with the last interest payment and payments of principal sum taking place on or before the 7th of March 2016. 1.3 The Lender has the right to repay principal after two months at anytime of the month. 2. In the case Borrowers default in the making of the payment pursuant to clause 1 or upon the occurrence of any of the following events: (a) If the Borrower shall be adjudicated bankrupt; (b) If any distress or execution shall be levied against the property or any part of the property of the Borrower and shall remain unsatisfied for at least 14 days[;] Then and in such a case the Lender shall be entitled to at their option to make demand by notice in writing to the Borrower for the immediate payment of the principal sum or so much thereof as shall then remain outstanding and upon the service and any such notice the principal sum shall become immediately due and payable by the Borrower to the Lender along with any outstanding and accruing interest or any part thereof remains outstanding and continuing until the whole of the principal sum and interest accrued has been paid in full. 3. The Borrower shall be allowed to repay the balance of the loan at any time before the date stipulated for repayment. 4. The Borrowers agrees to charge any real property or other assets they may jointly or severally now own or may own in the future with the performance of this deed and consent to the Lender lodging a caveat on any real property of which they are a registered proprietor to secure the performance of his obligation under this deed. 5. The Borrower shall upon request of the Lender execute all documents necessary to be executed by the Lender to perfect the security offered to the Lender in Clause 4. 6. In this Deed wherever the context so admits the expression Borrower means and includes their executors, administrators and assignees. 7. Service of any notice required to be served pursuant to this Deed shall be served in the manner prescribed by Section 170 of the Conveyancing Act, 1919 to 1964."
6. In his oral evidence, Mr Pambris admitted that in the past he had retained Mr Jim Kartsounis of J Kartsounis & Co, located in Earlwood, to do some legal work for him, and he produced a document which became the template for the various deeds of loan issued by Mr Pambris and/or the Plaintiff to the Defendant. The template has a number of difficulties in it. One will note immediately that sometimes the borrower is described in the plural, and at other times in the singular. The Court must construe the document to give it business efficacy. Here, the borrower was a natural person, a single person, and therefore whether the word "borrowers" or "borrower" is used, the Court must interpret that as being the "borrower."
7. One will see from cl 1.1 that the term of the loan was six months commencing on 7 September 2015 and expiring on 7 March 2016. The last sentence of cl 1.2 provides for the payment of interest upon any unpaid interest. This, very properly, has never been pressed by the Plaintiff's lawyers. One will note from cl 1.3 that the principal could repay the capital after the expiry of two months, that is, at any time after 7 November 2015.
8. Clause 2 has not been well set out. Subclause (b) ends at the end of the second line, that is, after the words "at least 14 days". A semi-colon should be there inserted, and the balance of the clause return to the initial indent. That is the only way in which to make sense of the clause. One will note that cl 3 is inconsistent with cl 1.3. However, the inconsistency does not raise any problem itself in the current case.
9. I have no hesitation in finding that the deed was properly executed. Ms Angela Hall provided an affidavit sworn on 8 June 2022 which became Exhibit D. In [15] of Exhibit D, Ms Hall relates the circumstances of the execution of deeds by the Defendant. [15(c)] of her affidavit is this: "On each occasion I witnessed the loan agreements, Sam would always ask me to make a copy for Emelie and give it to her. Emelie would always refuse to take a copy as she didn't want her partner to know specifics of her business dealings as well as not having the area to keep these files. I always made a copy and it was kept in Emelie's file in our office and she could access it any time she needed."
10. At p 70 of the transcript, it is clear from what was said by Mr Thomas, who appeared for the Defendant, that he wished to challenge the execution of the deed. I then asked certain questions of Mr Pambris, and the following evidence was given: "Q. You see there on page 90 Mr Pambris you signed it and put JP after your name. I assume that you're a Justice of the Peace? A. I am your Honour. Q. Now your signature has been witnessed by is it Ourania Apostolidis? A. Ourania Apostolidis. Q. Ourania, O-U-R-A-N-I-A, Apostolidis, A-P-O-S-T-O-L-I-D-I-S. A. Correct yes. Q. Who is she? A. She used to work for me at the time. Q. Ms Kallidis' signature has been witnessed by Angela Hall. Do you know Angela Hall? A. Yes your Honour, she's one of the witnesses for this case. Q. Were you present when Ms Kallidis signed the deed? Signed the document? A. Yes. Q. Ms Hall was there too, was she? A. Yes, sir. Q. As well as Ourania Apostolidis? A. Yes, your Honour. THOMAS Q. Can I suggest that in fact, the two witnesses came in after you and Ms Kallidis had executed, that is, signed the deed? A. That's not true. Q. That neither of them were in the room when you both executed it? Signed it? A. That's not true either. I mean, I don't know what you're trying to - "
11. In cross-examination, it was put to Ms Hall that she was not present when the signatures were put on the deed, that when she was called in, the signatures had already been placed on the deed. She replied, "No," to that. She knew Ourania Apostolidis. She said that Ms Apostolidis would have been the lady who typed up the deed. The challenge to the execution of the deed is, in my view, unsuccessful. It is upon that deed that the Defendant bases its case.

Payments

1. There were two payments made by the Defendant that were attributed to this deed. On 18 December 2015, she paid $13,500 to the Plaintiff. A record of the National Australia Bank ("NAB") attesting to that transfer can be found at p 258 of the court book. A further sum of $18,000 was paid to Mr Pambris, and a record of the NAB relating to that can be found at p 259 of the court book. That sum was paid on 16 June 2016.
2. On p 258 of the court book, one will find on the NAB document a handwritten note "3 months", and on p 259 of the court book one will find a handwritten note on the NAB document "4 months". There is no doubt that those two notations were made by Mr Pambris. According to Mr Pambris, he was told by the Defendant that when she paid the $13,500 to the Plaintiff, that was for three months' rent, and when she paid the $18,000 to the Defendant, that was for four months' rent.
3. I have no hesitation in accepting that evidence of Mr Pambris. However, from the way the case has been presented, pleaded, and argued, these payments were taken to be payments towards capital rather than payments of interest. No further payment was made by the Defendant until after the commencement of these proceedings when the sum of $30,000 was paid on 25 January 2022, that is, by that time, more than $60,000 had been repaid to the Plaintiff.

The Defendant's allegations

1. There is a major contest in this case between Mr Pambris and the Defendant. The Defendant would have me believe that she was a naïve young woman who accepted loans from Mr Pambris, either personally or from his superannuation fund, because of his goodwill, that she never read any of the papers that he asked her to sign and was completely unaware of what was going on. Such extreme naivety cannot be attributed to the Defendant when one considers the work that she is actually doing as a pawnbroker, lending money at high interest rates on motor vehicles and, for example, foreclosing on loans when the loans were not repaid in full after three months.
2. Further, such naivety is quite inconsistent with the spirited defence which the Defendant often made during cross-examination. For example, one issue about the loan here in question arises because of an allegation that the Defendant wished to purchase a motor vehicle which had been owned by the mayor of Canterbury. There are a number of affidavits or statements before me that were made by the Defendant. Exhibit 3 is an affidavit sworn on 24 November 2021. It contains this matter: "10 On or about mid 2015, a conversation took place between myself and Sam Pambris to the following effect Sam: 'The Canterbury Mayor's car is going to be auctioned soon at Pickles Auctions' Emelie: 'Ok' Sam: 'Do you still have access to a motor vehicle dealers licence?' Emelie: 'Yes' Sam: 'It's a good car. It is a BMW. Can you arrange to buy it before auction. I cannot be seen to be buying the car directly because of my connection with Canterbury Council?' Emelie: 'I can try for you' Sam: 'The Mayor has told me that the reserve price is $35,000.00. I will send you $40,000 to cover the price, stamp duty plus any costs. Give me your account details and I will deposit the money. I then gave Sam my bank account details and shortly thereafter, he deposited $ 40,000 into my personal account. This money was deposited into my account on the 3rd September. 11 I then made inquiries with Pickles Auction and was advised that the car in question had been sold. 12 I then contacted Sam and a conversation took place to the following effect Emelie: 'Sam, the car is sold' Sam: 'That's not good. We missed out' Emelie: 'Yes.It looks that way' Sam: 'Emelie, you told me your business partners have not paid you for months. Do you need the money?' Emelie: 'It would help me pay my credit cards and other debts that have mounted plus my mortgage.I will pay you hopefully soon when I get back on my feet' Sam: 'I have access to my super, which can be released. I need to draft a contract to provide to the auditors to show that the money is making a return' Emelie: 'Ok.That would really help me out' Sam: 'I can draw down another $ 20, 000 from the account. Will this help you ?' Emelie: 'Yes' Sam: 'I will prepare the agreement. Can you please come in and sign it' 13 I state that on the 7th September 2015, I attended Sam Pambris's office and I signed a loan agreement. I did not read the agreement and just signed it.I was not given a copy of the agreement nor was it suggested to me to have the agreement read by and explained to me by a solicitor."
3. The substance of the allegations contained in that explanation are disputed by Mr Pambris, who said that the question of the mayor's car arose much earlier. In that regard, Mr Pambris is corroborated by Ms Hall. Her affidavit, Exhibit D contains a par [14] which is in reply to par [14] of the Defendant's affidavit of 5 May 2022, which is Exhibit 4. Paragraph [14] of Exhibit 4 is this: "In relation to the agreement referred to in the preceding paragraph, Sam Pambris said to me in words to the following effect: Sam Pambris: 'The purpose of the money is to use it for what you need personally. When you have had the baby, start looking for a late model car for me and give me the details and I will tell you whether it is what I am looking for. You can then proceed with the purchase for me.'"
4. Paragraph 14 of the affidavit of Ms Hall sworn 8 June 2022 is this: "In reply to paragraph 14 of Emelie Kallidis May Affidavit: (a) I recall becoming more involved in that transaction due to Sam leaving to go overseas. At no time did Emilie or Sam state to me that the loan was for personal purposes, nor was I aware that it was for personal purposes. Prior to Sam going overseas he was looking for a car and he was willing to spend $25,000. He had suggested to me to get it through Emelie if she could secure the sale price to auction because she had a dealer's license. If that was going to happen, then I was instructed to transfer $25,000 into Emelie's account for the car. Sam and I had discussion with words to the effect of: Sam: 'Angela, I'm looking for a car and I'm willing to spend $25,000.00. I am leaving for Greece, but I saw an MV-Lexus. The ex-mayor's car is going to auction and I am going to ask Emelie if it's possible to secure a sale prior to auction if I can get it through her because she has a dealer's licence. Me: 'Ok, what do you want me to do?' Sam: 'If Emelie can secure the car for me then please transfer $25,000 to her account.' Me: 'Ok Sam, leave it with me.' (b) I then made a diary entry, noting Sam's instructions. Annexed hereto and marked 'B' is a true copy of a work diary entry of 13 June 2015, noting Sam's instructions to me to transfer $25,000.00 to Emelie for the purchase of MV-Lexus (ex-mayors) if she could secure the sale prior to auction. (c) On 15 June 2015, I was advised by Emelie that the car sold prior to auction and we missed out. I never transferred the $25,000.00 to Emelie as she never bought the car for Sam. I then made a note of this in my work diary. Annexed hereto and marked 'C' is a true copy of my personal diary entry for 15 June 2015. (d) As far as I am aware, Sam never lent money to Emelie for her everyday living expenses. He would not use the Superfund money for anything like that because strict rules apply. It was also to assist with her facilitating the hocking of cars. I am aware of this because of my position as Sam's accounting assistant."
5. It can be seen, therefore, that the ex-mayor's car was not a BMW but an MV Lexus, that it was up for auction in June 2015, and that money was never advanced to the Defendant in order to try to secure that car. Furthermore, if the Plaintiff's moneys had been used to try to effect the purchase of a motor vehicle for the personal use of Mr Pambris, that would have been an illicit use of the superannuation fund moneys.
6. The annexures to Ms Hall's affidavit, which is Exhibit D, show that on Saturday, 13 June, Ms Hall made a note that Mr Pambris was to give to the Defendant $25,000 towards the purchase of a motor vehicle, and then there is a reference to the Lexus and an arrangement for transferring the money to the Defendant. The same diary shows that, on Sunday 14 June, Mr Pambris left Sydney on Emirates Airlines flying to Athens. On Monday, 15 June, there is a note that the car was sold and the amount of the sale could not be disclosed prior to the auction. It was noted it was more than $25,000, and the sum of $39,900 has been added to that entry. In other words, the diary notes referred to in the affidavit of Angela Hall confirm objectively what she said occurred.
7. Mr Pambris' affidavit of 7 February 2022, Exhibit B, contains this matter: "36. On or about October 2016 the Defendant contacted me and exchanged words to the effect of: Emelie: 'Hi Sam, I would like to host my daughter's christening at one of your venue, can I come and talk over the details so I can book it in?' Me: 'Yes of course, let me know when you want to come in and we can organise it.' 37. On or about October 2016 the Defendant contacted me and we exchanged words to the effect of: Emelie: 'Hi, Sam, how are you?' Me: 'I am well Emelie, thank you. How are you going?' Emelie: 'I borrowed money for my business from Crown & Gleeson in Brisbane a few months ago using my home as security. It's around $150,000.00 at 3% per week reduced to 1% per week if I keep up with weekly payments.' Me: 'Well, how can I help you?' Emelie: 'Why don't you pay it out for me and get that same loan assigned to you so I can repay you the interest instead of giving it to them. Since I have the other loans with you we can keep them all together.' Me: 'I don't have that kind of money to give you Emelie.' Emelie: 'Would you be able to pay it from the Superfund?' Me: 'I'll get my solicitor to check it out first and we can organise it.' 38. On or about October 2016 the Defendant attended my office to finalise the details for her daughter's Christening and we exchanged words to the effect of: Emelie: 'So, have you had a chance to think about the assignment of the other loans from Gleeson? It would really help me and we can have all the loans together it will be easier to manage.' Me: 'I have briefly spoken to my solicitor, but I will follow it up. But before we do that, let's sit down and work out what is outstanding so far and what payments you made and see where we stand.' 39. Appearing at page 65 of Exhibit 'SP-1' is a true copy of my diary entry of 1 October 2016 signed by the Defendant acknowledging her liability and confirming the payment of $18,000.00 made was for the interest component accrued on the loan and not in reduction of the principal amount."
8. Page 65 of Exhibit 'SP-1' is in fact p 261 of the court book. The original of that document is Exhibit F. It has been written in pencil. The first part of the document refers to loans given personally by Mr Pambris. In the middle of the page there is reference to the Plaintiff and the lending by it of $60,000. There is then reference to interest payable between 7 July to 7 October of $18,000. There is then reference to outstanding interest for August of $340, and September of $680, and to the 14th, it may be of October rather than the September written, of $210. The total of the new interest sums is $1,230. It shows that what was owing was $79,230, and that on 7 October interest starts running again. The document has been signed in blue ink by the Defendant. The Defendant says that this document is bogus, that she merely signed a page of his diary, and that what was placed above her signature was a concoction.
9. Clearly there has been some erasure, but the erasure appears to have been of an incorrect addition of $340, $680, and $210. That, as far as I can see, is the only substantial amendment to the document. It was not as if the document showed details of the arrangements for the christening, which is what the Defendant would have me believe, that was subsequently erased, and the matter currently shown on Exhibit F inserted. I have no hesitation in accepting the oral evidence of Mr Pambris that this is a genuine document.

Crown & Gleeson loan

1. Another aspect arising from that evidence is the loan which the Defendant had from Crown & Gleeson of Brisbane. Documents relating to that commence at p 262 of the court book, being annexures to Mr Pambris' affidavit, which is Exhibit B. The first is a letter from Crown & Gleeson bearing date 24 November 2016, in which they advise that the then current payout figure for the loan was $171,487.40, valid until 30 November 2016. Annexed to it is a computation of the amount outstanding. It is to be noted that there were a number of debits made because of cheques payable by the Defendant being dishonoured.
2. At p 265 is a deed of assignment of an equitable charge between C & G 201624 Pty Ltd as the outgoing second mortgagee, and the Plaintiff as the incoming second mortgagee, and the Defendant. The cover sheet of the deed bears date 1 December 2018. The recital numbered B of this deed is this: "The Outgoing Second Mortgagee has secured the Debt by way of an Equitable Mortgage dated 16 June 2016 and registered as a second mortgage with NSW LPI No. AK812852Q over the property Folio ID 21/DP1100300 (the Charge)." To that document are annexed a waiver of independent financial advice signed by the Defendant on 1 December 2016, and a waiver of independent legal advice signed by the Defendant on 1 December 2016.
3. Commencing at p 275 of the court book is the mortgage initially granted by C & G 201624 Pty Ltd (an entity of Crown & Gleeson) by the Defendant as mortgagor. The loan date is 16 June 2016. The loan repayment date was 26 weeks from the date of the loan advanced. The principal advanced was $158,466.67. The lower rate of interest was 1% per week and the higher rate of interest was 3% per week. The lower rate of interest was clearly 52% per annum and the higher rate of interest was clearly 156% per annum.
4. Commencing at p 278 of the court book is a transfer of the mortgage granted by C & G 201624 Pty Ltd to the Plaintiff bearing the date 1 December 2016. Commencing at p 279 is a caveat, the caveator being "Sam Thomas Pambris" and the Plaintiff. It is a caveat over the property that I understand to be the Defendant's then residential address. The oral evidence tells me that the new finance provided by the Plaintiff to the Defendant to cover this was only interest at the rate of 12% per annum, which clearly was a great improvement for the Defendant on the interest rate that she had to pay for this loan, which was described to Mr Pambris as a business loan.

Assessment of the Plaintiff

1. The fact that Mr Pambris granted this refinancing of a substantial loan both as to its principal and as to the rate of the interest which the Defendant had been paying shows, in my view, goodwill by Mr Pambris on behalf of the Plaintiff to the Defendant, and shows that the Defendant was aware that Mr Pambris would provide her with financial accommodation when she needed it. Again, the interest rate of 12% per annum is not in the circumstances of business loans at all unreasonable or untoward.

The nature of the loans: personal or commercial

1. Another major thrust of the Defendant's case is that most of these borrowings, in fact the borrowing here in question, was for the Defendant's personal living expenses, for the payment of her mortgage and personal outgoings rather than a loan for any business purpose. That is denied by Mr Pambris and corroborated to a small extent by Ms Hall from her interactions with both Mr Pambris and the Defendant.
2. It pains me to have to say that I formed the view when listening to Ms Kallidis' evidence that I could not accept it at face value. Much of it appeared to me to be completely implausible. I have no hesitation, however, in accepting the evidence of Mr Pambris and the evidence of Ms Hall. Other evidence given in the Plaintiff's case was by Mr Minas, the Plaintiff's solicitor, and he was hardly challenged at all. I prefer the evidence of Mr Pambris and Ms Hall to that of Ms Kallidis which largely causes me to reject most of what Ms Kallidis had to say.
3. As to the allegation that the loan here in question was a loan to enable the Defendant to pay off her mortgage and living expenses, her credit cards and the like, no corroborative evidence was called by the Defendant at all. No attempt was made to put the Defendant's financial position at any particular time before this Court. There is no evidence of what her financial position was at the time of the loan granted by the Plaintiff on 7 September 2015, nor is there any evidence of her financial position both workwise and personally at any other time during the existence of the relationship of Mr Pambris and the Defendant. Insofar as it was open to the Defendant to prove what her financial position was at any particular time, no attempt was made to do so, and where corroboration for what she says is necessary, that lack of corroboration means that, on many essential issues, the Defendant's case fails.

Demand

1. A formal demand was made by Minas & Associates, solicitors for the Plaintiff, by letter dated 9 December 2020. That is headed "Letter of Demand". This letter caused some controversy. I shall quote a number of aspects of it which show the nature of the controversy and the angst that it caused: "2. We are instructed that you have defaulted under the Deed of Loan entered into by you and our client on 7 December 2015 in that you have failed to make repayment in accordance with the terms set out therein. (Please note this debt is separate to the debt owed to our client secured by way of mortgage against your property, for which we will be serving your separately). 3. Despite promises made by you and demands made by our client to date, payment has not been forthcoming and you are now in default under the payment terms as set out in the Deed of Loan referred to above. 4. Our client requests that you immediately pay to our office the amount of $4,500,811.02 ('Outstanding Amount') being the outstanding principal amount plus interest accruing on the balance in accordance with Clause 1.2 set out therein, being 90% per annum compounded daily, calculated up to and including 30 November 2020. Please find enclosed our interest calculations for your convenience and ease of reference. 5. However, and as a matter of commerciality, we are instructed to advise that should payment be made within 14 days from today, our client is willing to accept the sum of $750,000.00 as full and final settlement." The letter goes on to tell the Defendant how she could pay the sum demanded of her and, otherwise, should she wish to discuss the matter how she should contact the office of the solicitor sending the letter.
2. The calculation annexed to that letter commences on p 95 of the Court Book and ends on p 135 of the Court Book. That document is not helped by the fact that the word "principal" has been incorrectly spelt. However, clearly it was the compound interest which made the sum so large which, of course, is not what is pressed. One could understand a person in the position of the Defendant being distressed and alarmed when receiving a letter of demand saying that her indebtedness was some four and a half million dollars.

Plaintiff's claim

1. It is not necessary to go further into what happened since that time. The Plaintiff currently presses for payment of the sum of $178,334.79 as set out in a written submission, which is MFI-4, and of that MFI it is the paragraph numbered 4 which contains the calculation that maintains an interest rate of 90% per annum, but reduces the capital by $13,500 commencing on 18 December 2015 and further reduces the capital by $18,000 as at 16 June 2016, and reduces the capital by the sum of $30,000 paid on 25 January 2022. The Defendant, however, says that the only amount which ought be paid is $33,275.91, being the last of the three pages on the three documents, collectively marked MFI-3.
2. In essence, the Defendant's contention is that the interest rate of 90% per annum expired at the end of the lending period of 7 March 2016 and that, thereafter, the interest rate should only be that calculated in accordance with the Rules of Court for a payment of pre-judgment interest. That, again, raises a question of construction of the deed. Again, I frankly concede that the deed is confusing and inconsistent. However, it is clear what was intended, and objectively to be gleaned as the intention, are that whatever money was outstanding, the interest rate for the outstanding money should be at 90% per annum.
3. I accept completely the evidence of Mr Pambris that the Plaintiff offered him interest at the rate of 10% per month but he was happy to accept 7.5% interest per month which, of course, ends up at 90% per annum. The reason for such a high interest rate was because that was what the Defendant offered to Mr Pambris. She was collecting from moneys she advanced 20% per month and, therefore, it was in her interest to borrow money at a much lesser rate of 7.5% per month, which would still allow her to make a profit on her lending activities as a pawnbroker.
4. If the Defendant wanted to have escaped continuing to pay interest at 90% per annum, then she could have borrowed money from another source, from another financier, at a much lower interest rate to pay off the interest rate provided for in the agreement that she struck with the Plaintiff. However, she did not, and the evidence suggests that she did not do so in respect of the loans made to her personally by Mr Pambris.

Defences

1. I turn then to the various defences pleaded by the Defendant. The Amended Defence bears date 5 April 2022. The Defendant admitted that the Plaintiff was a corporation, but said that the Plaintiff carried on trade or commerce within Australia, which trade or commerce included the provision of financial services. It was also alleged that Mr Pambris, as a director, secretary, and shareholder, of the Plaintiff, and its alter ego and directing mind, personally engaged in the provision of financial services and activities, which would include within the Commonwealth of Australia.
2. The defence alleges a breach of s 911A of the Corporations Act 2001, in that the Plaintiff failed to hold a financeal services licence covering the provision of financial services. A like allegation is made against Mr Pambris personally. Plea 1(v) is this: "By reason of the plaintiff's breach of s 911A of the Corporations Act 2001 and/ or by reason of Pambri's [sic] breach of s 911 A of the Corporations Act 2001, neither the plaintiff nor Pambris entered into the loan transactions identified in a statement of claim (the loan transactions) with 'clean hands' and the loan transactions are unconscionable and unenforceable."
3. There is an alternative plea to that, that the lack of clean hands means that the allegations made in the Statement of Claim are unconscionable and unenforceable. Plea 3(xii) was that: "The purposes of the loan were predominantly for personal, domestic, or household purposes."
4. It is consonant with what I have already said that I reject that plea in its entirety.
5. Plea 3(xiii) alleges that the terms of the loan agreement implied by law include the provisions of the National Consumer Credit Protection Act 2009, Schedule 1 "National Credit Code", that Act generally, and the Contracts Review Act 1980. Plea 3(xiv) pleads this: "The Loan agreement and/or clause 1 and/or clause 1.2 of the loan agreement are void and/or unenforceable as being in breach of the above mentioned statutory provisions and/or by reason of being unconscionable and unjust."
6. Plea 4 complains of a lack of advice and of unconscionability. Plea 9 seeks a declaration, pursuant to the Contract Review Act 1980, that the loan agreement is unjust and/or that the repayment of interest and interest terms are unjust and unenforceable.
7. I begin with a consideration of the relevant State law. The Contracts Review Act 1980 contains in s 6 restrictions on the grant of relief. Section 6(2) is this: "A person may not be granted relief under this Act in relation to a contract so far as the contract was entered into in the course of or for the purpose of a trade, business or profession carried on by the person or proposed to be carried on by the person, other than a farming undertaking (including, but not limited to, an agricultural, pastoral, horticultural, orcharding or viticultural undertaking) carried on by the person or proposed to be carried on by the person wholly or principally in New South Wales."
8. Here, I am persuaded by the evidence that the Defendant was a person who is not entitled to be granted relief under this Act, as the contract that she entered into with the Plaintiff was a contract entered into in the course of, or for the purposes of, the trade or business, which was pawnbroking, and, in particularly, the business of A1 Hock-A-Car in one of its various corporate identities or another.
9. Unfortunately, the Commonwealth law is not so succinct. The National Credit Code makes these provisions: "3 Meaning of credit and amount of credit (1) For the purposes of this Code, credit is provided if under a contract: (a) payment of a debt owed by one person (the debtor) to another (the credit provider) is deferred; or (b) one person (the debtor) incurs a deferred debt to another (the credit provider). (2) For the purposes of this Code, the amount of credit is the amount of the debt actually deferred. The amount of credit does not include: (a) any interest charge under the contract; or (b) any fee or charge: (i) that is to be or may be debited after credit is first provided under the contract; and (ii) that is not payable in connection with the making of the contract or the making of a mortgage or guarantee related to the contract. 4 Meaning of credit contract For the purposes of this Code, a credit contract is a contract under which credit is or may be provided, being the provision of credit to which this Code applies. 5 Provision of credit to which this Code applies (1) This Code applies to the provision of credit (and to the credit contract and related matters) if when the credit contract is entered into or (in the case of precontractual obligations) is proposed to be entered into: (a) the debtor is a natural person or a strata corporation; and (b) the credit is provided or intended to be provided wholly or predominantly: (i) for personal, domestic or household purposes; or (ii) to purchase, renovate or improve residential property for investment purposes; or (iii) to refinance credit that has been provided wholly or predominantly to purchase, renovate or improve residential property for investment purposes; and (c) a charge is or may be made for providing the credit; and (d) the credit provider provides the credit in the course of a business of providing credit carried on in this jurisdiction or as part of or incidentally to any other business of the credit provider carried on in this jurisdiction. (2) If this Code applies to the provision of credit (and to the credit contract and related matters): (a) this Code applies in relation to all transactions or acts under the contract whether or not they take place in this jurisdiction; and (b) this Code continues to apply even though the credit provider ceases to carry on a business in this jurisdiction. (3) For the purposes of this section, investment by the debtor is not a personal, domestic or household purpose. (4) For the purposes of this section, the predominant purpose for which credit is provided is: (a) the purpose for which more than half of the credit is intended to be used; or (b) if the credit is intended to be used to obtain goods or services for use for different purposes, the purpose for which the goods or services are intended to be most used."
10. It should be noted that the paragraphs of s 5(1) of the National Credit Code are cumulative, and that the subparagraphs of s 5(1)(b) are in the alternative. I first go to s 5(1)(b). The credit which the Plaintiff provided to the Defendant was not for personal, domestic, or household purposes, nor was it to purchase, renovate, or improve residential property for investment purposes, nor was it to refinance credit that had been provided wholly or predominantly to purchase, renovate, or improve, residential property for investment purposes. Therefore, the Defendant cannot satisfy s 5(1)(b) of the provision, and therefore it cannot satisfy any part of s 5(1) of the National Credit Code. I was not taken by learned counsel for the Defendant to either s 5(2), 5(3), or s5(4), but they would not, in any event, be applicable in the current matter.
11. The Defendant's submissions rely heavily upon the evidence given by the Defendant that the loan agreement was to help her pay her credit cards and other debts that had mounted together with her mortgage. That is evidence which I do not accept.
12. Section 13 of the National Credit Code is this: "13 Presumptions relating to application of Code (1) In any proceedings (whether brought under this Code or not) in which a party claims that a credit contract, mortgage or guarantee is one to which this Code applies, it is presumed to be such unless the contrary is established. (2) It is presumed for the purposes of this Code that credit is not provided or intended to be provided under a contract wholly or predominantly for any or all of the following purposes (a Code purpose): (a) for personal, domestic or household purposes; (b) to purchase, renovate or improve residential property for investment purposes; (c) to refinance credit that has been provided wholly or predominantly to purchase, renovate or improve residential property for investment purposes; if the debtor declares, before entering the contract, that the credit is to be applied wholly or predominantly for a purpose that is not a Code purpose, unless the contrary is established. (3) However, the declaration is ineffective if, when the declaration was made, the credit provider or a person (the prescribed person) of a kind prescribed by the regulations: (a) knew, or had reason to believe; or (b) would have known, or had reason to believe, if the credit provider or prescribed person had made reasonable inquiries about the purpose for which the credit was provided, or intended to be provided, under the contract; that the credit was in fact to be applied wholly or predominantly for a Code purpose. (4) If the declaration is ineffective under subsection (3), paragraph 5(1)(b) is taken to be satisfied in relation to the contract. (5) A declaration under this section is to be substantially in the form (if any) required by the regulations and is ineffective for the purposes of this section if it is not. (6) A person commits an offence if: (a) the person engages in conduct; and (b) the conduct induces a debtor to make a declaration under this section that is false or misleading in a material particular; and (c) the declaration is false or misleading in a material particular. Criminal penalty: 2 years imprisonment. (7) Strict liability applies to paragraph (6)(c). Note: For strict liability, see section 6.1 of the Criminal Code."
13. In the current matter, the evidence overwhelmingly from Mr Pambris, supported to an extent from Ms Hall, that the loan made to the Defendant by the Plaintiff was for the purposes of the Defendant's Hock-A-Car business, and therefore the presumption is inapplicable. I am not persuaded that the current case is at all governed by the National Consumer Credit Protection Act 2009 or the National Credit Code.
14. The Defendant also submitted that the principle concerning penalties must apply, and submitted this: "Clause 1.2 of the Loan Agreement - especially if the repayment date of 7th March 2015 is deleted from the agreement so that the interest continues to accrue, the agreement not being limited to 6 months - is not just lacking in proportionality, but bears no relationship to the damage which the plaintiff would suffer upon default by the defendant and is 'extravagant', harsh and unjust. Importantly, as the plaintiff's reliance upon the December 2020 Letter of Demand demonstrates, it permits the plaintiff to conduct its recovery actions 'in terrorem'. It is a clause which clearly operates as a penalty and is a clause equity will not permit it to be enforced." Counsel then referred to Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28 and Ringrow Pty Ltd v BP Australia Pty Ltd [2005] HCA 71; (2005) 224 CLR 656.
15. Given the circumstances in which the finance was sought by the Defendant from Mr Pambris and the Plaintiff company, the fixing of the 90% interest rate should not be seen as being extravagant or disproportionate. The term of the loan itself, six months, could not be described as being extravagant in itself bearing in mind why the Defendant wanted the money. However, one would expect a contract to maintain the same rate of interest if there was a default because lowering the rate of interest would not be an incentive to the debtor to pay the creditor. It flies in the face of common sense and commercial reality. Here, the vice is not what the Plaintiff did but what the Defendant did not do in repaying the loan, and therefore exposing herself to a longer runoff.
16. I accept that the demand made in the letter of 9 December 2020 may appear to have operated in terrorem, but the demand for the lesser sum of $750,000 should have caused the Defendant to realise that the Plaintiff was not being genuine in the demand for the much larger sum of money. In all the circumstances of this case, I do not believe that the interest rate contained within the contract, the deed of loan, was extravagant, harsh, or unconscionable.
17. A large section of the Defendant's second set of written submissions MFI-2 set out an argument concerning unconscionability. Most of the references made by learned counsel for the Defendant were to the decision of the High Court of Australia in Australian Securities and Investments Commission v Kobelt [2019] HCA 18, but in my view, considering the background to this, there is no real grounds for unconscionability.
18. There is also an allegation contained in the same written submissions that there was a defence of non est factum, but as I have already pointed out I accept the deed was validly executed. Not only is the document described as a deed but, before the attestation of each of the parties thereto, are the words "Signed sealed and delivered" which means that the document is a deed, doubly a deed because it is expressed to be a deed and it has, in fact, been signed sealed and delivered. I, therefore, find that there is no valid legal defence to the Plaintiff's claim.
19. Does anyone want any further reasons? TRATSELAS: No. We're covered as far as reasoning is concerned.

Order

1. HIS HONOUR: I have inquired of solicitors for the parties if any further reasons for judgment are required. I am told that none is so required. For those reasons, I give verdict and judgment for the Plaintiff against the Defendant for $178,334.79. I direct entry of judgment. [Parties heard on costs]
2. I order the Defendant to pay the Plaintiff's costs on the ordinary basis until the 12 April 2022 and thereafter on the indemnity basis. 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: 10 February 2023