Foundas v Arambatzis (No. 5)

BELL CJ: I agree with White JA.

WHITE JA: The applicant, Ms Cassiani Foundas, and the respondent, Mr Peter Arambatzis, are sister and brother. Formerly, they were registered proprietors of two properties in Ashcroft as tenants in common in equal shares. One property was in Stanwell Crescent, Ashcroft. The other was in Magee Street, Ashcroft.

On 15 October 2018, Darke J made orders on the application of Mr Arambatzis appointing trustees for sale of the Magee Street property. His Honour ordered that the net proceeds of sale be divided between the parties equally after payment of the trustees’ commission, costs and other expenses. His Honour also gave judgment for Mr Arambatzis against Ms Foundas in the sum of $108,983.93 in respect of the surplus of proceeds of sale which she received following a mortgagee’s exercise of its power of sale of the Stanwell Crescent property.

Those orders were made in Ms Foundas’ absence. She had not been served with the summons in which Mr Arambatzis sought that relief. But orders for substituted service had been made and service was effected in accordance with those orders. On 24 April 2019 Ms Foundas filed a notice of motion seeking to set aside the orders of 15 October 2018. That application was dismissed by Darke J on 6 September 2019.

Ms Foundas appealed as of right from those orders and her appeal was determined by this Court on 24 March 2020. The appeal was allowed in part but Ms Foundas was substantially unsuccessful (Foundas v Arambatzis [2020] NSWCA 47). Further applications by Ms Foundas were dealt with in this Court and dismissed (see Foundas v Arambatzis (No. 3) [2020] NSWCA 87 and Foundas v Arambatzis (No. 4) [2020] NSWCA 100).

The orders of this court of 24 March 2020, as varied on 28 May 2020 (Foundas v Arambatzis (No. 4)) varied the orders made on 15 October 2018, discharged a stay of the orders of 15 October 2018 and 6 September 2019, required Ms Foundas to deliver vacant possession of the property in Magee Street Ashcroft to the trustees for sale and ordered that they be at liberty to obtain a writ for possession.

It appears from the reasons of Brereton JA of 1 March 2021 (Arambatzis v Foundas; Foundas v Wengel [2021] NSWCA 78) that the trustees for sale did not apply for a writ of possession until 24 December 2020.

On 26 February 2021 Ms Foundas filed a notice of motion (wrongly entitled as being filed in the Possession List of the Common Law Division) seeking a stay of a writ of possession that had by then been issued. That application came before Brereton JA and was the subject of his Honour’s reasons of 1 March 2021 in the judgment referred to above. In support of that notice of motion, Ms Foundas made an affidavit in which she deposed that on 3 December 2013 she and Mr Arambatzis had made a deed called a deed of acknowledgement in which Mr Arambatzis disclaimed any beneficial interest in either the Magee Street or the Stanwell Crescent properties. She had not previously produced this document, nor referred to its existence.

Ms Foundas annexed to her affidavit a copy of a letter from Currie & Cabarrus, solicitors, attaching a draft deed that they proposed be sent to Mr Arambatzis. She also annexed a copy of a deed of acknowledgement dated 3 December 2013 that bears what appear to be the signatures of her and of Mr Arambatzis. The deed is short. After referring to the parties, Cassiani Foundas (“Cassiani”) and Peter Arambatzis (“Peter”) it provides:

At the hearing before Darke J on 6 September 2019 Ms Foundas produced text messages between her and Mr Arambatzis on 10 and 13 November 2013 in which Mr Arambatzis had stated to her that “The houses are yours when you Wanna go to the solicitor” and had said that he wanted nothing for them. He proposed that a solicitor “change the paperwork” (Foundas v Arambatzis [2020] NSWCA 47 at [31]). Darke J found, and this court concluded, on the basis of the evidence that had been adduced before Darke J, that although Mr Arambatzis was content to make a gift of his interest in the properties to Ms Foundas, nothing was done to give effect to that intention (Foundas v Arambatzis at [32]).

Had the copy deed of acknowledgement that has now been produced by Ms Foundas been produced at the hearing before Darke J on 6 September 2019, Ms Foundas would have demonstrated an arguable defence to Mr Arambatzis’ claim. The orders of 15 October 2018 would have been set aside, and directions would have been given for a trial of the contested issue as to whether Mr Arambatzis had any beneficial interest in the properties when he commenced his proceeding.

In the proceedings before Darke J in 2019, before this court in 2020, and before Brereton JA in 2021, Ms Foundas represented herself. On 1 March 2021, Brereton JA ordered that she be referred to the Registrar for referral to a barrister or solicitor on the pro bono panel for legal assistance generally in relation to the proceedings (Arambatzis v Foundas; Foundas v Wengel [2021] NSWCA 78).

There are now two applications before this court. By an amended summons filed on 22 November 2021, Ms Foundas seeks leave to appeal from the orders made on 15 October and entered on 23 October 2018 and to set aside those orders. Relief to substantially the same effect was sought by Ms Foundas in a notice of motion filed on 28 May 2021 that Brereton JA has referred to this court.

The issue raised by both applications is whether this court has power to entertain them, having already made final orders partly allowing Ms Foundas’ earlier appeal from the orders of 15 October 2018 but substantially dismissing the appeal from those orders. If the Court can entertain a second appeal or, as it was put for Ms Foundas, if the Court can reopen the previous appeal, then leave to appeal is not required. All that is required is an extension of time for the filing of a new notice of appeal.

Pursuant to the referral by Brereton JA of Ms Foundas to the pro bono panel for legal assistance, Ms Foundas was represented on the hearing of the applications by Mr Seymour and Ms Koikas. The Court is grateful for their assistance.

There is no doubt that if Ms Foundas can establish that the orders of 15 October 2018, as varied by this Court, were obtained by fraud, those orders can be set aside. Such an action should be brought by fresh proceedings (McDonald v McDonald (1965) 113 CLR 529; [1965] HCA 45; Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691; Clone Pty Ltd v Players Pty Ltd (In Liq) (2018) 264 CLR 165; [2018] HCA 12 at [32]). Ms Foundas has instituted such proceedings. On 20 October 2021 she instituted fresh proceedings in the Equity Division seeking to set aside the orders made on 15 October 2018 as having been obtained either irregularly, illegally or against good faith for the purposes of r 36.15 of the Uniform Civil Procedure Rules, or by fraud.

By the present applications, Ms Foundas seeks to contend that it should be and is unnecessary for her to establish fraud because, so she contends, this court can and should reopen its earlier decision on the basis of the new evidence contained in her affidavit of 23 February 2021 to which she annexed a copy of the deed of acknowledgement quoted above. The authenticity of that document is not admitted but Ms Foundas contends that the orders of 15 October 2018 (as varied by this court) should be set aside, and Mr Arambatzis’ original claims should be remitted for trial at which Ms Foundas would rely upon the deed of acknowledgement in defence of those proceedings.

The question is whether the Court has power to do so. The orders of 24 March 2020 were final orders that were duly entered. Rule 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) provides:

No application to set aside the orders of 24 March 2020 was made within 14 days. Section 14 of the Civil Procedure Act confers power on the court to dispense with any requirement of rules of court if satisfied it is appropriate to do so in the circumstances of a case. Ms Foundas did not submit that s 14 entitled the court to dispense with the requirements of r 36.16(3A) that an application to set aside an order be made within 14 days after the judgment is entered. It has been held that s 14 authorises dispensation of the rule that such an application be made by notice of motion filed within the 14 day period where notice of intention to make such an application has been given within that period (Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19 at [11]; Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Ltd (No. 2) [2009] NSWCA 336 at [10]; Kable v State of New South Wales (No. 2) [2012] NSWCA 361 at [3], [15]; Motorcycling Events Group Pty Ltd v Kelly (No 2) [2013] NSWCA 399 at [2]; Aukuso v Tahan [No 2] [2018] NSWCA 302 at [4], [43], [45], [46]; Boateng v Dharamdas [2019] NSWCA 233 at [23], [72]. Rightly in my view, Ms Foundas did not seek to argue that the power of dispensation was wider and could extend to entire dispensation of the limits on the power conferred by r 36.16(3A) (AT v Commissioner of Police [2010] NSWCA 337 at [10]; Short v Crawley No 45 [2013] NSWSC 1541 at [46]-[47]).

Rather, Ms Foundas relied upon r 36.16(4). She submitted that there was another power to set aside the orders, namely the power exercised in the Court of Chancery prior to the Judicature Acts on a bill of review to set aside an earlier decree on the basis of the discovery of fresh evidence.

The orders of this Court of 24 March 2020 were final. In Bailey v Marinoff (1971) 125 CLR 529 at 530-531, Barwick CJ said:

In Gamser v Nominal Defendant (1977) 136 CLR 145; [1977] HCA 7 the position was reiterated. Aickin J (with the approval of Barwick CJ and Stephen J) said (at 153):

Aickin J also said:

Ms Foundas referred to the decision of the Full Court of the Federal Court (Spender, Gummow and Lee JJ) in Monroe Schneider Associates (Inc) v No.1 Raberem Pty Ltd (1992) 37 FCR 234; [1992] FCA 367 at 239-240, to suggest that the position was “unsettled” (DJL v The Central Authority (2000) 201 CLR 226 at 245 [36]). But Monroe Schneider Associates (Inc) v No.1 Raberem Pty Ltd lends no support to the proposition that, absent a challenge to a judgment on the ground that it was procured by fraud, it could be impugned on the ground of new material evidence where fraud is not alleged (at 239-240). The Full Court there stated that:

Before the Judicature Acts, judges of the Court of Chancery (but not the Common Law Courts) had jurisdiction on a bill of review to review prior decrees of the court, even though those decrees had been enrolled. A decree could be reviewed on the ground of error of law appearing on the face of the decree. The decree was required to state the evidence upon which it was based. With leave of the Court, a decree could also be reviewed on the ground of a new matter discovered, since the decree, that was relevant and material and might probably have occasioned a different determination (Edmund Daniell, Chancery Practice (5th ed 1871, Stevens and Haynes) pp 1422-1423). That jurisdiction did not survive the Judicature Acts. This was because such jurisdiction that formerly had been exercised by Chancery judges was not original jurisdiction, but appellate jurisdiction. After the Judicature Acts, appellate jurisdiction was vested in the Court of Appeal (In re St. Nazaire Company (1879) 12 Ch D 88 at 100-101). In Re Barrell Enterprises [1973] 1 WLR 19; [1972] 3 All ER 631, CA at 24-25; [1972] 3 All ER 631 at 637, Russell LJ observed that, since the introduction of the Judicature Acts, there had been no example of fresh action (not by way of appeal) to set aside a judgment on the ground of fresh evidence.

Ms Foundas relied upon a statement by the High Court in DJL v The Central Authority at [36], that the position was unsettled. She submitted that there were sound grounds for the retention of such a jurisdiction in Australia because the High Court’s jurisdiction under s 73 of the Constitution to entertain appeals applies only to appeals stricto sensu and not appeals by way of rehearing in which fresh evidence may be admitted. Accordingly if this court cannot reopen its earlier decision to admit new or fresh evidence, no court can except on the ground of fraud, or, possibly on the grounds of illegality, irregularity or lack of good faith in r 36.15

Even if the position were unsettled in 2000, when DJL v The Central Authority was decided, it is no longer unsettled. In Harrison v Schipp (2002) 54 NSWLR 612; [2002] NSWCA 78, this court comprehensively reviewed the English and Australian Authorities. Handley JA (at [56]-[61]), Giles JA (at [173]-[176], [181], [191]-[192]) and Ipp AJA (at [242], [288], [293]) held that the former power of a Chancery judge to set aside an enrolled decree on the ground of discovery of new evidence, that was formerly vested in the Supreme Court of New South Wales and (after 1840) could be exercised by a single judge, did not survive the appeal provisions introduced by the Equity Act 1880 (NSW) which provided for appeals to the Full Court to be by way of rehearing, with the right of the Full Court to give leave for the adducing of fresh evidence on special grounds. Sections 75A and 101 of the Supreme Court Act 1970 (NSW) are the successor provisions to those in the Equity Act 1880.

In Harrison v Schipp Giles JA (at [170]) and Ipp AJA (at [216]) also noted that the exceptional jurisdiction accepted by the Court of Appeal of England and Wales in Taylor v Lawrence [2003] QB 528; [2002] 2 All ER 353, to reopen a final order that had been entered was not the law in Australia (see also Marshall v Mactiernan [2003] WASCA 67 at [30]).

In Clone Pty Ltd v Players Pty Ltd, the High Court affirmed that the former jurisdiction of the Court of the Chancery on a bill of review to set aside an earlier decree either on the ground of error of law on the face of the decree or, on the ground of newly discovered evidence, did not survive the establishment of formal appellate structures effected in England by the Judicature Acts and in South Australia by 1935. Harrison v Schipp was referred to with evident approval (at [48]).

Accordingly, this Court does not have power to reopen the earlier appeal and set aside the orders of 24 March 2020. A judge of the Equity Division would have equitable jurisdiction to set aside the orders of 15 October 2018 as varied by this Court on 24 March 2020 and 28 May 2020 if Ms Foundas established that those orders were obtained by fraud (Clone Pty Ltd v Players Pty Ltd at [52]). The extent to which that power might be extended by the power conferred by r 36.15 is not a question that presently arises.

For these reasons I propose the following orders:

BASTEN AJA: I agree with White JA.