Attorney-General for the State of South Australia v Kowalski (No 6) - [2012] SASC 198

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
ATTORNEY-GENERAL FOR THE STATE OF SOUTH AUSTRALIA v KOWALSKI (NO 6)
[2012] SASC 198
Judgment of The Honourable Justice Blue
31 October 2012
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - EVIDENCE
In the action, the Attorney-General seeks a declaration that Mr Kowalski has persistently instituted vexatious proceedings and consequential orders pursuant to s 39 of the Supreme Court Act 1935 (SA).
The Law Society of South Australia applies to set aside a subpoena issued at the request of Mr Kowalski insofar as it requires the production of documents on grounds that the subpoena is oppressive, excessively wide, constitutes fishing and seeks irrelevant documents. Mr Bönig applies to set aside the subpoena insofar as it requires him to serve oral evidence on the ground that he could not give relevant evidence.
Held:
1.      In relation to the first category of documents sought, being audited trust account statements of three firms in respect of which Mr Kowalski instituted prosecutions of practitioners are alleged by the Attorney-General to have been vexatious, the Law Society did not demonstrate the audited trust account statements are irrelevant in respect of certain years. In respect of the remaining years, subpoena set aside.
2.      In relation to the second category of documents sought, being correspondence between the Law Society and the three firms over approximately 20 years, subpoena set aside as oppressive and too wide.
3.      In relation to the subpoena requiring Mr Bönig to attend to give oral evidence, subpoena set aside because Mr Bönig can give no relevant evidence.
Legal Practitioners Act 1981 (SA) s 33, s 52A; Supreme Court Act 1935 (SA) s 39; Workers Rehabilitation and Compensation Act 1986 (SA); Supreme Court Admissions Rules rule 14, referred to.
R v Baines [1909] 1 KB 258 ; R v Lewes Justices ex parte Gaming Board for Great Britain [1972] 1 QB 232; Re Golightly [1974] 2 NZLR 297, considered.

ATTORNEY-GENERAL FOR THE STATE OF SOUTH AUSTRALIA v KOWALSKI (NO 6)
[2012] SASC 198
Civil

BLUE J: By application dated 8 October 2012 (FDN 141), Mr Bönig and the Law Society of South Australia seek an order that a subpoena issued at the request of the defendant, Mr Kowalski, on 3 September 2012 be set aside.
On the application, I received an affidavit of Ms Burke of the Law Society sworn on 8 October 2012, an affidavit of Mr Bönig sworn on 8 October 2012, Mr Kowalski’s 44^th affidavit sworn on 23 October 2012 and Mr Kowalski’s 38^th affidavit sworn on 6 September 2012.
Speaking generally, there are several grounds upon which a subpoena may be set aside, including lack of relevance, excessive width, fishing and oppression.
Because the Law Society and Mr Bönig rely upon different grounds, argument was addressed to three distinct categories, namely:
1.the documents sought in paragraphs 1 to 3 inclusive of the list of documents attached to the subpoena;
2.the documents sought in paragraphs 4 to 9 inclusive of that list; and
3.the oral testimony of Mr Bönig.
Audited trust account statements
The first category seeks production of audited trust account statements for three firms of solicitors for the years 1988, 1989 and 1994 respectively up to and including, in each case, 2011. Those firms are Stanley & Partners, RJ Cole & Partners and Lieschke & Weatherill.
Each acted for Mr Kowalski in the late 1980s or 1990s in connection with disputes with the Mitsubishi group.
Section 33 of the Legal Practitioners Act 1981 (SA) requires a legal practitioner who maintains a trust account to have the accounts and records kept under Division 5 of Part 3 of the Act audited annually and to submit a copy of the Auditor’s Report to the Supreme Court on or before 31 October each year.
In 2011, Mr Kowalski instituted criminal proceedings against a practitioner or practitioners from each firm. In this action, the Attorney-General alleges that each of those criminal proceedings was vexatious within the meaning of section 39 of the Supreme Court Act 1935 (SA).
By Information and Summons in the Magistrates Court, Mr Kowalski alleged that Mr Bourne wrongfully obtained monies from Mr Kowalski for fees charged by Stanley & Partners because Stanley & Partners had already received $2,000 from Mitsubishi in February 1991. Mr Kowalski submits that the audited trust account statements for Stanley & Partners are relevant to the issue whether the criminal prosecution was vexatious for this reason.
By two Informations and Summonses in the Magistrates Court, Mr Kowalski alleged that Mr Cole, Mr Sim and RJ Cole & Partners Pty Ltd between June 1992 and June 1994 wrongfully appropriated $3,000, $18,534.66, $483.79, $23,000 and $10,000 from monies held in the RJ Cole & Partners trust account on behalf of Mr Kowalski. Mr Kowalski submits that the audited trust account statements of RJ Cole & Partners are relevant to the issue whether those prosecutions were vexatious for this reason.
By Information and Summons in the Magistrates Court, Mr Kowalski alleged that on 15 November 1995 he was wrongly billed $3,120 by Lieschke & Weatherill and on 16 November 1995 $2,000 of funds held by that firm in its trust account on his behalf were wrongfully appropriated by Mr Weatherill towards payment of that bill. Mr Kowalski submits that the audited trust account statements for Lieschke & Weatherill are relevant to the issue whether that prosecution was vexatious for this reason.
In her affidavit, Ms Burke deposes to the fact that the Law Society, by its Legal Practitioners’ Registry business unit, holds audit reports for Stanley & Partners, RJ Cole & Partners and Lieschke & Weatherill in respect of a number of years.
The Law Society’s first contention in respect of this category is that the documents which it holds are not amenable to subpoena to the Law Society because the Law Society holds them as the assignee of powers of the Court pursuant to section 52A of the Legal Practitioners Act 1981 (SA) and rule 14 of the Supreme Court Admission Rules 1999 (SA).
I reject that contention. The functions of the Court have been assigned to the Law Society. The documents are not in the possession of the Court. The documents are in the possession of the Law Society.
The Law Society’s second contention is that the audit reports are not relevant to the matters in issue in this action. The Law Society contends that the question whether the criminal prosecutions brought by Mr Kowalski were vexatious is not to be determined by an assessment on the merits whether the practitioners concerned committed the offences charged by Mr Kowalski.
It will be an issue at the trial of this action as between the Attorney-General and Mr Kowalski as to the nature, manner and extent of the assessment to be undertaken at trial of the merits of the underlying proceedings allegedly instituted by Mr Kowalski without reasonable ground or for an ulterior purpose. At the trial, I will hear argument from the parties in support of their respective positions in this regard. At this stage of the proceedings, before hearing that argument, it is not possible to make a determination of those questions.
When a stranger to litigation seeks to set aside a subpoena for the production of documents, there are inherent limits on the ability of the stranger to assert that the documents are not relevant to the issues in the action or on a court’s ability to determine such an assertion. There are cases in which it is plain that documents sought are not relevant to the issues in the action in which case the subpoena will be set aside. There are other cases in which the grounds upon which a stranger seeks to set aside a subpoena for the production of documents are oppression and/or excessive width and in those cases sometimes a court makes an assessment of the relevance of the documents for the purposes of determining the contention that the subpoena is oppressive or excessively wide.
On the one hand, the question whether proceedings are vexatious as being instituted for an improper purpose or without reasonable grounds is determined on the basis of the knowledge and state of mind of the litigant at the time and not on the basis of information which might later come to the attention of the litigant. It is not apparent that the existence of the trust transactions the subject of Mr Kowalski’s prosecutions was in dispute or that Mr Kowalski did not have available evidence to prove them.
On the other hand, at this stage of the proceedings, it is not apparent that the audited trust account statements cannot be relevant to the issues to be decided at trial.
The Law Society does not allege that the production of documents in first category from the Legal Practitioners’ Registry business unit is oppressive. Subject to the temporal extent of the audited trust account statements, the Law Society does not allege that the subpoena is excessively wide in relation to this first category.
Accordingly, subject to the temporal qualification, I reject the Law Society’s second contention. I decline to set aside the subpoena insofar as it seeks production of audited trust account statements for Stanley & Partners for the year ended June 1991, RJ Cole & Partners for the years ended June 1992, June 1993 and June 1994.and Lieschke & Weatherill for the year ended June 1996. Those years cover the periods in which Mr Kowalski alleged in the prosecutions that his funds had been misappropriated from the relevant firm’s trust account. While it is possible that the transactions the subject of the prosecutions will not be disclosed by the audited trust account statements, it is “on the cards” that they will be.
In respect of the balance of the years for which audited trust accounts statements are sought, the subpoena is too wide and I set it aside to that extent.
Correspondence between Law Society and the firms
The second category seeks the production of correspondence passing between the Law Society on the one hand and Stanley & Partners, RJ Cole & Partners and Lieschke & Weatherill on the other hand for the years 1988, 1989 and 1994 respectively up to and including in each case 2011.
Ms Burke deposes in her affidavit to the fact the Law Society holds, or may hold, correspondence with the firms over the relevant period and estimates that it would take at least 8 hours, 16 hours, 30 hours and 175 hours to search for such documents amongst documents held by the professional standards, education, member services and governance and executive management business units of the Law Society respectively. In addition, she deposes to the fact that the Legal Practitioners’ Registry and Law Claims business units hold, or may hold, such documents.
The Law Society contends that, insofar as it seeks the second category of documents, the subpoena is oppressive, excessively wide, fishing and seeks irrelevant documents.
Mr Kowalski submits that there may be correspondence passing between the Law Society and each of the three firms addressing monies held in its trust account for Mr Kowalski and the appropriation of those monies. Mr Kowalski says that he has a copy of one letter from the Law Society to RJ Cole & Partners concerning monies held in their trust account on behalf of Mr Kowalski and that he wants to see what other letters there are.
Mr Kowalski also submits that the lack of notification by practitioners from the three firms to the Law Claims business unit of the prosecutions against them by Mr Kowalski is relevant to the question whether their conduct was fraudulent as charged by Mr Kowalski. Mr Kowalski contends that it was mandatory under the Legal Practitioners Professional Indemnity Insurance Scheme that the insured practitioners give notice in writing to the insurers of any claim made against them. Mr Kowalski submits that the absence of notice in writing would be evidence that a practitioner’s conduct the subject of the prosecution by Mr Kowalski was fraudulent.
The documents sought in the second category (being paragraphs 4 to 9 inclusive in the list of documents) are not confined to correspondence in relation to either of those two topics but extend generally to any correspondence between the firms and the Law Society over periods of approximately 20 years. In the circumstances, I consider that the documents sought in the second category are excessively wide and that the subpoena is oppressive.
In relation to potential correspondence passing between the Law Society and the firms concerning trust account transactions relating to Mr Kowalski, the subpoena is not limited to correspondence dealing with this topic. Even if it were so limited, it is doubtful whether there is any correspondence addressing the transactions identified by Mr Kowalski and referred to at [9]-[11] above or that such correspondence would bear upon whether Mr Kowalski’s prosecutions were vexatious. The search by the Law Society for such correspondence would require the devotion by the Law Society of very considerable resources and, if the subpoena were so limited, it would still be oppressive.
In relation to potential notifications of claims by the practitioners to Law Claims, the Professional Indemnity Insurance Scheme and the Certificates of Insurance issued pursuant to it define “Claim” to mean a demand for, or an assertion of a right to, civil compensation or civil damages or an intimation of an intention to seek compensation or damages. The prosecutions by Mr Kowalski would therefore not be required to be notified. Upon the Law Society making a submission to that effect, Mr Kowalski does not take issue with that proposition, but submits that the practitioners concerned were obliged to notify civil claims by him. Mr Kowalski does not identify civil claims which he has brought against the practitioners for misappropriating trust monies. In any event, while the certificates of insurance exclude indemnity for claims brought about by dishonest or fraudulent acts or omissions or the misappropriation of trust monies, there are various other exclusions. Those exclusions include claims to refund, account for or pay damages calculated by reference to fees rendered by the practitioner. If practitioners did not notify Law Claims of a claim by Mr Kowalski for misappropriating trust monies to fees, that could not comprise probative evidence that the practitioner in fact misappropriated trust monies.
Accordingly, I set aside the subpoena insofar as it seeks the second category of documents.
Oral evidence by Mr Bönig
The subpoena requires Mr Bönig to attend at trial to give evidence.
In the 1990’s, Fountain & Bönig acted as solicitors for Mitsubishi Motors Australia Limited in connection with disputes between Mr Kowalski and Mitsubishi. In October 1998, a Heads of Agreement was executed by or on behalf of Mr Kowalski and his wife and Mitsubishi. The document was executed by Mr Bönig on behalf of Mitsubishi.
In subsequent underlying proceedings between Mr Kowalski and Mitsubishi, Mr Kowalski contended that the Heads of Agreement was void, invalid or ineffective on various grounds. Mr Kowalski contends that the validity of the Heads of Agreement will be an issue in this action relevant, amongst other things, to whether some of Mr Kowalski’s underlying proceedings were vexatious as alleged by the Attorney-General. This contention will be contested by the Attorney-General at trial.
Mr Kowalski submits that Mr Bönig can give relevant evidence concerning the Heads of Agreement.
I assume without deciding, for the purposes of determining the Law Society’s application and for the reasons given at [16] above, that the validity of the Heads of Agreement will be an issue at trial of this action. Making that assumption, the various grounds upon which Mr Kowalski contends that the Heads of Agreement is invalid involve external matters such as the operation of various provisions of the Workers Rehabilitation and Compensation Act 1986 (SA). They do not depend upon any oral evidence which it has been identified that Mr Bönig may be able to give.
It is an established ground to set aside a subpoena to give oral evidence that the witness could give no admissible evidence.[1]
[1] R v Baines [1909] 1 KB 258 at 261 per Bigham J (Walton J agreeing); Re Golightly [1974] 2 NZLR 297 at 302 per Mahon J; R v Lewes Justices, ex parte Gaming Board for Great Britain [1972] 1 QB 232 at 240 per Lord Parker CJ (Widgery LJ and Bridge J agreeing).
Accordingly, I set aside the subpoena insofar as it requires Mr Bönig to attend at trial to give oral evidence.
Conclusion
I set aside the subpoena insofar as it is directed to Mr Bönig but not insofar as it is directed to the Law Society of South Australia.
I set aside the subpoena insofar as it seeks production of:
1.the documents listed in items 4 to 9 inclusive of the attached List of Documents;
2.audited trust account statements in respect of Stanley & Partners for the years ended June 1988 to June 1990 and June 1992 to June 2011;
3.audited trust account statements in respect of RJ Cole and Partners for the years ended June 1989 to June 1991 and June 1995 to June 2011;
4.audited trust account statements in respect of Lieschke & Weatherill for the years ended June 1994, June 1995 and June 1997 to June 2011;
I will hear the parties as to any further orders.