De Costi Seafoods (Franchises) Pty Limited and De Costi Seafoods (Holdings) Pty Limited v Serge Wachtenheim

[2020] NSWDC 58

District Court

New South Wales

Medium Neutral Citation:	De Costi Seafoods (Franchises) Pty Limited and De Costi Seafoods (Holdings) Pty Limited v Serge Wachtenheim [2020] NSWDC 58
Hearing dates:	21 February 2020
Date of orders:	21 February 2020
Decision date:	21 February 2020
Jurisdiction:	Civil
Before:	Neilson DCJ
Decision:	Subpoena for production set aside.
Catchwords:	Practice and Procedure – Subpoenas.   Application to set aside a subpoena by person to whom it was addressed – Need to show a valid forensic reason for the issue of a subpoena – That documents required on subpoena might assist in proceedings being contemplated to be commenced in another court insufficient – Speculation as to what documents might disclose also insufficient – Subpoena set aside as an abuse of process.
Legislation Cited:	Uniform Civil Procedure Rules 2005
Cases Cited:	Newell; Muriniti v De Costi [2018] NSWCA 49
Category:	Principal judgment
Parties:	Suncorp Group Ltd – Applicant Robert Newell & Leonardo Murinti – Respondents
Representation:	N. Andrew – Applicant R. Newell – Respondents
File Number(s):	2006/00296319
Publication restriction:	Nil.

Judgement

1. HIS HONOUR: There is before me a notice of motion brought by Suncorp Group Ltd (“Suncorp”) seeking to set aside a subpoena for production issued at the request of Mr Robert Duane Newell and Mr Leonardo Carlo Muriniti. Suncorp had been the professional indemnity insurer of Mr Newell for a period of time when Mr Newell was a barrister. Suncorp indemnified him under a professional indemnity insurance for barristers between 30 June 2008 and 30 June 2014. On 24 April 2014 Suncorp wrote to Mr Newell and advised him of its decision not to offer to renew the policy, in effect, on 1 July 2014. The subpoena calls upon Suncorp to produce these documents:

“All advices given to Suncorp by lawyers retained by Suncorp to represent Robert Duane Newell and advices provided by counsels [sic] briefed by those lawyers in respect of claims for costs made against Robert Duane Newell [the said Robert Duane Newell, being a barrister at the material time that the claim was made and was insured by Suncorp Group Pty Ltd] and by de Costi Seafoods (Franchises) Pty Ltd, de Costi Seafoods (Holdings) Pty Ltd; Frank Theodore; George Costi and Androulia Costi (‘the de Costi parties’) and by Ms Louise Thomson, Trustee in Bankruptcy of the estate of David Shnider.”

There is some explanatory material following that description of documents but I need not recite that.

2. The background to the proceedings is extensive. In exhibit S2 is a 12-page document prepared by Mr Newell headed, “General Statement re complaint - George Costi re Robert Newell”. The first two paragraphs of that document are these:

“In or about August 2006, I was briefed by LC Muriniti and Associates in relation to a dispute with a likely cross-claim against De Costi. The dispute arose out of losses suffered by Wachtenheim following and by reason of the purchase of a franchise business at Dee Why and a claim by De Costi for payment of arrears, royalties and fish product supplied.

I was briefed on behalf of Mr Wachtenheim and his company, Deist Safety Equipment Pty Ltd (‘Deist’). De Costi had filed a statement of claim against Wachtenheim (and later amended to include Deist) claiming the arrears (‘the liquidated claim’). Wachtenheim subsequently filed a defence and a cross-claim. Both the statement of claim and the cross-claim was subsequently amended a number of times.”

The same document tells me that the hearing of the liquidated claim bought by the De Costi parties was listed for hearing for four days commencing on 31 October 2011.

3. The hearing of the cross-claim was severed from the hearing of the plaintiff’s action. The plaintiff’s action was heard and determined by Johnstone DCJ. However, his Honour could not deal with the cross-claim as he was appointed to be the President of the Children’s Court. The cross-claims were ultimately listed for hearing before Taylor DCJ. The trial began formally on 12 June 2012 but did not start in earnest until a week later as his Honour was invited to read a substantial number of affidavits prepared in the proceedings in anticipation of the oral evidence being called. It appears that his Honour delivered at least five judgments. The further progress of the proceedings is conveniently summarised in a headnote prepared by the Court of Appeal in Newell; Muriniti v De Costi [2018] NSWCA 49. The relevant parts of the headnote are these:

“Mr Newell and Mr Muriniti acted as counsel and solicitor respectively for the plaintiffs/cross-claimants (‘the Wachtenheim parties’) in proceedings involving certain franchise agreements. The franchisors sued for monies owing under the agreement. The Wachtenheim parties cross-claimed against the franchisors and others (‘the De Costi parties’) alleging, inter alia, the making of false and misleading statements. The cross-claim was dismissed and the De Costi parties sought orders that Mr Newell and Mr Muriniti indemnify them in respect of costs arising from the cross-claim, pursuant to the Legal Profession Act 2004 (NSW), s 348, and the Civil Procedure Act 2005 (NSW), s 99 (‘the costs proceedings’). Neither Mr Newell nor Mr Muriniti gave evidence in the costs proceedings. The costs proceedings were conducted in stages. At the first stage, the primary judge found that the presumption was satisfied pursuant to the Legal Profession Act 2004 (NSW), s 349(1) that legal services were provided without reasonable prospects of success in relation to the claim against Androulla Costi. By way of a further notice of motion Mr Newell and Mr Muriniti successfully sought orders dismissing the claim for indemnity costs under s 348 except insofar as it related to Androulla Costi. At the final stage in the costs proceedings, the primary judge found that Mr Newell and Mr Muriniti should indemnify the De Costi parties in respect of costs payable in the proceedings under the Legal Profession Act 2004 (NSW), s 348 and the Civil Procedure Act 2005 (NSW), s 99. He indicated the orders he would have made in respect of each of the sections, but imposed a combined order for wasted costs under those provisions.”

4. On appeal the Court, Beazley P (as her Excellency then was), Gleeson and White JJA granted leave to appeal from the orders made by Taylor DCJ and allowed each appeal in part. As far as Mr Newell was concerned the Court made a declaration that he was liable to indemnify the respondents to the appeal in respect of costs incurred by the respondents by reason of nine specified items which I need not recite. The Court of Appeal remitted the matter to Taylor DCJ.

5. On 20 March 2019 his Honour made a number of orders by consent. Those orders include:

1. Pursuant to r 20.14 of the Uniform Civil Procedure Rules 2005 (the “UCPR”), the issue of costs the subject of the Applicant’s Amended notice of motion filed 15 March 2016 and the decisions in De Costi Seafoods (Franchises) Pty Limited and Anor v Wachtenheim and Anor (No 6) [2016] NSWDC 378 and Newell; Muriniti v De Costi [2018] NSWCA 49, is referred to such person as the parties agree within seven days, being the Honourable Kevin Lindgren AM QC or alternatively, an experienced costs assessor ("Referee") for the purpose of the reference conducting an inquiry and providing a report as to the costs properly recoverable by the Costs Applicant. In the event that the parties are unable to agree on the identity of the Referee within seven days, the question of the Referee to be appointed shall be referred to the President of the Law Society to nominate an experienced costs assessor available to act as the Referee.

2. Without affecting the powers of the Court as to costs, the applicant and respondents are jointly and severally liable to the Referee for the fees payable to him.

Order 4(e) required the Referee to submit a report to the Court in accordance with UCPR 20.23 within six months of 20 March 2019. Order 8 gave the parties liberty to apply on three days' notice. This reference has not been completed.

6. There is listed for hearing before Taylor DCJ on Monday 24 February, that is, the next working day from today, a notice of motion headed, "Second Further Amended Notice of Motion," brought by Messrs Newell and Muriniti. There are 13 prayers for relief. A number of the prayers challenge the validity of the appointment of Ms Alyson Ashe as the Referee. Such appointment had been made by the President of the Law Society. In the event that the appointment of Ms Ashe as the Referee were valid, the applicants seek that the appointment of Ms Ashe as the Referee be revoked. The fifth prayer for relief is this:

“Further and in the alternative, such orders as necessary for the purpose of progressing a Reference.”

The sixth to ninth prayers concern costs that have been paid or might be payable to Ms Ashe. The tenth prayer seeks an order that the plaintiffs prepare and serve an itemised bill of costs in assessable form. The final prayer sought is that the plaintiffs and Ms Ashe pay the costs of the notice of motion.

7. The applicant before me submits that there is no valid forensic reason for the issue of subpoena upon it. For a subpoena to have a legitimate forensic purpose, it must be shown that it is likely that the documents sought by the subpoena will materially assist in an identified issue or that there is a reasonable basis beyond speculation that is likely that the documents will do so. The applicant before me submits that there is no such justification for the issuing of the subpoena, which it seeks to set aside. I enquired a number of times from Mr Newell, what was the legitimate forensic reason for the issue of the subpoena. All that remains for the Court to do, is to quantify the costs ordered to be paid by the Court of Appeal. The relief sought by Messrs Newell and Muriniti by the “Second Further Amended Notice of Motion” which is listed for hearing before Taylor DCJ next Monday does not in my view call for the production of the documents which Messrs Newell and Muriniti seek from the present applicant.

8. Whether Ms Ashe has been validly appointed as the Referee is a matter for Taylor DCJ. He could revoke the appointment if he felt it appropriate to do so, and appoint some other person to be the Referee. However, once validly appointed it appears that the only way to challenge the validity of the appointment of the Referee is pursuant to UCPR 20.22. Essentially, the grounds would be a breach of the rules of natural justice, either the audi alteram partem rule, or the nemo debet esse judex in propria sua causa rule.

9. Mr Newell addressed me at some length as to how production of these documents was relevant to any issue currently before the Court. He referred at some length to the history of these proceedings, and to proposed proceedings in the Equity Division in which he says he and Mr Muriniti will seek to set aside the earlier decisions of this Court and the decision of the Court of Appeal concerning the costs orders made against him and Mr Muriniti. Whether that be the proper procedure I do not know. However, it is clear that this is merely contemplated litigation and not any litigation actually on foot. Insofar as production of these documents might assist in bringing proceedings in the Equity Division of the Supreme Court it is clearly merely a fishing expedition.

10. The basis of the allegations made can be found in a “Introduction/Executive Summary” of written submissions comprising 63 pages and dated 20 December 2019 prepared for the hearing to be held next Monday. That "Introduction/Executive Summary” is this:

“1. It is contended that stakeholders (apart from the Respondents) do not want the reference to result in an objective assessment. This is the fundamental problem. Those stakeholders include the following:

a) De Costi;

b) the legal representatives for De Costi;

c) Law cover;

d) Suncorp.

2. The agreement is part of an historical compact which has at its face an intention to pervert the course of justice and in all probability to make the world safe for those wishing to benefit from such corruption prospectively.

3. The agreement has resulted in a collusion which deliberately denied the Court appropriate assistance and strove to achieve a perverse costs liability.

4. The purpose was to cause the respondents to cease to act for Mrs Young (Young v King litigation) in respect of her claims arising out of corrupt conduct of Warringah Council and a string of lawyers, nominally acting for Mrs Young, who were procured to act surreptitiously against her interests.”

Commencing on p 3 of the submissions is a heading “All the roads lead to Forestville”. [12] then commences thus:

“At this point, consider the case of Mrs Young of Calca Crescent in Forestville. It is not appropriate to talk about this matter without regard to Mrs Young. Mrs Young developed a predicament which is at the centre of this nominally unconnected matter. Mrs Young, who otherwise led a relatively peaceful life as a pensioner in Forestville until 2001, found one day that her fence had been removed and the land on the boundary excavated leaving her house less than adequately supported.”

The paragraph goes on to quote part of a judgment of Sheahan LECJ in which he points out damage caused to Mrs Young’s property by a development on the adjoining property owned by parties named King. [13] of the submissions then says this:

“The description of the matter, as it was then understood by his Honour, suggests something in the nature of a neighbour’s dispute. Such a description is wholly inadequate.”

11. The significance of that piece of litigation appears to be tied up with the fact that those acting for Mrs Young were Mr Muriniti and Mr Newell, and that those acting against them were Messrs Moray and Agnew, and that when Mr Newell called upon his professional indemnity insurer, Suncorp, to assist him with the claims for costs against him, Suncorp wished to appoint Messrs Moray and Agnew to act for him but he objected to their appointment, one can understand, quite appropriately in the circumstances.

12. However, what this all indicates is the perception by Messrs Newell and Muriniti of some massive conspiracy and it is stated by Mr Newell that the gravamen of his argument is to protect the assessment process of the costs ordered to be paid by him and Mr Muriniti so that it will not be misused or abused by, inter alia, Suncorp to conceal the conspiracy which it is alleged has occurred.

13. This is mere speculation. The speculation involves allegations of professional misconduct and illegality. The Court must not presume any illegality or misconduct. Insofar as illegality is concerned, there is clearly the presumption of innocence which applies both in criminal and civil proceedings.

14. With the utmost respect, it appears to me that this is clearly a fishing expedition. Whatever the advice received by Suncorp from lawyers retained by it to act on behalf of, inter alios, Mr Newell may be of interest in ascertaining whether there was the conspiracy alleged. But that is not any matter currently before this Court, and therefore this Court’s process cannot be used to obtain documents to support the allegation.

15. For those reasons, the issue of the subpoena at the request of Messrs Newell and Muriniti was an abuse of process of this Court. I set aside the subpoena for production sealed by the Registrar on 4 February 2020 at 10.46am addressed to Suncorp Group Limited of 266 George Street, Brisbane in the state of Queensland. I order Mr Newell and Mr Muriniti to pay the costs of Suncorp Group Limited of the current application.

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Decision last updated: 20 March 2020