Preston v Nikolaidis

[2022] NSWSC 813

Supreme Court

New South Wales

Medium Neutral Citation:

Preston v Nikolaidis [2022] NSWSC 813

Hearing dates:

23 August 2021

Date of orders:

20 June 2022

Decision date:

20 June 2022

Jurisdiction:

Common Law

Before:

Walton J

Decision:

(1)   The Notice of Motion filed by the plaintiff on 3 May 2021 is dismissed.

(2)   Subject to further order, no person, other than a party to these proceedings (or a lawyer retained by a party to these proceedings), be granted access to the Court’s file without the leave of a Judge.

(3)   The plaintiff is to pay the defendants’ cost on an indemnity basis.

Catchwords:

CIVIL PROCEDURE – Notice of motion – Referral or direction to NSW Police Force or Attorney General – Stay of proceedings – Allegations of fraud or criminal conduct – Abuse of process – Indemnity costs – Scandalous material

Legislation Cited:

Crimes Act 1900 (NSW)

Legal Profession Act 1987 (NSW)

Legal Profession Act 2004 (NSW)

Legal Profession Reform Act 1993 (NSW)

Police Act 1990 (NSW)

Supreme Court Act 1970 (NSW)

Supreme Court Rules 1970 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Nikolaidis v The Queen [2008] NSWCCA 323

Pethers v Minister for Agriculture [2010] NSWSC 805

Preston v Nikolaidis [2010] NSWSC 131

Preston v Nikolaidis [2017] NSWSC 1527

Preston v Nikolaidis [2021] NSWSC 36

Preston v Nikolaidis [2022] NSWSC 549

Re Beverage Freight Services Pty Ltd [2020] NSWSC 509

Wang v Cai (No 2) [2021] NSWSC 1268

Category:

Procedural rulings

Parties:

John Preston (Plaintiff)
Leon Nikolaidis in his capacity as executor of the estate of Mitrofanis Nikolaidis (First Defendant)
Leon Nikolaidis (Second Defendant)
Michael Zwar (Third Defendant)

Representation:

Counsel:
J Preston (Plaintiff self-represented)
T S Hale SC (First, Second and Third Defendants)

Solicitors:
Diamond Conway Lawyers (First, Second and Third Defendants)

File Number(s):

2018/96873

Choose an item.

Judgment

Introduction

1. The plaintiff, Mr John Preston, brought an action by Notice of Motion filed 10 May 2021. The prayers for relief in the Notice of Motion are as follows:

1. Report the allegations of fraud, corruption and criminal acts by the defendants in this proceeding to NSW Police and the Attorney General within 14 days of these orders.

2. A stay of proceeding until the investigation of NSW Police and the Attorney General to make a finding on the fraud, corruption and criminal acts by the defendants as alleged by the plaintiff.

2. The first defendant in the proceedings is Mr Leon Nokolaidis in his capacity as executor of the estate of Mr Mitrofanis Nikoladis, the second defendant is Mr Leon Nikolaidis and the third defendant is Mr Michael Zwar. The first to third defendants shall be referred to collectively as “the defendants”.

3. For the reasons stated below, I find that the motion by the plaintiff is an abuse of process and should be dismissed with costs on an indemnity basis.

History of Litigation

4. Between about 1984 and 1992, M D Nikolaidis & Co (MDN) acted as solicitors for the plaintiff and various companies controlled by the plaintiff (Preston entities) in a number of matters. The first defendant, who was a partner of MDN, acted as the principal point of contact between MDN and the Preston entities.

5. The Preston entities terminated MDN’s retainer in early October 1992 and the plaintiff requested the return of all of MDN’s files relating to the Preston entities. After termination of the retainer, MDN sent the plaintiff a summary of accounts stating that the sum of $95,749.40 was owing for legal services provided by MDN. The amount said to be owing had been the subject of 22 bills issued by MDN to the Preston entities during the period from February 1992 to October 1992.

6. Subsequent correspondence between MDN and the plaintiff did not result in payment of the fees claimed by MDN or delivery by MDN to the plaintiff of itemised bills or the legal files for work undertaken for the Preston entities.

7. I gratefully adopt the detailed procedural history set out by Williams J from [11] to [122] of her Honour’s judgment in Preston v Nikolaidis [2021] NSWSC 36. In summary, the plaintiff and Preston entities commenced proceedings in 1993 (file number 1993/23395) (1993 proceedings) in respect of 16 bills of costs that MDN had issued to the plaintiff and/or Preston entities for legal work the firm had done. The second defendant was a principal of the firm at all relevant times.

8. Between 9 November 1993 and 28 February 1994, RS Hulme J managed the proceedings. On 28 February 1995, RS Hulme J made final orders which were intended to dispose of proceedings, including orders in respect of costs.

9. RS Hulme J made order 2 sought in the summons on 16 December 1993, referring the matters for taxation pursuant to ss 199 and 200 of the Legal Profession Act 1987 (NSW). The assessment of the bills of costs the subject of the proceedings was to be determined by a taxing officer of the Supreme Court.

10. The Legal Profession Reform Act 1993 (NSW), which came into effect from 1 July 1994, introduced the system of costs assessment to replace taxation of bills of costs by an officer of the Court. This led to applications to the Court for the management of the costs assessments under the new cost assessment system.

11. The bills of costs were never paid, and no steps were taken to recover unpaid fees. Since 1993, the defendants have relied upon their lien over the plaintiff’s files as security for the payment of such amount that might be assessed as owing under the costs assessments.

12. The judgment of Williams J disposed of a recent application by the plaintiff. Her Honour ordered that the plaintiff pay the costs on an indemnity basis. Amongst other things, her Honour concluded that leave to file the verified pleading should be refused on the ground that it is an abuse of process.

13. The determination of the Costs Review Panel dated 13 February 2017, which is the subject of these proceedings, concerns costs orders of this client made in the 1993 proceedings. They are costs orders made by Rein J on 1 October 2010, by Black J on 16 September 2011, and orders for costs made by the Court of Appeal in relation to appeals from the decision of Black J.

14. On 28 September 2016, costs assessor Michael W Robinson issued a Certificate of Determination of Costs pursuant to ss 375 and 378 of the Legal Profession Act 2004 (NSW) (“the 2004 Act”). The plaintiff lodged a review application with the Manager Costs Assessment in respect of those certificates. A review of the certificates was undertaken by the Costs Review Panel.

15. On 13 February 2017, the Costs Review Panel made its determination and issued Certificates of Determination with respect to the review. By letter dated 13 February 2017, from the Costs Review Panel the plaintiff and defendants were informed. To obtain the Certificates, the plaintiff was required to pay the costs of the Costs Review Panel. The plaintiff decided to not pay those costs. As a result, the certificates were not released.

16. On 22 February 2018, the defendants paid the costs of the Costs Review Panel, which the plaintiff had declined to pay and on 17 February 2018 the Costs Review Panel issued the certificates, their determinations and their reasons.

17. On 27 March 2018, the plaintiff commenced these proceedings, being the summons seeking leave to appeal from the determination of the Costs Review Panel.

Evidence and Submissions

18. At the hearing for this motion, the plaintiff relied on three affidavits of John Preston dated on 3 May 2021, 2 July 2021 and 27 July 2021. The defendant made various objections to the vast majority of the plaintiff’s affidavit material, including on the grounds of “relevance, form, opinion, conclusions and hearsay” and the scandalous nature of the allegations. With respect to the latter ground, it can be observed that the affidavits make allegations against, not only the defendants, but also Judges of this Court for bias, perverting the course of justice, gross misconduct and other scandalous matters.

19. At the hearing, I proposed not ruling on the objections until I have heard the parties’ cases. The defendant agreed with my proposed course.

20. The defendants sought to rely on the affidavit of Michael John Zwar of 17 August 2021 and three letters from the Cost Review Panel dated 13 February 2017. They had sought to tender these documents on the view that there had been a referral from the Registrar requesting the plaintiff to show cause why the proceedings should not be dismissed pursuant to either r 12.7 or r 12.8 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).

21. After discussion with the parties at the hearing, this issue fell away because the matter was referred by the Registrar to the Duty List on the Notice of Motion only and not on the issue of showing cause. As a result, the defendant did not press the affidavit of Mr Zwar and the three letters.

22. The plaintiff submitted in his oral and written submissions:

1. If “there a glimpse or even alleged fraud[,] … then that should be referred to the police, and then the matter be stayed, and the police should be doing their job to see if there is fraud”;

2. The 16 bills of cost, referred to in and being the subject of the 1993 proceedings, were fraudulent;

3. The retainer produced by Mr Zwar to Mr Hattersley was a fraudulent document;

4. The second defendant was purportedly sentenced to two years gaol for producing the retainer to cover the purportedly fraudulent 16 bills of cost;

5. The defendants created fraud and criminal acts for over 28 years. The “evidence of fraud is so overwhelming that there is obvious gross fraud and crimes committed by the defendants before 1993, and during and in these proceedings from 1993 to 2021”. The fraud was purportedly to “gain a financial benefit by deceit”;

6. The NSW Police and the Attorney General must investigate the fraud and crimes;

7. There should be a court order for a stay of proceedings of all adverse judgments against the plaintiff “until the investigation by the NSW Police and the Attorney-General are finalised and make a finding of crimes by the defendants and their lawyers for perverting the course of justice and others”;

8. Justice Slattery made a judgment dated 17 November 2017 (which I understand to be a reference to Preston v Nikolaidis [2017] NSWSC 1527). The defendant is trying to delay the recovery of the plaintiff’s costs for nearly four years “because of the fraud to be made by Justice Slattery”;

9. The “whole proceedings has been tainted by fraud from 1993 and it has been delayed by the fraud and every judgment is also tainted with fraud and the fraud has to be removed”; and

10. The defendant is “just making more fraud on top of fraud and they are trying to cover up every aspect of the fraud that they have committed in these proceedings and during these proceedings”. It was alleged that the defendants are “trying to get a financial advantage by deception by deceiving the Court”.

23. The defendants submitted:

1. The first order is very broad in its terms and the Court does not entertain an application as to whether or not the matter should be referred to the police;

2. The plaintiff is seeking to set aside adverse costs orders made against him by various Judges of this Court in the long history of litigation in this matter;

3. The plaintiff is seeking to agitate issues that had already been dealt with and raised in the judgment of Williams J. Her Honour had found that the plaintiff’s attempt to set aside the costs orders were an abuse of process;

4. The plaintiff is seeking, not only an inquiry into the defendants, but also making allegations of criminal conduct by Judges and broadly the issue of corruption;

5. There is no power for the Court to direct the police or Attorney-General to inquire into fraud; and

6. The plaintiff’s motion should be dismissed with indemnity costs.

Consideration of the Plaintiff’s Motion

Admissibility of Plaintiff’s Affidavits

24. I first turn to the objections as to the admissibility of the three affidavits filed by the plaintiff. In my view, it is clear that many aspects of the three affidavits contain material that are not admissible. They are marked by irrelevancies, disparagement and conclusory assertions of criminal acts or fraud without explanation or proof.

25. Many parts of the affidavit were argumentative in nature and tantamount to submissions. An example is the Affidavit of John Preston, dated 3 May 2021 and filed 10 May 2021 at [21], which reads:

It is obvious and it would be a total waste of time and money to proceed [sic] the 2018 proceeding tainted with fraud. It will be good management to refer the fraud to NSW Police and the Attorney General, so the fraud can be dealt with first and not to prolong this matter further. It is a crime to cover up criminal acts, the fraud should be and must be reported to NSW Police and the Attorney General by the judges or registrar managing this 2018 proceeding,

26. Worse, many parts of the affidavits were scandalous and inflammatory. An example is of the same affidavit at [14], which states:

In 2018, the 1993 proceeding was 25 years old proceeding in the Supreme Court and suited the defendants to further frustrate and delayed [sic] the 1993 proceeding as no judges questioned any fraud and the defendants were quite happy to delay the 1993 and the 2015 proceedings as no judges for 25 years were interested in the fraud committed under their watch in their court. The defendants felt protected by the judges and the judges stayed inept and silent. The defendants believed that no judges will deal or will mention the fraud and criminal acts and produced more false affidavits between 2015 and 2021.

27. Given that there were limited submissions made by the defendants as to the admissibility of the affidavits and each objection had not been put to the plaintiff for response, it is not appropriate or necessary for the course that I take to determine the issues relating of the admissibility of the affidavits. Although unnecessary to decide, I would also note that, given the form and content of the affidavits, the evidence contained in them would normally attract very little weight.

First Prayer for Relief

28. Irrespective of the question of power, I agree with the defendants that the first order sought by the plaintiff is too vague and uncertain. The proposed order does not specify what “fraud, corruption and criminal acts by the defendants” is alleged. Even if one were to understand that phrase with reference to the materials in the affidavits, notwithstanding their admissibility is highly doubtful, it remains unclear precisely the conduct that amounts to fraud, corruption or criminal acts. This consideration is, in and of itself, a proper basis to refuse the first prayer for relief: see Pethers v Minister for Agriculture [2010] NSWSC 805 at [22] per Pembroke J, and the authorities cited therein.

29. That conclusion is amplified by virtue of the fact that the Court could not properly exercise a general power to make orders to direct the NSW Police Force or the Attorney General to conduct inquiries or investigations on the basis of a “hint”, “glimpse” or allegation of fraud or criminal conduct.

30. I do not propose to determine the question of power per se but make some general observations in that respect. Although there are statutory provisions where a Judge may refer matters to the Attorney General (see, eg, s 131(7) of the Supreme Court Act 1970 (NSW) with respect to the statutory offence of disrespectful behaviour in Court), the plaintiff was not invoking any such statutory basis for the order that he sought.

31. It is noted that the Court may be able to refer a matter to the Director of Public Prosecutions for consideration of an offence where there has been a contempt in the face or hearing of the court. Alternatively, where there is contempt of the Court, the Registrar may be directed to commence proceedings under pt 55 r 11(1) of the Supreme Court Rules 1970 (NSW). However, the powers of the Court in these respects are narrow and confined. They are not a general power to report any kind of alleged criminal conduct, especially conduct that is alleged to have occurred outside the Court.

32. There are some further discretionary considerations. Even if one assumes that the contents of the affidavits are admissible, it is clear that the motion and the plaintiff’s assertions of fraud and criminal acts are to reagitate matters that have been dealt with in previous proceedings.

33. This is not the first occasion that the plaintiff or Preston entities have raised issues of fraud. Indeed, the plaintiff’s allegations of fraud have been featured in many pleadings, submissions and other documents filed in this Court over many years. For example, the allegations of fraud relating to the creation of the 19 April 1984 letter, which the plaintiff asserts again in the affidavits, was first asserted by him or Preston entities in the Further Amended Points of Claim in April 2002 and again in a Statement of Claim in June 2009. With respect to the latter, the issue was considered and the Statement of Claim was struck out by Barrett J in Preston v Nikolaidis [2010] NSWSC 131.

34. The plaintiff also raised issues concerning fraud on the part of second defendant that have already been dealt with in the criminal justice system. The second defendant was charged in 2002 under s 300(1) of the Crimes Act 1900 (NSW) with one count of making a false instrument, namely the 19 April 1984 letter that he had used in the costs assessment. This criminal charge resulted in the 1993 proceedings being stayed from November 2002 until the criminal trial was concluded and relevant criminal appeal periods expired. The second defendant was convicted in 2007 of making a false instrument with the intention of using it to induce another person to accept it as genuine and because of that acceptance to do some act to the prejudice of the plaintiff. He was sentenced to a non-parole period of 12 months with a balance of term of 12 months. The same year, his name was struck from the roll of legal practitioners. An appeal against both conviction and sentence was dismissed on December 2008: Nikolaidis v The Queen [2008] NSWCCA 323.

35. For these reasons, I see no reason why the NSW Police Force or Attorney-General should be directed to investigate matters that have already been raised, heard and determined by the courts in previous proceedings.

36. Further, a person may report alleged offences to the police directly. I infer from the oral submissions of the plaintiff that he has taken that course. The plaintiff stated in oral submissions:

[T]he police have said to me, "It would be better if an authority like the Supreme Court could report the matter to us".

37. There does seem to be an element of the present application which is designed to support any complaint to police.

38. It is a matter for the NSW Police Force to decide how it would deal with any allegations presented by the plaintiff. There is a wide discretion conferred by the Police Act 1990 (NSW) for the NSW Police Force to decide how they would discharge their functions. This Court should not interfere with the procedures of the police in their handling of any complaints raised by the plaintiff. It would not be “better” for this Court to report a complaint that the plaintiff appears to have already reported.

39. In my view, the first prayer for relief is either incompetent, flawed or an abuse of process.

Second Prayer for Relief

40. It appears to me that the second order sought is contingent on the making of the first order. That is, the plaintiff only seeks a stay of proceedings if this Court makes the first order reporting the allegations to, or directing the same be inquired by, the NSW Police Force or Attorney General. This is because the order is framed as operating “until” the investigation of the NSW Police Force or Attorney General “make[s] a finding”.

41. Since I am refusing to make the first prayer for relief, it is thus unnecessary to deal with the second prayer for relief and it should be refused accordingly.

40. In any event, I propose to make some further brief observations regarding the second prayer of relief. There are two possible categories of proceedings, judgments or orders that the plaintiff is seeking to stay – a stay of the proceedings in this matter (file number 2018/96873) or the proceedings or judgments sort to be challenged in those proceedings, or a stay of other decisions, orders or proceedings between the same two parties that are extant or determined (including the orders made by various Judges in the 1993 proceedings). It would appear from all the material that it is the latter but I shall address both in turn.

41. If it is the first category, then no stay should be entered. It is ultimately for the plaintiff to decide whether proceedings he has initiated should continue whilst any investigation or inquiry by police or a law enforcement agency initiated by a complaint of the plaintiff is ongoing.

42. If it is the second category, this Court should refuse to stay those proceedings, orders, judgments or directions. This is because the stay is being sought to stop the operation or effect of orders made against the plaintiff without him having brought an appeal by means of impugning earlier processes or judgments, including the acts of judicial officers, without any proper basis.

43. Overall, the affidavits and the motion in substance constitute the plaintiff making indiscriminate allegations of wrongdoing with respect to persons or matters that have already been heard and decided, or are pending disposition, in this Court and other courts and tribunals. The plaintiff’s Notice of Motion seeks orders which appear designed, not to facilitate a final determination of any outstanding disputes about the original dispute, but to advance collateral allegations of fraud or the like. When seen in this way, the second prayer for relief, even if viewed independently of the first, is plainly an abuse of the processes of this Court.

Consideration of Orders Sought by the Defendants

46. I now address the orders sought by the defendants.

47. First, the defendants sought an order that the Notice of Motion be dismissed. As I have found that the Notice of Motion amounted to an abuse of process or was flawed or incompetent, I agree that the Notice of Motion should be dismissed.

48. Secondly, the defendants sought an order, pursuant to r 4.15(1)(b) of the Uniform Civil Procedure Rules 2005 (NSW), that the affidavits are to be placed in a sealed envelope on the Court file. Pursuant to r 4.15(2), that envelope may not be opened except by order of this Court.

49. Since the hearing of this matter, the judgment of Preston v Nikolaidis [2022] NSWSC 549 was published. In that decision, Lindsay J considered an application for summary dismissal of a notice of motion filed by the same plaintiff on 14 May 2021 (which appears to be four days after the notice of motion in this judgment). It is clear that the plaintiff has agitated similar issues before Lindsay J as he has raised in this matter (see [11] of his Honour’s decision).

50. I respectfully agree with Lindsay J at [17] that:

Although I am sympathetic to the defendants’ complaint that affidavits filed by the plaintiff have included material that could properly be described as “scandalous” (in the sense of making indiscriminate allegations of wrongdoing against a range of people) I very much doubt the utility of making orders under UCPR rule 4.15 pending the final determination of the principal proceedings. In my opinion, the better course, which I propose to take, is to make an order, subject to further order, that no person other than a party to the principal proceedings (or a lawyer retained by such a party) have access to the Court’s file without the leave of a judge.

51. I propose to make the same order as Lindsay J with respect to the material in the plaintiff’s Notice of Motion in these proceedings.

52. Lastly, the defendants sought indemnity costs.

53. The usual position is that the costs of interlocutory applications are not payable until the end of proceedings. In Wang v Cai (No 2) [2021] NSWSC 1268, Ward CJ in Eq (as her Honour then was) recently summarised the principles for when a court might depart from the usual position and make an order for costs forthwith at [23]:

It is noted that in [Solarus Projects v Vero Insurance [No 4] [2013] NSWSC 1012], Campbell J (as his Honour then was) summarised (at [4]) three non-exhaustive factors relevant to the discretion, as discussed by Barrett J (as his Honour then was) in Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1; [2002] NSWSC 432 (Morningstar), namely that: the subject matter of the interlocutory application is discrete and self-contained making it a suitable vehicle for a separate order for costs; whether some of the conduct of the unsuccessful party to the motion may be seen as being unreasonable; and that there is still some considerable distance to go in the litigation so that it may be appropriate that the successful party obtain the fruits of its costs order now.

54. The costs of this motion to are discrete and self-contained. I find that the plaintiff has acted unreasonably by abusing the processes of this Court. It appears that there may be some considerable distance to go in the litigation. I find that it is appropriate to award costs for this motion separately. In my view, the usual rule that “costs follow the event” is appropriate on this occasion.

55. In Re Beverage Freight Services Pty Ltd [2020] NSWSC 509, Black J summarised the principles in which costs may be ordered on an indemnity basis at [73] as follows:

The jurisdiction to order costs is compensatory and not punitive and whether an indemnity costs order should be made depends, at least in part, on whether there was a relevant delinquency on the part of the unsuccessful party: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 89. The relevant principles were also considered by the Court of Appeal in Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6] where the Court observed that an order for indemnity costs may be made where conduct in proceedings is plainly unreasonable or involves an element of delinquency.

56. In my view, costs should be awarded on an indemnity basis. The plaintiff’s motion was unreasonable and involved an element of delinquency. I respectfully agree with Lindsay J in Preston v Nikolaidis [2022] NSWSC 549 at [19] that:

Dismissal of the plaintiff’s motion as an abuse of the processes of the Court warrants an order that the costs of the defendants payable by him be assessed on the indemnity basis.

Orders

57. For these reasons, I make the following orders:

1. The Notice of Motion filed by the plaintiff on 3 May 2021 is dismissed.

2. Subject to further order, no person, other than a party to these proceedings (or a lawyer retained by a party to these proceedings), be granted access to the Court’s file without the leave of a Judge.

3. The plaintiff is to pay the defendants’ cost on an indemnity basis.

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Decision last updated: 20 June 2022