The respondents, Leonardo Muriniti and Robert Newell, have applied for an order that the appointment of a referee in 2019 be terminated. The referee was appointed to determine the amount of certain costs payable by them
In that application, they have issued subpoenas to Lawcover Insurance Pty Ltd, their insurers, and YPOL Pty Ltd, the former solicitors of Mr Muriniti. [1] Those subpoenas seek the following:
"All notes and/or documents and/or all recording discussions taken and/or created by any member, principal, solicitor or employee of YPOL including but not limited to Bruce Yeldham, Mary Vitalone and Robert Finnigan in respect conferences which were convened between Leonardo Carlo Muriniti and any or all of the following persons:
(a) Bruce Yeldham; and/or
(b) Mary Vitalone; and/or
(c) Robert Finnigan; and/or
(d) David Lloyd of Counsel; and/or
(e) Elissa Baxter of Lawcover;
touching and concerning the costs claims made by De Costi Seafoods (Franchises) Pty Ltd; De Costi Seafoods (Holdings) Pty Ltd; Frank Theodore, George Costi and Androulla Costi ('the De Costi parties') and by Ms Louise Thomson, Trustee in Bankruptcy of the Estate of Barry Shnider.
which conferences took place at either the offices of YPOL or at the chambers of counsel, David Lloyd on the dates hereinbelow set out:
(i) 2 April 2013
(ii) 14 July 2014
(iii) 26 May 2015
(iv) 8 July 2016
(v) 16 February 2017
(vi) 13 March 2017
(vii) 31 March 2017
(viii) 1 November 2017
3. Copies of all briefs provided to Counsel, Mr David Lloyd, in relation to the claims made by the de Costi parties and/or the Trustee in Bankruptcy for David Shnider against Leonardo Carlo Muriniti including but not limited to observations sheets and, all advices provided by Counsel, Mr David Lloyd in respect of the claims.
*For the purposes of this subpoena claims shall be taken to mean claims for costs in proceedings before his Honour Taylor DCJ in these proceedings and also includes the appeal from the decision of his Honour Taylor DC J in the Supreme Court, Court of Appeal being proceedings 2016/382130 in the period 1 June 2012 to date." [2]
De Costi Seafoods (Franchises) Pty Limited and Anor v Wachtenheim and Anor [2020] NSWDC 181 | Case summary | Zoe
A further subpoena filed 3 February 2020 provided to the Court without demur but not marked as an exhibit is issued to Searle & Associates, solicitors, seeking:
"2. Copies of any correspondence, documents, forms, emails, faxes from your firm on behalf of David Barry Shnider and/or his Trustee in Bankruptcy proposing any resolution or settlement or making of any offer of settlement of the claim by Serge Wachtenheim and/or Deist Safety Equipment (Australia) Pty Ltd in these proceedings together with but not limited to any documents confirming transmission of any such proposal of settlement or offer of settlement sent by either fax and/or email for the period between the period 1 January 2008 to 31 December 2012.
3. Copies of any agreement between your firm and Ms Louise Thomson, the Trustee in Bankruptcy for David Barry Shnider touching and concerning the Costs Application made by the Trustee against Leonardo Carlo Muriniti and Robert Duane Newell in these proceedings for the period between 1 January 2008 to 31 December 2012."
The claimed purpose of the subpoenas is to provide evidence of an alleged conspiracy to pervert the course of justice involving Lawcover, YPOL and a client of Searle, if not the firm itself, among others. Mr Newell and Mr Muriniti submitted that the material to be produced is relevant to proposed Equity proceedings they intend to commence in the Supreme Court. The utility of the documents in other proceedings, actual or proposed, is not a proper basis to subpoena them in these proceedings. Lawcover, YPOL and Searle have sought to set aside the subpoenas on the ground of relevance.
Mr Newell and Mr Muriniti do not assert that they must establish the existence of the conspiracy to obtain the orders determining the referee's appointment. Rather, they submit that establishing the bona fides of the allegation of conspiracy is relevant.
The test of relevance for material the subject of a subpoena is broader than mere admissibility. [3] Still, there must be some logical connection between the material sought and what it might show, and proof of the issues in the application. In this case, I do not think there is.
Neither the referee, nor the President of the Law Society, who nominated the referee pursuant to consent orders of this Court, is alleged to be a party to the conspiracy. The documents sought pertain to a period well before the appointment and are not alleged to contain any documents referring either to the President or the referee. Mr Newell and Mr Muriniti allege that the appointment of the referee, Ms Alyson Ashe, by the President involved the knowing appointment of a biased referee. The relevant component of the written submissions of Mr Newell and Mr Muriniti are as follows:
"c. There is evidence in addition that Ms Ashe is not a person who could be or be seen to be free of bias as the appointment requires.
d. It is not believable that the President of the Law Society was unaware that there was at the time that she was called upon to effect the nomination, a serious dispute between the Costs Respondents and Lawcover. Lawcover is the wholly owned subsidiary of the Law Society.
…
134. Apart from failing to ascertain that she is not a costs assessor, The President of the Law Society could not have asked any questions of Alison Ashe as to the relationship with Lawcover or else she appointed Ms Ashe for the very reason that her antecedents meant that she could be counted on to conduct herself in accordance with Lawcover's interests. The President could not have failed to be aware of a historically unprecedented dispute between the Respondents and Lawcover. Her knowledge included that:
a. The Respondents were representing themselves.
b. The Respondents had recently had a major dispute with Lawcover resulting in litigation in the Supreme Court the Court of Appeal and the High Court.
c. The forgoing litigation was ongoing litigation related to the Young v King matter which involved conduct by a Council. Elizabeth Espinosa is a lawyer for a Council.
135. In these circumstances, it cannot be disputed that the President knew of the exceptionally charged nature of the relationship between Lawcover and the Respondents. Given that the Lawcover is the wholly owned subsidiary of the Law Society, she must have had access to considerable information about the dispute and what Lawcover was doing in relation to it.
136. The requirement that the President ascertain whether there can be any question of a possible bias in the nominated costs assessor is underscored by the additional circumstance that, in a letter dated 3 April 2019 to the President, Ms Ng of MT Partners stated that it was necessary to avoid any question of conflict.
137. It is submitted that the President should not have nominated Ms Ashe. The President must have known of the circumstances informing a question of bias. Further, the President stated in her formal nomination document that "the President has been requested to nominate an independent solicitor to act as a Costs Assessor in the matter of Newell, Muriniti v De Costi [2018] NSWCA 49." [4]
I do not intend to minimize the seriousness of the allegations, but whether there is proof of them is yet to be determined. Lawcover is the insurer of Mr Newell and Mr Muriniti and in this application it conceded an obligation to indemnify Mr Newell and Mr Muriniti for the costs awarded, the amount of which is to be determined by the Referee. Ordinarily this might be thought to cause the opposing De Costi parties to be more concerned than Mr Newell and Mr Muriniti about the alleged connection of the Referee with Lawcover. Be that as it may, proof of an alleged bias or apprehended bias is likely sufficient to establish a proper basis for removal of the Referee. That basis does not depend upon and is not assisted by evidence of the alleged conspiracy.
The conspiracy is not alleged to be within the knowledge of either the President of the Law Society or the Referee and thus evidence of it is not probative of whether the President of the Law Society acted properly in nominating the Referee, or of whether the Referee is an inappropriate person to be appointed.
As the material the subject of the subpoenas does not bear upon the application for removal of the Referee, the subpoenas should be set aside. Mr Newell and Mr Muriniti should pay the costs occasioned by the successful applications.
The orders of the Court are:
1. Subpoenas to Lawcover Insurance Pty Ltd, YPOL Pty Limited and Searle & Associates, all filed on 3 February 2020 and issued by Mr Muriniti and Mr Newell be set aside.
2. The respondents, Mr Newell and Mr Muriniti, pay the costs of Lawcover's notice of motion filed 17 February 2020, YPOL's notice of motion filed 18 February 2020 and Searle & Associates' notice of motion filed 24 February 2020 to set aside the subpoenas.
[2]
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Decision last updated: 11 May 2020
Parties
Applicant/Plaintiff:
De Costi Seafoods (Franchises) Pty Limited and Anor