This judgment relates to an application for search orders by GEMI 169 Pty Ltd and GI 214 Pty Ltd (together referred to as "the plaintiffs") that I heard ex parte in the Duty List. For reasons unnecessary to detail in this judgment, no transcript for a large part of the hearing is available. In light of this, the plaintiffs have asked for reasons as to why the Court granted their application.
The plaintiffs are GEMI 169 Pty Ltd (GEMI 169) and GI 214 Pty Ltd (GI 214).
There are seven defendants:
1. Suria Global (L) Pty Ltd (Suria Global);
2. John Ata Alan Lutui (John Lutui);
3. F & L Violi Pty Ltd (F & L Violi);
4. Frank Paul Violi (Frank Violi);
5. Fred David;
6. Jason La Rocca;
7. Pacific Carbon Group Pty Ltd (Pacific Carbon Group).
The application arises out of allegations of fraud in relation to two loans together now exceeding $40 milllion advanced by the plaintiffs to Suria Global.
John Lutui and F & L Violi were guarantors of the loans.
John Lutui is the sole director and company secretary of Suria Global. He is also the sole director, company secretary and shareholder of Pacific Carbon Group.
Frank Violi is the sole director and shareholder of F & L Violi.
Jason La Rocca is an associate of Frank Violi who is alleged to have assisted in the procurement of the loans.
The search orders have been granted in respect of six premises located in NSW. The properties are:
1. Lawler Street, Panania. This is the residence of John Lutui.
2. Mallinson Road, Lake Wyangan. This is the residence of Frank Violi.
3. Barker Road, Strathfield. This is Fred David's home residence.
4. Harris Street, Fairfield. This is the work premises of David Legal, of which Fred David is a principal.
5. Oakes Road, Griffith. This is the residence of Jason La Rocca.
6. Yambil Street, Griffith. This property was the subject of two mortgages discussed below at [16] and [21]. F & L Violi is the registered proprietor of that property.
The orders also include any vehicles on the premises under the defendants' control and any relevant documents.
The orders made in relation to John Lutui, Frank Violi, Fred David and Jason La Rocca (i.e. the second, fourth, fifth and sixth defendants) authorise searches of any electronic devices such as computers, mobile phones, hard drives, servers, tablets or other electronic devices on which relevant documents may be stored.
The plaintiffs were represented at the hearing by Mr H Somerville of Counsel with Mr D Meyerwitz-Katz of Counsel.
[2]
Facts
The plaintiffs relied upon an affidavit of their solicitor, Mr John Gerard Buhagiar of Summer Lawyers, sworn on 22 June 2022 and a bundle of documents which were referred to as Exhibit JB-1. That material satisfied the Court of the following facts on an interlocutory basis.
On 1 March 2020, GEMI 169 advanced a loan of $19.5 million to Suria Global (First Loan Agreement). John Lutui and F & L Violi were guarantors of that loan.
Frank Violi is the sole director and shareholder of F & L Violi. John Lutui is the sole director and secretary of Suria Global. John Lutui is also the sole director, secretary and shareholder of Pacific Carbon Group.
As security under the loan, mortgages were taken out over two properties (one in Strathfield and the other in Griffith) of which F & L Violi is the registered proprietor (First Mortgage).
Fred David of David Legal is the solicitor who acted for Suria Global under the First Loan Agreement.
On 2 March 2020, Fred David emailed payment instructions to GEMI 169 which included:
1. $510,000 to the account of "FP & LW Violi" that appears to belong to Frank Violi;
2. $250,000 to Jason LaRocca; and
3. The balance of the monies to the account of "Pacific Carbon Group Pty Limited t/as CDX Australia".
On 5 March 2020, PEXA records show that $2.5 million of the loaned monies was deposited in the account of "FP & LW Violi" (Ex JB-1 227). Correspondence from solicitors for F & L Violi confirmed that this was Frank Violi's bank account.
On 25 January 2021, GI 214 advanced a loan of $2,529,974.81 to Suria Global (Second Loan Agreement). John Lutui and F & L Violi were again the guarantors and David Legal acted for the borrower.
Further mortgages were taken over the properties at Strathfield and Griffith as security for the Second Loan Agreement (Second Mortgage). These are the same properties that were subject to the First Mortgage. F & L Violi is the registered proprietor of both.
On 18 May 2021, the plaintiffs entered a deed of forbearance that was executed by Suria Global, John Lutui and F & L Violi.
On 8 December 2021, GEMI 169 received an email from PJA Accountants on behalf of F & L Violi and Frank Violi which stated that Frank Violi denied having agreed to the First Mortgage or Second Mortgage.
On 7 January 2022, GEMI 169 issued default notices to Suria Global, John Lutui and F & L Violi.
A further email from PJA Accountants on 11 January 2022 addressed to Summer Lawyers denied that Frank Violi had any knowledge of the First Loan Agreement or Second Loan Agreement.
On 14 February 2022, solicitors at WMW Lawyers who acted for F & L Violi emailed Summer Lawyers claiming that Frank Violi was a victim of fraud as the securities were granted "without his knowledge or consent".
In contrast to that claim, an email from Fred David to WMW Lawyers on 15 February 2022 alleged that Frank Violi had at all times acted with legal advice in relation to the First and Second Loan Agreements.
On 28 February 2022, WMW Lawyers again emailed Summer Lawyers. Attached to that email were two photographs of Frank Violi's driver's licences, seemingly identical except that they bore signatures that appeared quite distinct. One of the driver's licences had a signature that accorded with the multiple loan documents associated with the First Loan Agreement (First Signature) but the other did not (Second Signature).
On 25 March 2022, WMW Lawyers emailed to Summer Lawyers a letter addressed to Frank Violi and purporting to have been written by Fred David. Both the form and contents of that letter raise more questions than they answer. The letter is on David Legal's letterhead in these terms:
"Dear Frank,
I am writing to you in regards to the mortgages that are on Strathfield and Griffith Central.
Unfortunately I have taken it upon myself and without your consent to take a loan against your 2 properties being [redacted] Strathfield & [redacted] Griffith NSW.
I take full responsibility for these mortgages and the loan against your properties and have acted solely on my own accord.
I give you full authority to use this letter as my admission of guilt in this matter and report me to the relevant authorities.
I sincerely apologies [sic] for my reckless behaviour."
After this writing there are several centimetres of white space before Fred David's alleged signature and signature block appears at the very bottom of the page. Furthermore, the letter appears to use more than one typeface. Through WMW Legal, Fred David has "categorically and emphatically" denied authorship of the letter.
Given the ambiguity of what had occurred, Summer Lawyers obtained sworn statutory declarations from several relevant persons who deposed that they had personally witnessed Frank Violi sign the loan documents. These included:
1. Brendan Piggott, solicitor, who stated he had witnessed Frank Violi sign the First Loan Agreement;
2. John Lutui who stated he had witnessed Frank Violi sign the First and Second Loan Agreement; and
3. Jason La Rocca who stated that he had witnessed Frank Violi sign the First and Second Loan Agreement.
All three individuals were described by John Buhagiar as having been co-operative. Nevertheless, John Buhagiar expressed doubts as to the accuracy of their evidence given the denials by multiple parties and the documentary evidence.
Jason La Rocca provided a number of documents that were allegedly executed by Frank Violi which bore the Second Signature.
Jason La Rocca also provided a handwritten document to Summer Lawyers on which he wrote Frank Violi's name several times. A table comparing Frank Violi's name as written by Jason La Rocca and the signatures as they appeared on the First Loan Agreement and First Mortgage documents was compiled and tendered as evidence. This was done on the basis of a theory that Jason LaRocca may have signed the documents relating to the First Loan Agreement on Frank Violi's behalf, possibly even at his behest. No expert evidence was available at this time to determine whether they were in fact written by the same person, but the Court is satisfied that there was at least sufficient evidence to show that further expert investigation of the signatures in plainly warranted.
On 1 April 2022, at a meeting between Fred David and Paul Reese and John Buhagiar of Summer Lawyers, Fred David provided access to photographs on his mobile phone purporting to be of Frank Violi signing various loan documents. On at least one photograph, it was attested that there were some discrepancies, including a lack of metadata to confirm their veracity. There was also an alleged discrepancy between the signature as it was depicted in the photograph purporting to show Frank Violi signing the Second Loan Agreement documents and the signature depicted on the documents themselves. Fred David denied any knowledge of how this was so.
During the same meeting on 1 April 2022, Fred David allegedly expressed his concern to Paul Reese and John Buhagiar that Frank Violi or his associates might try to destroy files and other documents stored by Fred David.
An audio recording of a conversation purportedly between Frank Violi and Jason La Rocca was discovered at the Griffith property by receivers appointed by Gemi 169. Counsel candidly acknowledged that the circumstances in which that recording came into existence were not known to the plaintiffs and that possibility of the recording having been illegally obtained could not be excluded. The recording appears to disclose:
1. Frank Violi accused Fred David of having engaged in a fraud;
2. Frank Violi was having to "cover for yous [sic] for something I haven't done";
3. Frank Violi denied ever having signed "any papers";
4. Frank Violi and Jason La Rocca discussed deletion of emails in relation to large sums of money;
5. Frank Violi obtained a letter from Jason La Rocca that was purportedly authored by Fred David which he had stored in a safe.
[3]
The law
Rule 25.20 of the Uniform Civil Procedure Rules 2005 (NSW) states:
"25.20 Requirements for grant of search order
The court may make a search order if the court is satisfied that -
(a) an applicant seeking the order has a strong prima facie case on an accrued cause of action, and
(b) the potential or actual loss or damage to the applicant will be serious if the search order is not made, and
(c) there is sufficient evidence in relation to a respondent that -
(i) the respondent possesses important evidentiary material, and
(ii) there is a real possibility that the respondent might destroy such material or cause it to be unavailable for use in evidence in a proceeding or anticipated proceeding before the court."
The relevant matters to be considered when exercising the discretion to grant search orders was described by Brereton J (as his Honour then was) in Brags Electric Pty Ltd t/as Inscope Building Technologies v Gregory [2010] NSWSC 1205:
"[18] Generally speaking, an applicant for an Anton Pillar order must show a strong prima facie case, serious potential or actual damage to the plaintiff, clear evidence that the defendant has in its possession incriminating documents or things, and a real possibility that they may be destroyed before any inter-partes application can be disposed of, is that the risk of damage occasioned to the defendant and its affairs by the order is not excessive or disproportionate to the legitimate object of the order. Although sometimes strong adverbs are used - such as "extremely" strong prima facie case or "very serious" potential damage [see Austress Freyssinet at [15]] - I am not convinced that those extreme adverbs form part of the test. In every case, the court will be involved in balancing the strength of the case, the seriousness of the damage, the gravity of the risk of destruction, and the potential injury to the defendant. These are factors to be taken into account in the exercise of a discretion, rather than essential proofs."
[4]
Is there a strong prima facie case?
There is a strong prima facie case that the plaintiffs are owed substantial amounts of money and have an accrued cause of action to enforce their rights under the both the Loan Agreements and the Mortgages. So much is clear from the default notices in evidence. It is also clear that there will be serious issues with respect to who is responsible for executing those agreements and against whom those agreements are enforceable (if they are enforceable at all). In particular, the evidence raised the strong possibility that a fraud of some kind had been perpetrated by one or more persons involved. This was apparent in various issues raised before the Court including:
1. Frank Violi's denial that he consented to the loans or mortgages;
2. The discrepancies in the signatures used to sign the various documents, including loan and mortgage documentation;
3. The discrepancies in the signatures used to sign Frank Violi's identification documents, in particular two driver's licences;
4. The letter purporting to be from Fred David admitting to conducting a fraud against Frank Violi which Fred David denied;
5. The discrepancies in metadata related to images purporting to show Frank Violi signing loan documentation; and
6. The audio recording of the conversation between Frank Violi and Jason La Rocca.
[5]
Will the plaintiffs suffer loss or damage if the search orders are not granted?
Evidence was provided to show that monies still owing under the loan agreements was:
1. $38,398,509.40 in relation to the First Loan Agreement; and
2. $4,805,395.23 in relation to the Second Loan Agreement.
John Buhagiar deposed, and the Court accepts, that if the search orders were not granted and evidence that could prove relevant to fraud proceedings was destroyed, this would limit the plaintiffs to recovering the funds owed from John Lutui and Suria Global.
Evidence was also provided to show that neither John Lutui nor his company own and real property in Australia, further diminishing the plaintiffs' chances of recovering the funds.
For these reasons, the Court accepts that this would cause a significant detriment to the plaintiffs to recover the sums owed to them.
[6]
Is there a real possibility that evidence would be destroyed?
The Court finds that there is sufficient evidence in relation to the relevant respondents that they possess important evidentiary material which they might destroy to prevent its use in these proceedings.
[7]
Frank Violi
Frank Violi is the controlling mind of F & L Violi who was the guarantor under both loan agreements. On that basis, the Court finds that he has in his possession relevant evidence in relation to the loan agreements and mortgages. At the very least, the audio recording discloses that he has what could be highly relevant correspondence provided by Jason La Rocca and authored by Fred David stored in a safe at one of his properties.
Taking into account the evidence of the audio recording, the Court is satisfied that Frank Violi may destroy relevant evidence given his stated recklessness towards doing so. This is fortified by the other reasons put forward by the plaintiffs, including:
1. The fact that Frank was photographed signing documents related to the First Loan Agreement;
2. Frank Violi's involvement in transferring large sums of money under the First Loan Agreement; and
3. Frank Violi's receipt of approximately $2.5 million in relation to the First Loan Agreement.
Added to this is Fred David's alleged apprehension disclosed to John Buhagiar that Frank Violi may try to destroy files in Fred David's possession. Although this evidence is of lesser weight, particularly given its hearsay nature, it fortifies the Court's findings.
The plaintiffs conceded that if Frank Violi is the innocent victim of a fraud then it was "highly unlikely" that he would destroy evidence. However, if Frank Violi was himself the perpetrator of a fraud, or had acted in concert with others to perpetrate a fraud, then there would be a real possibility that documents might be destroyed. Given the totality of the evidence, the Court is satisfied that there is sufficient evidence for the orders to be made in respect of Frank Violi.
[8]
Jason La Rocca
The evidence before the Court suggests, by Jason La Rocca's own admission and by way of the audio recording, that he was present and involved in the loan transactions. The Court is satisfied on that basis that he has in his possession evidence relevant to the question of who is responsible for the loan agreements and the mortgages, whether a fraud has been perpetrated and by whom.
The Court is also satisfied that there is sufficient evidence that Jason La Rocca may destroy evidence related to the transactions. Like Frank Violi, Jason La Rocca was recorded discussing the potential destruction of emails. This is the primary factor that satisfies the Court the search order is necessary. However, there is the additional factor of his handwriting and the question of whether he may have signed documents purporting to be signed by Frank Violi. That matter requires further evidence to substantiate any such suspicion at a final hearing, but it nevertheless lends weight to the Court's conclusion.
[9]
Fred David
Fred David acted for the borrowers in both transactions and there is correspondence (which he denies) that casts him as the perpetrator of a fraud. As the borrowers' solicitor the Court is satisfied that he has in his possession important evidentiary material.
The Court is also satisfied that there is a real possiblity that Fred David may destroy such evidence. In reaching what I accept is a serious conclusion, I have given weight to his position as an officer of the Court. Nevertheless:
1. It is clear there is a serious question as to whether a fraud has been perpetrated. A document has been provided which suggests that Fred David may be the perpetrator. Although Fred David denied that he wrote the purported confession, it remains a pertinent consideration taken together with the remaining circumstances.
2. During the meeting with John Buhagiar, the evidence was that Fred David declined to allow John Buhagiar to record notes of the meeting or else Fred David would leave. While there may be a multitude of reasons for this, it supports a conclusion that Fred David is not approaching the matter with full and frank candour.
Mr Somerville for the plaintiffs noted that search orders in relation to Fred David, as a solicitor, had the potential to capture matters covered by client legal privilege. It would therefore be necessary to tread carefully when carrying out any search orders.
The Court was also made aware that Fred David had told John Buhagiar that he had made backup copies of all relevant files, in case Frank Violi tried to destroy them. It was properly submitted on this ex parte application that this would tend to weigh against the granting of the search orders because it indicates that Fred David is trying to preserve rather than to destroy evidence. However, it was also the case that Fred David declined to provide this material to GEMI 169 upon request. Further, in circumstances where it is entirely unclear who has perpetrated a fraud in the matter and given the extent of Fred David's involvement in witnessing and certifying documents used in the transactions, the Court is satisfied that there is sufficient evidence that he may destroy important evidence in his possession.
[10]
John Lutui
John Lutui is the controlling mind of Suria Global and Pacific Carbon Group. Both companies have had a high degree of involvement in the transactions. In the case of Suria Global, this was as the borrower of both loans. Pacific Carbon Group received a portion of the funds from the First Loan Agreement. John Lutui himself has been guarantor for both loan agreements.
In light of this and despite the lack of direct evidence to suggest his involvement in a fraud, the Court is satisfied that he has in his possession evidentiary material important to resolving the issues in these proceedings. Further, given the extent of his and his companies' involvement as borrower, guarantor and recipient of funds, the Court finds that there is a real possiblity that John Lutui would take actions to destroy evidence if he is a party to such a fraud, which is a conclusion that cannot be dismissed.
While John Luitui was described as cooperative by John Buhagiar, this is outweighed by the lack of clarity regarding who is responsible for the loan agreements, and the potential that a conspiracy to commit fraud has occurred to which John Lutui may be a party given his close involvement in the underlying transactions.
[11]
Conclusion
The Court finds that the search orders are justified when balancing the damage posed to the plaintiffs for failing to take out the orders, the gravity of the risk that evidence may be destroyed, and any potential harm to the defendants caused by the orders.
The greatest risk posed to any of the defendants identified above relates to the potential that privileged information held by Fred David might be accessed. The Court is satisfied that the inclusion of independent solicitors and an independent computer expert will be sufficient amelioration of this risk in the first instance in circumstances where it is clear that some type of fraud has been perpetrated, there is a real possibility that important evidence will be destroyed (if it hasn't already) and the plaintiffs will suffer a significant detriment if that is not prevented to the extent it can be.
[12]
Amendments
11 July 2022 - Heading before para 40 add "case" to end of heading - i.e. Is there a strong prima facie case?
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Decision last updated: 11 July 2022