Luigi Iacullo v Remly Pty Ltd

Commissioner for Railways v Small (1938) 38 SR (NSW) 564 Hexiva Pty Limited v Lederer [2006] NSWSC 561 CASES CITED : O'Born v Commissioner for Government Transport (1959) 77 WN (NSW) 81 Quach v Vu & Ors [2009] NSWSC 131 Trade Practices Commisions v Arnotts Ltd (1989) 88 ALR 90

TEXTS CITED : H Glass (ed) Seminars on Evidence, 1970, Law Book 6

Plaintiff: Luigi Iacullo PARTIES : First Defendant: Remly Pty Ltd Second Defendant: Dominic Iacullo Third Defendant: Lillian Iacullo

COUNSEL : Plaintiff/Respondent: G. Lucarelli Defendant/Applicant: R. Alkadamani

SOLICITORS : Plaintiff/Respondent:Gary Ulman, Minter Ellison

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY JUDGE LIST

2007/257623 LUIGI IACULLO v REMLY PTY LTD & ORS JUDGMENT 1 HIS HONOUR: This complex proceeding has come before me in the equity duty list upon the question of alleged non- compliance with a subpoena. The parties issuing the subpoena, the defendants in the proceedings Remly Pty Limited, Dominic Iacullo, and Lillian Iacullo, complain that the party to whom the subpoena was issued, MMAI Pty Limited has not produced the documents required under its five paragraphs. The defendants want the principal officer of MMAI, Mr Michael Murr to be orally examined in relation to the company's compliance with the subpoena. MMAI resists this course. 2 Although the main proceeding has its complications, the issue arising on the subpoena is in a narrow compass and can be resolved by well-established principles. 3 There appears to be great bitterness in these proceedings, which are being fought with passion on both sides. The parties' perspectives on the issues of compliance with the subpoena are in part a product of wider hostility that exists in the proceedings. The defendants believe that MMAI, a party more closely aligned with the plaintiff than it is with defendants, is concealing documents. MMAI's principal, Mr Michael Murr believes that attempts to examine him in relation to his compliance with the subpoena are designed to harass and intimidate him. 4 The plaintiff, Luigi Iacullo and the first defendant Dominic Iacullo are brothers. They have been involved in various property developments together since the mid 1990s. They no longer initiate property developments together. They have fallen out. Luigi commenced these proceedings against Dominic, Dominic's wife Lillian and Remly seeking a declaration that Remly holds its interest assets in a particular property development, known as property "A", on trust as to 50% for Luigi. Dominic cross claimed against Luigi and company associated with him, Badminton Investments Pty Limited, seeking a declaration that Badminton holds its interest in a property development in Hogben Street, Kogarah on trust for Dominic. MMAI was the developer of the Hogben Street development. Homeline Constructions Pty Limited, a company associated with Mr Murr and MMAI, built the Hogben Street development. A summary of the allegations in the proceedings has been given to me to in the course of argument about the subpoena. Dominic alleges that the Hogben Street Development was funded using money to which he was entitled from previous developments conducted by Dominic. Some of these funds are said to have been left in the form of excessive profits in Homeline, which were then applied to fund the Hogben Street Development. I do not need to analyse those allegations any further for the purposes of determining what should be done in relation to the subpoena. 5 The subpoena in question, or at least an earlier version of it, came before Justice Rein for argument on 23 April 2010. MMAI sought to set aside the subpoena on the grounds that the documents that it sought were described in oppressively wide terms. His Honour expressed views that the subpoena had some problems and as a result it was amended. The dispute now before the Court relates to alleged non-compliance with the amended form of subpoena. The subpoena is of five paragraphs as follows: "The documents or things you must produce are as follows:

' Document' means any record of information, and includes: (a) emails and notes,

(c) anything on which there re marks, figures, symbols or perforations having a meaning for persons qualified to interpret them, or

(d) anything from which sounds, images or writings an be reproduced with or without the aid of anything else, or

(e) a map, plan, drawing or photograph. 'Hogben Street Development' means the development of the property at 13-19 Hogben Street, Kogarah. 'Trust' means any trust (including any unit trust) of which MMAI Pty Ltd acted as trustee in relation to or concerning the Hogben Street Development. 1. All Documents recording or related to or disclosing the issue or allotment of any units in any Trust to any of the following: (a) Dominic Iacullo; (b) Luigi Iacullo; or (c) Badminton Investments Pty Ltd (ACN 064 564 754) (whether in its own right or as trustee of any trust including the Chiara trust). 2. All Documents recording or relating to the amounts invested in Hogben Street Development (whether by way of subscription for units in any Trust or otherwise) by any of the following: (a) Dominic Iacullo; (b) Luigi Iacullo; or (c) Badminton Investments Pty Ltd (ACN 064 564 754) (whether in its own right or as trustee of any trust including the Chiara trust). 3. All Documents (including notes of meetings, emails and letters) recording any communication relating to the Hogben Street Development between MMAI Pty Limited (whether as trustee of any Trust or otherwise) or Michael Murr on the one hand and any of the following: (a) Luigi Iacullo;

(b) Badminton Investments Pty Ltd (ACN 064 564 754) whether in its own right or as trustee of any trust including the Chiara trust);

that refer to Dominic Iacullo. 4. All profit and loss statements, balance sheets and income tax returns of MMAI Pty Ltd as trustee of the Trust for the period 1 July 2001 to date. 5. All documents recording or referring to the transfer to Badminton Investments Pty Ltd of the property comprised in folio identifier 8/SP73411 and/or folio identifier 4/SP73411, or any other real property in the Hogben Street Development transferred to Luigi Iacullo or Badminton Investments Pty Ltd." 6 There has been argument before me about the adequacy of production under each of these five paragraphs. I have indicated in the course of argument the possibility that the Court's power under Civil Procedure Act 2005 section 56 might be used to direct the production of information to assist in the issue of other subpoenas to sign documents that MMAI was unable to produce. I have come to the view however that such a course should await the testing of the adequacy of production on subpoena. 7 The defendant's specific application is that this matter be listed before the Registrar for the purposes of Mr Michael Murr, the proper officer of MMAI, being examined on oath as to the sufficiency of the subpoena. 8 The principles of law applicable to the testing of sufficiency of an answer to a subpoena for production are now fairly clear. They have been explained in two well known passages from judgments of the Full Court. In Commissioner for Railways v Small (1938) 38 SR (NSW) 564, Jordan CJ said (at 574): "A witness called on subpoena duces tecum may be asked, without being sworn, whether he has brought the documents, and if so, whether he produces them to the court. If he states that he objects to produce them, he should be sworn and the grounds of his objection stated on oath so that the court may judge of their sufficiency: eg that they constitute his title deeds, or would incriminate him. The court may allow a stranger who is a witness to be represented by counsel for this purpose if it thinks that the circumstances warrant it…." 9 In O'Born v Commissioner for Government Transport (1959) 77 WN (NSW) 81 the Full Court (Street CJ, Clancy and Walsh JJ) said: "But the person upon whom the subpoena is served (in the present case the plaintiff) must be asked in court to produce the document, and this question may be put to him without his being sworn. If he had adduced that he objected to produce the document 'he should be sworn and the grounds of his objection stated on oath so that the court may judge of their sufficiency', for if the witness produces a document he produces it to the court and not to the parties. Furthermore, if the plaintiff (echoing the words his counsel used) had stated that he did not produce the document because he knew nothing of it, it would not have been possible to deal with him for disobedience to the subpoena, unless some proof were given, not only that the document existed at the time, but also that it was in his possession and control". 10 These passages have been elaborated on by Beaumont J in Trade Practices Commisions v Arnotts Ltd (1989) 88 ALR 90. The applicable procedure has been explained more recently by Brereton J in Hexiva Pty Limited v Lederer [2006] NSWSC 561 and Quach v Vu & Ors [2009] NSWSC 131: 11 These cases draw upon the extra judicia writing of Moffitt J reproduced in H Glass (ed) Seminars on Evidence, 1970, Law Book 6 in which his Honour said of the discretion to ask of a person required to produce documents on subpoena, questions to ascertain the sufficiency of compliance, either informally or on oath:

"In exercising such a discretion, the court would not infringe the privilege of a person not to incriminate himself, having regard to the fact that deliberate non compliance with a subpoena is a contempt of court with penal consequences ... Any such discretion could not extend as far as conducting a discovery process ... The precise limits of questions of a person subpoenaed to produce documents are debatable, but it seems that a judge could ask and possibly permit to be asked, questions informally or on oath to ensure the party understood the terms of the subpoena and the documents referred to and his obligation thereunder, including his obligation regarding documents in his possession or power and relating to search ... It would seem, however, that questions could not extend to establishing proof that the person was in contempt of court, nor could they be of the search and inquiry type such as to the person's knowledge as to the location of documents not in his present possession or control, or as to the nature of other documents in his possession not within the scope of the subpoena, or as to his system of books or the like, so that this material could be used to search for other evidence or to enable a different subpoena to be framed." 12 Such examinations derive are only in the nature of examination in chief, not cross-examination and the Court will not permit an examination to become a substitute for discovery. The capacity of such examination to harass or annoy a third party such as MMAI is limited by the confined nature of the questions that are permitted. 13 I have examined the evidence of what has been produced by MMIA and what is still being asked for by the defendants. It is true that Mr Murr has now sworn an extensive affidavit of 25 August 2010. This is certainly not a case where no documents have been produced. However, the volume of documents produced in respect of several of the categories is relatively slight and the defendant' expectations that in the ordinary course of business more documents should have been kept by a developer such as MMIA during the relevant period are not without reasonable foundation in the circumstances. I have examined what has been produced and the general explanations for what has not been produced to reach this view.

14 There are several matters that complicate the making of orders for examination of the proper officer of MMIA in this case.

15 The first matter is that the orders that the defendants seek have been framed upon the basis that the defendants are entitled to require Mr Michael Murr to appear on behalf of MMIA to be examined in relation to compliance with the subpoena. MMIA is entitled to select its proper officer for the purposes of answering the subpoena. The proper officer should be a person who has sufficient knowledge of the company's affairs to be able to answer the subpoena or questions about compliance with the subpoena. There appears to be a misunderstanding on the part of the defendants that they are entitled to require Mr Michael Murr to appear to be examined on the subpoena. Whilst he may be the person that would be expected to appear for MMIA on such an examination he need not necessarily be the person. It is a matter of the company's choice.

16 The second matter is that there is a mediation to take place in these proceedings on 13 September 2010. That mediation may resolve these proceedings entirely. I had originally thought that it might be useful to have any examination of the proper officer of MMIA take place before the mediation but having examined since submissions, all the evidence that has been read on the application, I can see that even if an examination were to take place at next week for the production of documents prior to the mediation would be unlikely not impossible. The better course therefore in my view is for any examination to take place after the mediation if the mediation is unsuccessful. This also has the advantage of meaning that the examination will not be necessary if the mediation succeeds.

17 The third matter is that Mr Murr has been under close medical treatment in recent times such that an examination on the subpoena is likely to be stressful to him. I have no evidence before me that such an examination would actually damage his health. However, the ordering of any necessary examination after the mediation will allow further time for Mr Murr to regain his health. I should point out that the authorities make clear that any examination, which takes place it in the nature of evidence in chief and not cross-examination. The occasion for stress to be caused to Mr Murr from such examination is much reduced. I would expect any questions which are in the nature of cross examination or which otherwise travelled beyond the boundaries permitted by the authorities would be disallowed.

18 The fourth matter is that Dominic Iacullo has been convicted of a serious criminal offence and is the subject of an apprehended violence order in relation to Mr Murr. Any examination which takes place, must be undertaken consistently with the AVO. That means that while the AVO is in existence that Mr Dominic Iacullo should not under any circumstances be present in Court if and when Mr Murr is examined.

Orders 19 Accordingly, I order" (1) that the proper officer of MMAI Pty Limited attend before the Registrar of the Court for the purpose of being examined in respect of the subpoena for production issued on 17 August 2009, as varied by orders of Justice Rein on 23 April 2010; (2) that none of the evidence given on such examination be accepted as evidence in the principal proceedings or any proceedings for contravention or failure to comply with the subpoena; (3) in the first instance the costs of MMAI's attendance by its proper officer will be paid by the Defendants; (4) I reserve issues of the costs of this motion until after such examination has taken place. **********

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