Preston v Nikolaidis

Judgment

On 17 June 2020, the first plaintiff (Mr Preston) filed a notice of motion seeking orders for access to certain documents produced by the Council of the Law Society of New South Wales pursuant to a subpoena issued by the defendants on or about 23 April 2020 (the Law Society documents).
Mr Preston's motion was heard on 18 June 2020, on the first day of a two day hearing of Mr Preston's motion for leave to file a statement of claim in this proceeding. Mr Preston read affidavits of Mr George Anastasi, his solicitor, sworn on 10 June 2020 and 17 June 2020. Mr Preston made oral submissions in support of the application for access to the documents, and the defendants made oral submissions opposing access.
After hearing both parties' submissions, I dismissed the application for access and ordered each of Mr Preston and the defendants to pay their own costs of that application, on the basis that I would give reasons for that decision at a later time. These are my reasons for that decision.

The subpoena and the Law Society documents

At the same time that these proceedings have been on foot, Mr Preston has made complaints to the Council of the Law Society of New South Wales (the Law Society) concerning the conduct of the defendants.
On about 23 April 2020, the defendants issued a subpoena to the Law Society requiring production of: Any report or reports (including any documents annexed to such report or reports) prepared by or of Mr Darrell Swindell accountant and/or Mr R Hawthorne solicitor arising out of or relating to or touching upon: (a) the law firm MD Nikolaidis & Co, solicitors and/or the partners of that firm. (b) Leon Nikolaidis solicitor.
Mr Leon Nikolaidis is the second defendant in these proceedings and in the proposed statement of claim. The law firm MD Nikolaidis & Co is the name of the firm in which the three defendants in the proceeding practised in partnership, although the third defendant Mr Michael Zwar first became a partner in the firm in 1992.
Counsel for Mr Preston informed me that Mr Swindell and Mr Hawthorne were appointed to undertake investigations for the Law Society in relation to MD Nikolaidis & Co and/or the second defendant at some time prior to January 1995 and April 2000 (respectively).
According to Mr Preston's submissions, the Law Society has produced approximately between 4,000 and 5,000 documents in response to the subpoena. The defendants have had access to those documents. Mr Zwar is the defendants' solicitor, in addition to being named as the third defendant in the proposed statement of claim. In his affidavit sworn on 17 June 2020, Mr Anastasi deposed that he understands from Mr Zwar that some of the documents produced relate to complaints made by Mr Preston to the Law Society, and other documents relate to other clients of MD Nikolaidis & Co.
Mr Preston accepts that documents produced by the Law Society relating to other clients of MD Nikolaidis & Co are not relevant to the leave application. However, he seeks an order granting his solicitor and counsel access to all of the documents produced, for the purpose of them extracting the documents that relate to complaints made by Mr Preston and undertaking not to disclose or make use of, and destroy any copies of, documents relating to other clients of MD Nikolaidis & Co. It was common ground between the parties that the process of extracting those documents from the 4,000 to 5,000 documents produced by the Law Society would be very time consuming, and Mr Preston submitted that he would wish to have the opportunity to tender any of the extracted documents that might be relevant and helpful to his leave application. This would inevitably mean that the hearing of the leave application would not be completed with the two days allocated by the Court based on the parties' estimated hearing time.
It will be recalled that the defendant issued the subpoena to the Law Society. Nevertheless, the defendant submitted that the Court should decline to grant Mr Preston access to the Law Society documents (irrespective of any confidential regime that might be put in place) on the basis that there was no legitimate forensic purpose for which Mr Preston required access to the documents.
The defendant submitted (and I accept) that the test for determining whether a party should be granted access to documents produced on subpoena is that stated by Simpson J, as her Honour then was (with Spigelman CJ and Studdert J agreeing), in R v Saleam [1999] NSWCA 86 at [11]: "The principles governing applications [for an order that documents not be produced] are no different from those governing applications for access to documents produced in answer to a subpoena. Before access is granted (or an order to produce made) the applicant must (i) identify a legitimate forensic purpose for which access is sought; and (ii) establish that it is 'on the cards' that the documents will materially assist his case. So much was established in earlier proceedings brought by this applicant: R v Saleam (1989) 14 NSWLR 14 per Hunt CJ at CL…"
Whilst the applicant must show, or it must appear, that the documents are relevant to the issues in the proceedings, relevance alone is not sufficient to warrant an order to produce documents or leave to inspect documents produced. Documents may be relevant even if they are unhelpful to the applicant's case. It is necessary for the applicant to satisfy the second element of the test - that it is "on the cards" that the documents "will materially assist" the applicant's case. It is not sufficient for the applicant to show that there is a "reasonable chance" or "reasonable possibility" that the documents will assist the applicant: Attorney-General (NSW) v Chidgey (2008) 182 A Crim R 536; [2008] NSWCCA 65 at [58]-[80] (Beazley JA, James and Kirby JJ agreeing).
These principles apply in civil as well as in criminal cases: see, for example, Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd [2019] NSWSC 410 at [52].
At this stage, I need only determine whether the Law Society documents are relevant to the leave application and whether it is on the cards that they will materially assist Mr Preston in the leave application. Unless and until Mr Preston is granted leave to file the proposed statement of claim, any desire to inspect the Law Society documents for the purpose of the proposed claims (as opposed to the leave application) would not be a legitimate forensic purpose. However, as will be apparent from the summary of Mr Preston's submissions below, Mr Preston relied on the potential relevance of the Law Society documents to the proposed claims because, to the extent that the documents may assist Mr Preston in establishing the proposed claims, that may be relevant to any assessment of the strength of Mr Preston's claims undertaken by the Court in determining the leave application.
Mr Preston submitted that he should be permitted to inspect the Law Society documents for the following reasons.
First, Mr Preston submitted that the documents annexed to the investigators' reports are likely to include contemporaneous documents relevant to the complaints made by Mr Preston to the Law Society. Those contemporaneous documents "may assist" Mr Preston's leave application because they "may assist" Mr Preston in proving the alleged dishonest conduct in the proposed statement of claim and, the strength or weakness of Mr Preston's evidence in support of the proposed statement of claim "might be one matter, among others, the Court takes into account" in determining the leave application. Mr Preston referred to Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; [2006] HCA 27 at [238] (Heydon J, dissenting).
Second, Mr Preston submitted that investigators' reports "may" annexe or include responses from the second defendant in relation to complaints made by Mr Preston to the Law Society which are also the subject of the dishonest conduct allegations in the proposed statement of claim, and that any such responses "may assist [Mr Preston] in proving his allegations of dishonest conduct, for example, if the responses are inconsistent with contemporaneous documents which form part of [Mr Preston's] evidence".
Third, Mr Preston submitted that the investigators' reports "may" contain findings adverse to the second defendant concerning Mr Preston's complaints which are also the subject of Mr Preston's dishonest conduct allegations, and Mr Preston "wants an opportunity to consider" whether any such findings could be used in evidence in support of the proposed statement of claim.
Fourth, Mr Preston submitted that the Law Society documents "may" be relevant to the question of whether the second defendant knew that Mr Preston was making, and intended to pursue, complaints that are in substance the same as the dishonest conduct allegations in the proposed statement of claim, at the time when the second defendant destroyed files relating to the matters that are now the subject of those dishonest conduct allegations. This submission assumes that the investigators' reports address complaints made by Mr Preston that are the same as the dishonest conduct allegations. Mr Preston submitted that, if the Law Society documents revealed that the second defendant was aware of the substance of those claims, then any prejudice he claims that he would suffer by reason of delay if leave were granted to file the proposed statement of claim, then Mr Preston would submit in support of the leave application that the second defendant had brought that prejudice upon himself by destroying the files when he had knowledge of the complaints.
Fifth, Mr Preston submitted that the Law Society documents "may" assist the second defendant to overcome some of the prejudice that he may suffer as a result of the passage of time since the events the subject of the dishonest conduct allegations, by providing a source of contemporaneous documents from which the second defendant could refresh his memory.
Sixth, Mr Preston submitted that, if the Law Society documents reveal that matters now alleged in the proposed statement of claim were not the subject of complaints made by Mr Preston to the Law Society, "this may be relevant (perhaps in favour or perhaps against) to the question of whether leave should be granted".
In my opinion, Mr Preston's submissions identify layers of possibility upon possibility, and fall short of demonstrating that it is "on the cards" that the Law Society documents will materially assist Mr Preston on the leave application. I have formed this opinion on the assumption that the strength of Mr Preston's proposed claims may be relevant to the leave application. However, I do note that the circumstances in Batistatos were quite different from the present case, in that delay was the sole basis on which the proceedings were said to be an abuse of process. There was no suggestion of res judicata or estoppel. The judgment of Heydon J, on which Mr Preston relies, was a dissenting judgment.
In addition, the fourth submission referred to above does not withstand scrutiny. Assuming (without deciding) that the second defendant destroyed files that were relevant to matters about which Mr Preston had complained to the Law Society in the mid-1990s or early 2000s, and assuming (without deciding) that the defendant knew about those complaints at the time when he destroyed the files in about the mid-late 1990s, this could only be said to be the true cause of any prejudice that the defendants suffer as a result of Mr Preston seeking leave to commence the proposed claims approximately 30 years after the relevant events if knowledge of the mid-1990s to late-2000s complaints should have caused the defendants to retain those files until the present day. Given the manner in which the matters in issue in the 1993 proceeding were progressively reduced from 1993 up to and including the judgment of Slattery J in November 2017, as described in [37]-[237] of his Honour's reasons for judgment, I do not consider that it could be fairly suggested that the second defendant should have retained all files until the present day in anticipation of Mr Preston taking some further step.
Finally, the fifth and sixth submissions referred to above relate to whether documents may assist defendant, not whether it is on the cards that they will materially assist Mr Preston.
Because I have concluded that Mr Preston has failed to satisfy the "test" in R v Saleam, it has not been necessary for me to consider whether the overriding purpose and dictates of justice would have warranted refusal of leave to inspect the Law Society documents on the basis that Mr Preston had not sought to subpoena the documents himself and the time required to inspect the documents and adduce any additional evidence in relation to the leave application arising from that inspection would have delayed the hearing and determination of the leave application in these already ancient proceedings: Civil Procedure Act 2005 (NSW), ss 56-58.
For all of those reasons, Mr Preston's notice of motion filed on 17 June 2020 is dismissed.

At a glance

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Judgment (4 paragraphs)

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Legislation Cited (3)

Cases Cited (7)