New South Wales Supreme Court CITATION : Laurent v Law Society [1999] NSWSC 1182 CURRENT JURISDICTION : Administrative Law Division FILE NUMBER(S) : 30058/98 HEARING DATE(S) : 26/08/99, 26/11/99 JUDGMENT DATE : 3 December 1999 PARTIES : Daniel Antoine Laurent, Ormtrend Pty. Ltd., Fabrama Pty. Ltd. - Plaintiffs The Law Society of NSW - Defendant JUDGMENT OF : Dowd J Mr B Donovan QC with Mr Smallbone - Plaintiffs COUNSEL : Mr A Brown - Defendant Mr G.C. Lindsay SC - Miss Sayer SOLICITORS : CATCHWORDS : Subpoena - no oppression - cannot be characterised as discovery. ACTS CITED : Legal Profession Act 1900 Evidence Act 1995 CASES CITED : Waind v Hill and National Employers' Mutual (1978) 1 NSWLR DECISION : Motion dismissed IN THE SUPREME COURT OF NEW SOUTH WALES ADMINISTRATIVE LAW DIVISION DOWD J Friday 3 December 1999 30058/98 - DANIEL ANTOINE LAURENT & ORS v THE LAW SOCIETY OF NEW SOUTH WALES JUDGMENT - On subpoena to produce documents. 1 HIS HONOUR: The Plaintiffs in the principle proceedings, Daniel Antoine Laurent, Ormtrend Pty. Limited and Fabrama Pty. Limited, seek by way of summons against the Law Society of New South Wales ("the Law Society"), a declaration challenging Law Society Fidelity Management Committee's disallowance of the First Plaintiff's claim on the Fund for amounts of $317,500 and $322,804.70, and an order in the nature of mandamus requiring the Law Society to make determinations pursuant to s 79A (2)(b) of the Legal Profession Act 1900 ("the Act") in respect of such claims. 2 Section 79A of the Act relevantly provides: "(1) In this Division, a reference to a failure to account is a reference to a failure by a solicitor to account for, pay or deliver money or other valuable property received by, or entrusted to, the solicitor or an associate in the course of the solicitor's practice (in the case of an associate, being money or valuable property under the direct or indirect control of the solicitor). (2) This section applies only to a failure to account that arises from an act or omission of the solicitor or associate: (a) for which the solicitor or associate has been convicted of a crime or an offence involving dishonesty, or (b) which the Law Society Council has found to be dishonest. (3) A finding by the Law Society Council under subsection (2)(b) that an act or omission is, or is not, dishonest is final and conclusive. ……" 3 Subpoenae for production of documents were issued by the solicitors for the Plaintiffs, seeking the production of a series of documents by the Law Society and by Jean Sayer, the Receiver, appointed by the Law Society, of the practice of the late Michael Laurence Kandy, in respect of whose practice the claims were made. 4 The Law Society and Jean Sayer, by Notices of Motion, seek to set aside the respective subpoenae, having, in part, complied with those subpoenae, both of them leaving remaining as the basis of the motion to set aside, a document of which production is sought, namely the report of Miss Sayer as the Receiver of the practice of R.B. Kandy & Co. Some of the documents produced pursuant to the subpoena were various items of the correspondence which passed between Miss Sayer as Receiver and the Law Society, which included references to the First Plaintiff, Daniel Antoine Laurent, and his various companies. 5 Exhibited before the court were the Minutes of the meeting of the Fidelity Fund Management Committee on 27 July 1995, (although without knowing the correct date, that date may be in error) wherein a claim for $332,804.70 was disallowed on the basis that the First Plaintiff had produced no evidence of money being entrusted to the solicitor. Also produced were the Minutes of a meeting of that Committee on 30 April 1998 in respect of a claim made by the Plaintiffs, as well as Laurent trading as "Affiliated Equities", those Minutes disclosing that the Committee resolved that each of these claims be disallowed, using the words, "on the basis of no entrustment to the solicitor in the course of his practice as a solicitor, no failure to account, and that insufficient evidence and documentation had been produced to enable the claimants to establish that the solicitor was dishonest". 6 By letter of 13 May 1998 the Manager of the Fidelity Fund advised the solicitors for the Plaintiffs of the disallowance of the two claims. 7 Miss Sayer had been appointed pursuant to the Legal Profession Act 1987, on the 13th and 22nd January 1993 by this court, as Receiver of the property of the late Michael Laurence Kandy, and of Lisa Kandy and Gil Baron, those three being the persons carrying on the practice of R.B. Kandy & Company. Miss Sayer had conducted an investigation into the practice, which investigation is continuing. 8 The objection made to production of the report in answer to the subpoena as raised by the Law Society, is that the report of Miss Sayer of the trust property held by R.B. Kandy & Company comprised seven volumes of report and three volumes of annexures. The First Plaintiff's name is mentioned only in Miss Sayer's Report No.3 at page 9, and there are scattered references in Report No.5 and in Report No.7 at page 24. Neither of the other Plaintiffs have been mentioned. These pages have in fact been made available to the Plaintiffs' solicitors. 9 It is contended by the Law Society and Miss Sayer that the subpoena is vexatious and oppressive, and amounts to no more than an attempt to trawl through these reports held by the Law Society, for no good or apparent forensic purpose. 10 It has been submitted on behalf of Miss Sayer, and it does not appear to be in issue, that the late Michael Laurence Kandy had provided various services for investor clients, including money laundering and tax evasion investment service, and that those activities extended over a considerable number of years, and that the ultimate shortfall was in excess of twenty million dollars. As an integral part of that activity there was misappropriation by the late Mr Kandy. 11 This matter came before me initially on 26th August 1999, when a large number of documents were produced as a result of that hearing. A judgment was delivered by me on that day on the issue of costs and fees for the production of those documents. 12 The evidence before me on this application, from the evidence of the first plaintiff, is that he did not recall specific discussions over particular transactions. Over a period of many years a trusting relationship had developed between the first plaintiff and the late Mr Kandy, and as such the first plaintiff did not question his words or figures, the relationship of solicitor and client having gone back to 1978. The first plaintiff trusted the late Mr Kandy with numerous sums of money, which resulted in numerous conversations. The first plaintiff does not recall specific references to specific figures, other than that Mr Kandy did a vast number of real estate transactions for the first plaintiff and his companies. 13 The objection raised by Mr Lindsay SC on behalf of Miss Sayer is similar to that raised by Mr Brown for the Law Society, that this is a "fishing expedition" and that there is no relevance to the proceedings, since the focus of the report in dispute does not specifically relate to the plaintiff, but relates to other claimants and persons who have had dealings with the solicitor. It is suggested that this is, in effect, a discovery. 14 Mr Lindsay SC has referred the court to the judgment of Moffitt P in Waind v Hill and National Employers' Mutual (1978) 1 NSWLR 372 at 381, wherein his Honour points out the steps annunciated by Jordon CJ as to the procedure on subpoena, the first being by the witness bringing the documents to the court and handing them to the judge, who determines any objections. The second step is the decision concerning the preliminary use of the documents, which includes the question of whether or not permission should be given for access. The third step is the admission into evidence of such document. Moffitt P held at p 382: "It is the third step alone which presents material upon which ultimate decision in the case rests. In these three steps the stranger and the parties have different rights, and the function of the judge differs." 15 In Waind v Hill, Moffitt P goes on, however, to explain the way in which a subpoena may be oppressive, if in fact it is obliging a stranger to carry out what may be an oppressive search, when the stranger does not necessarily know the criteria to use in searching for a particular document. It could not in my view be characterised as a discovery where in fact a specific document is sought. There is no oppression caused when that specific document is known, as in fact is in the case in the present proceedings. As Moffitt P said at p 382 D: "It is a misuse of terms to say the person who inspects the latter is using it for the purposes of discovery, because he is unaware of the contents of the documents or some of them." In this case the document is known and the exercise of issuing a subpoena is not one of discovery, and the document is properly the subject of the subpoena. 16 There is no valid basis that the report may not be relevant. "Relevant" obviously means for the very widely expressed purposes of s 55 of the Evidence Act 1995. Clearly methodology used in the various schemes to deal with his clients' funds that have been adverted to in the course of these proceedings, used by the late Mr Kandy, may assist a claimant in searching for evidence of a pattern of payments of funds. The very use of one or several schemes to invest or misapply money could be relevant in the process of tracing monies paid, if other evidence can be obtained to link payments and the procedure used by the late Mr Kandy to disburse clients' funds, properly and improperly. It is irrelevant that the focus of the claim is the actual payments made, since the additional information that is needed relating to the solicitors methodology will be admissible if there is evidence found in the report of a procedure of paying monies to a particular account, or to a particular company, which may involve the funds of the plaintiffs or any of them. 17 It is proper that the reports in question be made available on the subpoena addressed to the Law Society, being a party to the proceedings, since the document is the same one sought from both. It seems to me that although Miss Sayer is not entirely a "stranger" to the proceedings, nevertheless it is the party which should comply with the subpoena, rather than Miss Sayer, and I would propose that the motion to set aside the subpoena against her be adjourned pending resolution of the production of the document by the Law Society. 18 I propose that in the event the report is produced by the Law Society, that the motion on Miss Sayer's behalf be granted. The subpoena to the Law Society is valid, as the Law Society was the proper party from whom production should have been sought. In the event of their being some further problem with production by the Law Society then it is my view that the subpoena addressed to Miss Sayer may then become the proper vehicle for the production of the report to the court. 19 In any event, I consider that conditions should be imposed in the making available of the report that can probably more conveniently be carried out by the Law Society as a party to the proceedings, which can more readily police those conditions. 20 As there have been certain security concerns expressed, and there is no opposition to conditions being imposed as expressed by Mr Donovan Q.C. on behalf of the plaintiffs, I would propose that any access that may be granted be confined to the counsel and the solicitors appearing for the parties in the proceedings, unless the court grants leave. 21 Further, I propose that information contained in the material shall not be used for any purposes other than these proceedings, or disseminated without the leave of the court. 22 Further, that access should be on the condition that the Plaintiffs undertake not to approach any client or former clients of the solicitor without the leave of the court or the prior written approval of the Law Society or of Miss Sayer. 23 I would propose that the parties have liberty to apply, and further would propose that the parties formally submit draft orders giving effect to the orders that I have set out above. 24 I would propose that the Law Society, having been unsuccessful in these proceedings, pay the costs of the motion. I reserve the costs of the motion by Miss Sayer against the plaintiffs. 25 The orders that I make therefore are: 1. The motion of the Law Society be dismissed. 2. The motion of Miss Sayer be adjourned pending resolution of the proceedings. 3. That the parties have liberty to apply. 4. That the parties submit draft orders giving effect to the orders and conditions I have set out above. 5. The Law Society is to pay the Plaintiffs' costs of this motion. 6. The costs of Miss Sayer's motion are reserved. -o0o- Last Modified: 12/03/1999 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.