Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Palermo Seafoods Pty Limited v Lunapas Pty Limited (No 3) [2015] NSWCA 359 Hearing dates: 09 November 2015 Decision date: 09 November 2015 Before: Leeming JA Decision: 1. Dismiss the notice of motion filed 28 September 2015. 2. Order that Palermo Seafoods Pty Limited pay the respondents' costs of that notice of motion. 3. Note that one copy of each of the seven draft subpoenas the subject of the motion be kept in the file and marked MFI 1. 4. Remaining copies of the subpoenas can be returned to Mr Fern. 5. Note that the matter has been stood over for further directions on 18 November 2015. Catchwords: PRACTICE – subpoenas – application for leave to issue subpoenas in appeal – subpoenas seeking further evidence – not demonstrated that evidence sought by subpoenas could not have been obtained with reasonable diligence at trial – application refused Legislation Cited: Supreme Court Act 1970 (NSW), s 75A Cases Cited: Akins v National Australia Bank (1994) 34 NSWLR 155 Palermo Seafoods Pty Limited v Lunapas Pty Limited [2014] NSWSC 792 Palermo Seafoods Pty Limited v Lunapas Pty Limited (No 2) [2014] NSWSC 1323 Palmero Seafoods Pty Limited v Lunapas Pty Limited [2015] NSWCA 175 Palermo Seafoods Pty Limited v Lunapas Pty Limited [2015] NSWCA 149 Tjiong v Tjiong [2012] NSWCA 201 Category: Procedural and other rulings Parties: Palermo Seafoods Pty Limited (Applicant) Lunapas Pty Limited (First Respondent) Luciano Menniti (Second Respondent) Representation: Counsel: Mr Fern (with leave to appear) (Applicant) A Lauchland (by phone) (Respondents) Solicitors: Applicant in person Respondents in person File Number(s): 2014/313606 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2014] NSWSC 1323 Date of Decision: 26 September 2014 Before: Young AJA File Number(s): 2013/206954 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] ex tempore Judgment 1. HIS HONOUR: Before me in the referrals list today is a notice of motion filed by Palermo Seafoods Pty Limited on 28 September 2015 whose substance is that it seeks leave to issue nine subpoenas in support of an appeal as of right which it has filed. 2. Today I have permitted, without opposition from the respondent, Mr Michael Fern to address on behalf of Palermo Seafoods. I note Mr Palermo has been present at the bar table while that has occurred. 3. Helpfully Mr Fern in the course of exchanges between me and him has indicated that he does not press two of the subpoenas, and in relation to a third (that is, a subpoena to Detective Senior Constable Duncan King) is content for it to be merely a subpoena to produce documents rather than also requiring that officer's attendance. 4. It is necessary to describe the way in which these proceedings come before me. There was a trial before Young AJA in over two days in May 2014 during which Palermo Seafoods was represented by solicitor and counsel. By reserved judgment on 16 June 2014 Young AJA gave answers to various questions and stood the proceedings over to permit either further submissions to be made or a further hearing to resolve them: Palermo Seafoods Pty Limited v Lunapas Pty Limited [2014] NSWSC 792. 5. There was a second hearing on 28 August 2014. Again, Palermo Seafoods was represented by solicitor and counsel. There was a further reserved judgment, delivered on 26 September 2014, the result of which was that the Court ordered Lunapas to pay Palermo Seafoods $9,500 but otherwise dismissed the proceedings with costs: Palermo Seafoods Pty Limited v Lunapas Pty Limited (No 2) [2014] NSWSC 1323. Palermo Seafoods filed a notice of intention to appeal, as was its right, and by notice of appeal filed 22 December 2014 has appealed to this Court. 6. To date, more than 10 months later, no red book has been prepared and no written submissions have been filed or served in support of the appeal on behalf of Palermo Seafoods. That in part is a consequence of interlocutory applications, which were twofold. The first was Lunapas' application to have the appeal dismissed as incompetent. That application was heard by JC Campbell AJA on 27 April 2015 and resolved, in substance favourably to Palermo Seafoods, on that day: Palmero Seafoods Pty Limited v Lunapas Pty Limited [2015] NSWCA 175. 7. Secondly, Lunapas' application for security for costs came before me on 25 May 2015 and was resolved by me on the basis that a considerably smaller amount ($20,000) than had been sought was required to be provided by way of security, pending which the appeal was stayed: Palermo Seafoods Pty Limited v Lunapas Pty Limited [2015] NSWCA 149. I have been told by the parties that that security was paid relatively recently, at the last callover before the Registrar. 8. No doubt those interlocutory applications are in large measure responsible for the fact that this appeal has not progressed substantially by way of red book and written submissions over the last 10½ months. I encourage the parties, especially the appellant, to focus upon the most important element of this appeal which is, as best it can, articulating in writing in accordance with the rules why it is it is said that the trial judge was appellably wrong. 9. The essential background to the litigation was described by JC Campbell AJA in the first interlocutory application in this Court to which I have referred at [9] – [19] in ways which, so far as I can see, are uncontroversial. Those paragraphs are as follows: "The proceedings below arose when the respondent had terminated the lease of premises in Tweed Heads that it had leased to the appellant. The appellant had conducted a business of selling seafood, and a seafood restaurant, in those premises. The decision in the matter was given by his Honour, Acting Justice Young. His Honour delivered two judgments. In the first judgment (Palermo Seafoods Pty Ltd v Lunapas Pty Ltd [2014] NSWSC 792) his Honour held that the lease had been terminated invalidly because it had been terminated two weeks early but that the appellant had not proved it had suffered any loss as a consequence of that termination. However, his Honour was not satisfied that all the questions involved in the case had been properly argued and so stood the case over for further submissions. The second judgment (Palermo Seafoods Pty Ltd v Lunapas Pty Ltd (No.2) [2014] NSWSC 1323) was given following those further submissions. The prayers for relief in the statement of claim included: '7. A declaration that on or about 8 May 2013 and the events that followed the first defendant and/or the second defendant held the assets of the business styled "Menniti Seafoods" conducted by the plaintiff at the premises, including plant, equipment and goodwill on constructive trust for the plaintiff. 8. An order that the first defendant and/or the second defendant account to the plaintiff for the assets of the business styled "Menniti Seafoods", and account to the plaintiff for any profit gained in consequence of the use of such assets. 9. An order that there be an inquiry as to the damages suffered by the plaintiff. 10. In the alternative Damages and/or Equitable damages. 11. Interest on any such damages.' The basis for that claim was that at the time that the lease was terminated the lessee still had plant and equipment in the premises. The statement of claim including the following allegations: '54. In consequence of such actions the first defendant repudiated the lease and option lease which repudiation was accepted by the plaintiff. Particulars On 10 May 2013 the plaintiff sought access to the premises to retrieve its plant and equipment specified in schedule B to this claim, which access was denied by the first defendant. 55. In consequence of such repudiation the plaintiff suffered loss and damage Particulars (a) The value of the business; and/or (b) Future profits; and/or (c) Plant and equipment as particularised in schedule B.' Schedule B to the statement of claim was a detailed list of items which the appellant claims to have been deprived. The schedule had a heading which stated it was the replacement value of those items which was being itemised, but a column heading said that it was the costs of the items that was being itemised. The total amount appearing in schedule B was over $520,000. The judge dealt with this issue at paragraphs [33] to [63] of his second judgment. Essentially he dismissed the claim because any such claim should have been brought in detinue or conversion, and the claim that the plaintiff had made in the statement of claim was that the items left in the premises were held by the respondent on a constructive trust. All of the grounds of appeal relate to the primary judge's dismissal of the claim concerning the items that remained in the premises. Those grounds all contend, in essence, that the judge should have dealt with the claim concerning the items that had been left in the premises and given judgment for the appellant concerning them. There was evidence before the judge prepared by an accountant, Mr Joel Gargiulo, which estimated the value of certain fixed assets connected with the seafood business at $285,000 written down value, and that in addition there was approximately $60,000 worth of stock. It appears - although this is not altogether clear - that the appellant also gave some evidence of the replacement value of the assets as being a little over $520,000 and that there was approximately $60,000 worth of stock. There is evidence before me today, but which Mr Wright, counsel for the respondent, tells me was not before the judge, that the fair market value and continued use of the fixed-assets in October 2013 was a little over $184,000, but that their forced liquidation value was a little over $44,000." 1. I turn to the motion which has come before me. The starting point is that the motion is in support of an appeal. Appeals are ordinarily heard and determined by reference to the evidence that was tendered before the primary judge. To that, s 75A of the Supreme Court Act 1970 (NSW) provides two exceptions. One, commonly known as "fresh evidence", applies in relation to matters occurring after the trial or hearing: s 75A(9). I have gone through each of the seven subpoenas that are pressed and all of them essentially relate to matters which were at the heart of the issues before Young AJA, namely, the circumstances in which the landlord retook possession of the premises in northern New South Wales. 2. The second exception is often described as "further evidence". It is authorised by s 75A(7) however, there is a proviso to that section in subs (8) which is in the following terms: "Notwithstanding subsection (7), where the appeal is from a judgment after a trial or hearing on the merits, the Court shall not receive further evidence except on special grounds." 1. In Akins v National Australia Bank (1994) 34 NSWLR 155 at 160 Clarke JA, with whom Sheller JA agreed, formulated what he described as "well understood general principles" on which the question of "except on special grounds" was to be determined. His Honour said as follows: "These principles require that, in general, three conditions need be met before fresh evidence can be admitted. These are: (1) It must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; (2) The evidence must be such that there must be a high degree of probability that there would be a different verdict; (3) The evidence must be credible." 1. Those principles have often been applied: see for example Tjiong v Tjiong [2012] NSWCA 201 at [165]-[176] and the decisions there referred to. 2. I turn to the seven subpoenas that are pressed. 3. The first is to an individual associated with a Telstra shop in Beenleigh in Queensland. It seeks an original or copy of the authority from Palermo Seafoods transferring two telephone numbers of the business of Menniti Seafoods to a third party, a call log of those two numbers from 28 March 2013 to present, and the individual's authority to act as an agent of Telstra Corporation. 4. The second is to the New South Wales Office of Liquor, Gaming and Racing. This document seeks a copy of the request by Palermo Seafoods via their solicitor not to assign the licence to a third party, a copy of the liquor licence registered to certain premises at Tweed Heads, the termination date of the licence in the name of Joe Palermo, the commencement date of the next licence issued immediately after termination of Palermo Seafoods, and any authority that may have been given regarding the assignment or termination of the said licence in the name of Menniti Seafoods. 5. It will be clear that both of those subpoenas are directed principally to the transfer of telephone numbers, fax numbers and the liquor licence that occurred at around about the time that possession was retaken of the premises. 6. The third is addressed to Queensland Transport. It seeks copies of the transfer of registration and ownership of a particular vehicle (a black Landcruiser) from F and F Palermo Leathergoods Pty Ltd to its next owner, and the registration details of a forklift registered to Palermo Seafoods. 7. The fourth subpoena is addressed to Detective Senior Constable Duncan King and seeks copies of a police report for a lockout attended by police on 8 May 2013, a request from Ray White to attend the lockouts of 28 March and 8 May 2013 if any, any other request by third parties to attend those lockouts, and the name of a police officer responsible for giving information of the police report to a loss adjuster in reference to his enquiry regarding Axis' claim over loss of plant and equipment and stock of Palermo Seafoods. 8. It is that subpoena which Mr Fern has told me he is content to rely upon merely as a subpoena to produce documents. The documents all evidently relate to the retaking of possession in March and May 2013. 9. The next subpoena is addressed to "Mr Greg Flower/ACE IRM Insurance Broking Group Pty Ltd" in Queensland. The subpoena seeks the production of five categories of documents, namely a copy of the request by Palermo Seafoods or J Palermo asking to inform the relevant insurance parties to the lockout, a copy of the old insurance policy of Palermo Seafoods trading as Menniti Seafoods that was recommended Palermo Seafoods renew after the lockout, any association or correspondence with Lunapas or Mr Menniti that would hinder the policy of Palermo Seafoods, any assignment of policy of either Palermo Seafoods or Lunapas prior to, during or after the lockouts of 28 March or 28 May 2013, and copies of all emails to and from both Joe Palermo and Palermo Seafoods and also emails to and from any third party insurer from January 2013 to present. 10. With the exception of the very broad final category, once again it is plain that the documents are targeted at the events surrounding the lockouts and dispossession of 28 March and 8 May 2013. It is also sought for Mr Flower to attend to give evidence. 11. Another subpoena in the same category is one addressed to "Ray White/Jarryd Hodge" (I have also been asked to provide an order for substituted service in relation to this subpoena). The subpoena seeks four documents: a copy of the management agency agreement in relation to the premises, a copy of a ledger used to evict Palermo Seafoods, a copy of the eviction notices for the events dated 28 March and 8 May 2013, and the name of the police officer contacted that was responsible for attending the lockouts on 28 March and 8 May 2015 (sic, 2013). It is noted that it also sought for there to be attendance by Mr Hodge in answer to that subpoena. 12. The final subpoena is addressed to "John Rossiter/Anyar Consulting", who was described as a "book keeper", presumably associated with Lunapas. It again seeks four documents, but is in quite broad terms. It seeks: a copy of all company documents for Lunapas from November 2006 to present in his care, a copy of the professional licence or licence used by him regarding Menniti Seafoods for the premises in Tweed Heads, a copy of the company books of Lunapas, if any, held by him, and a copy of his authority to act for Lunapas and a copy of his appointment by Lunapas to act upon their behalf regarding the tenancy of Palermo Seafoods in Tweed Heads. 13. It is plain that although the majority of the documentary production sought by those subpoenas is quite targeted, and, perhaps, could in substance be complied with without undue burdening of the addressees, a point made by Mr Fern, the threshold difficulty faced by Palermo Seafoods on this application is the first general principle identified by Clarke JA in Akins. There is no evidence whatsoever before me that the documents sought by the proposed subpoenas, which are directed quite closely to the events of March and May 2013, could not have been obtained with reasonable diligence for use at the trial which took place in the middle and towards the end of 2014. 14. The explanations that have been provided from the bar table as to the relevance of the series of enquiries that are sought to be made through these subpoenas include an examination of the stamp duty paid on the transfer of the vehicle, a question about whether the authority given to Mr Hodge to act for Lunapas was in fact given by Mr Menniti in his personal capacity, or in the capacity of the company, (it was said that if the former, the authority would be void), questions about whether documents had been forged in relation to the transfer of some of the intangible property of Palermo Seafoods and, especially, whether the ledger amounts relating to the claim of unpaid rent were reliable and should, in the circumstances that eventuated in March and May 2013, have been relied upon. 15. Those submissions confirm what flows from the face of the classes of documents sought by the proposed subpoenas, namely, they relate to evidence that was such that it could have been obtained with reasonable diligence for use at the trial. 16. To that there is an exception. Although there is no evidence about it, I have been told from the bar table by Mr Fern that in relation to one of the documents sought from Axis Insurance Brokers (this corresponds to one of the subpoenas that is no longer pressed), following a series of requests and, so I have been told, the intervention of an Ombudsman, a report that has been sought has now been obtained. 17. To the extent that there are documents in the possession of Palermo Seafoods that they wish to tender on the appeal, by way of fresh or further evidence, no subpoena is needed. That is not to say that the tender will be unopposed or will be admitted by the Court of Appeal. But that is not a matter for me. The only question before me is whether leave should be granted to issue the subpoenas. 18. The essential point is that the purpose of subpoenas, issued in aid of an appeal, must be that there is an apprehension that documents will be produced that are capable of being tendered on appeal in accordance with the principles enunciated in s 75A(7) or (9), and the general principles stated by Clarke JA in Akins. 19. There is no basis on which I can conclude that the issue of the subpoenas in the terms proposed could result in the production of documents that could satisfy even the first principle that was enunciated by Clarke JA to which I have referred, namely, that the evidence could not have been obtained with reasonable diligence for use at the trial. It is not for me to express a view one way or the way other as to the circumstances in which solicitor and barrister, formerly retained by Palermo Seafoods, did not take steps to obtain the documents presently sought during the trial and I am not to be taken to be expressing a view one way or the other in relation to that. 20. There is insufficient material presently before me by way of the submission sought to be advanced on appeal by Palermo Seafoods for me to form a view whether the second cumulative principle enunciated by Clarke JA in Akins, namely whether the evidence must be such that there is a high degree of probability that there would be a different verdict. I mention that by way of completeness only, in case in the future some application is made to renew an application for leave to issue subpoenas. 21. As noted above, several of the proposed subpoenas also sought the attendance of a witness to give evidence. What it is that the witness was expected to say, was not something that Mr Fern was able to give me or Lunapas a clear explanation. As best I can see, the evidence that was sought to be adduced once again would relate to matters which were central to the controversy between the parties, the retaking of possession in March and May 2013. 22. There are other reasons why I would be extremely reluctant to grant leave to issue subpoenas ad testificandum in the way that Palermo Seafoods has sought, but it is sufficient for present purposes to say that I am not satisfied that the testimonial evidence that could be given would satisfy the test of fresh or further evidence. 23. Paragraph 1 of the notice of motion that is before me today is in these terms: "To accept affidavit of Frank Palermo". That affidavit, which is twelve paragraphs occupying three pages, has been filed. So that the position is clear, although the affidavit was permitted to be filed on 28 September 2015, nothing I have said today bears upon the question whether it is to be included by way of fresh or further evidence in the material before the Court of Appeal when this appeal is finally heard and determined. 24. For those reasons I will dismiss the notice of motion filed 28 September 2015. [DISCUSSION AS TO ORDERS] 1. The formal orders are: 1. Dismiss the notice of motion filed 28 September 2015. 2. Order that Palermo Seafoods Pty Limited pay the respondents' costs of that notice of motion. 3. Note that one copy of each of the seven draft subpoenas the subject of the motion be kept in the file and marked MFI 1. 4. Remaining copies of the subpoenas can be returned to Mr Fern. 5. Note that the matter has been stood over for further directions on 18 November 2015. ********** 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. Decision last updated: 19 November 2015