Vaccaro sued Flammia, a solicitor, for professional negligence because a Certificate of Title was taken from the solicitor’s office and used to fraudulently obtain a mortgage. This was an interlocutory judgment on an application by Vaccaro to join LawCover to the proceedings as it had refused cover.
Flammia’s practicing certificate was suspended on or about 29 May 2006 and he became bankrupt in November 2007. Johnson J noted he was unlikely to appear or participate in the proceedings. LawCover opposed the application submitting the conduct of Flammia fell within the fraud exception in the LawCover policy of insurance.
By late 2000, Mr Flammia was acting as solicitor for a Mr Angelo Antonio Caradonna (“Caradonna”). Documents tendered in the case provide ample evidence of the direct involvement of Caradonna in the fraudulent mortgage transaction.
LawCover submitted that the findings of Emmett J in Colonial Mutual Superannuation v Flammia (No. 2)  FCA 1655 and Colonial Mutual Superannuation v Flammia (No. 3)  FCA 2104 demonstrated a fraudulent relationship between Mr Falmmia and Mr Caradonna in 2001 and 2002 in such manner which entitled LawCover to decline indemnity to Mr Flammia upon the dishonesty or fraudulent conduct basis. LawCover submitted that this was an important finding given the evidence concerning the use of Vacarro’s Certificate of Title in this case. LawCover also submitted that the making of a Fidelity Fund claim by the Vaccaro’s represented an admission on their part that dishonesty was involved on Flammia’s part.
LawCover also relied on the judgment of Young CJ in Eq in Vella v Permanent Mortgages Pty Limited  NSWSC 505 in support of an argument that there was a fraudulent and dishonest relationship between Flammia and Caradonna in 2006 (after the fraudulent mortgage was obtained in this case).
LawCover submitted that there was a pattern of dishonest and fraudulent conduct between Flammia and Caradonna, before and after the fraudulent mortgage, so that the Court may readily conclude that Mr Flammia was involved in a dishonest and fraudulent way, directly or indirectly, in the taking and unauthorised use of the Certificate of Title in this case.
Vaccaro submitted that LawCover did not present any evidence which demonstrated that Flammia, notwithstanding his connection with Caradonna, was either directly or indirectly involved in the dishonest removal of the Certificate of Title from Flammia’s office.
Johnson J found that there was no direct evidence of Flammia’s dishonest or fraudulent involvement in the removal of the Certificate of Title from his office or subsequent transaction. Thus leave was granted to Vaccaro to commence proceedings against LawCover and LawCover were joined as a party to these proceedings.