Agostino and Co Solicitors and Anor and Colville
[2014] FCCA 3127
•23 July 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| AGOSTINO & CO SOLICITORS & ANOR & COLVILLE | [2014] FCCA 3127 |
| Catchwords: FAMILY LAW – Practice and procedure – subpoena for the production of documents by a third party solicitor – issues as to form or validity of the subpoena – application for costs incurred in complying with the subpoena. |
| Legislation: Family Law Act 1975, s.117 |
| Expense Reduction Analysts Group Proprietary Limited & Armstrong Strategic Managing and Marketing (Norton Rose Litigation) (2013) 303 ALR 199 Weir & Weir [1993] FLC 92-338 Black & Kellner [1992] FLC 92-287 Prantage & Prantage [2013] FamCAFC 105 |
| First Applicant: | AGOSTINO & CO SOLICITORS |
| Second Applicant: | MS COLVILLE |
| Respondent: | MR COLVILLE |
| File Number: | PAC 5181 of 2013 |
| Judgment of: | Judge Harman |
| Hearing date: | 23 July 2014 |
| Date of Last Submission: | 23 July 2014 |
| Delivered at: | Parramatta |
| Delivered on: | 23 July 2014 |
REPRESENTATION
Counsel for the Applicant: Ms Obradovic
Solicitors for the Applicant: Agostino & Co Solicitors
Solicitors for the Applicant: LCI Legal
Solicitors for the Respondent: Adams & Partners Lawyers
ORDERS
Leave is granted to the solicitors for the wife to amend the subpoena issued at their request 16 May 2014 and so as to replace and substitute the recipient thereof as being Patrick Agostino trading as Agostino & Co. Solicitors.
The husband shall pay to Patrick Agostino trading as Agostino & Co. Solicitors:
(a)Costs in the sum of $770 representing the cost of compliance with the subpoena; and
(b)Costs in the sum of $1500 incurred with respect to today’s attendance.
Such costs to be paid within 28 days of today’s date being in the sum of ($2270).
Otherwise dismiss the Application in a Case filed 22 July 2014 and remove it from the list of cases awaiting finalisation.
Leave is granted to the parties and each of them to issue such further subpoena as they may consider relevant appropriate or useful and such leave expressly authorises and allows the issue of more than five subpoenas.
IT IS NOTED that publication of this judgment under the pseudonym Agostino & Co Solicitors & Anor & Colville is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT AT PARRAMATTA |
PAC 5181 of 2013
| AGOSTINO & CO SOLICITORS |
First Applicant
| MS COLVILLE |
Second Applicant
And
| MR COLVILLE |
Respondent
REASONS FOR JUDGMENT
The proceedings
These are proceedings between Ms Colville, who is the Applicant and former wife and Mr Colville, the Respondent and former husband to a marriage which founds the jurisdiction of the Court to deal with issues of property adjustment.
The Application before the Court today is not directly related to the subject matter of those proceedings.
The proceedings come before the Court today by way of an Application in a Case filed by a third party, being a practising solicitor who is the recipient of a subpoena for the production of documents.
Some issue arises as to the form or validity of the subpoena.
Both parties are legally represented and appear with their attorneys today. The husband’s attorneys appear by leave, having previously been granted leave to withdraw. Their instructions are far from complete and that has been made clear by counsel appearing on the husband’s behalf.
Counsel also appears and represents the solicitor who agitates for certain relief in accordance with the Application in a Case, namely:
a)That the subpoena be amended so as to comply with rule 15A.02 of the Federal Circuit Court Rules 2001;
b)That the wife pay the costs of the recipient of the subpoena incurred in complying with the subpoena; and
c)An order for costs of and incidental to the Application.
Thus there are in effect, two separate and distinct applications for costs.
History of the issue
The subpoena, the subject of the Application, was filed 16 May 2014.
The subpoena requires the production of documents by no later than 30 May 2014.
Service was to occur by 20 May 2014. It is clear that the subpoena was served on or about 16 May 2014. A copy of the correspondence which was served with the subpoena is attached to one of the two Affidavit’s filed in support of the Application in a Case. That letter purports to enclose, by way of service, the subpoena, a brochure produced by the Court regarding compliance with subpoena’s together with “conduct money in the sum of $30.00”.
The difficulty which arises with respect to that suggested provision of conduct money is that no such conduct money was in fact provided.
Annexed to the second of the Affidavit’s filed in support of the Application in a Case is a copy of the cheque, which in fact accompanied that correspondence. It is made payable to the recipient and is for a sum of $30.00. The cheque is not dated. Thus it is not a negotiable instrument capable of presentation and thus no conduct money accompanied the subpoena.
What flowed following receipt of the subpoena is somewhat unusual.
It would appear that on 29 May 2014, being the day prior to the required date for production; correspondence was forwarded from the recipient to the solicitors for the wife, who had caused the issue of the subpoena. The correspondence sought costs in the sum of $1,540 with respect to compliance. The cheque, undated, was returned.
It would seem that the deficiency with respect to the cheque was then corrected and the cheque, as originally drawn and now dated 16 May 2014, was returned to the recipient.
Further communication has then occurred between the parties.
On 3 June 2014, after the date fixed for compliance, correspondence was forwarded by the recipients of the subpoena addressed to the Registrar of the Federal Circuit Court of Australia. That correspondence was directed to my Chambers and dealt with by my Associate. It raised the same issue as regards the claim for costs and sought that an order be made by the Court requiring payment of the sum of $1,540 to cover those costs as sought.
Upon receipt by my Chambers of that correspondence a response was provided by my Associate advising:
It is inappropriate for this correspondence to be forwarded to Chambers. The issue raised in the correspondence should at first instance be raised with the firm who has issued the subpoena and if deemed necessary an objection to the subpoena lodged.
No objection has been filed.
The Court is advised that material has now been produced which answers the subpoena. A Notice of Request to Inspect has not yet been filed.
Following the date for production, these proceedings came before the Court on 3 July 2014. On that date and in addition to leave being granted to the husband’s attorneys to withdraw from the proceedings, a number of further orders and directions were made. They included the following order:
(8)The recipient of the above subpoena or their legal representatives shall appear before the Court 23 July 2014 to explain their non-compliance therewith and to afford them the opportunity to be heard as to why one or more of the following should not occur:
(a) An order for costs against that practice and in favour of the wife in relation to the subpoena;
(b) A referral to the Legal Service Commissioner of the principles of that practice regarding their apparent wilful non-compliance with the subpoena and process issued by the Court.
What is concerning, whilst I do not suggest that the order was inappropriate in the circumstances, is that the full circumstances relating to the subpoena, including that related above regarding the non-dated cheque and claim for fees, were not made known to the Court by the wife’s attorneys.
A further issue arises, and as was raised by the Court on 3 July 2014, as to the description of the recipient of the subpoena. The recipient is a legal practice. They are described by the trading name of the practice.
On 3 July 2014 the Court had specifically raised the question of whether the practice operated as a partnership or an incorporated legal practice, as whilst different descriptors would apply, it was clear that identification of the recipient by a trading name would not be sufficient. A registered business name is not a legal or personal identity in the fashion of a corporation or partnership.
Those issues are, at least in part and substantially so, the basis upon which the order is sought by the recipient for amendment of the subpoena, which order is irresistible. Indeed, compliance with the subpoena or sanction for non-compliance, absent such amendment, would be problematic.
The subpoena having now been complied with and the amendment being sought and conceded, the issue that remains relates purely to costs. A number of matters arise with respect thereto which will be addressed shortly.
A further and fundamental issue arises regarding disclosure and discovery and thus the identity of the person who should meet any order for costs as might be made by this Court in relation to the subpoena.
Thus I propose to deal with the three separate issues being:
a)Cost of compliance;
b)Costs of today; and
c)Who should be liable for any costs ordered?
Cost of compliance
The Federal Circuit Court Rules provide specifically for the payment of costs as regards compliance with a subpoena.
Rule 15A.07 provides that conduct money must be provided “…sufficient for return travel between the place of residence or employment (as appropriate) of the person subpoenaed and the court”. That conduct money must be at least $25.
Clearly, at the time that the subpoena was served, conduct money was not provided. It has since been provided and would appear to comply with the relevant rule. No issue is raised that it does not, so far as the cost of travel is concerned.
However, the Rules also provide at rule 15A.10, that the Court may make an order for costs with respect to “any loss or expense incurred in complying with a subpoena”.
At rule 15A.11 provision is made for the costs of complying with a subpoena by a non-party. It provides clearly that if a subpoena is addressed to a person who is not a party and before complying with the subpoena the person who is being subpoenaed issues a notice, (presumably to the person who has served the subpoena upon them and caused its issue) that substantial loss or expense would be incurred in properly complying with the subpoena and including an estimate of loss or costs and if the Court is satisfied that the substantial loss or expense is incurred, that the Court may then make an order to reimburse that cost.
The rule then directs the Court to the Supreme Court scale with respect to witness expenses and allowances in fixing and determining that amount rather than by reference to the Federal Circuit Court Rules.
The relevant Supreme Court Schedule of Expenses (NSW) need not be considered in any significant detail. There would not appear to be any specific provision regarding the cost of compliance with subpoena but rather attendance by experts and others and allowances to witnesses.
The allowance to witnesses in table 3 part 48 provides that the allowance for a barrister or solicitor or other professional attending as a witness is $76.
Further provision is included at part 49A in relation to such persons attending to give evidence being a slightly more generous amount of $116.
What is sought in relation to the cost of compliance is an amount of $770. That is made up of two hours of the professional’s time at a rate of $350 per hour plus GST.
The Court’s jurisdiction to make an order for “costs” in this circumstance relates to loss and expense.
It would be plausible to argue that the lost opportunity to apply the relevant professional charge out rate to time that is not so applied but rather is devoted to compliance with a subpoena, is a “loss or expense”.
It is certainly a lost opportunity to apply that time for the primary purpose of the practice.
As regards the charge out rate, I have no difficulty with it. Clearly, the attorney is highly qualified and experienced and there is no realistic basis to suggest, within the context of the legal market, that the charge out rate is unusual or excessive. Indeed, it would appear to be, for the level of experience of the attorney, modest. That is not to become embroiled in any dispute regarding the general level of legal fees and remuneration but purely to acknowledge its place and appropriateness within the marketplace.
The issue also arises as to what is required regarding compliance with a subpoena. It is instructive to consider the material that is sought being “All documents, deeds, files and contracts from 1 January 2010 to date” relating to five individuals or entities and relating to 10 specific transactions of either purchase or sale of commercial property or real estate. In addition, documents are sought with respect to wills and probate issues relating to the estate of the late Mr Colville.
Clearly, the documents that are required to be produced are substantial. As counsel for the subpoenaed attorney has made clear, there is some real requirement for legal attention to be applied to compliance with the subpoena. What is required to comply with the subpoena is to ensure that all documents within “the possession, custody or control” of the recipient and which fall within the category or classes of documents requested are produced.
There is real force to counsel’s submission that the eye of a solicitor and their experience, qualification and training would be required to determine full compliance, lest there then be a suggestion that there has been something other than full compliance or the production of documents which could not or need not be produced or might be the subject to some claim for privilege. It is not sufficient or appropriate to simply retrieve the files and send them.
In light of that which is sought by the subpoena, not having sighted that which has in fact been produced, but accepting that it will reflect that which is sought, it is entirely reasonable that it would take some two hours for a person to properly review that material.
In those circumstances, I do not have any difficulty with:
a)The amount of time that is suggested to have been required to comply with the subpoena;
b)The qualification of the person who has reviewed the material, (even if they have had some assistance from less-qualified persons) in extracting those records from storage; and
c)Thus, the quantum that is sought being $770.
Costs with respect to the subpoena
One is reminded of the judgment of the plurality of the High Court in Expense Reduction Analysts Group Proprietary Limited v Armstrong Strategic Managing and Marketing Proprietary Limited (2013) 303 ALR 199, what I will refer to hereafter as the Norton Rose litigation. That case, whilst it involved issues inter partes with respect to disclosure and discovery and within the context of the Uniform Civil Procedure Rules 2005 (NSW) would and should have given some clear guidance to all as to the approach which should be adopted to issues of this nature.
It is to be noted that the wife’s attorneys and the recipient of the subpoena are both practising solicitors. Thus, one would think that not only the rules and various requirements of statute would be observed, but their spirit. Whilst these proceedings and this issue are not dealt with under the Uniform Code of Civil Procedure but under the Federal Circuit Court Rules, their honours’ dicta is still highly relevant.
As their Honours indicate at paragraph 64 to 67, these are matters which can and should be dealt with appropriately and between parties without the need for the Court’s involvement.
The Federal Circuit Court Rules, in relation to the right and the entitlement to make a claim for fees, are clear.
It is suggested by the subpoenaed attorneys that upon the first estimate of costs being provided, seeking twice that which is now sought, that there was deafening silence from the wife’s attorneys. They may have been dumbstruck.
What is clear is that the parties to this issue simply did not communicate with each other. It is a matter that could and should have been properly and effectively resolved between them.
I am also troubled that certain aspects of the history, which would not now appear to be in dispute, were not made known to the Court previously and thus order 8 of the orders made 3 July 2014 to which I have referred, is drafted deliberately so, in the most directive of terms.
Whilst certainly that has been effective in obtaining an attendance by the solicitors for the recipient firm, it would appear that the attendance may not have been wholly necessary, particularly to the extent that a suggestion was raised from that which was before the Court on 3 July 2014 that there was, as is described in the order, apparent wilful non-compliance with the subpoena.
It would appear that this view, formed on the evidence then available, might not have been formed if all relevant material had been disclosed.
As their Honours comprising the High Court in the Norton Rose Litigation made clear, rules with respect to matters of this nature should not be necessary. It may be necessary for such rules as regards non-practitioners, but these lawyers should have sorted this issue out between themselves.
What their Honours indicated, which harks to a nostalgia for a day, it would seem, regrettably past, is as follows:
(66) In the not too distant past it was understood that acting in this way obviates unnecessary and costly interlocutory applications. It permits a prompt return to the status quo and thereby avoids complications which may arise in the making of orders for the rectification of the mistake and the return of documents.
In this case, clearly no issue arises with respect to mistaken return of documents. But what was sought by each attorney was clear.
The issue in relation to the description of the recipient could readily and easily have been addressed by two attorneys picking up the phone and speaking to each other rather than, being entirely inconsistent with the Court’s protocols regarding communication with Chambers, embroiling the Court in the dispute or seeking to. All that has resulted is that parties have had a standoff. That has led to the consequence of the matter now being before this Court, occupying court time and incurring cost for both parties and for the third party and taxpayers.
The other concern, as already indicated, is that the attendance today by the third party’s counsel is necessary. They were directed to ensure an appearance occurred on the basis of apparent concerns in relation to their behaviour but based upon an incomplete version of events. In those circumstances, I am satisfied that an order can and should be made with respect to today’s appearance.
That is tempered and to a large extent, limited by two factors:
a)Firstly, the process which could and should have been followed by the attorneys who had been subpoenaed, i.e. filing a Notice of Objection, which would have brought the matter before the Court far more promptly. Indeed, the matter could have been dealt with on 3 July 2014 on that basis and through either striking out the subpoena for the deficiencies identified (both as to the description of the recipient and absence of conduct money) or remedying those matters and dealing with the issue of cost. Instead, the matter has come before the Court on a separate Court event with an Application in a Case and all parties and the Court put to considerable expense.
b)Ordinarily an order for costs with respect to a court appearance, even if involving a third party, would be dealt with under section 117 of the Family Law Act 1975. I note that as the third party recipient is not a party, the general principle in section 117(1) would not and could not apply.
The Court is left with the general discretion in section 117(2) to make an order for costs, having considered the non-exhaustive but prescriptive list of considerations in subsection (2)(a).
I do not propose for one moment to delve into the financial circumstances of the third party recipient. It would be imprudent to do so. However, the wife is suggested, particularly in the correspondence that has passed between the parties, to be impecunious and thus not in a position to meet costs.
The order for costs that is sought does not specify as to whether it is sought against an attorney or against the wife. In the absence of specification, I do not propose to deal with it as the former. The circumstances in which the issue has arisen are, as described above, somewhat curious.
The matter can and should have been dealt with by people picking up the telephone and speaking to each other. If that had occurred, then surely a sensible and commercially realistic determination of the issue could have been made inter partes without the need for the Court’s involvement.
Cost has been incurred in attending court. The Court has been greatly assisted by the submissions of counsel appearing for the third party. In those circumstances, I do propose to make an order for costs.
I do not propose to make any costs order with respect to the preparation as that could have been addressed through lodging a Notice of Objection.
I certainly propose to make an order for costs with respect to the attendance at a half-day hearing, being $997 together with the advocacy loading provided by item 12 of schedule 1, which would produce an amount of $1495.50, which I will round to $1500. Clearly, disbursements have also been incurred, which some modest contribution towards can be made by the $4.50 rounding up.
Who should be liable for costs
The fundamental issue that arises here, particularly as regards costs of compliance with the subpoena, relates to issues of disclosure and discovery in these proceedings. Thus, regrettably, some short time must be spent examining those issues.
These proceedings were commenced by the wife by an Application filed 29 November 2013. A Response was filed by the husband on 28 March 2014, some five months later.
During the course of the proceedings, the husband has been less than diligent in his attending to his obligations. He appeared with his counsel on 4 February 2014, but had not filed any material. It is unclear when service occurred, but clearly some little time prior to that. The Federal Circuit Court Rules provide a period of 14 days for the filing of a Response, Affidavit and Financial Statement following service.
When the matter was next before the Court on 28 March 2014, the proceedings were advanced by an order being made for the parties to attend a Conciliation Conference with a Registrar on 2 June 2014. A number of interim orders were made on that occasion as well.
The parties attended a Conciliation Conference with a Registrar. However, the Conference did not proceed. The Registrar’s bench sheet commences with, “Parties attended, husband has not complied with disclosures [sic]”. Accordingly, the proceedings were referred back to my list and came before the Court on 3 July 2014.
As a consequence of non-disclosure by the husband, the subpoena was issued seeking to obtain documents, which should and could have been disclosed by the husband. They are by and large, documents that would have been in the husband’s “possession, custody or control”.
There is some controversy as to whether pre-action procedures under the Family Law Rules 2004 apply in this Court. However, rule 1.05 of the Federal Circuit Court Rules would appear at least on its face, to import those provisions. Lest I am wrong in that regard, clearly, under the Federal Circuit Court Rules, there is an obligation for disclosure. Both parties are required by part 14 to give full and proper disclosure.
Whilst this Court’s procedures are intended to be more informal and thus, a declaration is required before parties are entitled to administer interrogatories or seeking formal discovery, the same obligation for full and frank disclosure of all documents within a party’s possession, custody or control arises.
The obligation for full and frank disclosure is spoken to by authorities such as Weir & Weir [1993] FLC 92-338, Black & Kellner [1992] FLC 92-287 and the like. Clearly, the husband has failed to comply with his obligation of disclosure, thus necessitating the issue of the subpoena.
The husband did not attend on 3 July 2014 and had not instructed his solicitors sufficiently to enable them to continue to act. He is in the process of seeking to do so now. However, that simply compounds the difficulties. The Court does not have any input from him with respect to this issue.
If the husband’s obligation of disclosure had been met then it would have obviated the need for the issue of the subpoena at all and thus, the issues which have arisen.
If a party does not give proper disclosure and in an attempt to fill the void created thereby it is necessary to issue subpoena for production of the documents which can and should have been disclosed and produced, then any such party, in default of their obligations, can and should expect to be liable for the costs unnecessarily incurred in issuing and obtaining compliance with the subpoena.
I am satisfied that the husband should be liable for and in effect, indemnify the wife as regards any order for costs that is made in the proceedings with respect to the subpoena. The preferable course would be to make an order that the wife be liable for costs and the husband indemnify her. However, that would further complicate issues for these parties.
In the event that the wife did not satisfy the terms of any order as to payment of costs, the third party recipient would be entitled to commence proceedings in a court of civil claims to recover the amount, which would total $2270. The wife would be entitled to file a third-party notice seeking to activate and rely upon the indemnity with respect to the husband and thus, join him as a third party. However, it would not preclude judgment being entered against her.
I am satisfied the appropriate course to give life and effect to such an indemnity is to make an order that the husband meet those costs in first instance and thus, removing the wife from the transaction. For those reasons I propose to make orders as follows.
1. Leave is granted to the solicitors for the wife to amend the subpoena issued at their request 16 May 2014 and so as to replace and substitute the recipient thereof as being Patrick Agostino trading as Agostino & Co. Solicitors.
2. The husband shall pay to Patrick Agostino trading as Agostino & Co. Solicitors:
a. Costs in the sum of $770 representing the cost of compliance with the subpoena; and
b. Costs in the sum of $1500 incurred with respect to today’s attendance.
3. Such costs to be paid within 28 days of today’s date being in the sum of ($2270).
4. Otherwise dismiss the Application in a Case filed 22 July 2014 and remove it from the list of cases awaiting finalisation.
5. Leave is granted to the parties and each of them to issue such further subpoena as they may consider relevant appropriate or useful and such leave expressly authorises and allows the issue of more than five subpoenas.
Finally, it is germane to note that the above orders, particularly as regards the costs of today’s appearance, would have some analogy to the discussion of the Full Court in Prantage & Prantage [2013] FamCAFC 105 regarding indemnity costs.
The costs which have been incurred with respect to the subpoena have been incurred without the husband’s involvement. Indeed, on the basis of the criticisms that I had raised as to how the matter has been addressed by both sets of attorneys, they are clearly costs to which the husband has had no input. He may have sought to deal with the issue differently.
However, I am satisfied that it remains appropriate for such an order to be made. The failure of the husband to meet his primary obligation for disclosure is that which sparked the set of transactions. Had the husband sought to diligently participate in these proceedings or to diligently provide disclosure, none of the issues would have arisen.
Thus, I am satisfied that these circumstances are separate and distinct to that which is spoken of in the line of authorities to which the Full Court refers in Prantage & Prantage regarding “indemnity” and the order is and remains appropriate.
I certify that the preceding eighty-eight (88) paragraphs are a true copy of the reasons for judgment of Judge Harman
Associate:
Date: 24 February 2015
Key Legal Topics
Areas of Law
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Civil Procedure
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Family Law
Legal Concepts
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Costs
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Discovery
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