Apsara Capital Pty Ltd – application by Geoffrey Tauber for costs as examinee under s 596B.

[2013] VSC 82

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IN THE SUPREME COURT OF VICTORIA		Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT
CORPORATIONS LIST

S CI 2012 3137

IN THE MATTER OF APSARA CAPITAL PTY LTD (IN LIQUIDATION) ACN 133 895 457

ROSS ANDREW BLAKELEY (in his capacity as liquidator of Apsara Capital Pty Ltd
ACN 133 895 459 (in liquidation)) Plaintiff

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JUDGE:	GARDINER AsJ
WHERE HELD:	Melbourne
DATE OF JUDGMENT:	1 March 2013
CASE MAY BE CITED AS:	Apsara Capital Pty Ltd – application by Geoffrey Tauber for costs as examinee under s 596B.
MEDIUM NEUTRAL CITATION:	[2013] VSC 82

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr Luxton	Arnold Bloch Leibler
For the Examinee,  Mr G Tauber	Mr Maclaren (Solicitor)	Meerkin & Apel

HIS HONOUR:

1. On 15 June 2012 Geoffrey Tauber was summonsed pursuant to s 596B of the Corporations Act 2001 (“the Act”).  The summons required Mr Tauber to produce a range of documents in relation to transactions between Stewartville Pty Ltd, a company controlled by him and Apsara Capital Pty Ltd (in liquidation), the company whose affairs were the subject of the examination.

1. Mr Tauber produced documents in response to the summons and he was examined by Mr J Peters SC, Senior Counsel on behalf of the liquidators on 12 September 2012.  The examination of Mr Tauber was relatively brief.  At the conclusion of the examination Mr Tauber’s solicitor, Mr Maclaren from the firm Meerkin & Apel sought an order that Mr Tauber’s costs of the examination be fixed.  He indicated that despite communications with the liquidator’s solicitors there had been no agreement on the amount of such costs.  Mr Maclaren sought an order that such costs be fixed at $15,982.47.  Mr Maclaren relied on an affidavit sworn by him on 12 September 2012.

1. Both the liquidator’s lawyers and Mr Maclaren had considered my reasons in the case of McVeigh in his capacity as liquidator ofMedici Institute Pty Ltd (in liquidation) v Brumley [2009] VSC 668 in which I collected and considered the line of the authorities dealing with the issue of recoverability of expenses by examinees summoned under s 596B of the Act.

1. At paragraph [16] of Medici I summarised what appeared to be the position on a review of the relevant authorities.  

i.If the examinee is not directly concerned in the management of the company, he or she is entitled to the cost of attendance at the examination and in gathering together the documents, but not costs for his  legal representation (Re Equiticorp Finance Ltd; Ex parte Brock (1992) 6 ASCR 725 (“Brock No. 1”) at 734). [1]

ii.An examinee is not entitled to be awarded an hourly rate which includes a profit margin. A more appropriate scale is that applying to allowances to witnesses in the Court rules (Brock No. 1 at 734).

iii.Examinees who are not concerned with the management of the company are entitled to be paid for their out of pockets in a reasonable search for material and in attending the examination (Brock No. 1 at 734).

iv.Generally, the preferable procedure in regard to documents is that the liquidators should be given the documents to copy at their own expense although examinees may need to deal with the documents and charge photocopying and expenses for looking at the documents at cost (Brock No.1 at 734). 

v.As to the question of who is a company “insider” or “outsider”, insiders are characterised as being the directors, secretary and employees of the company and all others, even if they are technically officers of the company, such as auditors, are outsiders (Brock No.1 at 730; Re Spiraflite Ltd [1979] 1 WLR 1096).

vi.It would be unjust to require a person who had not been an officer of the company to attend for examination without provision being made in respect of their reasonable expenses for such attendance where those expenses would be substantial (Re Kempal Pty Ltd (receiver and manager appointed, in liq) (1989) 7 ACLC 1180 at 1182).

vii.It would be reasonable in the appropriate case to allow compensation for searching for documents, but the public interest is against making provision for a witness to confer with their staff or associates or with solicitors and Counsel or otherwise obtaining information from others which might be used in their evidence on the examination (Re Equiticorp Finance Ltd; Ex parte Brock (No. 2) (1992) 7 ASCR 13 (“Brock No. 2”) at 18).

viii.No allowance should be made for the examinee familiarising themselves with documents in order to prepare for the examination (Brock No. 2 at 18).

[1]See also Re Spedley Securities Ltd (1991) 9 ACLC 492 at 495 where it is suggested, relying on the Federal Court decision of Fuelxpress Limited v L.M.Ericsson Pty Ltd (1987) 75 ALR 284, in relation to costs of compliance with a subpoena, that an examinee may recover legal fees for advice on privilege issues incurred in complying with an order for production of documents.

1. It seems clear that Mr Tauber is an “outsider” for the purposes of the present context.  The parties have been able to agree that Mr Tauber’s costs associated with attending court should be reimbursed at a rate of $339.00 per hour.  The liquidator’s solicitors also offered to reimburse Mr Tauber for the costs of copying documents at $248.90.  In addition they have agreed to reimburse Mr Tauber for $3,238.40 including GST for time spent by members of Meerkin & Apel “responding to the subpoena” (sic) which was not acceptable to Mr Tauber.

1. On 12 September 2012 Mr Maclaren wrote to Meerkin & Apel providing a further explanation of the costs which had been claimed, including a breakdown of the time spent and requesting that the question of costs be agreed prior to the examination of Mr Tauber.  Mr Maclaren also accepted the offer to reimburse his client for his time at court at $339.00 per hour not exceeding $2,118.00 per day.

1. As I have said the examination of Mr Tauber was relatively short.  I would allow him one and a half hours at a rate of $339.00 per hour for his actual attendance at the examination, a total of $508.50.

1. Junior Counsel for the plaintiffs, Mr Luxton, indicated that he had the opportunity of reviewing Mr Maclaren’s affidavit. Mr Luxton’s instructors had annotated Meerkin and Apel’s account to Mr Tauber dated 30 July 2012.  The matters which were the subject of the agreement were coloured in green and they related to the gathering together of the documents as per paragraph [16](i) of Medici.

1. In my view, the balance of items appearing on the interim account of 30 July 2012 are not, on an application of the principles set out in Medici, recoverable by Mr Tauber.  Items such as conferring with his solicitors or familiarisation with documents in order to prepare for the examination are not recoverable.  I consider that the same position applies to provision of legal advice or research and dealing with a response to the summons.[2] 

   [2]See s 597(16) of the Act.

1. In addition to the costs agreed for copying of $248.90 and of Mr Tauber’s attendance at court for the examination of $508.50, Mr Tauber is entitled to be reimbursed for the costs associated with what Young J describes in Brock No. 1 as the “gathering together of documentation”.  On my review of the documentation, 116 time units were involved in this task at what appears to be a unit rate of $41.00, that is, $4,756.00. 

1. I note that none of the items appearing in the account of 30 August 2012 appear to be recoverable on an application of the principles set in paragraph [16] of Medici.

1. In the circumstances I will allow Mr Tauber’s expenses as follows:

i.       $4,756.00 for expenses in connection with gathering together the          documents in response to the summons.

ii.      Copying of $248.90.

iii.Attendance at court (one and a half hours at $339.00 per hour) at $508.50.

1. In the circumstances I will order that the plaintiff pay Mr Tauber’s expenses fixed in the sum of $5513.40.

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