Budgem and Budgem
[2006] FMCAfam 638
•22 December 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BUDGEM & BUDGEM | [2006] FMCAfam 638 |
| FAMILY LAW – Property settlement – subpoena to non party to proceedings – loss and expense in compliance with subpoena – costs in application to set aside a subpoena. |
| Federal Magistrates Court Rules, rr.15.19, 15.20(b)(c) Federal Court Rules, Orders 27 Rule 11 |
| Chapman v Luminis Pty Ltd and Others (No 3) 2000 179 ALR 702 Deposit & Investments v. Peat Marwick Mitchell & Co (1996) 39 NSW LR 267 Charlick Trading Pty Ltd v Australian National Railways Commission (1997) 149 ALR 647 Bank of NSW v Withers (1981) 52 FLR 207) |
| Applicant: | MS BUDGEM |
| Respondent: | MR BUDGEM |
| Subpoenaed Party: | [W & W] |
| File Number: | TVM 2303 of 2005 |
| Judgment of: | Slack FM |
| Hearing date: | 31 October 2006 |
| Date of Last Submission: | 31 October 2006 |
| Delivered at: | Brisbane |
| Delivered on: | 22 December 2006 |
REPRESENTATION
| Counsel for the Applicant: | Ms Pagani |
| Solicitors for the Applicant: | J. Hamilton & Associates |
| Counsel for the Respondent: | Ms Pack |
| Solicitors for the Respondent: | Macrossan & Amiet |
| Counsel for the Subpoenaed Party: | Mr Land |
| Solicitors for the Subpoenaed Party: | [W & W] |
ORDERS
The Application for costs in the application to set aside a subpoena be dismissed.
That the Wife pay to the subpoenaed party the sum of $1788.70 within 28 days for loss and expense of the subpoenaed party to answer the subpoena.
That the Husband pay to the subpoenaed party the sum of $342.10 within 28 days for loss and expense of the subpoenaed party to answer the subpoena.
IT IS NOTED that publication of this judgment under the pseudonym Budgem & Budgem is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MACKAY |
TVM 2303 of 2005
| MS BUDGEM |
Applicant
And
| MR BUDGEM |
Respondent
And
[W & W]
Subpoenaed Party
REASONS FOR JUDGMENT ON COSTS
This is an application by [W & W], Solicitors (hereafter “the subpoenaed party”) for:
a)“costs and conduct money” including its costs of producing the legal file to the Court;
b)costs in respect of the application to set aside the subpoena.
Background
The husband and wife had before the Court competing applications for property settlement orders pursuant to Part VIII of the Family Law Act 1975 as amended.
The matter was listed for trial in the August sittings of the Federal Magistrates Court in Mackay.
On the application of the wife (not opposed by the husband), the matter was adjourned to the November sittings of the Court.
When the matter was called over on 31 October 2006, the parties indicated they had reached settlement in the matter and orders were made by consent in terms of their agreement.
After the matter was adjourned in August, the wife’s solicitors issued a subpoena to the subpoenaed party to produce all files and documents including file notes and attendance records in relation to litigation between the husband, his father, his mother and a business entity and the lessor of the [M] Shopping Centre.
The subpoenaed party conducted a search of their archive files and identified two files that pertained to the litigation involving the named persons on the subpoena (Files numbered 88778 and 89952).
A search of the records of the subpoenaed party revealed that 18 files related to the four persons named in the subpoena. Most of those files have been destroyed in accordance with the firm’s destruction of documents policy.
On 1 September 2006, Mr A raised with the solicitors for the wife that the conduct money tendered with the subpoena was insufficient.
Then there was an exchange of correspondence between the solicitors for the wife and the subpoenaed party leading up to an application by the subpoenaed party to set aside the subpoena.
The application to set aside the subpoena was determined on
26 September 2006 and I ordered that the subpoenaed party produce the files numbered 88778 and 89952 to the Federal Magistrates Court in Mackay at 2.00pm on 31 October 2006. On that day, the parties made other arrangements to inspect the documents on the file in the interim.As I understand it, the documents were never produced to the Court. The parties, however, compromised the substantive proceedings and orders were made by consent without the need for a hearing.
When I heard the application to set aside the subpoena, I reserved for further hearing the application for payment of any loss or expense incurred in complying with the subpoena and the costs incurred in the application to set aside the subpoena.
Principles
The relevant rules of the Federal Magistrates Court that govern the Application provide as follows:
“Rule 15.19. Subject to Rule 15.20 the Court may, on application, make an order for the payment of any loss or expense incurred in complying with the subpoena.
Rule 15.20.1. This rule applies if:
a. A subpoena is addressed to a person who is not a party in the proceedings;
b. Before complying with the subpoena, the person subpoenaed has given the issuing party notice that substantial loss or expense would be incurred in properly complying with the subpoena including an estimate of the loss and expense;
c. The Court is satisfied that substantial loss or expense is incurred in properly complying with the subpoena.”
Although the rules provide for recovery for “any loss” as well as expenses, the use of the word “may” in rule 15.19 would indicate that unless otherwise prescribed by the rules, the compensation for loss both in terms of nature and quantum is discretionary.
A number of Judges have looked at this type of application relevant to the Rules applicable to their Court [See Van Doussa J in Chapman v Luminis Pty Ltd and Others (No 3) 2000 179 ALR 702; Bainton J in Deposit & Investments v. Peat Marwick Mitchell & Co (1996) 39 NSW LR 267; Mansfield J in Charlick Trading Pty Ltd v Australian National Railways Commission (1997) 149 ALR 647; and Sheppard J in Bank of NSW v. Withers (1981) 52 FLR 207].The authorities referred to support the principle that Courts and litigants should not expect persons who are not party to the proceedings to incur expense through loss of time without appropriate and reasonable reimbursement. This principle would seem to apply in the Rules of the Federal Magistrates Court subject to the provisos contained in Rule 15.20.
Because Rule 15.19 seems to allow a discretion as to the nature and amount of the claimed loss, I consider that one of the factors that can be taken into account in the exercise of the discretion is whether both the nature of the claimed loss and expense and the quantum are reasonable.
In essence the claim by the subpoenaed party is for the cost to the firm for loss of time incurred by members of the firm of the subpoenaed party to comply with the subpoena. However, it does seem clear that the claim for the loss of time may include such things as obtaining legal advice about having to answer the subpoena.
Bainton J in Deposit & Investments v. Peat Marwick Mitchell (supra), having regard to the rules applicable, said:
“My view is that a firm required to answer a subpoena is entitled to be reimbursed in respect of a partner’s time spent on that task and his ordinary charge out rate. If the work is done by an employed solicitor, the reimbursement should be at that solicitor’s charge out rate provided of course in both cases, that the partner/ employee would be otherwise be devoting time to chargeable work, as I would expect would usually be the case.”
Application of the rules and principles to this application
In this matter, notice was given that “substantial loss or expense would be incurred” in complying with the subpoena by letter from the subpoenaed party dated 31 August 2006 in compliance with Rule 15.20 (b).
Having regard to Rule 15.20(c) the Court must, then, be satisfied that “substantial loss or expense is incurred in properly complying with the subpoena”.
In this matter, the subpoena was served on 31 August 2006.
I consider that it would be reasonable for a Principal of a firm to consider and peruse the subpoena; give instructions to a clerk to search the records; for a clerk to retrieve the files; for a Principal of the firm to inspect the documents requested under subpoena; to write to the issuing party taking objection and complying with Rule 15.20(b).
Although the rules do not further define “substantial” as expressed in Rule 15.20(c), I consider that whether the loss is substantial should in part have regard to the amount of conduct money that was paid in the matter, namely $56. I agree with Bainton J that “it would be intolerably unjust to leave the burden of the cost of responding to such subpoena upon a stranger to the litigation on whom” a subpoena is served.
Having regard to what I consider was necessary to be undertaken by the subpoenaed party in the circumstances, I accept that “substantial loss” in time (beyond that which they were compensated in the conduct money provided) was incurred by a number of members of the firm to properly comply with the subpoena.
Having accepted that the conditions prescribed in rule 15.20 have been complied with, the next issue then in the exercise of my discretion is to determine what loss of time or expense has been incurred and the quantum of those costs.
As part of the claim the subpoenaed party claims the costs incurred in an application to set aside the subpoena.
The application to set aside the subpoena
The application to set aside the subpoena was based on paragraph 27 of the affidavit of Mr A filed on 15 September 2006.
The subpoena was not set aside and in the course of the judgment, I did not consider the subpoena was oppressive because of the number of documents involved. The affidavit of Mr A indicates that he was fairly readily able to identify the documents the subject of the subpoena.
In my judgment in the application, I acknowledged the merits in the submission that not all the documents on the files were likely to be relevant to the proceedings and it was not for the subpoenaed party to have to attempt to identify the relevant documents.
Notwithstanding I saw merit in the argument, I considered there were other reasons that, on balance, the subpoena should be complied with.
The subpoenaed party seeks, either as part of the loss of time and expense incurred in complying with the subpoena or by way of costs in the application, an order that the issuing party should pay the costs of the subpoenaed party in that application.
I am not persuaded that the wife, as the issuing party of the subpoena, should pay the costs of the subpoenaed party in the application or that the loss and expenses incurred in the application should form part of the loss incurred in answering the subpoena.
My reasons for reaching that conclusion are as follows:
a)The application to set aside the subpoena was unsuccessful. Whilst I acknowledged that there was merit in some of the submissions of the subpoenaed party in relation to one of the grounds argued, I nevertheless considered that there were other balancing factors that warranted compliance with the subpoena.
b)The documents and any privilege relating to those documents were those of the husband in the proceedings, his parents and the named entity. There is no evidence to suggest that they required the action to set aside the subpoena.
c)If the issue was proper compensation for the loss and expenses incurred in connection with compliance with the subpoena, then that could have and would have been dealt with in an orderly way without the necessity for argument about whether the subpoena should be set aside.
d)The subpoenaed party determined not to proceed in that way and proceeded with the application to set aside the subpoena and they were unsuccessful in that attempt.
e)Compliance with the subpoena in the circumstances was not, in my view, so onerous that it amounted to oppression. The documents were readily identified and although they were large in number, they could have been produced to the Court without significant prejudice to the subpoenaed party, save as to ensuring that they were properly compensated for loss and expenses.
f)I am not satisfied that the loss and expenses were so significant that it warranted setting aside the subpoena as being oppressive or that the subpoenaed party was in jeopardy of not receiving proper compensation for its loss and expenses in complying.
Hence I do not consider that any party should meet the costs of the application to set aside the subpoena.
I do not intend to allow that part of the subpoenaed party’s claim that relates to the costs of the application.
Quantum of loss or expense incurred in complying with the subpoena
In this matter I consider it is reasonable to compensate the subpoenaed party for time lost and expenses incurred.
The schedule of charges contained in Annexure 2 of the affidavit of
Mr A contains the itemised “fees” said to have been incurred in response to the subpoena and those fees include the loss of time by various members and employees of the firm.
Ordinarily, I would have thought that the hourly rate charged by Mr A as Principal of the firm would include a component for the operating costs of the firm as well as profit for the firm. As I understand it, there would be no separate charge out rate for non-legally qualified employees of the firm.
Hence to claim as he does for his charge out rate, Mr A, to my mind, has to some extent made a double claim by also claiming “fees” for the time for clerks and managers.
I accept that as a Principal of the firm it was reasonable that he would have incurred time in:
a)receiving and examining the subpoena;
b)instructing a clerk to search the files;
c)inspecting the documents when retrieved;
d)giving consideration to whether any protection or advice ought to be given to the clients of the firm on whose behalf the file was retained and whether there was any implication for the subpoenaed party;
e)raising in correspondence with the issuing party issues about the subpoena;
f)giving notice in writing that the conduct money was not sufficient.
I also accept that the firm would have incurred expenses in:
a)delivering the subpoenaed documents to Court;
b)photocopying expenses;
c)fax fees.
Having regard to those matters, I propose to allow the following items in the schedule attached to the affidavit of Mr A filed on 18 October 2006:
a)Item 4 - $44;
b)Item 5 - $13.20;
c)Item 18 - $396;
d)Item 21 - $99;
e)Item 22 - $44;
f)Item 26 - $99;
g)Item 27 - $19.80;
h)Item 28 - $99;
i)Fax fees - $59.40;
j)Item 30 - $44;
k)Item 131 - $24.20;
l)Item 132 - $24.20;
m)Item 140 (Part – 30 minutes allowed) - $198;
n)Item 141 - $33;
o)Item 143 - $301.40;
p)Item 144 - $203.60;
q)Item 145 - $16.50;
r)Item 146 - $16.50;
s)Attendance at Court to argue the matter – 1 hour allowed - $396;
t)Total - $2130.80.
In rejecting the other items not already referred to in the schedule, I did so for the following reasons:
a)I have refused any item that pertains to the application to set aside the subpoena;
b)there were no costs actually incurred in having the documents produced to the Court;
c)I am not persuaded that an inspection of the documents needed to be carried out in the presence of Mr A because:
i)those inspecting were officers of the Court;
ii)they were examining documents under subpoena;
iii)they were opposing parties and they inspected the documents together. I do not consider it was necessary that, as solicitors of the Court inspecting documents under subpoena to the Court, that additional supervision was required.
I consider that the wife, as the issuing party, should be responsible for those costs as assessed, save for those items that relate directly to the husband, namely Items 131, 143 and 145.
My reasons for reaching that conclusion are as follows:
a)When this matter was considered by the Court in August, the husband was proposing to deliver an authority to the subpoenaed party so that he could obtain the file. It was the decision of the wife to proceed with the issue of the subpoena in the circumstances where the husband had offered a perfectly viable way for the documents to be produced.
b)Whilst it may be argued that the husband had an obligation to disclose the documents, the evidence is that he was prepared to make proper disclosure in a timely way but it was the wife who chose to proceed with the issuing of the subpoena.
Costs of the parties in the application to set aside the subpoena
As I understand it, both the wife and the husband seek costs against the subpoenaed party in the application to set aside the subpoena.
I am not persuaded that either party should receive their costs in that application.
My reasons for coming to that conclusion in relation to the application by the wife are as follows:
a)The wife could have followed the procedure that was being proposed by the husband, namely, that the documents could be obtained by him and then inspected by the wife.
b)I did consider in the application that there was merit in the subpoenaed party’s argument that the wife could not establish the relevance of many of the documents that had been subpoenaed.
I am not persuaded that the subpoenaed party should pay the husband’s costs in the application for the following reasons:
a)I am not satisfied that it was necessary for the husband to appear on the application.
I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of Slack FM
Associate:
Date: 22 December 2006
0
2
2