Burns Philp Trustee Company Ltd v Moneylink Financial Planning (Systems) Ltd

[1990] FCA 370

Re: BURNS PHILP TRUSTEE COMPANY LTD and ESTATE MORTGAGE MANAGERS LTD
And: MONEYLINK FINANCIAL PLANNING (SYSTEMS) LTD; JUNTANT PTY LTD; WILFRID
THOMAS COLLINS; STEPHEN GREGORY VAN EYK; JULIE WEBBER and ESTATE MORTAGE
MANAGERS LTD.
No. N G1446 of 1988
FED No. 370
Practice

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Wilcox J.(1)

CATCHWORDS

Practice - Subpoena - Application by stranger to litigation for payment in respect of expense of compliance with subpoena - Applicant for order is a company having a connection with a party to the litigation which would have been required to discover the documents at a later stage - Different solicitors retained in respect of answer to subpoena to those retained in principal litigation - Reasonableness of claim for expenses which involved those solicitors becoming generally familiar with the litigation and the documents. Application refused.

Federal Court Rules, 0.27 r.4A

HEARING

SYDNEY

#DATE 7:6:1990

Counsel for the applicant: Mr G. McIlwaine

Solicitors for the applicant: Cohen Brown

Solicitor appearing for the 1st, 3rd and 4th respondents: Mr P.N. Argy of Malleson, Stephen Jacques

ORDER

That the orders sought in the notice of motion filed on 7 December 1989 be refused.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. (See also Order 37 rule 2(3)).

JUDGE1

This is an application under order 27(r.4A) of the Federal Court Rules by Estate Mortgage Financial Services Limited whereby that company seeks an order that the first, third and fourth respondents in proceeding G1446 of 1988 make a payment to it in respect of the expense or loss occasioned to it in complying with a subpoena issued by the Court at the request of those parties on 24 November 1989.

1. The applicant for the order asks me to assess the amount of the costs and seeks an order in the sum of $5,095. This sum includes $2,002, being an amount payable in respect of work done by Estate Mortage Financial Services Limited itself, time being charged on the basis of $150 per hour for the time of a person described as a "senior executive" and who was identified from the bar table as Mr Matthew Deegan, an investment officer. Additionally, the company seeks payment of a total sum of $1,898 in respect of solicitors' profit costs charged to it by solicitors, Messrs Cohen Brown, and a total sum of $1,195 for counsel's fees.

2. The only evidence which has been filed in support of the application is affidavit evidence from Mr M H Southwick, a solicitor acting on behalf of Estate Mortgage Financial Services Limited. Mr Southwick has annexed to his affidavits various items of correspondence, which detail the claim.

3. The argument put in favour of the application is that Estate Mortgage Financial Services Limited is a stranger to the litigation, that the subpoena was served upon it, and that this involved a deal of work in gathering together documents which were held in different offices in Melbourne, Sydney and Brisbane.

4. Counsel for the applicant points out that his client was represented by counsel at the return of the subpoena on 7 December 1989 and that at that time his client indicated its readiness to provide the documents but pointed out that they were voluminous. The suggestion was made and accepted that the documents be produced to the parties who had issued the subpoena in an informal way by arrangement between the solicitors. Apparently, the documents were duly produced in a series of waves agreed between the solicitors.

5. Ordinarily, the case for an order under order 27(r.4A) in respect of a stranger to the litigation who has been served with a subpoena would be compelling, notwithstanding the fact that the rule confers a discretion as to whether there should be an order for payment of the expense or loss incurred in compliance. However, there are unusual features in this case, which have been pointed out on behalf of the respondents. One of the applicants in the principal proceeding is Estate Mortgage Managers Limited. No evidence has been put before me as to the relationship between Estate Mortgage Managers Limited and Estate Mortgage Financial Services Limited, except that there is evidence that Mr Richard Lew is a director of both companies, and that they share premises, at least, in Sydney. As I understand the position, Estate Mortgage Managers Limited is the manager of a unit trust of which the first applicant, Burns Philp Trustee Company Limited, is the trustee. The documents required to be produced by the subpoena are all documents relating to investments of the trust. I confess that I share the puzzlement of the solicitor for the respondents as to how Estate Mortgage Managers Limited could manage these investments without access to the relevant documents. It seems to me that the true position is that, at all material times, the documents were held by Estate Mortgage Financial Services Limited pursuant to an arrangement whereby they were accessible by Estate Mortgage Managers Limited. Indeed, in directions hearings for the principal proceeding, it has been conceded by counsel for the two applicants that the relevant documents were documents properly discoverable in the principal proceeding. This can only be because, at relevant times, they were held by or on behalf of the applicants.

6. There is a history to the litigation. The original Statement of Claim made very extensive allegations against the respondents. The documents which have caused the present application were clearly relevant to the issues raised by the original Statement of Claim and the Defence which was then filed. The present respondents issued a notice to produce addressed to the applicants, or perhaps only to Estate Mortgage Managers Limited, requiring the production of a long list of documents, including the documents the subject of the subpoena. This notice to produce was made returnable on 28 September 1989, but compliance with the notice to produce was adjourned until 1 November 1989. In fact the matter was not dealt with on that day but on the following day, upon which day counsel for the applicants sought and obtained leave to file an amended Statement of Claim. The amended Statement of Claim considerably reduced the allegations made by the applicants. Indeed, it is not unfair to say that the case put by the applicants after the amendment was but a shadow of the original case. I think it is correct to say that the documents the subject of the notice to produce, and of the subpoena, would not have been relevant to, and therefore discoverable in, proceedings on the amended Statement of Claim, and any mere defence to that Statement of Claim. However, on 2 November 1989, counsel for the respondents indicated that their client proposed to bring a Cross-claim, and directions for the Cross-claim were given. The Cross-claim was filed on 16 November. It made allegations any defence of which would clearly involve discovery of the subject documents. The subpoena was issued on 26 November.

7. It is true to say, as counsel for the present applicant points out, that, on that day, there was no extant obligation to produce the documents by Estate Mortgage Managers Limited. The earlier notice to produce had, in effect, been abandoned, because of the change in position by the applicants. The time for discovery in respect of the Cross-claim had not yet been reached. Accordingly, I think that it can be said that the subpoena required steps to be taken to produce documents which would not otherwise have had to be produced at that time.

8. However, I emphasise the words "at that time". It was also clear on 26 November, that if the Cross-claim was defended - and this, of course, was a matter which was known to Estate Mortgage Managers Limited - the documents would be discoverable in due course pursuant to the Cross-claim. Accordingly, it might have been expected that Estate Mortgage Managers would have set about identifying the relevant documents and getting them in order for discovery.

9. The effect of the subpoena was really to require the documents to be produced at a somewhat earlier point of time. But I cannot see that, in terms of executive time, or the time of any other employees of Estate Mortgage Financial Services Limited, anything was done pursuant to the subpoena which would not have had to be done in any event by relevant people in one or other of the Estate Mortgage companies.

10. The other aspect of the matter relates to legal costs. Itemised accounts have been given. I say nothing in criticism of the quantum of any of the amounts charged or to suggest that the work which has been charged for was unnecessary in relation to the course which had been chosen to be taken. But I think that it is a fair comment to say, as Mr Argy on behalf of the respondent says, that it is most unusual for a company upon whom a subpoena is served, and which is closely related to another company already involved in the principal litigation, to go to new solicitors in relation to compliance with the subpoena. Inevitably this involves the new solicitors spending time taking instructions in relation to the litigation generally, a step which would have been time-consuming in the present case, as indeed the bill of costs indicates. This would have been unnecessary had the solicitors already instructed in the principal proceedings been used, in relation to compliance with the subpoena.

11. I appreciate the point emphasised by counsel for the applicant that the two Estate Mortgage companies are separate legal entities; but the only inference that I can draw is that they are, in fact, closely related in commercial and management terms. I think that it was unreasonable for Estate Mortgage Financial Services to retain separate solicitors with the consequential costs involved in taking that course.

12. I also think it was unnecessary for counsel to appear on 7 December. It appears that the main purpose of counsel appearing on that date was in support of a notice of motion which was, in fact, before the Court on that date, seeking an order under order 27(r.4a). That was a premature step to take at that time. If the only purpose of the appearance on that day had been to inform the Court about the arrangement which was being offered, and which was, in fact, accepted, about production of the documents, this could have been easily performed by the instructing solicitor who attended, and charged for his attendance, at Court on that day. The remaining counsel's fees appear to be related to the application for this order.

13. I do not think that it is appropriate to me to defer consideration of this matter until the trial of the principal proceedings. Those proceedings are already complicated enough, and involve enough parties without adding this particular problem. Furthermore, I would not wish Estate Mortgage Financial Services to find it necessary to incur further costs in regard to this application.

14. I think that one has to apply order 27(r.4A) in a practical and commonsense way, with some view to commercial realities. Taking that approach, the appropriate view is that the costs which have been incurred, to the extent that they were necessary in any event, are costs which would have been incurred by Estate Mortgage Managers Limited.

15. In the circumstances, I exercise my discretion by refusing the order sought.