Foyster v Foyster Holdings

[2003] NSWSC 881

CITATION:	Foyster v Foyster Holdings [2003] NSWSC 881
HEARING DATE(S):	23/9/03 - 24/9/03 and 10/10/03
JUDGMENT DATE:	23 September 2003
JURISDICTION:	Equity
JUDGMENT OF:	Campbell J
DECISION:	Issuer of subpoena to pay reasonable expenses and loss of recipient of complying with subpoena
CATCHWORDS:	PROCEDURE - Supreme Court procedure - subpoenas - extent of obligation to tender "reasonable expenses" at time of service of subpoena - extent of rights of recipient of subpoena to recover expenses and loss involved in complying with subpoena - WORDS AND PHRASES - "expenses" - "loss"
LEGISLATION CITED:	Supreme Court Rules 1970
PARTIES :	Jacqueline Foyster - Plaintiff Foyster Holdings Pty Limited (In Liquidation) - Defendant Geoffrey Trent Hancock - Applicant David Foyster - Respondent
FILE NUMBER(S):	SC 5585/01
COUNSEL:	J Sexton SC - Applicant M B Evans - Respondent P W Hopkins, solicitor - Tasmanian Titanium Pty Ltd
SOLICITORS:	Coudert Brothers - Applicant Kings Lawyers - Respondent P W Hopkins - Tasmanian Titanium Pty Ltd

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EQUITY LIST

CAMPBELL J

TUESDAY 23 SEPTEMBER 2003

5585/01 JACQUELINE WYATT FOYSTER v FOYSTER HOLDINGS PTY LIMITED

JUDGMENT – Ex Tempore (revised 25 September 2003)

1 HIS HONOUR: In this matter, a subpoena was served on Peter H Stitt & Associates Pty Ltd, by solicitors for Mr David Foyster, one of the respondents to the present application. Peter H Stitt & Associates Pty Ltd is a company of geologists who had done some work in connection with the development of a mine on King Island, which is connected with the subject matter of these proceedings.

2 The subpoena is one which is dated 9 September 2003. It required production of the following documents:

“SCHEDULE
1. Copies of all and any Feasibility Study or Studies prepared by the Peter H Stitt & Associates Pty Ltd, including copies of all drafts thereof sent to Tasmanian Titanium Pty Limited or anyone on behalf of that company, in respect of the project identified as the "King Island Sands Project" prepared for Tasmanian Titanium Pty Ltd together with copies of all and any supplementary updates of any such feasibility study sent to Tasmanian Titanium Pty Limited or anyone on behalf of that company.
2. Copies of all and any correspondence between Peter H Stitt & Associates Pty Ltd and Tasmanian Titanium Pty Ltd or anyone purporting to act on behalf of that company in relation to the "King Island Sands Project" for the period from 1 January 2001 to date.
3. A copy of a video film made by Peter H Stitt & Associates Pty Ltd on the subject of the "King Island Sands Project" and concerning a visit to King Island by Peter Stitt and Peter Hopkins in February 2002 which video was shown at a meeting of shareholders of Tasmanian Titanium Pty Ltd held on or about 4 October 2002.”

3 The subpoena was returnable on 18 September 2003. There was no production at that time. It has come to be stood over to today.

4 On 17 September 2003, the principal of Peter H Stitt & Associates wrote to the solicitor who had procured issue of the subpoena saying that he had reviewed the files and collated the material, and that he had been paid conduct money of $50 but that was quite inadequate in view of the work involved. He claimed that he had spent 11 hours searching out material, that his personal attendant had spent six hours, and that some copying of documents had been done. Altogether, he claimed that an amount of $1,306.36 should be paid for his company’s work in complying with the subpoena. He said:

"I understand that I am not obliged to produce the documents unless this amount is paid prior to production. I am not prepared to accept any undertaking by David Foyster to pay this amount.”

5 He requested payment that day, and said that if the issue could not be resolved that day he would have no alternative but to arrange for his solicitor to appear on the return of subpoena, and that he would seek additional payment of costs if it became necessary for the solicitor to appear.

6 The solicitors who had issued the subpoena, wrote to Mr Stitt's solicitor on 22 September, pointing out that Part 37 rule 9 of the Supreme Court Rules allowed a party served to make an application to the court for orders that they be reimbursed:

“However this does not mean that documents requested on subpoena can be held effectively hostage.”

7 There was no offer to pay any amount of reasonable expenses or loss which might have been incurred. Rather, the letter concluded by saying:

“We confirm that if the documents requested on subpoena are not produced tomorrow and the subpoena is called, our clients reserve all their rights including the right to recover from your client all costs thrown away if the matter is adjourned, any costs ordered against them if proceedings are adjourned, and all rights to request the issue of a bench warrant.”

8 There was some other correspondence, in which again the solicitors issuing the subpoena referred to Part 37 rule 9 and the rights under that rule, but made no offer to pay anything.

9 Part 37 rule 3 of the Supreme Court Rules provides:

“Conduct money
3(1) A subpoena shall not require the person named to attend or produce any document or thing on any day on which his attendance or production by him is required unless a sum sufficient to meet the reasonable expenses of the person named of complying with the subpoena in relation to that day is paid or tendered to him at the time of service of the subpoena or not later than a reasonable time before that day.”

Part 37 rule 9 provides:

“Expense and loss
9(1) Where a person named is not a party and, in consequence of service of the subpoena, reasonably incurs expense or loss substantially exceeding any sum paid under rule 3, the Court may order that the party who requested the issue of the subpoena pay to the person named an amount in respect of the expense or loss.”

10 Part 37 rule 3 is headed "Conduct money". However, the wording of the rule imposes a wider obligation than to merely pay fares, or reasonably anticipated expenses for accommodation or sustenance involved in complying with the subpoena. The rule requires, it seems to me, that the person tendering the subpoena make an estimate of what are the reasonable expenses of the person named of complying with the subpoena, and to tender that amount at the time of service. “Expenses” would include all money actually paid out, and the cost of items used up, in complying with the subpoena.

11 There is provision in Part 37 rule 9 for the payment of an extra amount to be ordered by the court. However, the situation ought not arise where the issuer of a subpoena tenders a fairly nominal amount at the time of issuing, has the benefit of a court order requiring the person who receives the subpoena to incur substantial expense, and then, when the documents are brought to court, says that if the person who brought the documents to court wishes to be paid for the work done in complying with the subpoena, then that person should put on a notice of motion, should put on evidence, and should arrange for a lawyer to come along to court to argue about whether there is any entitlement to be paid, and if so the quantum.

12 That way of proceeding would involve imposing a very substantial inhibition on a person being actually paid for the work done in compliance with the subpoena. It is the clear policy of Part 37 rule 3 and Part 37 rule 9 that the person issuing a subpoena should bear all reasonable expenses and loss involved in complying with it, unless the expense or loss incurred beyond the amount tendered at time of service of the subpoena is so slight that it can fairly be ignored. Subpoenas involve the exercise of a significant compulsive power, and they are issued by the Court on request, without any pre-screening of the appropriateness of the orders so made. The combined effect of Part 37 rule 6(1) and rule 6(1A) is that it is the solicitor for a party or (if the court gives leave to a party not represented by a solicitor) the party himself or herself, who procures the issue of the subpoena. While the issuing of subpoenas is necessary for the proper administration of justice, the intrusiveness of a subpoena is justified, according to this policy of the rules, only on terms that, ultimately, reasonable expenses and loss involved in complying will be paid by the party who issues the subpoena. If a request by the recipient of a subpoena to the issuer of the subpoena to be paid reasonable expenses and loss is met by an unreasonable refusal to pay, or an unreasonable statement that the only way the recipient will get paid is by going to court to seek an order under Part 37 rule 9, the issuer of the subpoena can usually expect to pay the costs of any application then made under Part 37 rule 9. And when the issuing of subpoenas is to such a large extent in the hands of solicitors, they have a professional responsibility that the power is not abused.

13 In determining what are "reasonable expenses" under Part 37 rule 3, it would be necessary to take into account that the issuer of a subpoena will not, usually, be in a position to know exactly what it is that is required to be done to search out any material that is required to be produced to comply with the subpoena. Any question of whether the issuer of a subpoena has failed to tender the "reasonable expenses" would need to be decided in that frame of reference. However, when it is completely predictable that expenses will be incurred, it is not open to the issuer of a subpoena to make no attempt to estimate what those expenses might be, and to take the attitude that it will leave the person issued with the subpoena to come along to court to make a claim under Part 37 rule 9.

14 Part 37 rule 3 requires the tender of the “reasonable expenses” at the time of service, while Part 37 rule 9 permits the later recovery of a more widely based sum, the reasonably incurred expense or loss involved in complying with the subpoena. The notion of “loss” includes reasonable reimbursement for time spent in complying with the subpoena, that would otherwise have been spent in productive activities.

15 If the recipient of a subpoena, who has been provided with the sum required by Part 37 rule 3, has a sound basis for doubting that he or she will actually be paid the extra amount that will become payable under Part 37 rule 9 if the subpoena is complied with, that could in some circumstances provide a basis for setting the subpoena aside as oppressive.

16 In the present case, the recipient of the subpoena has its office in York Street, Sydney. There is no evidence whatever before me about what the issuer of the subpoena might have known or did know, about the expenses which would be involved in complying with the subpoena. The material which is called for in the subpoena is material which might, in an office with a well organised filing system, have been very readily available. In the circumstances, I am not prepared to make a finding that there has been a failure to tender at the time of service a sum sufficient to meet the reasonable expenses of the person named in the subpoena. From there it follows that the subpoena is validly served, and the documents are ones which are required to be produced to the court.

17 While it appears, from the correspondence, that the Stitt company was not prepared to extend credit to David Foyster in connection with its expenses and loss connected with the subpoena, this was not made the basis of any application to set the subpoena aside.

18 However, the Stitt company has a claim under Part 37 rule 9. It is appropriate to order at this stage that David Foyster pay the reasonable expenses and loss of Peter H Stitt & Associates Pty Ltd of complying with the subpoena. The quantum claimed by the company is an amount which counsel for David Foyster has indicated his client would wish to challenge. It will, therefore, be necessary for the reasonable quantum of those expenses and loss to be established by either affidavit on a reference to a Master, or agreement.

19 The solicitor for Peter H Stitt & Associates appeared at court today and sought an order for his own costs for appearing in connection with the subpoena. He initially took the stance that there was no obligation to produce the documents to the court unless expenses and loss involved in searching out the documents were paid. That contention is one which I have not upheld. However, he has achieved a more limited degree of success, namely the order, which David Foyster’s solicitors had not offered to consent to, that the reasonable expenses and loss be paid.

20 When he has had only this partial success, and started from a mistaken position, I decline to make an order for payment of the legal costs incurred to date of the solicitor for Peter H Stitt & Associates Pty Limited. Whether any legal costs become payable, concerning quantification of the expenses and loss properly payable, is a matter which can be decided by the judicial officer that decides that question.

21 I order that David Foyster pay the reasonable expenses and loss of Peter H Stitt & Associates of complying with the subpoena dated 9 September 2003. I refer to a Master the question of the quantum of those expenses and loss. I grant liberty to Peter H Stitt & Associates to file an affidavit and notice of motion in these proceedings to seek to quantify those expenses and loss. Otherwise I make no orders.

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Last Modified: 10/03/2003