G and D & D - [2005] FamCA 1429

[2005] FamCA 1429

FAMILY LAW ACT 1975

IN THE FAMILY COURT OF AUSTRALIA
AT BRISBANE No. (P) BRF 1325 of 2002

BETWEEN:  G
  `
  First Applicant

AND: D

Second Applicant

AND: D

Respondent

REASONS FOR JUDGMENT

BEFORE THE HONOURABLE JUSTICE CARMODY

Dates of Oral
Applications : 4 and 13 April 2005.

Date of Judgment: 19 May 2005.

Appearances: The First Applicant appeared on his own behalf.

On 4 April 2005 Mr. Green of Counsel, instructed by McInnes Wilson, Solicitors of 27 Gordon Street, Ipswich, Qld. 4305, appeared on behalf of the Second Applicant. On 13 April 2005, the Second Applicant appeared on his own behalf.
Mr. O'Neill of Counsel, instructed by McCallum Mylne Lawyers of Level 2 Corporate Offices, Chevron Renaissance, 3240 Surfers Paradise Boulevard, Surfers Paradise, Qld. 4217, appeared on behalf of the Respondent.

Name of Case:  G AND D AND D
File Number:  BRF 1325 of 2002
Date of Oral Applications:             4 and 13 April 2005
Date of Judgment:  19 May 2005
Coram:  Carmody J
Catchwords:  FAMILY LAW – PRACTICE AND PROCEDURE – Subpoenas – Costs of compliance – Travel expenses, business losses and witness fees
Legislation:  Family Law Act 1975 (Cth), s 112AP
Family Law Rules 2004 (Cth), rr 15.20, 15.23, 15.24, 15.25, 15.26, 15.36

Cases considered: Bank of New South Wales v Withers & Anor (1981) 35 ALR 21
Commissioner for Railways v Small (1938) 38 SR (NSW) 564

Dewley v Dewley [1971] 1 NSWLR 264
Fuelexpress Ltd v LM Erickson Pty Ltd (1987) 75 ALR 284
Kennedy and Evans, Trust Bank (Intervener) (1994) FLC 92-514

The respondent issued a subpoena to the first applicant, who was a chartered accountant, on 12 November 2004 requiring him to produce relevant accounting documents in his possession. The first applicant did not comply with the terms of the subpoena because, in his opinion, they were too wide and oppressive. The respondent then issued a second subpoena on 2 April 2005, this time requiring the first applicant to produce documents and give evidence. The first applicant appeared at Court on the required day, but was informed that he would not be called until a later date. As a result, the first applicant had to cancel all business commitments for both dates.

In his application, the first applicant claimed the cost of his lost earnings due to the inconvenience caused to him by the disruption of answering the subpoena and the subsequent confusion caused.

In relation to the second applicant, who was the receiver of the disputed marital property, the respondent issued a subpoena requiring him to give evidence. The second applicant objected to the subpoena and was subsequently excused from compliance.

The second applicant sought to be indemnified for answering the subpoena on the basis that the respondent’s legal representatives should have known that his attendance was not required at the time stated in the subpoena as parenting issues were being litigated at that time.

Held:

1. The first applicant incurred business and other losses and recoverable expenses substantially greater than the amounts payable under the Rules due to the late service and unreasonable demands of the subpoena. As a result, he was entitled to be paid an amount to meet the reasonable costs associated with compliance, including recompense for lost income.
2. The second applicant was allowed conduct money and reasonable expenses of complying with the subpoena, including the cost of travel and witness fees.

3. The second applicant did not act reasonably in engaging counsel to appear on his behalf. As a qualified solicitor, his complaint was a simple one that was easily addressed.

These Reasons deal with two separate claims by subpoenaed witnesses under r 15.26 of the Family Law Rules. Both applications are governed by the provisions of r. 15.23.

The first application

The first applicant is a chartered accountant. On 15 October 2004 the respondent issued a subpoena (the first subpoena) to produce accounting documents in the first applicant’s possession or control for the five financial years ended 30 June 1998 - 2002.
The subpoena obligation was not complied with by the enlarged date of 12 November 2004.
Contested enforcement proceedings taken by the respondent were dismissed on 11 February 2005 because the terms of the subpoena were said to be too wide and oppressive.
The first applicant seeks to be reimbursed for legal costs associated with those proceedings in the sum of $810.00.
The respondent later subpoenaed the first applicant to attend to give evidence and produce documents at trial (the second subpoena). The subpoena was served only two working days before the return date of 4 April 2005.
He dutifully answered the subpoena on the 4th but was sent away until the morning of the 11th. He was later told that he would not be needed until the afternoon of that day but not before his diary had already been cleared. When he arrived at court he was informed that he would now not be called until the 14th. However, on the 12th, he received a message instructing him to be at court by 10.00 am on the 13th. He testified later that day but, once again, had to cancel business commitments at the last minute.
The first applicant complains that the late service of the subpoena put him to the considerable inconvenience of having to cancel and re-schedule client appointments and says all the confusion and disruption to his practice could have been avoided if those acting for the issuing party had been more considerate and consultative in making arrangements.
He claims $2,115.80 for the cost of retrieving subpoenaed documents and a total of $3,465.00 in lost earnings, calculated at his standard hourly rate of $300.00.

The second application

The second applicant is the receiver of the property of the marriage. He resides and works as a solicitor on the Gold Coast. A subpoena issued by the respondent on 17 March 2005 was served on 30 March 2005 requiring him to attend to give evidence at 10.00 am on 4 April 2005. No conduct money was tendered at the time of service.
The second applicant appeared with counsel on the 4th to object to the subpoena and was excused from compliance until the 13th.
The second applicant contends that he should be indemnified by the issuing party or his solicitors for the costs incurred in answering and objecting to the subpoena on the return date because it was, or should have been, obvious to them that his attendance would not be needed on that day because the issues being litigated in the first week of the trial related to children's matters that did not concern him.

The relevant rules

A subpoena is an ex parte court order directed to a named person, requiring him or her to attend on a specified date (the court date) to give evidence or to produce documents or do both of those things.
A subpoena cannot be amended after service (r 15.20) and remains in force until it is complied with or the witness is excused or released by the issuing party or the court from the obligation to do so (r 15.24(2) and 25(a), (b)).
Failure to strictly comply with a valid subpoena may lead to the issue of a warrant for arrest or proceedings for contempt, or both (see: s 112AP Family Law Act 1975 (Cth) and r 15.36(1)).
A named person is entitled to be paid conduct money sufficient to meet the reasonable expenses of compliance and at least equal to the minimum amount in Pt 1 of Sch 4, viz., $10.00 (r 15.23(1)).
After a witness has duly complied with a subpoena to give evidence he or she is also entitled to be paid travel and accommodation allowances (r15.23(2)) and appearance fees at the rate of $75.00 a day, in accordance with Pt 2 of Sch 4 (r 15.23(2)).
In addition to any sum payable under the Rules for conduct money, travelling and accommodation expenses and witness fees, the court has discretionary power to order that the issuing party pay a subpoenaed witness who incurs substantial additional expense or loss in complying with a subpoena the amount needed to compensate him or her for such expense or loss (r 15.23(3)): cf. Bank of New South Wales v Withers & Anor (1981) 35 ALR 21 at 30. This has been taken to include recovery of the costs of legal advice and representation in relation to documents under subpoena: see Fuelexpress Ltd v LM Erickson Pty Ltd (1987) 75 ALR 284.
A person is not bound to comply with a subpoena which is oppressive because of late service or unreasonable requirements. Nor is there any obligation to go to court unless a proper sum for conduct money has been offered or received (rule 15.24). However, because a subpoena remains valid until set aside on notice, the named person must, in any event, attend on the court date to raise his or her objection or seek compensation for losses or expenses caused by the subpoena or apply for any other relief (r 15.26(b), (c), (d)).
The terms of r 15.23(3) differ from those of its 1984 forerunner. The old O 20 r 17 provided a process for compensating a subpoenaed third party who reasonably incurred costs or expenses (but not losses) connected with compliance. Thus, while the actual cost of the time and effort spent in answering a subpoena were recoverable, trading margins or losses were not: cf. Kennedy and Evans; Trust Bank (Intervener) (1994) FLC 92-514. The commercial charge-out rates for a professional service therefore had to be reduced by any profit component to be recoverable. Moreover, the costs or expenses claimed had to not only be reasonable but reasonably incurred as well.
Under the new rule, by contrast, a business loss is just as recoverable as an actual expense, provided it is a substantial one. The rule does not give any clue to the meaning of "substantial" in this context but I take it to denote something considerable as distinct from a mere trifle.
Technically speaking, there is no separate requirement to establish that the loss or expense in question was reasonable as well as substantial. However, that does not mean that the concept of reasonableness is irrelevant to the discretionary exercise.

Should either or both claims be allowed?

A number of points need to be made before I move on to deal with the merits of the applications of both the first and second applicants.
The first is that the subpoena is a compulsory process to aid the proper administration of justice between litigating parties. For that purpose, the law imposes a legal duty on strangers to the action who have relevant knowledge or documents in their possession or control. The procedure interferes with the enjoyment of private rights by third parties and can put them to considerable expense and effort. Severe penalties are provided for non-compliance yet they are available to litigants as of right and issued ex parte by an administrative officer without judicial supervision.
For these reasons, courts require the exercise of care and due diligence by the issuing party to take account of the recipient's legitimate rights and interests when framing the terms of a subpoena. In Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 572 for instance, Jordan CJ said:
"It is altogether improper that a pre-emptory order should be issued from the court commanding persons under a heavy penalty to do something which they are not or ought not be required to do".
Allen J also emphasised the professional responsibility of legal practitioners in drawing subpoenas in Dewley v Dewley [1971] 1 NSWLR 264 at 270 :
"The right to have a subpoena issued with the authority of the court and the stated sanctions must carry with it the responsibility of acting reasonably and properly in relation to any person summoned to appear and obey its terms. Solicitors, as officers of the court, should, in my view, be vigilant to ensure that no oppressive or improper demands are made on strangers to the litigation under the authority and power which a subpoena presents to a layman. This should be obvious to any conscientious and responsible practitioner".
Thus, in an appropriate case, a legal practitioner who makes exorbitant or needless demands in a subpoena can be made to bear the costs incurred by the recipient in seeking to have it set aside or other relief.
I am satisfied that, due to the circumstances set out in pars 2 to 6 above, the first applicant has incurred recoverable losses and expenses substantially greater than the amounts payable under Sch 4 in answering the second subpoena. However, I do not think that his claim of $3,465.00 (including GST) for 10.5 hours of cancelled appointments, calculated at his schedule rate of $300.00 per hour, is a fair measurement of his compensable loss. The figure does not factor in the civic duty aspect of the subpoena process nor does not appear to give credit for the prescribed witness fees of $75.00 per day or the recoupment of losses from rescheduled appointments. The claimed amount will be reduced by two thirds to take account of these factors and reduced further by the GST component (which is not payable if it is not received) to produce a total recoverable loss under r 15.23(3) of $1,050.00.
The claim of $2,015.80 for costs or expenses incurred in connection with the production of subpoenaed documents is not further particularised and it is not clear whether it includes the documents retrieved in compliance with the subpoena dated 17 February 2005 as well as those covered by the subpoena served on 31 March 2005. This makes it difficult to examine the costs and expenses themselves or the process by which they are said to arise for the purposes of establishing whether it is reasonable to require the issuing party to meet them. That said, I do not think that anyone familiar with the cost of professional services these days would baulk at $500.00 as being a modest but fair price for the issuing party to pay for the time and effort that compliance with the subpoena to produce is likely to have demanded of a chartered accountancy firm.
The first applicant is entitled to be paid sufficient to meet the reasonable expenses of complying with the subpoena, including the travelling allowances mentioned in Sch 4 and witness fees at the prescribed rate for each of the days that he was required to attend until released or the subpoena obligation was complied with.
In summary, I will allow a total of $500.00 for document retrieval, $120.00 for travelling expenses, $225.00 for witness expenses, and $1,050.00 to compensate him for additional business losses. He is also entitled to recover the legal costs incurred in objecting to the first subpoena in the sum of $810.80.
In my view, the second applicant is entitled to the payment of conduct money and reasonable expenses of complying with the subpoena, including the cost of travel to and from his office to the Court by public transport in accordance with Pt 1 of Sch 4 and to witness fees for the day he actually gave evidence at the prescribed rate of $75.00 per day.
He says that he acted reasonably in engaging counsel to appear on his behalf on the 4th. I do not agree. He is a qualified and experienced solicitor. His complaint was a simple one that was easily addressed. He could have taken steps under r 15.24 or 15.25 but chose not to.
The second applicant did not seek to make out a case under r 15.23(3) to be reimbursed for any other additional substantial losses or expenses.
I assess the total amount due to him related to his attendance at $300.00, inclusive of witness fees for two days, reasonable conduct money and travelling expenses to and from the Gold Coast.
The amounts assessed as payable to both the first and second applicants must be paid within 30 days of this order.
I think that the respondent and not his lawyers should be responsible for the payment. He was the issuing party and, no doubt, gave the relevant instructions. He did not suggest that the solicitors were to blame or that they were acting beyond the scope of his authority in issuing the subpoenas or in their dealings with both the first and second applicants. He is, therefore, primarily liable for the consequences.

I therefore make the following orders:

IT IS ORDERED THAT:

The RESPONDENT do pay to the FIRST APPLICANT the sum of $2,585.80 for costs, expenses and loss incurred in connection with complying with subpoenas issued by the RESPONDENT on 15 October 2004 and 17 March 2005 and to attend to produce documents and give evidence respectively within 30 days from the date of this Order.
The RESPONDENT do pay to the SECOND APPLICANT the sum of $300.00 for costs and witness expenses (including conduct money) incurred in connection with complying with a subpoena issued by the RESPONDENT on 17 March 2005 within 30 days from the date of this Order.
I certify that the preceding 38 paragraphs
are a true copy of the Reasons for Judgment and Orders herein of the Honourable Justice Carmody.

………………………………….
Associate
Date: 19 May 2005.