Karllsson & Karllsson
[2021] FedCFamC1F 298
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Karllsson & Karllsson [2021] FedCFamC1F 298
File number(s): ADC 43 of 2013 Judgment of: MEAD J Date of judgment: 15 December 2021 Catchwords: FAMILY LAW – COSTS – Subpoena – Where a subpoenaed party (school) made an application for costs of compliance – Where the application is brought pursuant to rule 15.23 of the Family Law Rules 2004 – Where it was found that the demands of complying with the subpoena were neither “unusual in the sense of requiring ordinary activity to stop” nor did they cause “an unfair inconvenience having regard to the fact that the recipient had nothing to do with the litigation” – Where it is reasonable for a subpoenaed party to seek legal advice with respect to questions of privileged documents – Where a subpoenaed party is entitled to recover an amount for reasonable expenses comprised of legal fees – Where it was found that the school had incurred a substantial loss or expense by virtue of legal fees charged – Where the Court was not satisfied that the amount of the loss or expense as claimed met the threshold of reasonable expense – Where the order provides for the reasonable expenses to be agreed or assessed on a party/party basis. Legislation: Family Law Act 1975 (Cth) ss 117, 117(2)
Family Law Rules 2004 rr 15.23, 15.23(1)(a), 15.23(3), Chapter 15, Pt 15.3, Div 15.3.1
Federal Court Rules O 27 r 4A
Cases cited: Fuelxpress Ltd v L M Ericsson Pty Ltd (1987) 75 ALR 284
Moriarty & Moriarty [2009] FamCA 369
Markoska & Markoska and Anor [2011] FamCA 833
Pfenning and Anor & Snow [2014] FamCA 736
Division: Division 1 First Instance Number of paragraphs: 97 Date of hearing: 23 April 2020 Place: Adelaide by Global Meet Telephone Conference Counsel for the Applicant: Mr Nehmy Solicitor for the Applicant: Mills Oakley Lawyers Counsel for the Respondent: no appearance Solicitor for the Respondent: no appearance Counsel for the Intervener: Mr Cudmore Solicitor for the Intervener: CCK Lawyers ORDERS
ADC 43 of 2013 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR KARLLSSON
Applicant
AND: MS KARLLSSON
Respondent
THE PRINCIPAL, BB SCHOOL
Interested Party
ORDER MADE BY:
MEAD J
DATE OF ORDER:
15 DECEMBER 2021
THE COURT ORDERS THAT:
1.That the husband do pay the reasonable expenses incurred by BB School in seeking legal advice with respect to issues of compliance with the subpoena issued herein on 20 November 2019.
2.That those reasonable expenses be such of the legal fees charged by CCK Lawyers to the said BB School for the period 8 November 2019 to 4 December 2019 as agreed or assessed on a party/party basis.
3.That the husband pay the costs of the said BB School arising from preparation for and attendance at the hearing on 23 April 2020 in such sum as agreed or assessed on a party/party basis.
4.That these proceedings do otherwise stand dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonyms Karllsson & Karllsson has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
On 9 May 2018 following a trial, final parenting orders were made with respect to B and C, the children of Mr Karllsson and Ms Karllsson.
In December 2018 Mr Karllsson (hereinafter referred to as “the husband”) filed an Initiating Application seeking a variation of those parenting orders.
On 5 February 2019 Ms Karllsson (hereinafter referred to as “the wife”) filed a Response seeking a dismissal of that Application, an injunctive order, and an order with respect to communication with the children. The wife filed an Amended Response on 12 March 2019.
On 4 November 2019 the husband filed an Amended Initiating Application and on 19 November 2019 the wife filed a Second Amended Response.
The matter was listed for final hearing on 9 December 2019 and concluded with a consent order made on 10 December 2019 (as amended on 20 December 2019).
On 20 November 2019 a subpoena was issued by the husband’s solicitors directed to The Principal, BB School Adelaide.
The subpoena sought production of:
Your entire file, or a true copy of your entire file, in respect of the following pupils:
1.B of DD Street, Suburb VP SA, born … 2007;
2.C of DD Street, Suburb VP SA, born … 2010;
including but not limited to all and any file notes, memoranda, emails, reports and all communications.
The subpoena was returnable on 4 December 2019.
These reasons relate to an oral application for costs of compliance with the said subpoena made on 9 December 2019 by Mr Cudmore, the solicitor appearing for BB School (also referred to herein as “BB School”). The application was against the husband only.
Background
Prior to the issuing of the subpoena by the Court on 20 November 2019, it is common ground that by correspondence dated 14 November 2019 the wife’s solicitors corresponded with the husband’s solicitors seeking discovery in the following terms:
Karllsson – ADC43/2013 – Discovery
We refer to previous correspondence.
Please provide the following by way of discovery:
1.All correspondence between Mills Oakley and/or your client and BB School in relation to the Intervention Order (including, but not limited to, the letter referred to in paragraph 91 of your client’s trial affidavit);
2.All correspondence between Mills Oakley and BB School;
3.All correspondence between your client and BB School which contain any requests your client has made for the school to notify him about the time the children arrive at school, any absences of the children from school, any restrictions on the children leaving the school grounds with their mother or any similar notifications;
4.All correspondence between your client and BB School in relation to B’s maths tuition during the weeks the children are in his care
…
By correspondence dated 26 November 2019 the husband’s solicitors communicated with the wife’s solicitors about those issues in the following terms:
Karllsson – Family Law Matter
We enclose by way of service Subpoena to the Principal of BB School, served with an accompanying letter.
This Subpoena was filed in response to your letter dated 14 November 2019 seeking all communications with BB School. We had not yet served it on you.
The documents produced under the Subpoena ought to answer your request.
We are conferring with Counsel as to whether Ms AE is required for cross-examination and will let you know once that has happened.
…
The subpoena had issued on 20 November 2019.
BB School instructed CCK Lawyers to act on its behalf with respect to this subpoena. Although the subpoena was only issued on 20 November 2019, it would appear from annexure 2 to the Submissions of BB School filed 25 March 2020 that their instructions to their solicitors commenced as early as 8 November 2019. A tax invoice was issued to BB School by CCK Lawyers on 28 November 2019 in the sum of $4,072.20, relating to work apparently undertaken with respect to the subpoena between 8 and 21 November 2019.
By correspondence dated 29 November 2019 CCK Lawyers communicated with the husband’s solicitors with respect to:
·concerns about the “ambiguous” nature of the documents sought by the subpoena;
·the difficulties in collating the material sought;
·the liability that the subpoena would be set-aside on grounds of it being “vague or oppressive (or both)”;
·BB School having had to form the judgment that reference in the subpoena to “file” means a folder containing documents,
and further, that:
·a folder of printed documents and an electronic folder of documents was maintained by the Principal’s secretary;
·BB School proposed to produce copies of the documents in the two folders in response to the subpoena; and
·if the husband’s solicitors did not agree with that interpretation they should advise CCK Lawyers by 10.00 am on Monday 2 December 2019.[1]
[1] Submissions of BB School filed 25 March 2020, paragraph 36.
No objection was communicated by the husband’s legal representatives to that interpretation.
On 2 December 2019 a Notice of Objection to the subpoena was filed on behalf of BB School by CCK Lawyers. The Notice of Objection was returnable for 10.00 am on 9 December 2019, the date set for the commencement of the trial.
The details of the objection were stated to be as follows:
The documents record confidential information shared and communications between BB School and their lawyers bought into existence for the dominant purpose of giving or obtaining legal advice.
On 3 December 2019 further correspondence was sent by CCK Lawyers to the husband’s solicitor. This correspondence referred inter alia to:
·the need for BB School to take advice on the “scope of the subpoena”;
·the lengthy process to investigate and collate the children’s records;
·the considerable work required by both BB School and their solicitors throughout the process;
·significant issues of privacy and compliance to be considered as well as privilege;
·BB School incurring substantial loss and expense by reason of the subpoena;
·BB School seeking reimbursement from the husband pursuant to rule 15.23 for loss and expense incurred by reason of the subpoena;
·the amount of $8,572 (including GST) being sought at that time by reason of reimbursement for the loss and expense;
·BB School incurring substantial internal costs for the time of its staff;
·an offer to settle its claim for loss and expense incurred in the total sum of $8,572 on the basis of its legal fees only;
·further disputes about reimbursement increasing the costs for which the husband may ultimately be liable; and
·seeking payment of $8,572 on or before 9 December 2019.[2]
[2] Submissions of BB School filed 25 March 2020, paragraph 37.
By correspondence dated 4 December 2019 the wife’s solicitors communicated with the husband’s solicitors in the following terms:
Karllsson – ADC43/2013 – Subpoena to BB School
We refer to your letter dated 26 November 2019 enclosing a copy of your client’s subpoena to BB School filed on 20 November 2019.
Our client rejects any suggestion that it was necessary for your client to subpoena the school in response to her request for disclosure made on 14 November 2019. All documents requested in our letter are in the possession and/or control of your client.
A request for discovery is not to be answered with the filing of a subpoena. If our client wanted to subpoena the school, she could and would have done so herself.
BB School complied with the subpoena on 4 December 2019.
The trial was listed to commence at 10.00 am on 9 December 2019. Mr Cudmore of CCK Lawyers attended for BB School.
Prior to the commencement of trial the following order was made:
1.That by consent, the legal representatives for BB School being CCK Lawyers be at liberty to uplift documents produced pursuant to subpoena to BB School on 20 November 2019 in the packet marked “privileged”.
2.That the proper costs of compliance with the said subpoena be adjourned to a date to be fixed.
By correspondence dated 24 December 2019, following the consent uplifting of documents in respect of which privilege was claimed on 9 December 2019, CCK Lawyers again forwarded correspondence to the husband’s solicitors referring inter alia to:
·issues arising from the subpoena, not limited to “the ambiguity of the Subpoena and privilege” forming the basis of BB School seeking legal advice;
·earlier correspondence of 29 November and 3 December 2019 making it clear to the husband’s solicitors that “there was significant work and legal assistance involved”;
·the matters set out in their correspondence to the husband’s solicitors of 29 November 2019 being “the only reason that BB School was able [to] answer the subpoena by the return date”;
·the husband appearing to have requested the Court to issue the subpoena to answer a request for discovery from the wife;
·such a course of action having “the consequences of shifting the burden and cost of compliance onto an unrelated non-party”;
·costs being likely to be in the order of $11,000 including GST; but
·the matter could be resolved on the basis that BB School would not pursue the claim for costs if the husband paid $8,500 towards the loss and expense suffered by BB School.[3]
[3] Submissions of BB School filed 25 March 2020, paragraph 38.
By correspondence dated 30 January 2020 from CCK Lawyers to the husband’s solicitors, fees including unbilled work in progress had increased to $13,838.[4]
[4] Submissions of BB School filed 25 March 2020, paragraph 39.
Further correspondence was forwarded to the husband’s solicitors by CCK Lawyers dated 13 February 2020 enclosing a copy of an invoice to BB School dated 28 November 2019 in the amount of $4,072.20 and a billing report for the period to 12 February 2020 in the amount of $10,433, a total of $14,505.20.[5]
[5] Submissions of BB School filed 25 March 2020, paragraph 40.
As at 25 March 2020 the legal costs incurred by BB School were $16,438.69 together with unbilled work in progress.[6]
[6] Submissions of BB School filed 25 March 2020, paragraphs 42 and 43.
At the hearing on 23 April 2020 the Court was advised by the solicitor for BB School that the legal fees incurred by BB School arising from the subpoena totalled $21,021.84.[7]
[7] Bundle of Documents tendered on behalf of BB School at the hearing on 23 April 2020, Items 2, 3 and 4.
Summarising the legal fees incurred by BB School with CCK Lawyers they would appear to be:
·fees incurred between 8 November 2019 and 21 November 2019 - $4,072.20 invoiced 28 November 2019;
·fees incurred between 25 November 2019 and 13 February 2020 - $12,366.49 invoiced 25 February 2020; and
·fees incurred between 24 February 2020 and 24 March 2020 - $4,583.15 invoiced 27 March 2020.
The amount of these three invoices totals $21,021.84.
On 23 April 2020 it was submitted by the solicitor for BB School that Rule 15.23(3) of the Family Law Rules 2004 (“the Rules”) was relied on by his client in circumstances where it had incurred “a substantial loss or expense that is greater than the amount of the conduct money or witness fee payable under this Rule”. He submitted that in those circumstances BB School was applying to be reimbursed for that substantial loss or expense but was confining its claim to its external out-of-pocket legal expenses and making no claim for its internal costs.[8]
[8] Submissions of BB School filed 25 March 2020, paragraph 46.
It was submitted by Counsel for the husband that the application should be dismissed.
The law and legal principles
Chapter 15, Pt 15.3, Div 15.3.1 of the Rules sets out the general provisions regarding the using of subpoenas in the Family Court of Australia, the types of subpoenas, service of the subpoenas and, particularly germane to this matter, provisions as to conduct money and witness fees.
Rule 15.23 is in the following terms:
(1)A named person is entitled to be paid conduct money by the issuing party at the time of service of the subpoena, of an amount that is:
(a)sufficient to meet the reasonable expenses of complying with the subpoena; and
(b)at least equal to the minimum amount mentioned in Part 1 of Schedule 4.
…
(3)A named person may apply to be reimbursed if the named person incurs a substantial loss or expense that is greater than the amount of the conduct money or witness fee payable under this rule.
In Moriarty & Moriarty [2009] FamCA 369 (“Moriarty & Moriarty”), his Honour Justice Cronin said at [57] to [63]:
57. The rules refer to a ‘substantial’ loss or expense.
58.The determination of what is substantial is very subjective. In my view, it means that the expense must be large causing loss; it must be unusual in the sense of requiring normal activity to be stopped; or it must cause an unfair inconvenience having regard to the fact that the recipient has nothing to do with the litigation.
59.Assessment of the reasonableness of burdens involved in complying with a subpoena must take account the capacity of a party to collect and produce the documents. That means that in a large organization, the capacity to cover the expense is greater than in a small organization (see Lucas Industries v Hewitt (1978) 18 ALR 555 and G and D & D (2005) FamCA 1429).
60.Notwithstanding the administration of justice issue, the rules are not intended to put the individual presenting the documents in a position where they lose income or capital. The rule however refers to a substantial expense and each situation must be determined on its peculiar facts.
61.However, if the subpoena is simple and clear, requiring the production of the recipient’s own documents, the inconvenience is intended and expected to be minimal.
62.Thus, in a case where a professional fee is claimed or the bobcat driver claims significant hours of ‘downtime’, the question still remains whether the finding, collecting, collating, marshalling and producing the documents or materials required the attention of the owner, partner or professional or whether it could be done by a clerical person albeit with some ownership or professional oversight. It is that question that the judicial officer has to ask in every case.
63.The outcome is determined by the exercise of a discretionary judgment guided by the rules of court.
In Markoska & Markoska and Anor (Costs) [2011] FamCA 833 (“Markoska & Markoska”), Murphy J, in discussing the process for determining a claim pursuant to the provisions of Rule 15.23(3), said at [112] and [113]:
112.As has been seen, r 15.23(3) gives the ‘named person’ in a subpoena an entitlement. It is an entitlement to be paid the ‘reasonable expenses’ of complying with the subpoena in an amount not less than the prescribed minimum (currently $10). But, where the prescribed amount [or other amount] is tendered and is asserted by the named person to be less than the named person’s ‘reasonable expenses’, an onus is cast upon the named person to make application for an additional payment. When that application is made, the Court must be satisfied that the named person has incurred a ‘substantial’ loss or expense. If that threshold is crossed, the claimed amount cannot be greater than the ‘reasonable expenses’ of compliance with the subpoena.
113. Thus, it is necessary to ask:
(a)What ‘loss or expense’ is asserted to have been incurred by the named party?; and
(b)Can the loss or expense/s so claimed be regarded as ‘reasonable expenses of complying with the subpoena’ for this particular named party receiving this particular subpoena in these particular circumstances?; and
(c)Can any such reasonable expense/s be regarded as ‘substantial loss or expense’ that is, relevantly, greater than the $10 tendered?
The dispute
The claim before the Court arose, on its face, out of a most ordinary set of circumstances.
Mr and Ms Karllsson were in dispute with respect to parenting arrangements.
Final orders having been made by the Court on 9 May 2018 with respect to those issues, the dispute had reignited allegedly upon the husband becoming aware in November 2018 that the wife had sought and obtained an Intervention Order against a Mr AD some six months earlier. The existence of that order was not, according to the husband, disclosed to him or the Court at the time of the making of the final order on 9 May 2018.[9]
[9] Husband’s affidavit filed 4 November 2019, paragraph 9.
Although that appeared to the catalyst for the further proceedings, the dispute widened in the period leading up to the trial date, as is so often the case in matters before this Court.
The wider dispute related to the toxic relationship between the parties, the impact of that on the parties’ level of communication, the psychological wellbeing of both of the children, B’s social difficulties at school, and the level of exposure of both children and the impact on them of their parents’ dispute.
These were issues raised by both parties in their trial affidavits. It is not necessary to set them out in detail in these reasons.
Both B and C, the parties’ children and the subject of the proceedings, were and had been for some time, students at BB School.
The Intervention Order obtained by the wife named not only her but the parties’ children B and C as protected persons.
It was the evidence of the husband in paragraph 70 of his trial affidavit filed 4 November 2019, that prior to receiving correspondence from BB School dated 6 November 2018 referring to, inter alia, the Intervention Order, he had been unaware of its existence.
In paragraph 83 of that same trial affidavit the husband further alleged that the wife had withheld information about the Intervention Order from BB School, had not responded to calls made to her by BB School to discuss the order, and efforts made by the wife to downplay the seriousness of Mr AD’s conduct in discussing the issue with the head of the Junior School.[10]
[10] Husband’s trial affidavit filed 4 November 2019, paragraph 83.
It was clear from the material contained in that particular paragraph that the husband had been in communication, quite appropriately it would seem, with BB School regarding the Intervention Order.
The correspondence dated 14 November 2019 from the wife’s solicitors to the husband’s solicitors set out in paragraph 10 of these reasons would appear to have been appropriate. It requested discovery of material that on its face, save as to any issues of privilege, was entirely appropriate and germane to the proceedings.
The response to the correspondence was unusual to say the least.
It consisted of correspondence from the husband’s solicitors to the wife’s solicitors enclosing by way of service a copy of the subpoena to the Principal of BB School and included the words “[t]he documents produced under the Subpoena ought to answer your request.”
Nevertheless, the subpoena issued to the Principal of BB School was an uncomplicated, straightforward, and what might be regarded by this Court as, a fairly standard subpoena, directed to a school seeking the school’s file relating to pupils “including but not limited to all and any file notes, memoranda, emails, reports and all communications.”
It would appear from the first invoice issued to BB School on 28 November 2019 that some form of discussion regarding the subpoena had been occurring between BB School and its legal representatives as early as 8 November 2019, some twelve days prior to its issue.
In any event, some three days after the unhelpful response from the husband’s solicitors to the wife’s solicitors to which I have referred, the husband’s solicitors received correspondence on behalf of BB School expressing concerns about the ambiguous nature of the documents sought, the difficulties in collating the material, and the liability that the subpoena would be set-aside on grounds of it being “vague or oppressive (or both)”.
The husband’s solicitors were advised in that same correspondence that the secretary to the Principal of BB School maintained a folder of print documents and an electronic folder of documents in relation to the two children, that BB School proposed to produce copies of those documents in the two folders in response to the subpoena, and that the husband’s solicitors should advise if they did not agree with that interpretation by 10.00 am on Monday 2 December 2019. The correspondence also referred to BB School having had to “form a judgment” that the word “file” in the subpoena meant a folder containing documents.
Unhelpful as was the husband’s response to the wife’s request for discovery, he was entitled to issue the subpoena, which on its face may have contained material directly relevant to the dispute between the parties, and was broader in its terms than the wife’s request for discovery. It was clearly a matter to which he and his legal representatives had turned their minds some six days prior to the request for discovery forwarded by the wife’s solicitors.
In any event, in circumstances where the husband’s solicitors did not take objection to the interpretation of the requirements of the subpoena as described to them in the correspondence from CCK Lawyers dated 29 November 2019 by 10.00 am on Monday 2 December 2019, one would have assumed compliance by the required date of 4 December 2019 in terms as proposed in the correspondence from CCK Lawyers. BB School was of course at liberty to file any Notice of Objection they may be advised.
The Notice of Objection was filed on 2 December 2019 on the basis as set out in paragraph 17 of these reasons, the objection was listed for hearing at the commencement of the trial on 9 December 2019 and without further ado, the issue as to documents in the packet marked “privileged” was resolved and the documents in respect of which privilege was claimed were uplifted. One would have expected the involvement of CCK Lawyers to cease as at that time save as to the argument with respect to proper costs of compliance with the subpoena.
Submissions
It was submitted on behalf of BB School that:
·both parties were aware that there had been correspondence between the husband’s solicitors and BB School in relation to the Intervention Order and other matters;
·it could be inferred that the husband must have known that BB School had previously needed to seek and obtain legal advice in relation to the issue of the Intervention Order prior to the issue of the subpoena;
·the parties must have known that legal professional privilege would have applied to that legal advice;
·BB School is a large independent school operating across a number of campuses;
·BB School owes particular duties to students individually and collectively and to their parents;
·those duties include special duties of care and duties of confidentiality in connection with the education and care of its students;
·it could be inferred there would be no one single place where all communications or correspondence with BB School would be collated;
·the husband elected not to answer a request for discovery from the wife but to shift the burden of producing the documents she sought to BB School;
·that in turn shifted the burden of discovery and its consequent cost from the husband to BB School;
·the description “entire file” is imprecise as is the description “all communications”, which is also extremely wide;
·the drafting of the wording reflected an attempt to capture any piece of paper, or any communication, or any document which could in any way have related to the two children;
·BB School should not have been burdened with the significant obligation of locating, assessing and obtaining legal advice in connection with its obligations in relation to its “entire file” and “all communications”;
·BB School were required to locate documents from disparate locations through many departments and campuses and from various senior staff and teachers;
·those documents had to be collated and produced to its lawyers to seek and obtain proper advice as to what was required to be produced;
·BB School was required to seek and obtain advice as to its rights not to produce documents including communications protected by legal professional privilege;
·BB School did not regard its obligations to comply with the subpoena lightly;
·BB School only sought and incurred legal advice when appropriate and necessary;
·BB School had appropriately entered into correspondence with the husband’s solicitors for the purpose of seeking to recover the loss and expense of BB School;
·the husband refused to meet the costs; and
·BB School therefore continued to incur loss and expense by reason of the husband’s actions.
These submissions were set out in paragraphs 22 to 35 of the Submissions of BB School filed 25 March 2020.
It was submitted on behalf of the husband in Written Submissions tendered to the Court by the husband’s counsel Mr Nehmy that:
·it was surprising that the correspondence from CCK Lawyers to the husband’s solicitors on 29 November 2019 expressed confusion as to what was meant by “a file” in the context of a subpoena to a large private school seeking production of documents relating to two of its students;
·the husband did not object to the interpretation of the subpoena referred to in the correspondence to the husband’s solicitors from CCK Lawyers dated 29 November 2019;
·the husband’s solicitors were advised on 3 December 2019, in correspondence from CCK Lawyers serving the Notice of Objection, that BB School had by then incurred fees to that time of $8,572;
·these fees were associated with compliance with a straightforward subpoena;
·the cost was incurred within thirteen days of service of the subpoena;
·BB School complied with the subpoena on 4 December 2019;
·the husband did not object to privileged documents being uplifted from the subpoenaed documents;
·the costs of compliance with the subpoena by way of increased legal fees continued to rise after 9 December 2019;
·the costs of compliance argument was listed in the afternoon on 25 February 2020;
·the submissions relied on by BB School with respect to the cost of compliance with the subpoena do not provide an accurate representation of the test and considerations to which the Court must have regard;
·there is no reference to relevant public policy considerations in the submissions;
·whilst legal expenses may be recoverable pursuant to r 15.23(3) such recovery is discretionary and the rule does not serve as an indemnity for costs or expenses incurred;
·the reasonable compliance costs of complying with a subpoena requiring production of the files of two students at BB School cannot be said to be “large causing loss”, “usual in the sense of requiring normal activity to be stopped”, or cause “unfair inconvenience”;
·the Court should have regard to the matters set out in the cases of “Moriarty” and “Markoska” in determining what if any order should be made in favour of BB School;
·the application for payment of $21,021.84 is an application that the husband pay BB School’s legal fees on an indemnity basis;
·the claim was not formulated on the basis of the actual costs of compliance with the subpoena;
·the description “entire file” is a usual and common description in subpoenas of the nature of the subpoena to BB School and should have made compliance easier;
·no objection was made to the subpoena on the basis of its scope;
·the claim for payment of $21,021.84 conflates the issue of reasonable costs of compliance with the subpoena with an application for costs pursuant to s 117 of the Family Law Act 1975 (Cth) (“the Act”); and
·the matter was adjourned shortly after it commenced that day in circumstances where approximately two hours prior to the hearing an affidavit sworn by a solicitor at CCK Lawyers had been filed in the Court comprising some eighty pages including annexures. It had only just been served on the husband’s solicitors. The Court ordered it be uplifted from the file and adjourned the argument to 23 April 2020.
Consideration of the issues
The factors for the Court to consider include:
·whether the expense claimed by BB School is:
·large causing loss;
·unusual in the sense of requiring normal activity to be stopped;
·it must cause an unfair inconvenience having regard to the fact that the recipient has nothing to do with the litigation; and
·is the loss or expense in complying with the subpoena substantial.[11]
[11] Moriarty & Moriarty at [58].
The claim maintained by BB School is for its external “out-of-pocket” legal expenses.
BB School makes no claim for its internal costs.
The total amount of costs is $21,021.84.
BB School did not object to the scope of the subpoena.
The husband accepted the interpretation of BB School as to what was required by the subpoena.
BB School were entitled to seek legal advice with respect to issues of privileged documents.
In correspondence dated 29 November 2019 BB School’s solicitors advised the husband’s solicitors that the Principal’s secretary maintained a folder of printed documents and an electronic folder of documents in relation to both of the children.
That does not accord with the submission contained in paragraph 33 of the Submissions of BB School filed 25 March 2020 that:
It was necessary for BB School, in the circumstances, to locate documents from disparate locations through many of its departments and campuses and from various of its senior staff and teachers, and have those documents collated and produced to its lawyers so it could seek and obtain proper advice as to what was required to be produced in answer to the Subpoena…
There is no doubt the legal fees incurred by BB School in relation to compliance with the subpoena issued on 20 November 2019 were substantial.
BB School was of course entitled to seek such legal advice as it thought fit.
The basis of the claim by BB School was submitted to be a claim for “out‑of‑pocket” legal costs as opposed to internal costs.
Subpoenas seeking school files relating to children the subject of proceedings in this Court are common.
The documents that were required to be produced were BB School’s own documents. They were, according to correspondence from CCK Lawyers, maintained by the secretary to the Principal.
The subpoena was simple and clear. The inconvenience was intended and expected to be minimal.
Compliance with a subpoena involves an element of service to the community. Those issues are referred to in [19] and [20] of the judgment of Hogan J in Pfenning and Anor & Snow [2014] FamCA 736 (“Pfenning & Snow”) where her Honour said:
19.I agree that the assessment of what is, in fact, reasonable in any case should properly take into account:
a.that the purpose of the process of subpoena is to facilitate the proper administration of justice between parties and that, for that purpose, ‘it is the policy of the law that strangers who have documents may be put to certain trouble in searching for and gathering together relevant documents and bringing them to Court’: Lucas Industries v Hewitt (1978) 18 ALR 555, 570;
b.each citizen has a ‘duty to aid in the administration of the law’;
c.that the subpoena process is an integral party (sic) of our system of the administration of justice and that there is some aspect or facet of community responsibility to be taken into account.
20. I agree with and adopt that said by Murphy J at par [116] of Markoska:
‘Reasonable expenses of compliance are, in my view, not ascertained by reference to any pre-ordained categorisation of those expenses. Rather, what are reasonable expenses must be ascertained by first looking at what reasonably needed to be done so as to comply with the particular subpoena and any obligations attached to, or associated with, its compliance.’
(footnotes omitted)
With respect, I adopt what her Honour said in those passages.
The loss or expense asserted to have been incurred by BB School is confined to legal fees incurred as a result of advice regarding legal privilege that may attach to certain documents, as evidenced by the terms of the Notice of Objection.
Although the extent of the expense no doubt caused loss to BB School, I am not satisfied that the demands on BB School in complying with the subpoena were either “unusual in the sense of requiring normal activity to be stopped”[12] or that they caused “an unfair inconvenience having regard to the fact that the recipient has nothing to do with the litigation.”[13]
[12] Moriarty & Moriarty at [58].
[13] Moriarty & Moriarty at [58].
The claim by BB School for $21,021.84 was formulated on the basis of the amount of the legal fees it was charged by CCK Lawyers for advice it sought from them regarding any issues of privilege that may be relevant to its compliance with the subpoena.
In Fuelxpress Ltd v L M Ericsson Pty Ltd (1987) 75 ALR 284 Lockhart J considered a claim made for costs of complying with a subpoena including a claim for legal fees for acting and advising in relation to the subpoena. His Honour said on p 285 and 286:
It has not been argued that legal costs do not fall within the scope of the expense or loss that is recoverable under O 27, r 4A. Whether they are in fact recoverable depends, of course, on the circumstances of each case. Where, as in a case like the present, a third party is subpoenaed to produce a large number of documents (some of which are agreed as being confidential and others may raise questions of legal professional privilege) if a third party seeks legal advice with respect to those and other related matters, the cost of that advice answers the description of expense or loss incurred by the third party in complying with the subpoena…
…
The intent of r 4A is to compensate a person subpoenaed to produce documents for expense or loss reasonably incurred in complying with the subpoena… It is a case of a third party seeking compensation for what it has actually cost it in expense or loss in complying with the subpoena…
In Markoska & Markoska Murphy J discussed the differentiation between “an order for costs” and the Court’s power to make orders to cover “substantial loss or expense” pursuant to r 15.23 of the Rules, a comparative rule to order 27 r 4A of the Federal Court Rules. His Honour said at [79]:
The power in this Court to award ‘costs’ (properly so called) is confined to s 117(2) of the Act. The ‘substantial loss or expense’ ordered pursuant to r 15.23 is a separate head of power, noting that the sum so claimed might, in appropriate circumstances, include legal costs or expenses (see e.g. Kelleher & Anderson [2008] FamCA 113; Moriarty & Moriarty [2009] FamCA 369; Fuelxpress Pty Ltd v L M Ericsson Pty Ltd (1987) 75 ALR 284).
The claim in these proceedings was argued pursuant to r 15.23(3) of the Rules, notwithstanding that the amount claimed was based solely on “out‑of‑pocket” legal expenses.
In Pfenning & Snow Hogan J had to consider an application pursuant to both r 15.23 of the Rules and s 117(2) of the Act for costs/loss and expense of compliance with the subpoena.[14] The amount claimed totalled $21,843.56, of which $20,243.06 comprised legal costs.
[14] Pfenning & Snow at [5].
It was submitted on behalf of the named person in that case that she “be compensated for her actual costs, expenses and loss in meeting the subpoena.”[15] That submission was made having regard to:
·the detailed nature of the documents sought to be produced;
·the arguments in support of the objection to production;
·the outcome of that appearance;
·that it was reasonable, given the extent of the documents sought and the period of time over which they ranged (2008 to 2014) for the named person to seek legal advice about compliance with the subpoena; and
·that it was reasonable to take objection to the subpoena as she did, particularly taking into account an order setting aside the majority of the subpoena.[16]
[15] Pfenning & Snow at [32].
[16] Pfenning & Snow at [33].
Her Honour took into account the evidence relied upon with respect to the claim for legal fees of $20,243.06 but noted that there was no evidence before her detailing the work performed and no way for the Court to ascertain the items or work done to give rise to amounts invoiced. She took the view that in those circumstances she could not discern what of the amount spent by the named person was reasonable.
Her Honour was satisfied that the amount claimed by the named person amounted to a substantial loss or expense,[17] and further that the types of expenses that could be covered by an order made on an application pursuant to r 15.23(3) of the Rules included:
[O]btaining advice as to the validity of the subpoena and about matters such as privilege or confidentiality and representation in respect of the documents sought by the subpoena: see Fuelexpress Ltd v Ericsson Pty Ltd (1987) 75 ALR 284 and Hadid v Lenfest Communications Inc (1996) 65 FCR 350.[18]
[17] Pfenning & Snow at [13].
[18] Pfenning & Snow at [22(c)].
Rule 15.23(1)(a) of the Rules refers to the “reasonable expenses of complying with the subpoena”.
Although the amount of legal fees incurred by BB School were substantial, I am not satisfied that the expense as claimed meets the threshold of “reasonable expense”.
BB School was the named party receiving a subpoena to produce school records pertaining to two of its students.
The subpoena was simple and clear. It required the production of BB School’s own documents. Those documents were held by the Principal’s secretary.
It was reasonable for BB School to seek legal advice with respect to questions of privilege in circumstances where the documents may contain “confidential information shared and communications between BB School and their lawyers brought into existence for the dominant purpose of giving or obtaining legal advice”.[19]
[19] Notice of Objection filed by BB School on 2 December 2019.
The husband’s solicitors did not indicate to CCK Lawyers either by 10.00 am on 2 December 2019, or at any other time prior to trial, any objection to BB School’s proposal with respect to production contained in the correspondence referred to in paragraph 14 hereof.
At the commencement of the trial the husband did not object to the documents, in respect of which privilege was claimed by BB School, being uplifted from the documents produced pursuant to the subpoena. The issue was resolved by consent order.
CONCLUSION
I find that BB School is entitled to recover an amount for reasonable expenses comprising legal fees incurred between 8 November 2019 and 4 December 2019.
The amount of those fees should be as agreed or assessed.
I find further that there should be an order for costs in its favour with respect to preparation for and attendance at the hearing on 23 April 2020 as agreed or assessed.
For those reasons I make the orders as set out at the commencement of these reasons for judgment.
I certify that the preceding ninety-seven (97) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Mead. w
Associate:.Dated: 15 December 2021
0
5
0