Kelleher & Anderson
[2008] FamCA 113
•27 February 2008
FAMILY COURT OF AUSTRALIA
| KELLEHER & ANDERSON | [2008] FamCA 113 |
| FAMILY LAW – COSTS |
| Family Law Act 1975 (Cth) |
| Applicant: | K Pty Ltd |
| Respondent: | MS ANDERSON |
| File Number: | MLF | 2734 | of | 2006 |
| Date Delivered: | 27 February 2008 |
| Place Delivered: | Melbourne |
| Place Heard: | Melbourne |
| Judgment of: | Carter J |
| Hearing Date: | By written submissions |
Representation
| Advocate for the Applicant: | Ms Mimmo |
| Solicitor for the Applicant: | Hicks Oakley Chessell Williams |
| Counsel for the Respondent: | Mr J G Levine |
| Solicitor for the Respondent: | Issac Brott & Co |
Orders
That there be no orders as to costs.
IT IS NOTED that publication of this judgment under the pseudonym Kelleher & Anderson is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLF 2734 of 2006
| K PTY LTD |
Applicant
and
| MS ANDERSON |
Respondent
REASONS FOR JUDGMENT
[Costs]
The genesis for these proceedings is a subpoena issued on 3 July 2007 at the request of the wife requiring K Pty Ltd (“the Subpoenaed Party”) to produce documents. The Subpoenaed Party has sought an order that legal costs be awarded against the wife on an indemnity basis and the wife resists that application.
Pursuant to orders made 19 November 2007 the wife and the Subpoenaed Party were granted leave to apply for costs by way of written submissions and a timetable was fixed for the filing of any such submissions and responses.
Those submissions have been considered in Chambers. In addition, I have reread the wife’s Form 2 Application and affidavit in support both filed 18 October 2007 as well as the affidavit sworn or affirmed on 13 November 2007 by Mr C on behalf of the Subpoenaed Party. Where relevant reference has also been made to other earlier affidavit material.
Background
The proceedings in respect of the subpoena comprised one of a number of matters which had been referred to me as Judge Manager of proceedings pending in this Court between the wife and the husband. The substantive issues involve applications dealing with financial and children’s matters.
When the subpoena in question was issued a return date of 17 July 2007 was fixed. The subpoena required the provision of documents spanning a period of 10 years relating to the husband, both his parents, and related corporate entities. Mr C’s evidence was that there were more than 12 entities involved. This was also the submission made on behalf of the Subpoenaed Party which was not disputed in the wife’s submissions.
There is no evidence before the Court as to when the subpoena was served and as to what, if any, conduct money was paid.
On 16 July 2007 Stephen Farmer and Associates acting on behalf of the Y Family Trust and the husband’s father advised the wife’s solicitors that they were instructed to object to subpoenae which had been issued at the request of the wife, including the subpoena to the Subpoenaed Party. Enclosed to that letter were copies of Notices of Objection which were proposed to be filed at Court on the following day. (See Annexure AA9 to the wife’s affidavit.)
Part of Annexure AA9 is a letter dated 16 July 2007 from the Subpoenaed Party to the wife’s solicitor advising that objection was taken to the subpoena, on the grounds that the terms were too broad and were oppressive. The reasons for this were also set out in the letter. The letter also required an undertaking to pay for Mr C’s professional fees which were charged at $200 per hour.
It appears to be common ground that Mr C on behalf of the Subpoenaed Party attended the hearing on 17 July 2007, although the degree of his participation in that hearing cannot be determined from the evidence put before the Court. The Registrar’s List Hearing Record provides that orders were made adjourning the four separate subpoena to 7 August 2007 or some other date arranged between the parties and the Registry.
It is common ground that the next relevant hearing date was 7 August 2007. Orders were made by Registrar Lethbridge on that day and those orders note that the husband was represented as was the wife. No appearance by or on behalf of the Subpoenaed Party is referred to in the Court order and indeed the written submissions make it clear that Mr C did not appear.
The orders made provision for documents produced by the husband’s solicitors to be released to all parties for copying. Additionally all documents produced by a Dr S, another person subpoenaed by the wife, were ordered to be released to all parties for inspection only. Relevantly, an order was also made that documents from the Subpoenaed Party be released to all parties for photocopying. Objections from the Subpoenaed Party were set aside on the basis that there was no one present to continue the objection. Otherwise, the subpoena was adjourned to 21 August 2007 and the wife’s solicitors were required to give notice of the further return date and the setting aside of the objection (inter alia). A further order was made reserving the costs of the husband and the wife. No order was made relating to any costs of the Subpoenaed Party relating to compliance with the subpoena or otherwise.
On 17 August 2007 Mr C (on behalf of the Subpoenaed Party) instructed solicitors. It was contended that this was to assist him to recover costs prior to the release of the material, given that the wife’s solicitor had not provided the undertaking in relation to costs as had been earlier requested. The Subpoenaed Party’s submissions go on to contend that on the same day the Subpoenaed Party’s solicitors wrote to the wife’s solicitors seeking payment of the sum of $5,280 in respect of costs of compliance, further advising counsel would be engaged to appear at the subpoena hearing on 21 August 2007 seeking such costs in addition to legal costs incurred as a consequence of the wife failing to pay, or arranging to pay, the reasonable costs of the Subpoenaed Party. The wife’s written submissions do not contradict this save that it was submitted that the Subpoenaed Party was obliged to comply with the terms of the subpoena, the wife having already obtained an order for the release of the relevant documents.
It was contended on behalf of the Subpoenaed Party that a facsimile from the wife’s solicitors was received on 21 August 2007 advising that a Tax Invoice for the costs of compliance which had been provided was “nothing but a sham” and that the Subpoenaed Party would be obliged to abide by the Rules of the Court and to comply with the subpoena. The wife’s submissions do not contradict the fact of this correspondence. The matter returned to Court on 21 August 2007. Mr Levine of counsel appeared on behalf of the wife and Mr Ham of counsel appeared on behalf of the Subpoenaed Party. It is clear from the Court file that this was the return date for a number of other subpoenae to produce documents and the return date for those other subpoenae was adjourned to 25 September 2007.
Orders were made by consent as between the wife and the Subpoenaed Party. A hand-written Minute of the Orders signed by counsel for the wife and counsel for the Subpoenaed Party is on the Court file.
Relevantly the Minute provides:
“That the wife pay the reasonable costs of [the Subpoenaed Party] in complying with the subpoena issued including counsel’s fee of the day and reasonable legal expenses such costs to be agreed within 28 days and in the event of agreement not being reached, costs as taxed.”
The wife’s evidence was that she instructed her counsel to enter into these consent orders, a copy of which is attached to her affidavit (“Annexure AA2”). However, she alleged that she was induced to enter into the consent orders on the basis of the representation made by counsel for the Subpoenaed Party to her counsel that the documents, the subject of the subpoena, would be provided to the Court and that on the return date the Subpoenaed Party would consent to have the documents released to her, without requiring any payment “up front”. She also alleged that this representation was repeated to the Court by counsel for the Subpoenaed Party on the same day. She further deposed in her affidavit that it was important to her to have any payment deferred because her financial resources were limited.
When the matter was before me, Mr Levine informed me from the Bar table that the wife was present at the time he spoke to counsel for the Subpoenaed Party. That of course did not appear in the wife’s affidavit. In the wife’s written submissions it was contended that it was inconceivable that, in light of the orders of Registrar Lethbridge on 7 August 2007, that the wife would accept any arrangement other than one whereby the documents would be released without the need for payment in advance of the Subpoenaed Party’s costs.
For his part Mr C denied that the wife was induced to enter into the consent orders by any representation made by his counsel.
There was discussion at the hearing before me in respect to comments noted on the Registrar’s List Hearing Record of 21 August 2007 which I read to all persons present at Court. Those notes appear to be contrary to the wife’s evidence, at least in parts, but Mr Levine told me that he disputed the Registrar’s notes and comments saying that they were not an accurate record.
It is common ground that the matter was adjourned to 4 September 2007. The Court notes that the adjournment was “for release of documents”.
According to the Subpoenaed Party’s submissions, a letter was sent to the wife’s solicitors on 29 August 2007 which provided itemised costs incurred by the Subpoenaed Party, with a request for either agreement as to those costs and payment, or alternatively, advice as to whether it was preferred that the costs be taxed. The wife’s only response to this submission was “that the Tax Invoice provided was not properly particularised”.
It is common ground that the Subpoenaed Party complied with the subpoena on 4 September 2007 and that the relevant documents were delivered to the Court. It is also common ground that the Subpoenaed Party’s solicitor attended at Court on that day objecting to the release of the documents until such time that reasonable costs were paid, including legal costs for the Subpoenaed Party. Again, it is common ground that the documents were not released on that day and the matter was further adjourned to 25 September 2007. It was conceded by the wife that the Registrar suggested to the wife’s counsel that some offer as to payment of costs should be made to finalise the matter (see par (5)(g) wife’s submissions).
On 4 September 2007 the wife’s solicitors sent a letter to the solicitors for the Subpoenaed Party responding to their letter of 29 August which, as seen, sought payment for the Subpoenaed Party’s costs as well as legal costs. The wife’s solicitors advised in their letter that taxation of costs would be required.
The matter was adjourned by consent and then listed for hearing again on 4 October 2007. Relevantly orders were made:
“(i)That within 14 days the wife file and serve any application to set aside the orders made 21-8-07.
(ii)That in the event that the wife failed to file and serve any application pursuant to order (i) herein the matter be listed for taxation by the Taxation Registrar at the earliest available date.
…”
On 18 October 2007 the wife filed a Form 2 Application in a Case together with an affidavit. Relevantly she sought:
“(a) the orders made on 21 August 2007 be set aside;
(b) that the documents that are the subject to the subpoena be released;
(c) that [the Subpoenaed Party] pay the costs of this application;
(d)that any entitlement to the payment of costs of [the Subpoenaed Party] for compliance with the subpoena be fixed and determined by a Judge at this hearing.”
The Subpoenaed Party did not file a Form 2A Response to the wife’s application, but as already recorded, Mr C swore or affirmed an affidavit in response to the wife’s affidavit and in support of the claim by the Subpoenaed Party.
The proceedings before me in respect of this subpoena did not commence until just after 5:00pm. As was the case with the other aspects of these proceedings which I determined on the day, the matter was dealt with “on the papers”. As can be seen, there was a dispute as to the circumstances in which the orders of 21 August 2007 were made. That dispute could not be determined without a proper testing of the evidence by cross-examination. It was possible that further evidence would need to be called. The evidence of course related in particular to the question of whether the orders of 21 August 2007 should be set aside. Regardless of whether those orders were set aside, there would then be a need to determine what costs, if any, the Subpoenaed Party should be paid for compliance with the subpoena.
Eventually it was agreed, and sensibly so in my view, that the basis of my determination of the matter would be limited to the question of costs incurred in the production of documents pursuant to the subpoena. That was not to say however, as was also discussed, that the costs of the applications that brought the matter before me were important, and in that regard the question of whether there was an agreement was a relevant matter.
In the event I made orders which provided, amongst other things, that the Subpoenaed Party was entitled to be reimbursed by the wife for the costs of complying with the subpoena issued on 3 July 2007 at the request of the wife and directed to the Subpoenaed Party, which costs were fixed in the sum of $4,339.48. This amount was fixed by reference to the Subpoenaed Party’s work in progress ledgers for the period from 1 July 2007 to 16 August 2007 (Part of Annexure CK2 to Mr C’s affidavit). The amount included a charge of $742.50 for attendance at this Court at the Subpoena Hearing on 17 July 2007.
The orders were made shortly after 6:00pm. Prior to making the orders Ms Mimmo, who appeared on behalf of the Subpoenaed Party told me that she was seeking “some costs for legal fees since counsel was briefed, noting that (she herself) had been to Court on three occasions. Given the hour I was not prepared to sit any longer and advised that any application for costs could be made in writing. Provision for this was made in the orders.
In the Subpoenaed Party’s written submissions legal costs were sought on an indemnity basis and were noted as $6,466.30.
Family Law Rules 2004
The procedure in this Court for the production of documents under subpoena is set out in Part 15.3 of the Family Law Rules. Rule 15.23 of the Family Law Rules is in the following terms:
“15.23(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.
15.23(2) A named person served with a subpoena to give evidence and a subpoena to give evidence and produce documents is entitled to be paid a witness fee by the issuing party in accordance with Part 2 of Schedule 4, immediately after attending court in compliance with the subpoena.
15.23(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.”
Discussion
It can be seen that a person who issues a subpoena is required to pay conduct money at the time of service of the subpoena. The amount is not limited, for example, to expenses of travel to the Court and must be sufficient to meet the reasonable expenses of compliance with the subpoena. As seen, r 15.23(1) requires the tender to be made at the time of service of the subpoena, and if the recipient of the subpoena incurs a substantial loss or expense greater than the amount of the conduct money (or witness fee), then the recipient of the subpoena is entitled pursuant to sub-rule (3) to seek recovery.
Pursuant to r 15.26 the recipient of a subpoena, must attend Court on the court date to apply for an order if payment is sought for any loss or expense relating to the person’s attendance or the production of a document in compliance with the subpoena.
Provided that the loss or expense is otherwise reasonable in the circumstances of any case the recipient of a subpoena may seek to be reimbursed, for example, for the expenses of finding, collecting, collating, marshalling and producing the documents or materials sought, together with the incidental cost of attending the Court. For the purposes of Part 15.3 the recovery of costs of legal advice and representation in relation to the documents which have been subpoenaed may also be sought. (See Fuelxpress Ltd v LM Ericsson Pty Ltd (1987) 75 ALR 284; and Hadid v Lenfest Communications Inc (1996) 65 FCR 350.) The sort of matters envisaged include legal costs incurred in seeking advice as to the validity of the subpoena, or as to matters such as privilege and confidentiality.
In my view, subject to the tender of conduct money within the meaning of 15.23 the Subpoenaed Party was obliged to comply with the subpoena after service had been effected. There is no evidence what, if any, conduct money was tendered. If the conduct money tendered was not sufficient “to meet the reasonable expenses of complying with the subpoena”, the Subpoenaed Party was entitled to apply to be reimbursed either under r 15.23(3) or r 15.26(c) for additional expenses and legal costs, or substantial loss incurred in complying with the subpoena obligation.
The Subpoenaed Party acted properly and responsibly in notifying the wife’s solicitor and the Court on 16 July 2007 of the objections to the subpoena and the difficulty and expense of complying with it. The point is made on behalf of the wife that this was only done on the day before the Subpoena Hearing. Depending on when the subpoena was served, this point has merit.
The Subpoenaed Party also acted responsibly in attending the hearing on 17 July 2007. The matter then returned to Court on 7 August 2007. The Subpoenaed Party did not attend, and was not represented. As I have already recorded, one of the orders which was made authorised the release of documents from the Subpoenaed Party to all parties for photocopying. Furthermore, the objection to the subpoena was set aside on the basis that no one was present to continue that objection. The relevant subpoena was adjourned to 21 August 2007 and the solicitors for the wife were required to notify the Subpoenaed Party of the further return date and the setting aside of the objection by 5:00pm on 9 August 2007.
Given that the parties have a factual dispute and with this matter being dealt with on the papers I have looked at extraneous material to see whether support is provided for one or both of the parties.
The Registrar’s List Hearing Record effectively sets out the stance taken by counsel on behalf of the Subpoenaed Party: the documents would be produced upon costs being paid, and further, an order was made by consent in respect of the costs of the Subpoenaed Party. Additionally, the matter was adjourned to 4 September 2007 for the release of documents pursuant to the subpoena. That would perhaps support the wife’s contention, however, it was disputed on behalf of the wife that the Registrar’s Hearing Record provided an accurate summary of events.
The Minute of the Proposed Orders does not indicate that documents were not to be produced or released for inspection until after costs had been paid. The description of the “costs” of the Subpoenaed Party was said to be “in complying with a subpoena” and to include “counsel’s fees of the day” and reasonable legal expenses. It should be noted that the orders made 21 August 2007 provided the parties with a period of 28 days to reach agreement as to quantum.
I do not accept the submission made on behalf of the Subpoenaed Party that the wife breached the orders of 21 August 2007 by not paying the Subpoenaed Party’s costs or having the matter referred to a “Taxation of Costs” by 18 September 2007. It is clear that, as from 4 September 2007 when the wife’s solicitors wrote to the solicitors for the Subpoenaed Party, that there was no agreement as to quantum and accordingly, pursuant to the orders, costs would have to be “taxed”. In any event this was certainly the case after about 18 September 2007 when the period of time for agreement as to quantum had elapsed. The orders did not require the wife to refer the matter to a “Taxation of Costs” by a fixed date or at all. The procedure open to the Subpoenaed Party who obviously sought to rely on the orders of 21 August 2007 was that set out in r 19.21 of the Family Law Rules.
Conclusion
Whether particular costs are costs of compliance with a subpoena is a matter of fact. In my view the legal costs sought by the Subpoenaed Party are not costs of compliance with the subpoena within the Rules. The legal costs which are sought are the legal costs incurred in resisting the release of the document until costs of compliance of the subpoena were paid. Those legal costs were incurred after the orders were made on 7 August 2007 which authorised the release of the documents for photocopying. The legal costs now claimed are not, for example, costs incurred in relation to questions of privilege or confidentiality. They are purely and simply legal costs and disbursements incurred in resisting the release of the documents for inspection. I appreciate that the Subpoenaed Party may well have felt that the release of the documents prior to payment of costs of compliance with the subpoena, or alternatively, an undertaking being given as to payment, would have diminished, at least on a practical basis, the opportunity to recover those costs.
The order I made on 19 November 2007 in favour of the Subpoenaed Party were for the costs necessarily required to locate, collate and produce the documents sought by the wife in the subpoena, together with the costs of the Subpoenaed Party in attending at the Court for a Subpoena Hearing on 17 July 2007. It would be obvious that I formed the view that the Subpoenaed Party was entitled to be compensated for expense or loss reasonably incurred in complying with the subpoena in this regard.
After the orders were made on 21 August 2007 the situation became one when the Subpoenaed Party relied on the orders made that day, and the wife (eventually) sought to set the orders aside. As I have already recorded the factual dispute between the parties could not be determined, given that the hearing was conducted on the papers. The legal costs and expenses incurred on 21 August 2007 and at the other Subpoena Hearing which followed were all incurred because the Subpoenaed Party resisted the release of the documents, in reliance on the orders of 21 August 2007 in circumstances where the parties were in dispute as to when the documents were to be produced, and in particular, whether the Subpoenaed Party’s costs had to be paid beforehand.
Authorities such as Fuelxpress make it clear that a person subpoenaed to produce documents can rely on legal costs incurred in resisting the release or inspection of any such documents on the basis that the resistance was directed to matters such as confidentiality, privilege or the validity of the subpoena. However, I have not been referred to any authority, nor am I aware of any authority which establishes that legal costs incurred in resisting the release or inspection of any such documents prior to payment of costs of compliance with the subpoena constitute “an expense” incurred in complying with a subpoena.
In my view those legal costs do not constitute costs of compliance with a subpoena in the sense envisaged by the Rules.
Family Law Act 1975
It is a general rule under s 117(1) of the Family Law Act 1975 (“the Act”) that each party shall bear his or her own costs. In Penfold (1980) FLC ¶ 90-800 the Full Court of the High Court of Australia explained the general rule expressed in s 117(1) must yield to s 117(2) whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs. Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Apart from that, however, there is nothing in the subject matter or in the inter-relationship of the provisions which imposes any additional or special onus on the applicant for an order for costs. The members of the High Court did not agree with the suggestion made by the Full Court of this Court in the judgment under appeal that an order could only be made under s 117(2) in “a clear case”.
In considering what order (if any) should be made the Court is required (amongst other things) to have regard to the matters referred to in s 117(2A).
In Fitzgerald (as child representative for A (Legal Aid Commissioner of Tasmania)) v Fish 33 FamLR 123 the Full Court gave a timely reminder that nowhere in s 117(2A) or elsewhere in s 117 is there any prescription that more than one factor must be present before an order for costs can be made. Nor is there any indication of the comparative weight of the factors set out in sub-s (2A). It is therefore the case that there is nothing to present any factor being the sole foundation for an order for costs.
Discussion
The Subpoenaed Party has not referred to s 117 of the Act and has not dealt with the s 117(2A) factors.
The solicitors for the wife have submitted that the relevant matters under s 117(2A) are those set out in sub-pars (a); (c); and (d). I agree that those matters are relevant and would add s 117(2A)(e), namely whether any party to the proceedings has been wholly unsuccessful in the proceedings.
Financial Circumstances
It is the case, as was submitted on behalf of the wife, that there is no evidence or information as to the financial circumstances of the Subpoenaed Party. I am aware from my involvement in this case (in general terms at least) of the wife’s financial circumstances. It is likely that the wife’s financial circumstances are not as good as those of the Subpoenaed Party. I agree with the submission that any order for costs would place financial pressure upon the wife and I would also agree that this in turn is likely to impact on the children of the marriage.
This factor favours the wife.
I note that the wife’s submissions go on to allege that on previous occasions the Court has placed little or no weight on the wife’s financial circumstances “presumably because the Court has so demonised the wife that it has displayed no sympathy or compassion for these financial circumstances …”
That assertion is not a submission and its inclusion in the wife’s written submissions is to be deplored. Otherwise I will not dignify it with further response.
Conduct
I have already largely dealt with the matters raised in both parties’ submissions in discussion as to the course the proceedings took, however some matters require further observation.
The subpoena, which is the subject of the present proceedings, was not the only subpoena returnable on 17 July 2007. There were four subpoenae in all. In one way or another all sought production of documents related to the husband’s father or his affairs. Messrs Stephen Farmer and Associates, Solicitors, acted for the husband’s father and the Y Family Trust and objected to all four subpoenae. The husband’s father was clearly a person having sufficient interest in a subpoena within the meaning of r 15.26. I see nothing untoward in the circumstances that objection was taken to the subpoena directed to the Subpoenaed Party.
Each party alleges that the other has been unreasonable. The wife alleges the conduct of the Subpoenaed Party “has been reprehensible”. The Subpoenaed Party contends that it is “astounding that the wife has seen fit to continue to escalate (the Subpoenaed Party’s) legal costs unnecessarily and unreasonably.”
These matters are bound up with the dispute as to what happened on 21 August 2007. Each party has a different version. The Subpoenaed Party relied on the agreement and consent orders, but did not take steps under Part 19.6 of the Rules. The wife claims that there was an agreement or representation that the documents would be released without the need for payment in advance of the costs of the subpoena, but took no steps to set the orders aside until her Form 2 Application was filed on 18 October 2007, following the Registrar’s orders of 4 October 2007.
For reasons already given the truth or otherwise of these matters could not be determined “on the papers”. Eventually, at the hearing before me, it was agreed that my determination would not extend to the validity, enforcement or otherwise of those orders.
Whether the conduct of either party was reasonable or otherwise is accordingly not a matter open to me to determine.
Lack of Success
It could not be said that either party was completely unsuccessful in the proceedings before me. The Subpoenaed Party was successful to the extent reflected in the orders I made and the wife was unsuccessful in that she resisted any order being made in favour of the Subpoenaed Party. This factor favours the Subpoenaed Party.
Conclusion
When the foregoing matters are weighed against each other and the merits of the respective submissions are considered, ultimately I am unable to find justifying circumstances sufficient to depart from the position set out in s 117(1) of the Act.
Accordingly the Subpoenaed Party’s application will be dismissed.
I certify that the preceding sixty-five (65) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carter.
Associate:
Date: 27 February 2008
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