Kenny v Gippsreal Ltd
[2015] VSC 284
•18 June 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S CI 2015 01489
| CAROLINE MAJELLA KENNY | Plaintiff |
| v | |
| GIPPSREAL LTD (ACN 076 779 630) | Defendant |
S ECI 2015 000120
| IAN SYMONDS & ASSOCIATES | Plaintiff |
| v | |
| GIPPSREAL LTD (ACN 076 779 630) | Defendant |
S CI 2012 02626
| GIPPSREAL LTD (ACN 076 779 630) | Plaintiff |
| v | |
| ACTION CYCLES and ORS | Defendant |
S CI 2011 04416
| ACTION CYCLES (Receivers and managers appointed) | Plaintiff |
| v | |
| DAVID ANTHONY ROSS (in his capacity as receiver and manager of Action Cycles Pty Ltd (receivers and managers appointed) | Defendant |
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JUDGE: | VICKERY J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 26 May 2015 |
DATE OF JUDGMENT: | 18 June 2015 |
CASE MAY BE CITED AS: | Kenny & Anor v Gippsreal Ltd |
MEDIUM NEUTRAL CITATION: | [2015] VSC 284 |
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PRACTICE AND PROCEDURE – Applications for costs and compensation against lawyers for alleged breaches of overarching obligations – Civil Procedure Act 2010 (the ‘Act’) ss 28, 29, 30 and 31 – Meaning of ‘finalisation’ s 30(2) of the Act – Non-compliance with time bar in s 30(2) of the Act – Section 29 applications under the Act for costs and compensation against lawyers set aside – Subpoenas addressed to lawyers – Whether served a legitimate forensic purpose – Validity of subpoenas considered – Subpoenas upheld.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff (Barrister) | P B Murdoch QC with D A Klempfner of counsel | DLA Piper Australia |
| For the Plaintiff (Solicitors) | C Jones, solicitor | Colin Biggers & Paisley |
| For the Defendant (Gippsreal) | J L Evans of counsel | Oakleys Legal |
HIS HONOUR:
In this part of the proceedings, two issues arise for determination:
1.First, whether a party to legal proceedings before this Court, Gippsreal Ltd (‘Gippsreal’), by reason of the timing of the making of its applications, is entitled to pursue costs and/or compensation pursuant to s 29 of the Civil Procedure Act 2010 (the ‘CPA’) from a barrister and an instructing solicitor in respect of proceedings conducted by them where it is alleged that they have contravened the overarching obligations prescribed by the CPA; and
2.Second, whether subpoenas issued by Gippsreal for the production of documents directed to the barrister and the instructing solicitor, seeking documents in support of its applications for costs and/or compensation, should be permitted to stand or should be set aside.
Background
I accept the following facts and documents relevant to the matters presently before the Court:
1.Between September 2011 and June 2012, The Barrister acted at various times for Darren Gellie, Lorelle Gellie and Action Cycles Pty Ltd (the ‘Action Cycles parties’) in the 2011 Proceeding and the 2012 Proceeding. Essentially, the proceedings centred upon allegations made by the Action Cycle parties that deeds of settlement which they had entered into with Gippsreal in settlement of other matters were unenforceable and should be set aside. The underlying causes of action in the 2011 Proceeding and the 2012 Proceeding are not relevant for present purposes
2.Between 26 April 2012 and 10 July 2012, the Solicitors acted at various times the Action Cycles parties in both proceedings
3.On 30 April 2012, Gippsreal’s solicitors wrote directly to the Solicitors and the Barrister in the following terms:
Further, we must respectfully put the Respondents’ legal representatives on notice that if it is determined that the respondents have no basis to oppose the entering of the Orders and that in all the circumstances their opposition had no reasonable prospect of success, we are instructed to seek an Order for indemnity costs against the Respondents’ legal representatives personally and will produce this correspondence in support of that application.
On 7 August 2012, Proceeding Orders were made by consent in both the 2011 Proceeding (the ‘2011 Proceeding Orders’) and the 2012 Proceeding (the ‘2012 Proceeding Orders’). Relevant parts of the orders dated 7 August 2012 were made in the following terms:
2011 Proceeding Orders
THE COURT ORDERS BY CONSENT THAT:
1.The plaintiffs [i.e. the Action Cycles parties] pay the third defendant [i.e. Gippsreal] the sum of $2,336,782.74
2. …
3. …
4. …
5. …
6. …
7. …
8. …
9. The proceeding and the counterclaim otherwise be dismissed.
10. The third defendant has liberty to apply.
11.The plaintiffs pay the third defendant’s costs of the proceeding and the counterclaim, from 27 April 2012 to the date of this order, including reserved costs, on an indemnity basis
2012 Proceeding Orders
THE COURT DECLARES BY CONSENT THAT:
1.The Deed of Settlement entered into between the parties on or about 1 March 2012 was valid and binding upon the parties
THE COURT ORDERS BY CONSENT THAT:
2. The counterclaim is dismissed.
3.The first to third defendants [i.e. the Action Cycles parties] pay the plaintiff’s [i.e. Gippsreal’s] and fourth and fifth defendants’ costs of the proceeding and the counterclaim to the date of this order, including reserved costs, on an indemnity basis
4.The fourth and fifth defendants’ costs of this proceeding and of the counterclaim to the date of this order are fixed at $114,817.35.
5.The question of whether any third parties may also be liable to pay any or all of the plaintiff’s and fourth and fifth defendants’ costs of this proceeding is reserved.
The Proceeding Orders made in both the 2011 Proceeding and the 2012 Proceeding were authenticated.
Gippsreal served its summonses on the Solicitors in early February 2015. I infer that it served its summonses on the Barrister sometime after 22 December 2014.
Prior to the issue of its summonses on 22 December 2014 Gippsreal did not make any application against with the Solicitors or the Barrister for costs or compensation against either of them.
At the time of the making of the 2011 and 2012 Proceeding Orders on 7 August 2012, neither the Solicitors nor the Barrister were acting on behalf of the Action Cycles parties, and they were not recorded on the orders as acting or appearing on that occasion.
Gippsreal’s Applications
The Defendant Gippsreal has two applications before the Court in the separate proceedings (together referred to as the ‘2011 and 2012 Proceedings’):
1.Gippsreal’s application made by Summons filed on 22 December 2014 in proceeding S CI 2011 4416 (the ‘2011 Proceeding’); and
2.Gippsreal’s application made by Summons filed on 22 December 2014 in proceeding S CI 2012 2626 (the ‘2012 Proceeding’);
The Summons in the 2011 Proceeding claims:
1. Pursuant to Rule 63.23 of the Supreme Court (General Civil Procedure) Rules 2005, Ian Symonds & Associates and Caroline Kenny QC pay the third defendant's costs of the proceeding, and the plaintiff's by counterclaim's cost of the counterclaim, in respect of the period between 30 April 2012 and 7 August 2012.
2. Further or in the alternative to paragraph 1, by reason of the contravention by (either or both of) them of section 18 of the Civil Procedure Act 2010 (Vic) with respect to the claims made by the plaintiffs in the proceeding during the period from 30 April 2012 and 10 July 2012, pursuant to section 29(1) of the Civil Procedure Act 2010 (Vic):
1) Ian Symonds & Associates and Caroline Kenny QC pay the third defendant's costs of the proceeding, and the plaintiff's by counterclaim's cost of the counterclaim, in respect of the period between 30 April 2012 and 7 August 2012;
2) Ian Symonds & Associates and Caroline Kenny QC compensate the plaintiff by counterclaim in respect of its loss incurred by its inability to obtain judgment against the defendants by counterclaim (in the terms of the judgment ultimately obtained on 7 August 2012) during the period from 30 April 2012 to 7 August 2012.
3. Ian Symonds & Associates and Caroline Kenny QC pay the third defendant's/plaintiff by counterclaim's costs of this application.
The Summons in the 2012 Proceeding claims:
1. Pursuant to Rule 63.23 of the Supreme Court (General Civil Procedure) Rules 2005, Ian Symonds & Associates and Caroline Kenny QC pay the plaintiff's costs of the proceeding and counterclaim.
2. Further or in the alternative to paragraph 1, by reason of the contravention by (either or both of) them of section 18 of the Civil Procedure Act 2010 (Vic) with respect to the defence and counterclaim filed by the defendants in the proceeding (as amended from time to time), pursuant to section 29(1) of the Civil Procedure Act 2010 (Vic) Ian Symonds & Associates and Caroline Kenny QC pay the plaintiff's costs of the proceeding and counterclaim.
3. Ian Symonds & Associates and Caroline Kenny QC pay the plaintiff's costs of this application.
Barrister’s Applications in the Present Proceedings
By Originating Motion filed in proceeding SCI 2015 1489 on 2 April 2015, the Plaintiff, Ms Kenny QC, (the ‘Barrister’), seeks:
(a)a declaration that Gippsreal’s application made by its Summons filed on 22 December 2014 in the 2011 Proceeding is incompetent;
(b)a declaration that Gippsreal’s application made by its Summons filed on 22 December 2014 in the 2012 Proceeding is incompetent;
1. alternatively to paragraph 1(a) above, a declaration that Gippsreal’s application made by Summons filed 22 December 2014 in the 2011 Proceeding that Ms Kenny pay costs and compensation pursuant to section 29(1) of the Civil Procedure Act 2010 (Vic) was, contrary to section 30(2) of the Civil Procedure Act 2010 (Vic), not made prior to the finalisation of the civil proceeding to which the application relates;
2. alternatively to paragraph 1(b) above, a declaration that Gippsreal’s application made by Summons filed 22 December 2014 in the 2012 Proceeding that Ms Kenny pay costs pursuant to section 29(1) of the Civil Procedure Act 2010 (Vic) was, contrary to section 30(2) of the Civil Procedure Act 2010 (Vic), not made prior to the finalisation of the civil proceeding to which the application relates;
3. an order that Gippsreal’s application made by Summons filed 22 December 2014 in the 2011 Proceeding be:
4. dismissed;
5. struck out; or
6. permanently stayed;
7. like orders in the 2012 Proceeding;
8. an order that the subpoena for production to the Prothonotary dated 3 February 2015 addressed to Ms Kenny and issued at the request of Gippsreal in the 2011 Proceeding is set aside;
9. an order that the subpoena for production to the Prothonotary dated 3 February 2015 addressed to Ms Kenny and issued at the request of Gippsreal in the 2012 Proceeding is set aside.
There are therefore two discrete elements to the Barrister’s proceeding:
1. first, a challenge to Gippsreal’s ability to pursue costs and/or compensation from the Barrister in respect of the 2011 Proceeding and costs in respect of the 2012 Proceeding;
2. second, a challenge to the subpoenas for production directed to the Barrister issued by Gippsreal in both the 2011 Proceeding and the 2012 Proceeding.
Solicitor’s Applications in the Present Proceedings
By Originating Motion in proceeding SCI 2015 000120 also filed 2 April 2015, the Solicitor Plaintiff firm, Ian Symonds & Associates (the ‘Solicitors’) seek materially identical relief as is sought by the Barrister Plaintiff in proceeding SCI 2015 1489.
Mr Ian Symonds is the sole principal of the firm of Solicitors.
Relevant Provisions of the Civil Procedure Act
It is convenient to commence by setting out the key relevant sections of the CPA relied upon in argument under the first question.
The purposes of the CPA are provided for in s 1, which provides:
Purposes
(1) The main purposes of this Act are—
(a)to reform and modernise the laws, practice, procedure and processes relating to civil proceedings in the Supreme Court, the County Court and the Magistrates' Court and provide for uniformity;
(b) to simplify the language relating to civil procedure;
(c)to provide for an overarching purpose in relation to the conduct of civil proceedings to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute;
(d)to amend various Acts in relation to the conduct of civil proceedings to reflect the new procedures
(2) Without limiting subsection (1), this Act provides for—
(a)overarching obligations for participants in civil proceedings to improve standards of conduct in litigation;
(b)expanding the powers of the courts in relation to costs in relation to civil proceedings;
(c)the enhancement of case management powers of the courts, including in relation to discovery;
(d)further enhancement of appropriate dispute resolution processes;
(e) reform of the law relating to summary judgment;
(f)clarifying sanctions available to courts in relation to contravention of discovery obligations;
(g)the management and control of expert evidence in civil proceedings
The definition of ‘civil proceeding’ is provided in s 3 as: ‘any proceeding in court other than a criminal proceeding or quasi-criminal proceeding;’
The overarching purpose of the CPA are provided for in s 7.
Section 7 provides:
Overarching purpose
The overarching purpose of this Act and the rules of court in relation to civil proceedings is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.
Without limiting how the overarching purpose is achieved, it may be achieved by—
(a) the determination of the proceeding by the court;
(b) agreement between the parties;
(c) any appropriate dispute resolution process—
i. agreed to by the parties; or
ii. ordered by the court.
A court is required to seek to give effect to the overarching purpose in s 8, which provides:
Court to give effect to overarching purpose
(1)A court must seek to give effect to the overarching purpose in the exercise of any of its powers, or in the interpretation of those powers, whether those powers—
(a)in the case of the Supreme Court, are part of the Court's inherent jurisdiction, implied jurisdiction or statutory jurisdiction; or
(b)in the case of a court other than the Supreme Court are part of the court's implied jurisdiction or statutory jurisdiction; or
(c)arise from or are derived from the common law or any procedural rules or practices of the court.
(2)Subsection (1) applies despite any other Act (other than the Charter of Human Rights and Responsibilities Act 2006) or law to the contrary.
The overarching obligations under the CPA are defined in Part 2.3 of the CPA.
They are extended to apply to a wide range of participants in civil litigation, including for present purposes under s 10(1)(b), any legal practitioner or other representative acting for or on behalf of a party.
Section 10 provides:
Application of overarching obligations—participants
(1) The overarching obligations apply to—
(a) Any person who is a party;
(b)Any legal practitioner or other representative acting for or on behalf of a party;
(c) Any law practice acting for or on behalf of a party;
(d)Any person who provides financial assistance or other assistance to any party in so far as that person exercises any direct control, indirect control or any influence over the conduct of the civil proceeding or of a party in respect of that civil proceeding, including, but not limited to—
i. an insurer;
ii.a provider of funding or financial support, including any litigation funder.
(2)Subject to subsection (3), the overarching obligations do not apply to any witness in a civil proceeding.
(3)The overarching obligations (other than the overarching obligations specified in sections 18, 19, 22 and 26) apply to any expert witness in a civil proceeding.
(4)Subsection (3) is in addition to, and not in derogation of, any existing duties applying to expert witnesses.
Part 2.4 of the CPA then provides sanctions for the contravention of the overarching obligations. Sections 28–31 of the CPA, which together comprise Part 2.4, are central to the present applications, and they are set out in full below.
Section 28 calls upon the courts, in exercising their powers in civil proceedings, including in exercising a discretion in relation to costs, to take the overarching obligations into account.
Section 28 provides:
Court may take contravention of overarching obligations into account
(1)In exercising any power in relation to a civil proceeding, a court may take into account any contravention of the overarching obligations
(2)Without limiting subsection (1), in exercising its discretion as to costs, a court may take into account any contravention of the overarching obligations
Section 29 empowers a court to impose sanctions, which are defined in a non-exhaustive list, including sanctions by way of orders as to costs (s 29(1)(a) and (b)) and the payment of compensation (s 29(1)(c)), if a court is satisfied that, on the balance of probabilities, a person has contravened any overarching obligation.
Section 29 provides:
Court may make certain orders
(1)If a court is satisfied that, on the balance of probabilities, a person has contravened any overarching obligation, the court may make any order it considers appropriate in the interests of justice including, but not limited to—
(a)an order that the person pay some or all of the legal costs or other costs or expenses of any person arising from the contravention of the overarching obligation;
(b)an order that the legal costs or other costs or expenses of any person be payable immediately and be enforceable immediately;
(c)an order that the person compensate any person for any financial loss or other loss which was materially contributed to by the contravention of the overarching obligation, including—
i.an order for penalty interest in accordance with the penalty interest rate in respect of any delay in the payment of an amount claimed in the civil proceeding; or
ii. an order for no interest or reduced interest;
(d)an order that the person take any steps specified in the order which are reasonably necessary to remedy any contravention of the overarching obligations by the person;
(e)an order that the person not be permitted to take specified steps in the civil proceeding;
(f)any other order that the court considers to be in the interests of any person who has been prejudicially affected by the contravention of the overarching obligations.
(2) An order under this section may be made—
(a) on the application of—
i. any party to the civil proceeding; or
ii.any other person who, in the opinion of the court, has a sufficient interest in the proceeding; or
(b) on the court's own motion.
(3)This section does not limit any other power of a court to make any order, including any order as to costs.
The CPA then provides for the process and procedure to govern s 29 applications, including the application time limitation for the application.
Section 30 provides:
Applications for orders under section 29
(1) An application for an order under section 29 is to be made—
(a)in the court in which the civil proceeding was, or is being, heard; and
(b) in accordance with the rules of court.
(2)An application for an order under section 29 must be made prior to the finalisation of the civil proceeding to which the application relates (excluding any period for appeals).
(3)For the purposes of subsection (2), if an order, including an order in respect of costs, is made after the date of finalisation of the civil proceeding to which the application relates, the date of making of the last of the orders is taken to be the date of finalisation of that proceeding.
Provision is then made for an extension of time within which an application for an order under s 29 must be made.
Section 31 provides:
Extension of time for application
(1)Despite section 30(2), a person may apply to the court for an extension of time to apply for an order under section 29 after the finalisation of the civil proceeding.
(2)The court may grant an extension of time for making an application under section 29 if satisfied that the person making the application was not aware of the contravention of the overarching obligations until after the end of the period specified in section 30(2).
(3) An application under this section may be made by—
(a) Any party to the civil proceeding; or
(b)any other person who has a sufficient interest in the civil proceeding.
It may be observed that the operation of s 30 in combination with s 31 in effect creates two classes of potential applicants for s 29 orders:
1.those to whom s 31(2) may apply, namely persons who were not aware of the contravention of the overarching obligations until after the end of the period specified in s 30(2); and it follows,
2.those to whom s 30(2) may apply, namely persons who were in fact aware of the contravention of the overarching obligations before the end of the period specified in s 30(2).
Relevant Case Law on Civil Procedure Act
The Court of Appeal in Yara Australia Pty Ltd & Ors v Oswal[1] took the opportunity to review the statutory regime and the obligations that are imposed by the CPA.[2] Referring to ss 1(2)(a) and (b), the Court observed that the Act provides for ‘overarching obligations for participants in civil proceedings to improve standards of conduct in litigation’, and ‘expanding the powers of the courts in relation to costs in relation to civil proceedings’.
[1][2013] VSCA 337 (‘Yara’).
[2]Yara [2013] VSCA 337 [5]–[11].
The Court stated further that pursuant to the provisions of the CPA:[3]
The court is obliged to give effect to the overarching purpose of the Act ‘to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute’. The court is directed to further the overarching purpose by having regard to the objects and matters articulated in s 9 of the Act which include the efficient use of judicial and administrative resources and dealing with the proceeding in a manner proportionate to the complexity and importance of the issues and amount in dispute.
The overarching obligations apply to any person who is a party, any legal practitioner, legal representative or law practice acting for or on behalf of a party. The overarching obligations do not override any duty or obligation of a legal practitioner arising under common law or statute to the extent that such duties and obligations and the overarching obligations can operate consistently. But a legal practitioner or law practice engaged by or on behalf of a client in connection with a civil proceeding ‘must comply with the overarching obligations despite any obligation ... to act in accordance with the instructions or wishes of the client’. A legal practitioner is not required to comply with any instruction or wish of a client which is inconsistent with the overarching obligations, and must not cause the client to contravene the overarching obligations To the extent that there is an inconsistency between a legal practitioner’s duty to a client and their overarching obligations, the obligation prevails.
Part 2.3 outlines the overarching obligations The duty stated in s 16 is that each person to whom the overarching obligations apply has a paramount duty to further the administration of justice. The overarching obligations include the obligation to only take steps that are considered to be necessary to resolve or determine the dispute. [Footnotes omitted]
[3]Yara [2013] VSCA 337 [9]–[11].
With regard to the operation of s 29 of the CPA specifically, the Court of Appeal said in Yara:[4]
Section 29 of the Act in particular is a unique provision, conferring powers broader than those in any other jurisdiction in Australia, to sanction legal practitioners and parties who fail to meet their overarching obligations
[4]Yara [2013] VSCA 337 [17].
As the Court of Appeal further observed, s 29 of the CPA provides the Court with broader and more flexible powers than under the Supreme Court (General Civil Procedure) Rules 2005 (the ‘Rules’) or those under its inherent jurisdiction.[5] To this observation I would add that s 29 of the CPA also clarifies and possibly extends the Court’s power to award costs pursuant to s 24 of the Supreme Court Act 1986 (Vic).
[5]Yara [2013] VSCA 337 [18].
In Yara the Court of Appeal expanded further on the operation of s 29 in the following passage:[6]
The Court’s powers under s 29 of the Act include the power to sanction legal practitioners and parties for a contravention of their obligations as the heading to Part 2.4 indicates In our view, these powers are intended to make all those involved in the conduct of litigation — parties and practitioners — accountable for the just, efficient, timely and cost effective resolution of disputes. Through them, Parliament has given the courts flexible means of distributing the cost burden upon and across those who fail to comply with their overarching obligations. A sanction which redistributes that burden may have the effect of compensating a party. It may take the form of a costs order against a practitioner, an order that requires the practitioner to share the burden of a costs order made against their client or an order which deprives the practitioner of costs to which they would otherwise be entitled. The Act is clearly designed to influence the culture of litigation through the imposition of sanctions on those who do not observe their obligations. Moreover, the power to sanction is not confined to cases of incompetence or improper conduct by a legal practitioner. Where there is a failure by the practitioner, whether solicitor or counsel, to use reasonable endeavours to comply with the overarching obligations, it will be no answer that the practitioner acted upon the explicit and informed instructions of the client. A sanction may be imposed where, contrary to s 13(3)(b), the legal practitioner acts on the instruction of his or her client in breach of the overarching obligations.
Section 28(2) enables a court, in exercising its discretion as to costs, to take into account any contravention of the overarching obligations In our view, the enactment of s 29 together with s 28(2) imbues the Court with broad disciplinary powers that may be reflected in the costs orders that are made. The Court is given a powerful mechanism to exert greater control over the conduct of parties and their legal representatives, and thus over the process of civil litigation and the use of its own limited resources.
[6]Yara [2013] VSCA 337 [20]–[21].
Section 29 of the CPA therefore has both compensatory and punitive elements where there is a finding of a contravention of an overarching obligation required by the CPA.[7]
[7]See Hudspeth and Scholastic Cleaning and Consultancy Services (No 4) [2013] VSC 14 [5]–[7] (Dixon J).
In Yara the Court of Appeal summarised its analysis with the following observation:[8]
The Act prescribes that parties to a civil proceeding are under a strict, positive duty to ensure that they comply with each of the overarching obligations and the court is obliged to enforce these duties The statutory sanctions provide a valuable tool for improving case management, reducing waste and delay and enhancing the accessibility and proportionality of civil litigation. Judicial officers must actively hold the parties to account.
[8]Yara [2013] VSCA 337 [26].
The Court of Appeal concluded in Yara with the following guidance as to how a judge may go about making an ‘own motion’ order under s 29(2)(b). The approach is consistent with the time limit imposed on litigant applicants for s 29 orders required by s 30(2):
As the sanction for a breach will usually lie in an appropriate costs order, a judge may at the conclusion of the reasons for judgment immediately invite oral submissions as to why there should not be a finding that the Act was contravened. The judge may in a relatively brief way deal with that issue in providing succinct reasons for a finding that there has been a breach of the Act and how that finding affects the orders for costs that are to be pronounced.
Whether Orders of 7August 2012 Resulted in the s 29 Applications being Statute Barred
The central question in these applications is whether the 2011 and 2012 Proceeding Orders, having been made and authenticated on 7 August 2012, ‘finalised’ the 2011 and 2012 Proceedings within the meaning of s 30(2) CPA, with the result that the present applications of Gippsreal for costs and compensation against the Solicitors and the Barrister are statute barred because they were not made ‘prior to the finalisation of the [relevant] civil proceeding’.
Gippsreal makes no application for any extension of time within which to bring its applications pursuant to s 31 CPA. In any event, had any such application for an extension of time been made, it would more than likely have faced the hurdle of the test set by s 31(2) CPA, in the light of the letter from Gippsreal dated 30 April 2012 in which Gippsreal demonstrated an awareness of its s 29 rights in the 2011 and 2012 Proceedings well prior to the making of the orders of 7 August 2012. For this reason, had an application for an extension of time been made, I may well have refused it.
Meaning of ‘Finalisation’ in s 30(2)
The Court was not made aware of any authority on the meaning to be attributed to the word ‘finalisation’ as used in s 29 of the CPA.
Indeed, the ‘finalisation’ of a civil proceeding for this purpose is neither defined in the CPA, nor does it enjoy any accepted meaning as a term of art in statutory or general law. Yet the word has been used in s 30(2) as the pivotal event which governs the time limit within which a s 29 application must be brought.
The concept of ‘final orders’ has received some attention in procedural law, when used in contradistinction to the concept of ‘interlocutory orders’. However, I do not equate the phrase ‘finalisation of [a] civil proceeding’ as used in s 30(2) with a ‘final order’ (as opposed to an ‘interlocutory order’), as that phrase is employed in civil procedure.
In these circumstances, I approach s 30(2) in an endeavour to divine and apply the ordinary and natural meaning of the word ‘finalisation’ as used in its textual context. I take it that the Legislature intended this to be the approach to construction of the word as used.
In so doing, I seek to give effect to the evident legislative intention of s 30(2), which is to confer on the trial court the power to deal with applications founded upon s 29 of the CPA.[9] This is the court which is likely to be in the best position to determine the issues in a just, efficient, timely and cost-effective manner consistently with the overarching purpose of the CPA.[10]
[9]Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd & Ors (No 8) [2014] VSC 567 [245] (Dixon J).
[10]See s 7 CPA.
In this context, in its ordinary and natural meaning the word ‘finalisation’ as used in s 30(2) means to ‘complete’, ‘conclude’ or ‘bring to an end’ the relevant civil proceeding. It is a concept to be applied looking at the position at the end of a case overall and in a practical way, rather than in any technical sense.
Further, as observed by the Court of Appeal in Yara,[11] the Court’s powers under s 29 of the CPA include the power to sanction legal practitioners and parties for a contravention of their overarching obligations under the Act. For this reason s 29 has given the courts flexible means of distributing the cost burden ‘upon and across those who fail to comply with their overarching obligations’. The sanction ‘may take the form of a costs order against a practitioner, an order that requires the practitioner to share the burden of a costs order made against their client or an order which deprives the practitioner of costs to which they would otherwise be entitled.’ An order made under s 29(1)(c) may also be made which results in compensation being paid to a person who has suffered financial or other loss which was materially contributed to by the contravention of the overarching obligation.
[11][2013] VSCA 337 [9-11].
The facility provided by s 29 of the CPA alters the balance in favour of litigants who would otherwise incur a costs burden or suffer loss which was materially contributed to by a contravention of an overarching obligation, and does so in a significant way. The CPA in this way gives very valuable, and commercially important advantages to litigants
Further, and in the interests of justice, achieving finality in litigation is a clear and necessary objective.
The availability of the rights conferred by s 29 of Act is therefore balanced and governed by due observance of the time limit found in s 30(2), which is expressed in mandatory terms.
The legislative purpose of s 30(2), calls for the time limit to be observed, with the result that, if it is not, the rights of a party to a civil proceeding or any other person to make an application under s 29 are statute barred.
Gippsreal’s Submissions on Applicability of s 30(2) CPA
Gippsreal raised a number of matters which it submitted pointed away from the making of the 2011 and 2012 Proceeding Orders as evidencing the ‘finalisation’ of the proceedings within the meaning of s 30(2) CPA. These will be dealt with in turn.
Liberty to Apply
Liberty to apply was granted to the third defendant by paragraph 10 of the 2011 Proceeding Orders
The mere fact that the 2011 Proceeding Orders provided Gippsreal with ‘liberty to apply’ does not detract from the orders operating to effect the finalisation of the proceeding for the purposes of s 30(2). In In re Porteous,[12] the Victorian Full Court considered an application of a widow to seek an increase in her allowance provided by orders made under Part V of the Administration and Probate Act 1928, and whether this was permissible under the liberty to apply provision in the orders. The Court said this about the effect of a reservation of liberty to apply:[13]
In orders that are not final it is unnecessary to make any express reservation of liberty to apply, for all such orders carry with them in gremio liberty to apply to the Court. And where in a final order there is such an express reservation, the character of the order is not changed. It is not rendered any the less final thereby. The only effect of reservation is to permit persons having an interest under the order to apply to the Court touching such interest in a summary way. It enables the Court to deal with matters that arise in the course of working out the order, but does not enable it to make what is substantially a different order.
[Citations omitted]
[12][1949] VLR 383.
[13][1949] VLR 383 (Herring CJ, O’Bryan and Fullagar JJ).
Applying In re Porteous, the fact that there was liberty to apply granted to the third defendant by paragraph 10 of the 2011 Proceeding Orders did nothing to alter the effect of those orders in bringing about the finalization of the 2011 Proceeding for the purposes of s 30(2). The reservation merely provided a facility for the Court, if it was necessary to call upon it, to deal with matters that may have arisen in the course of working out the order.
Orders as to Costs
The 2011 Proceeding Orders by paragraph 11 ordered as to costs:
The plaintiffs pay the third defendant’s costs of the proceeding and the counterclaim, from 27 April 2012 to the date of this order, including reserved costs, on an indemnity basis.
The 2012 Proceeding Orders by paragraphs 3; 4 and 5 ordered as to costs:
3.The first to third defendants [i.e. the Action Cycles parties] pay the plaintiff’s [i.e. Gippsreal’s] and fourth and fifth defendants’ costs of the proceeding and the counterclaim to the date of this order, including reserved costs, on an indemnity basis
4.The fourth and fifth defendants’ costs of this proceeding and of the counterclaim to the date of this order are fixed at $114,817.35.
5.The question of whether any third parties may also be liable to pay any or all of the plaintiff’s and fourth and fifth defendants’ costs of this proceeding is reserved.
The concept of ‘finalisation’ receives some limited attention in s 30(3) which provides that: ‘For the purposes of subsection (2), if an order, including an order in respect of costs, is made after the date of finalisation of the civil proceeding to which the application relates, the date of making of the last of the orders is taken to be the date of finalisation of that proceeding’.
Sub-section 30(3) contemplates that ‘an order’, ‘including an order in respect of costs’ may be made after the date of the ‘finalisation’ of the relevant civil proceeding. In this event the date of making of the last of the orders is taken to be the date of finalisation of that proceeding.
Such orders may be taken to include any supplemental orders made in the proceeding, as well as any further costs orders, for example, if costs are reserved.
On the other hand, if no such further orders are in fact made, even if they may be contemplated by the initial orders made on the ‘finalisation’ of the relevant civil proceeding, for example by the reservation of costs in the initial orders, the intention of the statutory framework is to confer on the first-made initial orders the status of orders made by way of ‘finalisation’ of the relevant civil proceeding within the purview of s 30(2), if they otherwise have this effect.
I do not accept that the effect of s 30(3) of the CPA is to defer the date of ‘finalisation’ of the relevant civil proceeding to the date on which a party’s costs application is finally determined following the making of orders which otherwise result in the ‘finalisation’ of proceedings. Construing the sub-section in this way would itself extend the time in which to make an application for the special s 29 costs order, notwithstanding the clear legislative intent to provide for the time limit set out in s 30(2) of the Act.
Further, and in any event, the present applications made under s 29 CPA and r 63.23 are made in separate proceedings to the 2011 and 2012 Proceedings in which the orders of 7 August 2012 were made. On a proper construction of s 30(3), I am of the view that it applies only to orders made in the same proceeding as orders which otherwise would have resulted in the proceeding being finalised. The ‘finalisation’ of a proceeding, which is the critical factor in s 30(2) for the purposes of determining the statutory time limit, would not work as it was intended if the effect of orders made in other proceedings was also to be taken into account.
In my view, s 30(3) of the CPA recognises and accommodates the reality that inter partes costs orders, and other supplemental orders, will often be made in a proceeding days or weeks after determination of the substantive dispute. In these particular circumstances, s 30(3) provides that the date of finalisation of the civil proceeding will be the date on which the inter partes costs orders or supplemental orders are made in that proceeding. However, s 30(3) has no application in a case such as the present where no further orders of this character were in fact made.
It should be noted that in the present case, Gippsreal obtained a complete judgment against the Action Cycles parties on 7 August 2012. No further costs orders or supplemental orders have been made. Section 30(3) of the CPA therefore has no application to the present facts.
The order made by paragraph 5 of the 2012 Proceeding Orders, namely: ‘The question of whether any third parties may also be liable to pay any or all of the plaintiff’s and fourth and fifth defendants’ costs of this proceeding is reserved’, finds no counterpart in the orders made on 7 August 2012 in the 2011 Proceeding Orders.
In the circumstances of this case, I find that the reservation did not alter the character of the 2012 Proceeding Orders as orders which evidenced the finalisation of the 2012 Proceeding for the purposes of s 30(2) CPA.
Rather, they were orders which on their face were orders in respect of costs which were contemplated might be made in favour of any or all of the plaintiff and the fourth and fifth defendants against unspecified third parties If the reservation was in fact acted upon, it might have ignited the operation of s 30(3) to extend the s 30(2) time limit in accordance with s 30(3), but it was not acted upon with this effect as no further costs orders were ever made as contemplated by paragraph 5 of the 2012 Proceeding Orders, or otherwise.
However else it was intended to operate, the reservation could not be construed to operate to extend the statutory time limit prescribed by s 30(2) for the bringing of s 29 applications, and could not be construed to so operate in this case as against the Solicitors and the Barrister. To construe the reservation in this way would do a violence to the statutory regime and would be beyond power.
Secondly, the reservation did not make any reference to any liability for costs which might be payable under s 29 CPA, and it made no reference to compensation which might be payable pursuant to s 29(1)(c) CPA.
Thirdly, the Solicitors and the Barrister were not parties to the consent order made which resulted in the reservation, and on the evidence, had no prior notice of the proposed order. They were not placed in any position to be heard, and were not in fact heard on the matter. This suggests that at the time of the making of the 2012 Proceeding Order there was no question before the Court as to any liability on the part of the Solicitors and the Barrister to pay costs or compensation under s 29 CPA, and this question was therefore not part of the reservation in any event.
Taxation of Gippsreal’s Costs
Gippsreal submitted that there are still applications which might potentially be expected to be made by Gippsreal in the proceedings – in particular, the making of applications for the taxation of Gippsreal’s costs ordered to be paid by the Action Cycles parties pursuant to the Court’s orders made on 7 August 2012.
A summons for taxation of those costs could quite properly be issued by Gippsreal under rule 63.38 of the Rules, and if issued, would eventually lead to the making of an ‘order in respect of costs’ within the meaning of s 30(3) – with the consequence that the proceedings had not been ‘finalised’ before the date of issue of the present applications.
However, the taxation of costs of a proceeding, should that become necessary in the absence of agreement, is but one of the matters that may arise in the ordinary course of working out an order, which otherwise for the purposes of s 30(2) CPA, would result in the finalisation of a proceeding.
An application for the taxation of costs is now made to the Costs Court established pursuant to Division 2B of Part 2 of the Supreme Court Act 1986.
Pursuant to the practice of the Court, an application for the taxation of costs in a proceeding is initiated in the Costs Court in a separate proceeding, and is not made in the original proceeding where the relevant costs order was made. This is underscored by the fact that the Costs Court has jurisdiction to determine costs in all proceedings referred to it, whether they originate in the Supreme Court, the County Court, the Magistrates’ Court or VCAT, or whether they be costs to be assessed in an arbitration subject to the Commercial Arbitration Act 2011.[14]
[14]See s 17D Supreme Court Act 1986; See also r 63.38(6) Supreme Court (General Civil Procedure) Rules 2005.
Further, Practice Note 7 of 2010 provides that the initiating document for a taxation in the Costs Court is a Summons for Taxation of Costs in the prescribed form, which upon being issued will be allocated a new file number. This indicates that a separate proceeding is issued for a taxation of costs in the Costs Court. The Practice Note relevantly provides in this regard:
Initiation and Filing Documents
9.The party filing the Summons for Taxation is to be described as the ‘applicant’. The party with the obligation to pay is to be described as the ‘respondent’.
10.The Summons for Taxation must recite the original file number of the Court or Tribunal, the name of the individual who made the order for costs and the date the order was made. A copy of the relevant order should be attached to the Summons for Taxation.
11.The initiation of all new matters and the filing of any subsequent documents after the initiation of proceedings will occur at the Supreme Court Registry (Level 2, 436 Lonsdale Street).
12.The initiating document is the Summons for Taxation of Costs (Form 63A) for all taxation matters, and each matter will be allocated a new file number.
Accordingly, the fact of taxation of costs in the 2011 and 2012 Proceedings being potentially outstanding did not alter the character of the 2011 or 2012 Proceeding Orders as orders which evidenced the finalisation of the proceedings for the purposes of s 30(2) CPA.
Conclusion as to Whether the Proceedings ‘Finalised’ under s 30(2)
The challenge to the competency of Gippsreal’s summonses filed 22 December 2014 in the 2011 and 2012 Proceeding, insofar as the summonses sought to rely upon s 29 CPA, depends upon whether the proceedings were finalised within the meaning of s 30(2) CPA on 7 August 2012 upon the making of the 2011 and 2012 Proceeding Orders.
I find that, in both the 2011 and 2012 Proceeding, contrary to s 30(2) of the CPA, Gippsreal failed to make its applications for orders under s 29 of the CPA ‘prior to the finalisation of the civil proceeding to which the application relates’.
In a practical sense, both the 2011 and 2012 Proceeding were completed, concluded and brought to an end for the purposes of s 30(2) CPA on 7 August 2012 upon the making of the 2011 and 2012 Proceeding Orders
Accordingly, Gippsreal’s summonses filed 22 December 2014 in the 2011 and 2012 Proceeding, insofar as the summonses seek to rely upon s 29 CPA, are incompetent.
Whether the Applications Themselves Breached the CPA and are Subject to the Inherent Jurisdiction of the Court
In the alternative, the Solicitors and the Barrister submitted that, even if Gippsreal’s s 29 applications were commenced before the finalisation of the 2011 and 2012 Proceedings, and for this reason were competent, its summonses of 22 December 2014 should nevertheless be dismissed, struck out or permanently stayed because they were instituted in breach of the provisions of the overarching obligations of the CPA.
In so doing, the Solicitor and the Barrister call in aid s 28(1) and s 29(1)(e) of the CPA which empowers a court, on being satisfied of a breach of the statutory overarching obligation, to order that the transgressor not be permitted to take any specified step in a civil proceeding.
In the further alternative, the Solicitors and the Barrister submitted that Gippsreal’s s 29 applications are subject to being dismissed in the exercise of the inherent jurisdiction of the Court, by reason of the delay in commencement.
In the light of my findings that Gippsreal’s summonses filed 22 December 2014 in the 2011 and 2012 Proceeding, insofar as the summonses seek to rely upon s 29 CPA, are incompetent based on the application of s 30(2) CPA, it is unnecessary to determine whether the summonses should be dismissed, struck out or permanently stayed on any further ground.
Validity of the Subpoenas
Subpoenas for Production
On 3 February 2014 Gippsreal caused subpoenas for production to be issued against the Solicitors and the Barrister in both the 2011 Proceeding and the 2012 Proceeding.
The two subpoenas issued by Gippsreal seek production of the same categories of documents, namely:
Any documents created between 24 February 2012 and 7 August 2012 containing or evidencing instructions received from Action Cycles Pty Ltd, Darren Lionel Clifford Gellie, and Lorelle Leigh Gellie, or any of them, with respect to the entry by them into the Deed of Settlement with Gippsreal Ltd, David Anthony Ross and Richard Albarran in or about late February 2012 (‘Deed of Settlement’)
Any documents created between 24 February 2012 and 7 August 2012 containing or evidencing legal advice given to Action Cycles Pty Ltd (or to natural persons on its behalf) with respect to:
1)the enforceability by Gippsreal Ltd against Action Cycles Pty Ltd of the Deed of Settlement; and/or
2)the right of Action Cycles Pty Ltd to avoid or set aside the Deed of Settlement.
Mr Gellie, one of the Action Cycles parties, seeks to maintain his privilege in relation to documents and communications brought into existence for the purpose of advising him in relation to his defence and that of Action Cycles in relation to the 2011 and 2012 Proceedings.
Notwithstanding the fact that Gippsreal’s solicitor/managing director, Trevor Rickard, signed an Overarching Obligations Certification and Proper Basis Certification under the CPA in each proceeding, on 10 February 2015 Mr Rickard wrote to the solicitors variously acting for the Barrister and the Solicitors, as follows:
It is our position that we wish to obtain access to the relevant files [i.e. those the subject of the subpoena for production] and we are not really in a position to put forward any further evidence until we have had the opportunity to inspect the various documents
Legal Principles in Relation to the Subpoenas
The Solicitors and the Barrister seek orders setting aside the subpoenas.
The principles to be applied in determining whether a party is entitled to access documents the subject of a subpoena are well settled.[15] They were approved by the Court of Appeal[16] in Woolworths Ltd v Svajcer[17] in the following terms:[18]
[15]Commissioner of Australian Federal Police v Magistrates’ Court of Victoria & Ors [2011] VSC 3 [28].
[16]Nettle, Ashley and Neave JJA.
[17][2013] VSCA 270.
[18][2013] VSCA 270 [16].
a)It is necessary for the party at whose request the witness summons was issued to identify expressly and precisely the legitimate forensic purpose for which access to the documents is sought;[19]
b)The identification of such a legitimate forensic purpose is to be considered by the court without inspecting the documents sought to be produced;[20]
c)The applicant for the witness summons must also satisfy the court that it is ‘on the cards’[21], or that there is a ‘reasonable possibility’[22], that the documents sought under the subpoena ‘will materially assist the defence’[23];
d)A ‘fishing expedition’ is not a legitimate forensic purpose and will not be permitted;[24]
e)The relevance of a document to the proceeding alone will not substantiate an assertion of legitimate forensic purpose.[25] There is no legitimate forensic purpose if the party is seeking to obtain documents to see whether they may be of relevance or of assistance in his or her defence;[26]
f)A mere assertion of bad faith by an applicant or that something might be found demonstrating bad faith is not enough – the criteria set out in (c) must be satisfied;
g)In criminal proceedings a ‘more liberal’ view is taken by a court in respect of the application of the test. Special weight is to be given to the fact that the documents may assist the defence of the accused;[27] and
h)Where a party fails to demonstrate a legitimate forensic purpose, the Court should refuse access to the documents and set aside the witness summons [28]
[19]R v Saleam (1989) 16 NSWLR 14 18; R v Mokbel (Ruling No 1) [2005] VSC 410 [45]; Principal Registrar of the Supreme Court of New South Wales v Tastan (1994) 75 A Crim R 498, 504; R v Sergi [1998] 1 Qd R 536; NSW Commissioner of Police v Tuxford [2002] NSWCA 139 [22]; Re Don [2006] NSWSC 1125 [26].
[20]Attorney-General for NSW v Stuart (1994) 34 NSWLR 667, 681.
[21]Alister v The Queen (1984) 154 CLR 404, 414.
[22]DPP v Selway (Ruling No 2) [2007] VSC 244; (2007) 16 VR 508 [10]; Ragg v Magistrates’ Court of Victoria [2008] VSC 1; (2008) 18 VR 300 [96].
[23]Attorney-General (NSW) v Chidgey [2008] NSWCCA 65; (2008) 182 A Crim R 536 [5], [62], [64]; R v Mokbel (Ruling No 1) [2005] VSC 410 [45]; R v Saleam [1999] NSWCCA 86 [11]; Alister v The Queen (1984) 154 CLR 404, 414; R v Saleam (1989) 16 NSWLR 14, 18.
[24]Alister v The Queen (1984) 154 CLR 404; R v Saleam (1989) 16 NSWLR 14, 17; Commissioner for Railways v Small [1938] NSWSt Rp 29; (1938) SR (NSW) 564, 575; Re Don [2006] NSWSC 1125 [26].
[25]Attorney-General (New South Wales) v Chidgey [2008] NSWCCA 65; (2008) 182 A Crim R 536 [59].
[26]Carroll v Attorney-General (NSW) (1993) 70 A Crim R 162, 181.
[27]Sankey v Whitlam(1978) 142 CLR 1 42, 62; Alister v The Queen (1984) 154 CLR 404, 414, 454-456; R v Saleam (1989) 16 NSWLR 14, 17; R v Mokbel (Ruling No 1) (2005) VSC 410 [40].
[28]R v Saleam (1989) 16 NSWLR 14, 18. See also R v Sergi [1998] 1 Qd R 536; R v Saleam [1999] NSWCCA 86 [11].
The principles are of long standing. In their contemporary form they can be traced to Commissioner for Railways v Small[29] where Jordan CJ described the procedure and the governing rules which are of some relevance to the present applications The Chief Justice said:[30]
[29] (1938) 38 SR 564 (‘Small’).
[30] Small (1938) 38 SR 564, 573-575.
A writ of subpoena duces tecum may be addressed to a stranger to the cause or to a party. If it be addressed to a stranger, it must specify with reasonable particularity the documents which are required to be produced. A subpoena duces tecum ought not to be issued to such a person requiring him to search for and produce all such documents as he may have in his possession or power relating to a particular subject matter. It is not legitimate to use a subpoena for the purpose of endeavouring to obtain what would be in effect discovery of documents against a person who, being a stranger, is not liable to make discovery. A stranger to the cause ought not to be required to go to trouble and perhaps to expense in ransacking his records and endeavouring to form a judgment as to whether any of his papers throw light on a dispute which is to be litigated upon issues of which he is presumably ignorant.
And if a subpoena duces tecum is issued to such a person in an objectionable form, the witness may apply to the Court to have it set aside.
If duly served with such a writ and provided with the proper conduct money, the person served must obey it and bring to the Court the documents mentioned in the subpoena if he has them, unless he procures the writ to be set aside as oppressive; and he must produce to the Court the document which he has brought unless he satisfies the Court that some good reason exists why they should not be produced: this he is always at liberty to do if he can.
A witness called on subpoena duces tecum may be asked, without being sworn, whether he has brought the documents, and if so, whether he produces them to the Court. If he states that he objects to produce them, he should be sworn and the grounds of his objection stated on oath so that the Court may judge of their sufficiency: e.g. that they constitute his title deeds, or would incriminate him. The Court may allow a stranger who is a witness to be represented by counsel for this purpose if it things that the circumstances warrant it.
If the witness produces the documents, he produces them to the Court and not to the parties he may, if he chose, state that he objects to their being handed to the parties for inspection. If so, it is for the Judge to make such examination of them as he thinks proper, and he may order such of them as he considers relevant to be read, or handed to the parties for inspection, as he may think desirable, with a view to their being tendered in evidence.
Where the subpoena is addressed to a party, it is still necessary that it should state with reasonable particularity the documents which are to be produced.
It is true that a party, unlike a stranger, can be required to give discovery; but it is not legitimate to use a writ of subpoena duces tecum as a substitute for an application for discovery of documents, or as an alternative to an application for further and better discovery.
Discovery applications should be made at the proper time and place. It would greatly impede the trial of actions at nisi prius, and impose an intolerable burden upon the presiding judge, if he were required from time to time to suspend proceedings and wade for himself through masses of documents for the purpose of endeavouring to determine whether any of them are relevant. Especially is this so when the documents may be called for whilst the case is still at the stage when it is difficult or perhaps impossible for the Judge to know what may become relevant and what may not.
[Citations omitted]
The Solicitors and the Barrister submitted that it is self-evident that Gippsreal, through the subpoenas, seeks to have access to documents that ordinarily would be the subject of a client privilege. However, as Jordan CJ in Small outlines in the passages cited above, documents produced on subpoena are produced to the court, not to a party. When they are so produced, applications can then be made, if warranted, for the documents that are properly the subject of a privilege to be protected. The issue as to whether a client legal privilege arises is an issue to be addressed on the inspection of documents. It is not an issue which will arise in the usual case at the stage of production of documents to a court in answer to a subpoena. For these reasons, I will put to one side any issue as to privilege which might be subsequently claimed in documents to be produced in answer to the subpoenas.
However, the principal ground relied upon here to set aside the subpoenas is that they serve no legitimate forensic purpose.
In considering this question, by reason of my ruling that the summonses issued by Gippsreal for orders for costs and compensation under s 29 CPA cannot stand, the summonses can only have force and effect for the purposes of the subpoenas in relation to the applications for costs against the Solicitors and the Barrister made under r 63.23 of the Rules.
Rule 63.23 relates to the costs liability of a lawyer and is in the following terms:
Costs liability of lawyer
1)Where a solicitor for a party, whether personally or through a servant or agent, has caused costs to be incurred improperly or without reasonable cause or to be wasted by a failure to act with reasonable competence and expedition, the Court may make an order that—
a)all or any of the costs between the solicitor and the client be disallowed or that the solicitor repay to the client the whole or part of any money paid on account of costs;
b)the solicitor pay to the solicitor's client all or any of the costs which the client has been ordered to pay to any party;
c)the solicitor pay all or any of the costs payable by any party other than the client.
2)Without limiting paragraph (1), a solicitor fails to act with reasonable competence and expedition for the purpose of that paragraph where any application in or trial of a proceeding cannot conveniently be heard or proceed, or fails or is adjourned without any useful progress being made, by reason of the failure of the solicitor to—
a) attend in person or by a proper representative;
b) file any document which ought to have been filed;
c)lodge or deliver any document for the use of the Court which ought to have been lodged or delivered;
d) be prepared with any proper evidence or account; or
e) otherwise proceed.
3)The Court shall not make an order under paragraph (1) without giving the solicitor a reasonable opportunity to be heard.
4)The Court may, before making an order under paragraph (1), refer the matter to a Costs Judge or another Associate Judge for inquiry and report.
…
6)The Court may order that notice of any proceeding or order against a solicitor under this Rule be given to the client in such manner as the Court directs.
7)This Rule shall, with any necessary modification, apply to a barrister as it applies to a solicitor.
Rule 63.23 may operate in circumstances where it is found that a solicitor or barrister for a party, whether personally or through a servant or agent, has caused costs to be incurred improperly or without reasonable cause or to be wasted by a failure to act with reasonable competence and expedition. If any of these circumstances is found to have arisen, a discretion is then enlivened for the Court to make any of the specified costs orders against the lawyer in question. The exercise of the discretion is left at large, however it would be required to be undertaken judicially and in the interests of justice.
Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (a firm)[31] concluded from his analysis of the cases relating to the Court’s jurisdiction to order a solicitor to pay costs, that the jurisdiction is enlivened when the solicitor has:[32]
unreasonably initiated or continued an action when it had no or substantially no prospects of success but such unreasonableness must relate to reasons unconnected with success in the litigation or to an otherwise ulterior purpose or to a serious dereliction of duty or serious misconduct in promoting the cause of and the proper administration of justice. Further, the cases establish the proposition that it is a relevant serious dereliction of duty or misconduct not to give reasonable or proper attention to the relevant law and facts in circumstances where if such attention had been given it would have been apparent that there were no worthwhile prospects of success
[31](1998) 156 ALR 169 (‘White Industries ‘).
[32] White Industries (1998) 156 ALR 169 239.
White Industries illustrates the potential breadth of circumstances where the jurisdiction of a court to order costs against a lawyer may arise.
In the present case the description of the documents sought to be produced under the subpoenas fall into two categories, namely, any documents created between the defined dates (being 24 February 2012 and the date of the orders made on 7 August 2012):
1.containing or evidencing instructions from the defined clients (being Action Cycles Pty Ltd or the natural persons on its behalf) relating to a defined matter (being entry by them into the defined Deed of Settlement); and
2.containing or evidencing legal advice given to the defined clients (being Action Cycles Pty Ltd or the natural persons on its behalf) relating to two defined matters, being
a) the enforceability by Gippsreal Ltd against Action Cycles Pty Ltd of the Deed of Settlement; and/or
b) the right of Action Cycles Pty Ltd to avoid or set aside the Deed of Settlement.
I take into account the relative specificity of the documents sought to be produced, and the potential relevance of those documents to the question as to whether r 63.23 should be applied.
I also take into account the context of the proceedings, in which it is alleged that the Solicitors and the Barrister contravened one or more of the overarching obligations of the CPA found in Part 2.3 of the Act in relation to the proceedings instituted to set aside the deeds of settlement. Both the instructions received from the clients, and any advices given to them by the lawyers in relation to these matters, in my view would be likely to be of direct relevance to the applicability of r 63.23 and would serve legitimate forensic purposes, being:
a.in relation to client instructions received, the provision of potentially critical evidence as to the factual basis upon which the lawyers determined to proceed with the actions; and
b.in relation to any advices given to the clients, the soundness of the decision to proceed, and the attention given to the relevant law and facts, as potentially evidenced in such advices, if any exist.
I further take into account the apparent breadth of r 63,23 and the circumstances which may legitimately be taken into account in the exercise of the Court’s discretion if the threshold matters are established.
The Solicitors and the Barrister pointed to the proper basis certification executed by the solicitor acting for Gippsreal in its applications for costs, submitting in effect that this evidenced that Gippsreal already had the necessary material to make its applications, and that an inference should be drawn that the subpoenas were unnecessary and were merely a fishing expedition. I do not accept this submission. There may be many circumstances where a proper basis certification is legitimately provided, but where further documents of relevance are properly sought, either by way of discovery or subpoena, to support a case at trial. This may well prove to be such a case.
For these reasons I do not find that the subpoenas are examples of a mere fishing exercise and I am unable to find that the subpoenas will serve no legitimate forensic purpose.
The applications of the Solicitors and the Barrister to set the subpoenas aside must therefore be dismissed.
Orders
I will make the following orders:
(1) It is declared that the applications of Gippsreal Ltd made by summonses filed 22 December 2014 in the 2011 and 2012 Proceedings, insofar as they seek relief pursuant to s 29 of the Civil Procedure Act 2010 but not otherwise, are incompetent by reason that, contrary to s 30(2) of the Act, the applications were not made prior to the finalisation of the civil proceedings to which the applications related;
(2) The applications of the Plaintiff, Caroline Kenny, and the Plaintiff Ian Symonds & Associates to set aside the subpoenas issued by Gippsreal Ltd dated 3 February 2015 are dismissed.
I will hear the parties on costs.
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