Layland and Layland and Ors

[2007] FamCA 358

FAMILY COURT OF AUSTRALIA

LAYLAND & LAYLAND AND ORS [2007] FamCA 358

FAMILY LAW - PRACTICE AND PROCEDURE - Witness fees - Subpoenaed parties - Expenses - Substantial loss associated with compliance

APPLICANT: MRS LAYLAND

RESPONDENT: MR LAYLAND

SUBPOENAED PARTIES: MR BAGSHAW &
MR FOWMES

FILE NUMBER: MLF 3363 of 2004

DATE DELIVERED: 13 APRIL 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 13 APRIL 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Nikou of Senior Counsel

SOLICITOR FOR THE APPLICANT: Rudstein Kron Lawyers

COUNSEL FOR THE RESPONDENT: Mr Thompson of Counsel

SOLICITOR FOR THE RESPONDENT: Meerkin & Apel, Solicitors

COUNSEL FOR THE INTERVENOR: Ms Englefield of Counsel

SOLICITOR FOR THE INTERVENOR: Wards Barristers & Solicitors

Orders

IT IS ORDERED:

1. The reasonable costs and expenses of the Subpoenaed Parties relating to their responses to the subpoenae be fixed in the sum of $7000.00.

2. The question of payment of the costs of the Subpoenaed Parties be either determined at the adjourned hearing by the Honourable Justice Carter or as her Honour otherwise determines.

IT IS FURTHER ORDERED BY CONSENT:

1. Within 28 days, the Subpoenaed Parties provide to the Court in answer to the subpoenae directed to them filed on 30 November 2006 the documents referred to in the affidavit of Mr W filed on 11April 2007 save and except the documents referred to in item (g) on page 4, item (c) on page 5 and item (a) on page 6 of the said affidavit and in the event that such documents are not in their custody, possession or control they jointly swear an affidavit to be filed and served by 4.00pm on 25 May 2007 setting out their explanation for not being able to produce such documents.

2. Mr Bagshaw, Trustee of the Estate of the wife’s later father and Mr Fowmes, Chartered Accountant, pursuant to their obligation under paragraph 3 of these Orders, provide documents to and answer questions from, the Single Expert Witness appointed to value the wife’s remainder-man interest in the estate of her father including if requested providing the documents excluded in paragraph 3 of these Orders.

3. All documents produced pursuant to paragraph 3 of these Orders be released by the Court to the parties for the purposes of inspection and photocopying.

AND IT IS ORDERED:

1. All extant applications be adjourned to 10.00am on 25 May 2007.

2. The wife is to file and serve any affidavit material on which she intends to rely by 4.00pm on 10 May 2007.

3. The husband is to file and serve any affidavit material on which he intends to rely by 4.00pm on 17 May 2007.

4. Each party is to file and serve a Summary of Argument setting out all issues in dispute by 4.00pm on 22 May 2007.

5. The costs of all parties of and incidental to today’s hearing be reserved including costs of Senior Counsel.

6. The Reasons for Judgment in respect to the issue of costs of the Subpoenaed Parties be transcribed and a copy issued to the parties.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 3363 of 2004

MRS LAYLAND 

Applicant

And

MR LAYLAND 

Respondent

REASONS FOR JUDGMENT

1. These are my reasons for making Orders on 13 April 2007 in respect of a discrete issue concerning the costs of the recipients of a subpoena.

2. On 13 April 2007, I ordered that the expenses of Mr Bagshaw and Mr Fowmes be fixed in the sum of $7,000.00 and that those costs be paid by either or both of the husband and wife but that there be a stay of payment of three months.

3. I ordered that the determination of the question of the liability for the payment of those costs be either decided by the judge hearing the rest of the matter on 24 May 2007 (at that stage it was anticipated to be the Honourable Justice Carter) or if her Honour felt that she was unable to make such a decision, then the matter should be returned to me on another day.  The explanation for that particular course of action is as follows. 

4. This matter came to me in the duty list on 13 April 2007.  Ms Nikou of Senior Counsel appeared on behalf of the wife, Mr Thompson of Counsel appeared on behalf of the respondent husband and Ms Englefield of Counsel appeared on behalf of the two parties to whom I have referred as the recipients of the subpoenae.

5. There are a number of issues in these property proceedings.

6. The wife in an Amended Application in a Case sought injunctions, discovery of documents, the appointment of a manager for the service station asset and the appointment of a forensic accountant as a single expert.

7. The husband sought discovery of documents.

8. I determined that it was important to deal with the issue of the objections to subpoenae first as much of why they were before the Court revolved around the dispute between the parties over disclosure and/or discovery.  Unfortunately, the issue of the determination of the objections took up most of the day and with other matters in the duty list, I was only able to determine that issue.  However, the case took an unusual twist in that the parties and, more particularly the husband, entered into discussions with the recipients of the subpoenae and reached agreement in respect of the provision of documents and I made orders accordingly in terms of the minutes drawn by counsel.  The dispute, however, between the parties and the recipients of the subpoenae was then over the question of their expenses.  In normal circumstances, that may not have been a difficult issue but in this case, there are some unusual features that, in my view, entitled them to their expenses.

9. As I have said, the issue between the husband and the wife is yet to be determined and both parties requested that they be given an opportunity at the earliest possible date to resolve that issue.

10. The parties were in a relationship for a long period of time and have two children, one over 18 and one under 18 years of age.  The husband is 64 years of age whilst the wife is 43 years.

11. When the proceedings were first issued in 2004, they were not only about property issues but also parenting disputes in relation to the youngest child.

12. Without in any way endeavouring to set out precisely what the property dispute is about, it was clear that the wife has a remainder-man entitlement to her father’s estate, he having died in 1982.  The subpoenae referred to above were directed towards the valuation of that entitlement because, according to the husband, the wife refused to disclose relevant documents that would enable the valuation to be done. 

13. The surrounding circumstances of the subpoenae were somewhat confusing because on 8 September 2006, the parties attended a Trial Notice listing before Registrar Riddiford.  The Registrar on that occasion made an order for the appointment of a single expert in relation to that remainder-man interest along with other interests.   It is common ground that that valuation exercise was not undertaken.  There is a dispute between the parties as to whose fault that is and that may ultimately be a determining factor in relation to the question of who pays the expenses of the parties who were the recipients of the subpoenae. 

14. As I understand the position, the wife says that she offered one name as a potential single expert and the husband did not accept that name.  I was unable to provide the time to hear the submissions of counsel for the wife as to why the wife did not take the step to enforce the order of Registrar Riddiford.  As I pointed out to the parties, the Family Law Rules 2004 clearly set out a process to be followed not only in respect of the instructions to the single expert, but the terms and conditions of that exercise if there is a dispute.  That did not occur.

15. Lest it be understood that this is simply a criticism of the wife, in dialogue with the husband’s counsel, I queried why that exercise was not undertaken by the husband and was told that it would have been a pointless exercise because instructions could not be given to the single expert until the discovery of documents had been completed.  This raises the question of the “cart before the horse” problem because it seems that no one had considered that it may have been the single expert who should determine what documents were to be provided.

16. Needless to say, the impasse between the parties meant that the discovery process was commenced by the husband by issuing the subpoenae to the persons to whom I have referred.

17. Before turning to what those subpoenae were about, it is important to note that the impasse to which I have referred brought the matter before Mushin J who took the case out of the Trial Notice list because the dispute was going nowhere.  His Honour ordered that the parties attend before a Registrar and file specific indications of what orders they were seeking.

18. I had some concern that the subpoenae were issued prematurely but, in hindsight, particularly having regard to the fact that the recipients of the subpoenae have now produced documents, that is not so.

19. The subpoenae were issued seeking:

1.	27 August 1982 to 30 November 2006	All original and copy file notes, diaries, diary notes, correspondence, documents and records of whatsoever kind whether stored digitally, electronically or in hard copy created sent or received (“Material”) relating to loans, transactions, investments, accounts, security and other similar transactions between or including any of the following entities: ·    [B] Pty Ltd ACN […] ·    [Y] Pty Ltd ACN […] ·    [A] Pty Ltd ACN […] ·    [M] Pty Ltd ACN […] ·    [V] Pty Ltd ACN […] ·    [S] Pty Ltd ACN […] ·    [H] Pty Ltd ACN […] ·    [E] Pty Ltd ACN […] ·    [O] Pty Ltd ACN […] ·    [R] Pty Ltd ACN […] ·    [I] Pty Ltd ACN […] ·    [G] Pty Ltd ACN […] ·    [N] Pty Ltd ACN […] ·    [P] Pty Ltd ACN […] ·    [F] Pty Ltd ACN […] or any of the children of [the wife’s late father];
2.	27 August 1982 to 30 November 2006	All documents and details of all dividends, payments and other benefits paid to: a)         the wife; b)        any other beneficiaries of the estate of the wife’s later father by [B] Pty Ltd ACN […];
3.	27 August 1982 to 30 November 2006	Financial statements for [B] Pty Ltd ACN […] (including balance sheets, profit and loss accounts, depreciation schedules and tax returns)
4.	27 August 1982 to 30 November 2006	Any bank and trading accounts of [B] Pty Ltd ACN […];
5.	27 August 1982 to 30 November 2006	All documents referable to investment of monies to which the wife is entitled under the estate of the wife’s late father

1. The recipient of one of the subpoenae, Mr Bagshaw, lodged an objection to the production of the documents in the following form:

   “1.The subpoena requires me to go to unreasonable effort and expense in gathering together an exceedingly large volume of documentation and information for a period of twenty-four (24) years and will take a significant amount of time and expense to gather the information and forward it to the Court.

   2.The $10.00 cheque for conduct money is insufficient to pay the costs of providing the documentation to the Court by 11^th December 2006.

   3.I was served with the Subpoena on 2^nd December 2006 and do not have sufficient time to gather the enormous volume of documentation and information and produce same to the Court by 11^th December 2006.

   4.It will take considerable time and substantial cost for me to gather all of the documentation and I seek an Order as to payment of both my costs and my legal costs for responding to the Subpoena and producing the subsequent documentation.

   5.Relevance and privilege of [I] Pty Ltd ACN […] as I was a Director and shareholder of same approximately ten years, have held no interest in the company for approximately ten years and there was no relevance, connection or otherwise with the Estate of the [wife’s father] Deceased.”

2. As I have discussed, it is the obligation of the recipient of the subpoena to respond to it and then to argue the question of obligations as well as the issue of the release of information and its inspection by the parties.  The recipients of the subpoenae not only did that, but as required, attended before the Court represented by counsel to argue their objections.  The record shows that on two occasions they attended and ultimately, the matter was adjourned to the Duty List before me.  This was therefore the third time on which the recipients of the subpoenae had attended with counsel.  It should be said that they had provided documents prior to this Duty List hearing and after some discussion with counsel, the agreement to which I have referred above was achieved. 

3. Accordingly, whilst the objections may have been overcome by the agreement and orders, it is still clear that the recipients who are not parties to the proceedings had gone to an extraordinary amount of trouble to provide documents in what appears to be a complex trust arrangement.  It is to be remembered that the recipient of a subpoena is to produce documents.  As will be seen from what was sought by the husband, more than that was being pursued requiring the recipient to not only search out documents but also information.  Whilst that, in itself, gives rise to arguments about the wideness of the subpoena and the question of its oppressive nature, if the issuing party persists, as occurred here, it is hard to imagine how a complaint can be made that costs of the stranger to the proceedings should not be incurred.  In addition, in circumstances where the trust structure is complex and involves a number of entities which are managed by professionals such as accountants, it is reasonable in my view that those professional costs be included in the expenses that are incurred by the recipients of the subpoenae.

4. Rule 15.23(3) reads:

   “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.”

5. Rule 15.23 relates more to conduct money and the attendance by the witness at the hearing in respect of giving evidence and/or arguing the objection.  There is nothing in the Rule to give any guidance as to the definition of a substantial loss or expense other than that it needs to be greater than the amount of the conduct money.  In this case, having regard to all of the matters that I have set out above, I am quite satisfied that the loss incurred by the recipients of the subpoenae is not only substantial, but certainly greater than the amount or conduct money or witness fees to which the recipients would be entitled. 

6. Having regard to those issues, I determined on 13 April 2007 to make an order for the reimbursement of the expenses. 

7. At the outset, Ms Englefield for the recipients indicated that there were substantial costs involved having regard to the fact that the recipients had not only gone to the trouble of appearing, but had also sought advice from their accountants and been charged for it, and then there were the legal fees as well.  Interestingly, and perhaps unusually in this case, the solicitors for the parties entered into correspondence with the solicitors for the subpoenaed parties and as the litigation increased, affidavits were drawn including by the solicitors for the subpoenaed parties.  To a large extent, those affidavits were unnecessary having regard to the issues that had to be determined arising out of their objections.  For that reason, and in the exercise of my discretion, I decided that the expenses would not be as comprehensive as the subpoenaed parties would have liked them to be but certainly, they are more than usual. 

8. I have accordingly allowed accounting fees of $2,600.00, solicitor’s fees of $2,600.00 and counsel’s fees of $1,800.00.  These expenses relate to all three appearances and all work done up until and including the hearing before me on 13 April 2007.  By virtue of the orders made on that day, the involvement of the subpoenaed parties comes to an end.

9. As I have indicated, because of the shortage of time, I was not able to hear the substantive issues between the husband and the wife and therefore not able to determine who should bear those expenses for the subpoenaed parties.  The parties refused to agree to each pay half and I was not prepared to leave the issue for trial having regard to the fact that the parties who had been subpoenaed had gone to an extraordinary amount of trouble.  In the event that as a result of the parties continuing to proceed with their substantive issues, a judge is unable to determine who should pay, the matter should be returned to me and I shall make the appropriate discretionary orders based upon the evidence presented to me.  Because of the matters to which I have just referred, I have indicated to the subpoenaed parties that I was proposing to grant a stay of payment in respect of those expenses for three months in any event.  If the matter cannot be determined fully on this issue on 24 May 2007, I propose that I shall determine it very shortly thereafter. 

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin.

Associate: 

Date:              24 April 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as LAYLAND & LAYLAND