M-H Engineering Solutions Pty Ltd t/as LMF Earthmoving v Michael John Rolfe

[2023] NSWSC 398

Supreme Court

New South Wales

Medium Neutral Citation:

M-H Engineering Solutions Pty Ltd t/as LMF Earthmoving v Michael John Rolfe & Ors [2023] NSWSC 398

Hearing dates:

14 February 2023

Date of orders:

19 April 2023

Decision date:

19 April 2023

Jurisdiction:

Common Law

Before:

Harrison AsJ

Decision:

(1) The decision of the Registrar dated 30 May 2022 is set aside.

(2) Each party is to pay its/his own costs of the Notices of Motion filed on 10 February 2022 and the Amended Notice of Motion filed on 27 June 2022.

Catchwords:

COSTS – Party/Party – Costs of compliance with a subpoena – Appeal from a Registrar’s decision – Each party is to pay its/his own costs

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW) rr 33.11 and 49.19

Cases Cited:

AMV Australia Pty Ltd v Premier Compensation Lawyers Pty Ltd [2020] NSWSC 446

Bauhaus Pyrmont Pty Ltd (In Liq) [2006] NSWSC 253

Florida Kitchens Pty Ltd v Number One Marble and Granite [2019] NSWSC 574

Hall v Donlon [2011] NSWSC 1088

In the matter of Aquaqueen International Pty Limited [2016] NSWSC 453

Oshlack v Richmond River Council (1998) 193 CLR 72

Tomko v Palasty (No 2) (2007) 71 NSWLR 61

Category:

Costs

Parties:

M-H Engineering Solutions Pty Ltd t/as LMF Earthmoving (First plaintiff/ Applicant)

Stephen Michael Rolfe (Second plaintiff/ Applicant)

Michael John Rolfe (First defendant/ Respondent)

Leetecia Yvonne Rolfe (Second defendant/ Respondent)

Farshard Armibeaggi (Subpoenaed party)

Representation:

Counsel:

A.J. Munro (Respondents).

No appearance (Defendants)

A.F. Fernon SC (Subpoenaed party)

Solicitors:

Campbell, Paton & Taylor (First and second plaintiff/ Applicants)

Self-represented (First and Second Defendant/ Respondents)

Yates Beaggi Lawyers (Subpoenaed party)

File Number(s):

2021/00290889

JUDGMENT

1. This judgment concerns a dispute over the amount of reasonable loss or expense in complying with a subpoena.

2. There are three Notices of Motion before this Court. They are one dated 10 February 2022 that relate to the costs of producing documents in answer to a subpoena before the Registrar. On 10 February 2022, the subpoenaed party filed a Notice of Motion that sought an order that the plaintiff pay $17,000 on account of reasonable expenses incurred by the subpoenaed party. By amended Notice of Motion filed 27 June 2022, Mr Farshad Amirbeaggi, the subpoenaed party, seeks to review orders made by Registrar Jones (‘the Registrar’) dated 30 May 2022 concerning payment of expenses prior to the production of documents to him by a third party. Mr Armibeaggi also filed a Notice of Motion seeking his costs of production.

3. The first plaintiff is M-H Engineering Solutions Pty Ltd (‘M-H Engineering’). The second plaintiff is Stephen Michael Rolfe who is a director of the first plaintiff (‘the plaintiffs’). The first defendant is Michael John Rolfe. The second defendant is Leetecia Yvonne Rolfe (‘the defendants’). The first and second defendants are husband and wife and the parents of the second plaintiff. The parties relied on a Court Book (‘Ex A’) and some documents that were omitted from the Court Book (‘Ex 1’).

4. These proceedings concern a claim by M-H Engineering and Stephen Rolfe for possession of chattels, or in the alternative, a claim for damages, restitutionary damages and equitable compensation for wrongful detention of chattels against the first and second defendants. The chattels comprised various vehicles and equipment used in an earthmoving business. Michael Rolfe and M-H Engineering had brought earlier Supreme Court proceedings against George Zacharia Group for the return of various items of earthmoving machinery which had been seized. Some of those items were returned to M-H Engineering and the first defendants.

The subpoena

5. On 20 January 2022, the first plaintiff, M.H. Engineering issued a subpoena addressed to Farshard Armibeaggi, of Yates Beaggi lawyers. Farshard Armibeaggi is a solicitor (‘the subpoenaed party’).

6. The schedule of the documents or things to be produced in the Schedule are as follows:

“1. In respect of case number 2020/00100755 (Case name Michael Rolfe & Anor v George Zakharia Group Pty Ltd) copies of all pleadings and affidavits read in that proceeding.”

7. In the plaintiffs’ Notice of Motion filed 10 February 2022, they sought an:

“(1) Order pursuant to s 68 of the Civil Procedure Act that on a date to be determined by the Court, Farshad Amirbeaggi produce to the Court those documents described in the Schedule of the Subpoena issued on 25 January 2022 to Farshad Amirbeaggi of Yates Beaggi Lawyers.

(2) Further or in the alternative, order pursuant to rule 33.6 of the Uniform Civil Procedure Rules that on a date to be determined by the Court, Farshad Amirbeaggi produce to the Court those documents described in the Schedule of the Subpoena issued on 25 January 2022 to Farshad Amirbeaggi of Yates Beaggi Lawyers.

(3) In the event of non-compliance with orders 1 and/or 2 above, order pursuant to s 97 of the Civil Procedure Act 2005, for the issue of an arrest warrant for the arrest of Mr Farshad Amirbeaggi for non-compliance with a subpoena to produce.

(4) Order that Farshad Amirbeaggi pay the plaintiffs’ costs of the motion.”

8. In my view order (3) seeking to issue an arrest warrant against the subpoenaed party in this case, a solicitor of this court, seems extreme and unnecessary.

9. In the Notice of Motion filed 10 February 2022, the subpoenaed party seeks an:

“Order that the Plaintiffs pay the Subpoenaed Party the amount of $7,000.00 on account of reasonable expenses incurred by the Subpoenaed Party to comply with the Subpoena addressed to Farshad Amirbeaggi filed on 25 January 2022.

Order that the Plaintiff pay the Subpoenaed Party’s costs of:

(1) The Plaintiffs’ Notice of Motion filed 10 February 2022;

(2) This Motion.”

10. Uniform Civil Procedure Rules (NSW) Part 33, r 33.11 reads:

“33.11   Costs and expenses of compliance

(cf SCR Part 37, rule 11)

(1)  The court may order the issuing party to pay the amount of any reasonable loss or expense incurred in complying with the subpoena.

(2)  If an order is made under subrule (1), the court must fix the amount or direct that it be fixed in accordance with the court’s usual procedure in relation to costs.

…

On 30 May 2022, the Registrar made the following orders:

“(1) Prayers for relief 1 and 2(a) of the Notice of Motion filed 10 March 2022 are dismissed;

(2) In relation to prayer for relief 2(b) of the Notice of Motion filed on 10 March 2022 order;

(3) The plaintiffs pay Farshad Amirbeaggi’s costs of the Notice of Motion filed 10 March 2022 on an ordinary basis as agreed or assessed up to 16 March 2022.

(4) Farshad Amirbeaggi pay the plaintiffs’ costs of the Notice of Motion filed 10 March 2022 on an indemnity basis after 16 March to date.”

11. It is now convenient that I briefly summarise the relevant portions of correspondence between the parties. It reads like a game of brinkmanship over the amount payable for the cost of producing documents in answer to the subpoena. The correspondence is as follows:

12. The email from the plaintiffs’ solicitors to the subpoenaed party dated 2 February 2022 reads:

We advise that the term ‘conduct money’ applies only to subpoenas to attend, and not subpoenas to produce. UCPR Rule 33.6 makes no mention of subpoenas to produce, rather it applies to subpoenas to attend. This issue was raised by Brereton J in Hall v Donlon [2011] NSWSC 1088 at [4] - [5]. Thus, we advise that compliance with a subpoena to produce cannot be avoided on the basis that insufficient conduct money has been paid by the issuing party.

…

In any event, we respectfully suggest that your firm comply with the production of documents in accordance with the subpoena.

13. The email from the subpoenaed party to the plaintiffs’ solicitors dated 2 February 2022 reads:

We refer to the Subpoena to Produce addressed to our office filed in the above Proceedings and served under cover of your letter dated 25 January 2022.

We estimate that we will require 3 hours to gather and produce the documents requested.

We kindly request that you deposit $2,100 into our trust account on account of costs in complying with the Subpoena to Produce.

14. The mail from the plaintiffs’ solicitors to the subpoenaed party dated 2 February 2022 reads:

We refer to your email of even date. We note that you maintain your position that you require the payment of $2,100 in respect of conduct money before you will comply with our client’s subpoena. For the reasons outlined in our earlier letter of 2 February 2022, it is most unlikely the Court would consider that sum to be a reasonable amount to be incurred by you for your losses or expenses, in complying with the subpoena.

Our client does not dispute that you are entitled to reasonable costs and expenses of compliance. You are nevertheless subject to an order that the documents be produced, and you cannot avoid compliance with the subpoena by demanding an unreasonable amount of conduct money. As an officer of the Court one generally expects a greater degree of compliance with the Court’s orders.

Notwithstanding the above, we advise that our client is prepared to pay your firm $450 for your costs and expenses, being the sum of $160 per hour for the three hours you have indicated you require to produce the documents.

Would you please confirm, by no later than 5.00pm Monday 7 February 2022, that you accept amount offered for your costs and expenses. In the event our client’s offer is not accepted, advise that we hold instructions to make an appropriate application by reason of your non-compliance. This letter shall be referred to on the question of costs.

[My emphasis added]

15. The email from the subpoenaed party to the plaintiffs’ solicitors dated 2 February 2022 reads:

Thank you. I don’t accept the offer. I’ll appear on the return and seek payment of conduct money, and costs of that appearance.

16. The email from the subpoenaed party to the plaintiffs’ solicitors dated 3 February 2022 reads:

Unless the request for conduct money is met we will not be complying with the subpoena.

Feel free to list the matter, and we'll apprise the Court of that.

17. The email from the subpoenaed party to the plaintiffs’ solicitors dated 11 February 2022 reads:

My hourly rates for work are $700.00 an hour, and have been for the last 4-5 years.

They’ve just this week been increased to $800.00 an hour. And we have many clients waiting for us to reach them.

The task is estimated to take 3 hours of my time. So I’m not sure why the sum sought is unreasonable, or why you’d think offering $150.00 is reasonable when I expect that is even less than what each of your hourly rates are.

To ask someone to work at a loss is unreasonable, so too is to go and expend more money on process rather than accept and meet the sum sought for conduct money.

But if your client now wishes to have a $25,000 battle over this then a matter for him. I have briefed Counsel, and will file my reply evidence.

18. In the affidavit of the subpoenaed party filed 9 March 2022, paragraphs [22]-[24] read:

My reasonable expenses to comply with the Subpoena to Produce

[22] In the premise of paragraphs [15] to [21] above, I estimate it will take me not less than 10 hours to comply with the Subpoena (Revised Estimate). Any additional time spent by me to comply with the subpoena above and beyond my Revised Estimate will be incurred by me.

[23] My reasonable expenses to comply with the Subpoena are therefore $7,000.00 and I require that those expenses be paid prior to the production of documents to comply with the Subpoena.

[24] Once my reasonable expenses have been paid, I further estimate that it will take approximately 5 business days for me comply with the Subpoena.

19. The email from the plaintiffs’ solicitors to the subpoenaed party dated 16 March 2022 reads:

Notwithstanding that, in order to simplify your required compliance with the subpoena, our client is prepared to limit the scope of the documents sought.

In this regard we enclose herewith a copy of the judgment of Robb J in Rolfe v George Zakharla Group Pty Ltd [2020] NSWSC 391. That decision identifies the pleadings and evidence that was relied on, and clearly read, at the hearing of the Zakharia proceedings. The following documents are referred to in that judgment;

1. Amended Summons filed 2 April 2020 at [6].

2. Affidavit of Michael Rolfe dated 3 April 2020 at [16].

3. Affidavit of Michael Rolfe dated 2 April 2020 at [35].

4. Affidavit of "GZG’s solicitor” dated 6 April 2020 at [43].

5. Affidavit of Michael Rolfe dated 7 April 2020 at [60].

6. Affidavit of George Zakharia dated 7 April 2020 at [64].

7. Affidavit of Anthony Riordan dated 7 April 2020 at [64].

8. Word versions of the Affidavits of George Zakharia and Anthony Riordan at [64].

9. The 'final Affidavit’ of Michael Rolfe [date not specified] at [73].

We confirm that our client limits the categories of documents sought pursuant to the subpoena, to the nine identified documents listed above.

…

In view of the confined scope of the categories for production, we are instructed to make the following offer to you:

1. Our client agrees to confine its request to the documents set out above.

2. Our client pays you $1,000 for your costs of compliance, allowing 2 hours for administrative staff member to copy the documents at $150 per hour, and 1 hour for you to review and oversee the production of documents at $700 per hour.

3. You agree to produce the documents set out above within one week of receiving the sum of $1,000.

This offer will remain open for acceptance until 4:00pm on 30 March 2022.

20. The significance of this letter dated 16 March 2022 is that the documents now required to be produced had been specifically identified by the plaintiffs’ solicitors. The copies of all pleadings and affidavits that were read in the prior proceedings were no longer sought. The task for the subpoenaed party at this point became a much less onerous task by the plaintiffs’ offer. However, this offer was not accepted by the subpoenaed party within the time specified. However, it is my view that this compromise narrowed the scope of documents produced and consequently meant that the amount of time that would be required for the subpoenaed party to produce the documents would be less.

21. The email from the plaintiffs’ solicitors to the subpoenaed party dated 8 April 2022 reads:

…

We confirm that in your letter dated 16 March 2022, your client narrowed the scope of documents sought under subpoena filed 25 January 2022 (Narrowed Scope of Documents).

In an attempt to avoid the costs associated with a hearing of the two motions, we are instructed to make the following open offer to resolve the Proceedings;

1. Prior to the production of the Narrowed Scope of Documents, your client pay our client the sum of $1,000.00 on account of its expenses incurred to produce those documents, (Subpoena Expenses)

2 The parties agree to the following orders with respect to the two motions:

a. The Plaintiff’s motion filed 10 February 2022 is dismissed with no order as to costs.

b. The Subpoenaed Party's motion filed 9 March 2022 is dismissed on the basis that the Plaintiff pay the Subpoenaed Party’s costs and expenses of the motion up to and including 16 March 2022 fixed in the sum $3,500.00 (Cost).

Upon receipt of the Subpoena Expenses and Costs, totalling $4,500,00 by Yates Beaggi Lawyers, the Narrowed Scope of Documents will be produced within 7 days.

This offer is made a commercial basis to avoid further costs being incurred by the parties and is open for acceptance until 4pm on 15 April 2022 after which time the offer will lapse. For the avoidance of doubt, the above offer is an open offer and will be tendered in support of our client’s Notice of Motion.

22. In the subpoenaed party’s outline of submissions filed 22 April 2022, it was stated:

Nevertheless and subject to any application of the Defendants to the present proceedings to set aside the Subpoena and costs, the parties have reached agreement as to sufficient compliance costs with the Subpoena:

(a) The subpoenaed Party shall produce to the Court the limited range of documents identified in correspondence between the parties [see Annexure A to the affidavit of Robert Tom Bennett sworn 24 March 2022];

(b) The plaintiffs shall pay the Subpoenaed Party’s expenses in compliance with the subpoena in the sum of $1,000.

23. The Review of the Registrar’s decision

24. Rule 49.19 of the Uniform Civil Procedure Rules 2005 sets out the review of a Registrar’s decision. It reads:

49.19   Review of registrar’s directions, certificates, orders, decisions and other acts

(1)  Subject to subrule (2), if in any proceedings a registrar gives a direction or certificate, makes an order or decision or does any other act, the court may, on application by any party, review the direction, certificate, order, decision or other act and make such order, by way of confirmation, variation, discharge or otherwise, as the court thinks fit.

25. A review is not equivalent to an appeal and no error or material error is required for the Court, on review, to reach a different determination. The Court must exercise its own discretion (Tomko v Palasty (No. 2) (2007) 71 NSWLR 61, Basten JA at [43]-[48]: Hodgson JA at [5]-[10]; Davies J in AMV Australia Pty Ltd v Premier Compensation Lawyers Pty Ltd [2020] NSWSC 446 at [28]- [29]).

26. Although error is not required to be shown, there must be a reason to depart from the orders made by the Registrar. In this case, it was alleged that there was error on the part of the Registrar in that she failed to take into account a relevant consideration that was within her discretion to consider, particularly in respect of the ordering of costs under both Notices of Motion. Such a relevant consideration was the terms of the agreement reached between the parties in respect of the Subpoena and the subpoenaed party’s costs and expenses.

27. The Registrar’s reasons dated 30 May 2022 in relation to costs of the two motions dated 30 May 2022 are as follows:

“Following that correspondence the plaintiffs' solicitors filed the notice of motion on 10 February 2022. Importantly the plaintiffs and Mr Amirbeaggi have subsequently agreed on payment of $1,000 for Mr Amirbeaggi's costs of compliance with the subpoena. What remains in dispute between them is the costs of the two notices of motion.

The plaintiffs seek payment of the costs of their notice of motion filed 10 February 2022. In relation to Mr Amirbeaggi's notice of motion filed 10 March 2022, the plaintiffs seek an order that they pay Mr Amirbeaggi's costs on an ordinary basis between 10 March 2022 and 16 March 2022, being the date when the offer of $1,000 in compliance costs was made, and that Mr Amirbeaggi pay their costs on an indemnity basis after 16 March 2022.

In his primary submissions Mr Amirbeaggi sought an order that the plaintiffs' notice of motion filed 10 February 2022 be dismissed with no order as to costs and that the plaintiffs pay $3500 for his costs up to including 16 March 2022 of the notice of motion filed 10 March 2022. In subsequent submissions Mr Amirbeaggi has sought a gross sum costs order of $12,800 for his costs of responding to the plaintiffs’ notice of motion filed 10 February 2022 and for his costs of his motion. Mr Amirbeaggi has provided detailed and varied submissions in support of those orders.

…

Whilst Mr Amirbeaggi now raises in his submissions dated 22 April 2022 and 11 May 2022 various objections to the subpoena, these objections can have no relevance to the Court's consideration of the costs of the notice of motion filed 10 February 2022 as no such objections were raised prior to the notice of motion being filed and in any event the parties have reached an agreement on the production of documents.

…

I do not accept Mr Amirbeaggi's submissions that the plaintiffs' offer to limit the scope of the request in the subpoena on 16 March 2022 is in any way a concession as to any unreasonableness of the terms of the subpoena, a review of the correspondence reveals that the plaintiffs offered to limit the scope of the subpoena in an effort to resolve the dispute on compliance costs.

In all of the circumstances I am satisfied that it was unreasonable for Mr Amirbeaggi to refuse to produce documents in answer to the subpoena and that he ought to pay the plaintiffs' costs of the notice of motion filed 10 February 2022.

Turning then to Mr Amirbeaggi's notice of motion filed 10 March 2022. The plaintiffs offered to settle the compliance costs issue on 16 March 2022 and that offer was accepted by Mr Amirbeaggi on 8 April 2022. Whilst there remained a dispute on that motion as to the costs of the motion and the plaintiffs' notice of motion filed 10 February 2022, the costs of the plaintiffs' motion filed 10 February 2022 have been decided against Mr Amirbeaggi.

In all of the circumstances I accept the plaintiffs' submissions that it is reasonable to order that the plaintiffs pay Mr Amirbeaggi's costs of the notice of motion filed 10 March 2022 on an ordinary basis as agreed or assessed up to 16 March 2022 when the offer of settlement was made and that Mr Amirbeaggi pay the plaintiffs' costs of the notice of motion of 10 March 2022 on an indemnity basis after that date.

I consider that it is appropriate to order indemnity costs, noting that it was never reasonable for Mr Amirbeaggi to seek to avoid producing documents under subpoena by raising an issue of disputed compliance costs. The notice of motion filed 10 March 2022 was premature, noting that production had not yet occurred. In the usual way a party would produce documents and then tally its incurred costs and disbursements for negotiation of payment of compliance costs with the party issuing the subpoena.”

The case law

28. The parties referred to Bauhaus Pyrmont Pty Ltd (In Liq) [2006] NSWSC 253 (‘Bauhaus’); Hall v Donlon [2011] NSWSC 1088 at (‘Hall’); In the matter of Aquaqueen International Pty Limited [2016] NSWSC 453 (‘Aquaqueen’); and Florida Kitchens Pty Ltd v Number One Marble and Granite [2019] NSWSC 574 (‘Florida Kitchens’).

29. In Bauhaus, Austin J stated at [9], [15], [16] and [18]:

“[9] It seems to me that if the situation described by Campbell J at [11] were to arise under the new Uniform Civil Procedure Rules (2005), the usual outcome would be the very outcome that Campbell J said “ought not to arise”. That is, in the normal case the person receiving the subpoena is obliged to incur the expense of complying with it and then make an application to recover reasonable expenses.

…

[15] Rule 33.11 of the new rules makes provision for recovery of reasonable expenses. The rule declares that the Court may order the issuing party to pay the amount of any reasonable loss or expenditure incurred in complying with the subpoena. This proposition applies to subpoenas to produce as well as subpoenas of the other two kinds to which I have referred. Significantly, for present purposes, the authority given to the Court relates to the payment of reasonable loss or expenses "incurred in complying with the subpoena". This suggests that at least in the normal course, the Court will deal with the matter after the expenditure has been incurred.

[16] Although rule 33.11 does not expressly say so, it seems to me that the Court would have jurisdiction, at least under its inherent jurisdiction, to entertain an application for an order to be made before the person to whom the subpoena is directed had incurred expenses. Such an application may be appropriate where the probability is that the amount of expenditure will be great compared with the resources of the applicant and/or there may be some doubt about the ability of the issuing party to meet an order for recovery of expenses of such a substantial amount.

…

[18] It seems to me that in the absence of some special and additional facts beyond evidence of the sheer cost of compliance of the kind provided by Mr Byrnes, for the Court to intervene by ordering prepayment of an amount to cover expenses would be to act contrary to the policy underlying the new rules. I do not agree with the submission by counsel for Mr Byrnes that the new rules represent an "oversight". Rather, it appears to me from their drafting, that they are specifically intended to confine the concept of a tender of payment at the point of service of the subpoena, to the case of subpoenas for attendance where the payment is a payment only of conduct money as defined. The recovery of reasonable expenses is intended to be governed by rule 33.11 which speaks, as I have said, of expenses incurred, suggesting that the application is made after the response to the subpoena is complete. Since, it seems to me, this situation reflects the policy underlying the rules, I see no basis for intervening to make an order for payment of the kind sought on behalf of Mr Byrnes.”

30. In Hall, Brereton J stated at [5]:

“[5] The second objection raised was that an agreement had not been reached as to payment of his costs of compliance with the subpoena. The defendants are said to have given an undertaking to pay Mr Hancock's reasonable costs. There is a dispute as to whether that was sufficient, and as to what were reasonable costs. However, the absence of agreement or payment of costs and expenses of compliance is not a legitimate objection to production of documents in compliance with a subpoena. The court is given a discretion to order an issuing party to pay the amount of any reasonable losses or expenses incurred by the addressee in complying with the subpoena [UCPR, r 33.11]. Ordinarily, that question is determined after compliance with the subpoena, when the addressee has incurred expenses [Re Bauhaus Pyrmont Pty Ltd (in liq) [2006] NSWSC 253, [15]]. In Re Bauhaus, Austin J observed (at [16]) that whilst UCPR, r 33.11, does not expressly state that the Court has jurisdiction to entertain an application for an order to be made prior to the addressee incurring expenses, the Court may, under its inherent jurisdiction, have such jurisdiction which might be exercised in circumstances where the amount to be incurred will be substantial when compared with the resources of the addressee and/or there is doubt about the ability of the issuing party to meet an order for recovery of such expenses. No application was made under this rule. This objection was not a proper basis for resisting compliance.”

31. In Aquaqueen, Kunc J quoted Bauhaus with approval at [7]- [8]. His honour stated:

“[7] In the matter of Bauhaus Pyrmont Pty Ltd (in Liquidation) [2006] NSWSC 253, Austin J said:

[15] Rule 33.11 of the new rules makes provision for recovery of reasonable expenses. The rule declares that the Court may order the issuing party to pay the amount of any reasonable loss or expenditure incurred in complying with the subpoena. This proposition applies to subpoenas to produce as well as subpoenas of the other two kinds to which I have referred. Significantly, for present purposes, the authority given to the Court relates to the payment of reasonable loss or expenses "incurred in complying with the subpoena". This suggests that at least in the normal course, the Court will deal with the matter after the expenditure has been incurred.

[16] Although rule 33.11 does not expressly say so, it seems to me that the Court would have jurisdiction, at least under its inherent jurisdiction, to entertain an application for an order to be made before the person to whom the subpoena is directed had incurred expenses. Such an application may be appropriate where the probability is that the amount of expenditure will be great compared with the resources of the applicant and/or there may be some doubt about the ability of the issuing party to meet an order for recovery of expenses of such a substantial amount.

[8] I respectfully agree with and adopt his Honour’s views [Justice Austin] about the inherent jurisdiction. The Court in particular fixes today on his Honour's reference to there being “some doubt about the ability of the issuing party to meet an order for recovery of expenses of such a substantial amount", although the present case turns on the likelihood of any payment rather than the size of the amount involved.”

32. Kunc J ordered Mr Penson to provide security for the recipient of subpoenas, Messrs Devine and Hoare, of $1,300 and $1,000 respectively, in respect of their reasonable costs of complying with the subpoena addressed to each of them.

33. In Florida Kitchens at [36], I said:

“[36] As is set out above, conduct money is not required to be tendered on the service of a subpoena to produce documents pursuant to UCPR 33.11. Ordinarily that question will be determined after compliance with the subpoena, when the addressee has incurred expenses. The step by step guide to issuing subpoenas in relation to the obligation to pay conduct money does not differentiate between a subpoena to give evidence and one to produce documents. So the failure to tender conduct money when the subpoena was served is not a valid objection.”

34. The plaintiff’s submissions – costs

35. The plaintiff submitted that the subpoenaed party’s submissions presuppose that it was always reasonable for him to resist production of documents on the basis he ought to be paid first.

36. The solicitor submitted that the Registrar did not record that the parties had agreed that payment was to be made prior to production, and as a consequence there was no basis for the relief granted.

37. The plaintiff’s argued that it is beside the point that M-H Engineering agreed to make payment prior to production. The plaintiff drew attention to commercial agreement reached in the face of steadfast resistance to production. It is argued that M-H Engineering was forced into bringing an application to achieve compliance with the subpoena and achieved success in doing so. The plaintiff further posits the submission made by the subpoenaed party that the relief sought was not relevant to compliance with the subpoena, which ignores the fact that M-H Engineering achieved the very thing it set out to do - that is, require the subpoenaed party to comply with the subpoena. It was further submitted that M-H Engineering does not, in any event, accept that the relief sought was irrelevant, and referred to paragraphs [21]-[24] of its submissions as to costs filed on 3 May 2022, and the authorities cited therein.

38. The plaintiff submitted that, having achieved an outcome on its motion in its favour, M-H Engineering was entitled to the usual order as to costs.

39. As McHugh J stated in Oshlack v Richmond River Council (1998) 193 CLR 72 at [67]:

“The expression the “usual order as to costs” embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.”

40. The plaintiff asserted that the Registrar was correct to find that the subpoenaed party ought to pay the costs of M-H Engineering, and that finding should not be disturbed by the Court.

Costs of the Motion by the subpoenaed party (10 March 2022)

The plaintiff’s submissions

41. The Registrar found that M-H Engineering made an offer to settle compliance costs on 16 March that was accepted by the subpoenaed party on 8 April. On that basis, M-H Engineering was ordered to pay the subpoenaed party’s costs up to 16 March on the ordinary basis, and that the subpoenaed party pay M-H Engineering’s costs thereafter on the indemnity basis.

42. The plaintiff submitted that while the communication by the subpoenaed party on 8 April did not explicitly convey that he ‘accepted’ M-H Engineering’s earlier offer (which had expired), it achieved the very same thing. In doing so, the subpoenaed party achieved an outcome no better than that as had already been offered. On ordinary principles, costs should follow the event.

43. The Registrar also made a further finding relevant to the discretion to award costs. The Registrar’s decision to order indemnity costs accords with the authorities cited above, including the decision of Austin J in Bauhaus that relied upon by the subpoenaed party.

44. The subpoenaed party submitted that because he achieved success on his motion, it cannot be said to have been premature. To the extent that there was any success, it came as a result of a commercial compromise between the parties following the filing of the motion by M-H Engineering, whereby M-H Engineering offered to pay $1,000, which was taken up by the subpoenaed party. M-H Engineering accepts that it should pay the subpoenaed party up to the date it made that offer (16 March), a position that it articulated in its earlier cost submissions. However, the plaintiff submitted that since the agreement between the parties that was subsequently reached achieved the very outcome M-H Engineering had proposed, as a matter of discretion, there is no basis for the subpoenaed party to recover any costs after that date, and he ought to pay M-H Engineering’s costs after that date on the indemnity basis.

45. As for M-H Engineering also relying on its reference to Calderbank principles (in its offer of 16 March), it must be established that the offer represented a genuine compromise, and that it was unreasonable for the party against whom the order was made not to accept it.

46. As to the offer being a genuine compromise, the subpoenaed party was required to produce pleadings and affidavits read in earlier proceedings in which the subpoenaed party had been the solicitor for a party. M-H Engineering originally estimated that was a task that would take an administrative assistant three hours at $100 per hour, and offered $300. That offer was later increased to $450. Having then confined the scope of production to one pleading, and eight Affidavits, M-H Engineering then offered $1,000.

47. The plaintiff characterised the offer of $1000 as a genuine, and generous increase to the initial position of M-H Engineering on the costs of compliance.

48. As to whether rejection of the offer was unreasonable, between the date of the offer being made (16 March 2022), and the date the subpoenaed party confirmed that he would accept payment of $1,000 (8 April 2022), no evidence has been provided by the subpoenaed party as why the offer was not accepted before its expiry on 30 March 2022. There was sufficient time to permit the subpoenaed party to consider the offer, and in the particular circumstances of this dispute, all relevant evidence had been seen by M-H Engineering in support of its motion.

49. The plaintiff suggested that a a significant factor in favour of the indemnity costs order was the point raised by the Registrar, and as articulated above, that it was never reasonable for the subpoenaed party to have resisted production by demanding prepayment.

50. Ultimately, the parties reached a compromise on compliance expenses. That came about by reason of an offer by M-H Engineering on 16 March 2022. The plaintiff submitted the Registrar was correct in her costs decision concerning the motion by the subpoenaed party, and that decision should not be disturbed by the Court.

51. Ultimately, the plaintiff submitted that the Court should not disturb any of the orders made by Registrar Jones. On that basis, the plaintiff seeks that the motion by the subpoenaed party seeking review under UCPR r. 49.19 be dismissed, with the subpoenaed party to pay the costs of M-H Engineering on the ordinary basis.

The subpoenaed party’s submissions

52. The Registrar noted that the parties had reached agreement on the costs to be paid to the subpoenaed party. The subpoenaed party submitted that what the Registrar did not note was that such sum was to be paid prior to the subpoenaed documents being produced and that the scope of the documents to be produced had been substantially altered, thereby reducing the amount of time required in answering the subpoena. The subpoenaed party asserted that the Registrar did not take into account the relevant considerations.

53. The subpoenaed party also submitted that as a consequence of that agreement, there was no basis for granting any relief sought in the plaintiffs’ motion. The plaintiffs’ had, as the subpoenaed party alleged, relied upon provisions that were not applicable and irrelevant, and were opposed.

54. In any event, by reason of the agreement that the Registrar noted, it was argued that there was no need for determination of any of the substantive issues raised by the motion. Nonetheless, the Registrar proceeded to do so.

55. The Registrar referred to the decision of Hall in which Brereton J held that the absence of the payment of costs is not a legitimate basis to object to production. However, the solicitor submitted that the court has recognised that there may be circumstances in which costs are to be paid prior to the documents being produced, such as Bauhaus.

56. Although r 33.11 does not expressly say so, the subpoenaed party suggested that the Court would have jurisdiction, at least under its inherent jurisdiction, to entertain an application for an order to be made before the person to whom the subpoena is directed had incurred expenses.

57. Examples that were given in Bauhaus as to when the inherent jurisdiction is to be exercised include the amount of expenditure to be incurred and the resources of the issuing party.

58. The parties are always at liberty to agree that an alternative arrangement should it arise. It is submitted that such an agreement is what had occurred between the two parties.

59. The subpoenaed party's opposition to the subpoena and the plaintiffs' motion resulted in an outcome the subpoenaed party argues prevents a granting the relief sought under the motion.

60. The Registrar then determined that the subpoenaed party was unreasonable to refuse to produce the documents. The subpoenaed party submitted that such a determination was not available to her or not reasonably available in the circumstances. It was argued that the subpoenaed party had negotiated a reduced scope of the subpoena and had negotiated an agreement for the payment of $1,000 to defray expenses and on terms as to timing as to payment.

61. The subpoenaed party ultimately submitted that no costs order of the plaintiffs’ motion should have been made. It was also submitted that no other order in respect of the production of documents should have been made, other than in accordance with the agreement.

62. So far as the subpoenaed party's motion, it sought an order for its costs and expenses to be paid. It was successful in obtaining such an outcome. The reason for the amount agreed to being less than the amount sought is that the scope of the subpoena was narrowed and thereby the costs to be incurred was reduced. Nevertheless, by reason of its motion, the subpoenaed party successfully recovered monies (which have subsequently been paid).

63. The Registrar recognised this and ordered the plaintiffs’ to pay the costs of the subpoenaed party's motion until 16 March 2022, the date the respondents proposed to pay $1,000 one week before production was required.

64. The Registrar then ordered the subpoenaed party to pay indemnity costs to the respondents thereafter. The reasons for doing this appear to be; the subpoenaed party was unreasonable to not produce documents in answer to the subpoena. The subpoenaed party argued that that issue was irrelevant to the question of the subpoenaed party's motion that only sought costs, as it was entitled to; and the motion was premature as production had not yet occurred. UCPR 33.11 does not require an application to be made before production. Secondly, the plaintiffs’ agreed to pay the subpoenaed party's costs as agreed. Therefore, success occurred on the motion. The subpoenaed party submitted that it could not be premature.

52. There appears to be a suggestion in plaintiffs’ submissions before the Registrar that the offer was equivalent to a Calderbank letter and it had obtained a response no worse than the offer. The subpoenaed party submitted that if that is the reasoning the Registrar accepted (and given indemnity costs was awarded), she erred as there was no determination of the motion on its merits. The reason the plaintiffs’ did not suffer a more adverse outcome as the outcome was agreed between the parties. Therefore, Calderbank principles are irrelevant.

53. The subpoenaed party’s costs should have continued to be paid or no order for costs from after 16 March 2022 should not have been made.

Resolution

67. As I stated earlier in this judgment, this dispute over production expenses became an exercise of brinkmanship. Originally, the plaintiff’s solicitor required the documents to be produced to the Court and then it would make it payment of reasonable expenses. The plaintiffs offered $150.00 compliance costs that will be incurred in complying with the subpoena. That amount was clearly insufficient.

68. As far as I can ascertain unlike in Hall, the plaintiffs’ solicitors did not give an actual undertaking to pay the subpoenaed party’s reasonable costs involved in producing the documents in answer to the subpoena, although I accept that they accepted that he was entitled to reasonable cost and expenses of compliance (email 2 February 2022).

69. I have carefully read the Registrar’s decision and the documents and submissions before her. The submissions of the subpoenaed party before me placed emphasis on the plaintiff’s letter 16 March 2022 where the plaintiff confined and specified the documents that should be produced. This narrowed the number of documents to be produced. To my mind, that made the production of those documents less onerous and therefore less time would be required by the subpoenaed party to produce those specified documents and less money would be required for reasonable expenses. This compromise, led to the costs production of these specified documents being agreed upon.

70. With respect, I have reached a different conclusion to that of the Registrar. It is my view that neither party’s approach up until the narrowing of the schedule of documents to be produced was reasonable until the plaintiffs’ solicitor’s email on 16 March 2022 when the plaintiff solicitor narrowed and specified the actual documents to be produced. The parties then agreed on reasonable expenses to be paid to the solicitor to produce these documents. The resolution of this dispute should never have required either party to file a Notice of Motion. On this basis, I set aside the decision of the Registrar dated 30 May 2022. It is my view that what follows is that each party should pay its own costs of the two Notices of Motion. Applying the same reasoning in relation to the Notice of Motion seeking a review of the Registrar’s order, I order each party to pay its own costs.

THE COURT ORDERS THAT:

1. The decision of the Registrar dated 30 May 2022 is set aside.

2. Each party is to pay its/his own costs of the Notices of Motion filed on 10 February 2022 and the Amended Notice of Motion filed on 27 June 2022.

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Decision last updated: 19 April 2023