Mazzeo v KSH Consulting Pty Ltd

[1999] FCA 441

FEDERAL COURT OF AUSTRALIA

Mazzeo v KSH Consulting Pty Ltd [1999] FCA 441

ROCCO SANTO MAZZEO v KSH CONSULTING PTY LTD & ORS

NG 3586 OF 1994

EMMETT J
1 APRIL 1999
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 3586 OF 1994

IN THE MATTER OF KSH CONSULTING PTY LIMITED

BETWEEN:

ROCCO SANTO MAZZEO
Applicant

AND:

KSH CONSULTING PTY LIMITED
(ACN 003 937 915)
First Respondent

FRANK RUDOLF BORCHERDT
Second Respondent

CLAUDE JAMES FRA
Third Respondent

PETER EDWARD FARMER
Fourth Respondent

JUDGE:	EMMETT J
DATE:	1 APRIL 1999
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

1. I have before me a motion under Order 27 Rule 4A of the Federal Court Rules brought by Effective Computer Solutions Pty Limited (“ECS”) for the recovery of what is said to be expense or loss reasonably incurred by that company in complying with a subpoena.  Order 27 rule 4A(1) provides:

   “Where a person named in a subpoena is not a party to the proceeding and he incurs substantial expense or loss in complying with the subpoena, the Court or a Judge may order that the party who requested the issue of the subpoena pay to that person […] an amount to compensate him for such expense or loss as is reasonably incurred or lost by that person in complying with the subpoena.”

2. The claim is for a sum of $5,113.85, which is particularised in an affidavit of Mr Frank Borcherdt, sworn 13 January 1999.  It appears that Mr Borcherdt, who is a director of ECS and who is also a director of KSH Consulting Pty Limited, has been accustomed to provide computing consulting services for the benefit of ECS.  When he does so, ECS bills out his time to its client at $100 per hour or $1000 per day.

3. The evidence is somewhat hazy as to the basis upon which Mr Borcherdt’s services are made available to ECS.  As best as I can understand it, a company with which Mr Borcherdt is connected, Claireheath Pty Limited (“Claireheath”), bills ECS for the time of Mr Borcherdt in providing services for the clients of ECS.  It seems that Claireheath bills Mr Borcherdt’s time to ECS at the same rate which ECS bills his time to its clients.

4. Mr Borcherdt has sworn an affidavit explaining the manner in which the sum of $5,113.85 is made up.  It includes considerable time spent by Mr Borcherdt in sorting through documents in order to answer the subpoena.  The subpoena required production of various documents, being as follows:

   ·invoices received from P3 Software (Australia) Pty Limited for the supply of Primavera computer program;

   ·taxation returns prepared for the company;

   ·invoices and receipts pertaining to the sale of Primavera computer program;

   ·invoices received from P3 Software (Australia) for the purchase of Primavera computer program;

   ·notes, memoranda, invoices, receipts and other documents pertaining to consultancy fees paid to:

   (a)       Frank Rudolph Borcherdt;

   (b)       Claude James Fra,

   (c)       Claireheath Pty Limited and

   (d)       Haniross Pty Limited;

   ·notes, memoranda and other records pertaining to courses arranged or conducted for the Primavera computer program.

   Those documents were restricted to the period 1 July 1994 to 30 October 1998, in some cases, and from 1 July 1994 to date in other cases.

5. Belatedly, there was some evidence from Mr Borcherdt as to the basis upon which it was asserted that ECS had incurred any obligation in relation to the time taken by Mr Borcherdt to sort through the documents in order to answer the subpoena. Mr Borcherdt says that a conversation took place between himself and Mr Fra, who is also a director of ECS, in which he said that he would do the work necessary to answer the subpoena, provided ECS paid him for it.  It is not quite clear whether it was Mr Borcherdt himself who was to be paid, or if it was his company, Claireheath.  There is certainly no evidence of any invoice having been rendered or any book entry having been made to indicate any liability at all on the part of ECS to pay the amounts claimed in the affidavit.

6. I do not consider there is evidence before me to justify Mr Borcherdt spending time at $100 an hour in doing what appears to be basically a clerical task.  There is evidence that some clerical work was done by Louise Andrews at the rate of $25 per hour.  In the absence of any evidence to justify retaining Mr Borcherdt, instead of using an employee of ECS, I do not consider that the affidavit justifies a conclusion that the sum of $5,113.85, if it has in fact been incurred, was reasonably incurred or lost by ECS in complying with the subpoena.

7. However, I would be prepared to order that the issuing party pay to ECS its costs of complying with subpoena calculated at the rate of $25 per hour, rather than $100 per hour. Absent any further evidence I would be disposed to direct that there be no order as to the costs of the motion brought by ECS.  However, against the possibility that one of the parties might want to call some evidence on that question, I will reserve the costs of the motion.

I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated:             1 April 1999

Counsel for Effective Computer Solutions:	M.W. Young
Solicitor for the Effective Computer Solutions:	Somerville & Co
Counsel for the Applicant:	C. Stomo
Solicitor for the Applicant:	Cichero McLean & Menzies
Date of Hearing:	1 April 1999
Date of Judgment:	1 April 1999