Moorehead Nominees Pty Ltd v Barclays Australia Securities Ltd

[1991] FCA 380

IN THE FEDERAL COURT OF AUSTRALIA	)
1
NEW SOUTH WALES DISTRICT REGISTRY )	NO VG63 of 1989

1

GENERAL DIVISION )

MOOREHEAD NOMINEES PTY LTD &

ORS

Applicants

04 J U L 1991 BARCLAYS AUSTRALIA SECURITIES

FEDERAL COURT OF

AUSTRALIA	LTD & ORS.
PRINCIPAL
REGISTRY	Respondents

,

. .

CORAM: HILL J PLACE: SYDNEY DATED: 17 MAY 1991

EX TEMPORE REASONS FOR JUDGMENT

NZ1 Capital Corporation Limited (hereafter referred to as " N Z I " ) by a motion in respect of which Barclays Australia Securities Limited ("Barclays") is the respondent, moves the court for orders that Barclays pay to NZ1 pursuant to Order 27 rule 4A of the Federal Court Rules an amount to compensate NZ1 for such expenses or losses as that company alleges it has reasonably incurred or lost in complying with a subpoena"issued at the request of Barclays and dated 22 June

enforcement of a letter of credit. The subpoena that was	issued in the present proceedings required production of two
classes of documents as follows:-

1990.

At or about the same time as proceedings were continuing in this court, there were proceedings in the Equity Division of the Supreme Court of New South Wales in which NZ1 had been sued by a M r Porter. Those proceedings concern the

" (1) The original or a copy of all letters, memoranda, file notes and working papers relating t o negotiations and other dealings with Mandemar OV Limited and/or Grahame Jennings in respect of the issue of NZI Capital Corporation Limited's Irrevocable Standby Letter of Credit

No.25 dated 19 June 1987.

(2) The original or a copy of all correspondence between the parties in Warren Porter v NZI Corporation Limited and Others, proceedings No.4687 of 1988 in the Supreme Court

of New South Wales. "

After the subpoena was issued and served, NZ1 sought advice from its solicitor concerning the enforceability of the

subpoena. That advice apparently led to NZ1 giving

instructions to its solicitors to set aside the subpoena and those instructions were communicated to the solicitors for

Barclays .

The grounds upon which it was said that the subpoena should be set aside was, firstly, that it amounted to a fishing expedition and, secondly, that the second paragraph was oppressive. A request was made of the solicitors for Barclays to provide copies of the pleadings in the proceedings in this court. That ultimately was refused as was also the giving of an undertaking that Barclays would not seek to join

NZ1 in the present proceedings.

There were apparently numerous discussions that followed thereafter between the solicitors. It would appear that the solicitors for NZ1 perused documents which had been forwarded to them for consideration. Having regard to the terms of the subpoena it is obvious that some of the documents required to be produced would have been privileged.

The evidence before me suggests that NZI, and/or those advising it, had an apprehension that the documents sought may have been sought by Barclays for an improper purpose, that is to say, for a purpose concerned with its own litigation in the Supreme Court of New South Wales, rather than for the purposes of the present litigation. I say nothing as to whether such an apprehension was merited but certainly on the face of it there is no evidence that would suggest it was.

It was also apprehended that the subpoena required were apparently located in diverse localities such as the	the production of a large number of documents, some of which
Cayman Islands. There were discussions between the solicitors which were directed at narrowing the class of documents that would be required to be produced, no doubt in the interests both of economy of time and the saving of money.
At the end of the day no application by notice of motion was made by NZ1 to set aside the subpoena, nor indeed was the subpoena called upon. Indeed, ultimately it was stood over generally and the substantive proceedings came to a fruition without a hearing in circumstances which presumably involved a settlement.
Both parties adopted an all or nothing approach, save that they were in general agreement with the general principles set out by Lockhart J in Fuelx~reSS Ltd v L.M. Ericsson Ptv Ltd (1987) 75 ALR 284 (at 285-6).
That case established that legal costs fall within the scope of Order 27, rule 4A, which rule reads as follows, relevantly:

"(1) 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. "

In the course of his judgment, Lockhart J illustrated the application of the rule by reference to a case where a large number of documents are subpoenaed some of which may be confidential and some of which may raise issues of legal professional privilege. Legal advice with respect to matters of that kind fall clearly within the scope of the rule.

His Honour was also of the view that the costs to be ordered under the rule could be ordered on a solicitor and client basis. His Honour said (at 286):

"The i n t e n t o f r .4A i s t o compensate a person subpoenaed to produce documents f o r expense or l o s s r e a s o n a b l y i n c u r r e d i n

comply ing w i t h the subpoena. I t i s n o t

the c a s e o f a s u c c e s s f u l p a r t y t o

l i t i g a t i o n s e e k i n g recovery o f c o s t s where

the d i s t i n c t i o n o f s o l i c i t o r and c l i e n t

c o s t s on the one hand and p a r t y and p a r t y

c o s t s on	the	o t h e r i s observed	by	t a x i n g
o f f i c e r s .	I t	i s a	c a s e o f a	t h i r d p a r t y

s e e k i n g compensation for what it h a s

a c t u a l l y c o s t i t i n expense o r l o s s i n

complying w i t h the subpoena. "

Counsel for N Z 1 submitted that all of the costs incurred by his client were costs of complying with the subpoena. The costs in question were set out in a bill which although lengthy and containing some detail, was not an

which would enable taxation to proceed. As, I suppose, is	itemised bill of costs in the sense that it was not in a form
inevitable in matters of this kind, the evidence before me does not include the files and briefs which are referred to in the bill of costs and so such knowledge as I have of the work performed by the solicitor is inevitably confined to the summary bill of costs which is before me.
When one examines rule 4A it is obvious that it is concerned with costs of compliance with the subpoena. Not all costs incurred by a party subpoenaed as a consequence of being subpoenaed fall within the scope of these words. The costs in question must be costs of compliance. Of course as well they must be reasonably incurred.
Whether particular costs are costs of compliance is obviously a matter of fact. Put in general terms, it seems to me that costs of compliance will include the costs incurred by the party subpoenaed in seeking advice as to the validity of the subpoena, that is to say, as to whether he has to comply with all or but a part of it; it will include correspondence with and attendances upon the party issuing the subpoena concerning the terms of the subpoena and in particular discussions which go to narrowing the scope of the subpoena and it will obviously include attendances in court in connection with the subpoena being called or being stood over to some other date. As Fuelxuress Ltd v Ericsson makes clear,
confidential or subject to some form of privilege or for some it would include seeking advice as to whether documents are
other reason need not be produced, for example, because the documents do not fall within the terms of the subpoena.
On the other hand, I do not think that all of the expenditure which has been incurred by the applicant before me can be said to have been incurred in complying with the subpoena.
Having sought advice as to the validity of the subpoena, instructions were given by NZ1 to proceed to have the subpoena set aside. So far as one can gather from the bill of costs, those instructions caused the solicitors to brief counsel and were productive of many other attendances. It seems to be difficult to say that advice on setting aside a subpoena, once the decision has been made to set it aside, is advice in complying with the subpoena. Under the rules of the court a party seeking to set aside a subpoena is required to move the court by motion and file a notice of motion accordingly.
If it should turn out that the subpoena is for some reason to be set aside, then the parties subpoenaed would ordinarily be entitled to an order for costs of the notice of motion. Likewise, should it turn out that the party seeking to set aside the subpoena was not entitled to set it aside, subject to the usual judicial discretion on costs, an order of
costs would be made against the party lodging the motion.
It is, however, difficult, without in fact inspecting the files and analysing step by step each of the steps taken by NZ1 and its solicitors to determine what it did in terms of compliance, and what it did in terms of seeking to set aside the subpoena. At the end of the day, of course, there was no need to set aside the subpoena because the entire problem evaporated when the proceedings were settled.
However, it does not seem to me that it follows from that, that the steps taken in the meantime to that end were steps of compliance. It was submitted on behalf of the respondent that, since throughout, the instructions of NZ1 were to set aside the subpoena, nothing it did could properly satisfy the description of compliance.
It was said it did not comply as a matter of fact; it did not seek to comply, nor did it ever intend to. In making this submission the solicitor for the respondent did not suggest that the mere fact that there had been no compliance, because ultimately a subpoena was not called upon, did not preclude an order being made under rule 4A.
However, it was said that once the intention was formed not to comply, it followed that no expenditure thereafter fell within rule 4A. As a second submission it was said that the evidence did not establish that the parties
subpoenaed had incurred substantial loss or damage.
The bill of costs which is before me, some part of which should be clearly reimbursed under rule 4A, and some part of which should not, is of a total amount of $6058.50. As I have indicated, I am unable without a detailed analysis of all the papers to form a view as to the appropriate figure. Nor did the parties suggest that I should approach the matter in such a detailed way.
It is obvious to me from a perusal of the bill, but without the assistance of the papers, that a not insubstantial portion of the bill related to compliance, although it is clear that a substantial part of the bill did not. However, it seems to me that I am in a position to form the view that such amount as did relate to compliance is nevertheless substantial, so that rule 4A should apply to it.
In the present circumstances clearly the matter has to be referred to the Registrar, ultimately to tax the amount of costs to which N Z 1 would be entitled under rule 4A. Having regard to the principles which I sought to set out, it will be for the Registrar to determine in respect of each item of the taxed bill, and by reference to the files which will no doubt be then presented to him, how much of the bill related to compliance, that is to say seeking advice as to the validity of the subpoena, and taking steps to do what the subpoena requires to be done, including negotiations with the
what items in the bill actually relate to giving effect to the solicitors for Barclays as to the terms of the subpoena, and
instruction to set the subpoena aside and seeking advice in connection with the implementation of that instruction.

Accordingly, I would order as follows:-

(1) Pursuant to Order 27 rule 4A the respondent, Barclays Australia Securities Limited, pay to NZ1 Capital Corporation Limited an amount which is sufficient to compensate it for the expense or loss which it reasonably incurred or lost in complying with the subpoena, issued by the respondent to this motion, and served on Barclays Australia Securities Limited, and that the amount shall be fixed by the court's taxing officer.

(2) That the amount so certified by the taxing officer be paid to N Z 1 Capital Corporation Limited by the respondent within 21 days after the certificate of taxation has issued. Such amount to be determined on a solicitor and client basis.

(3) I order that Barclays pay N Z 1 Capital Corporation's costs of the motion on a party and party basis.

I certify that this and the

preceding nine (9) pages

are a true copy of the Reasons
for Judgment herein of his Honour

Mr Justice Hill.

I i s s o c i a t e : p

Date: 17 ay 1991

Counsel and Solicitors	D.J. Fagan instructed by
for Applicant in the motion:	Holman Webb
Solicitors	R. Featherston of
for Respondent:	Mallesons Stephen Jaques
Date of Hearing:	17 May 1991
Date Judgment Delivered:	17 May 1991