Rayney v David Price t/as D G Price and Co

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: RAYNEY -v- DAVID PRICE t/as D G PRICE & CO [2011] WASC 265

CORAM: COMMISSIONER SLEIGHT

HEARD: 19 SEPTEMBER 2011

DELIVERED : 30 SEPTEMBER 2011

FILE NO/S: CIV 1844 of 2011

BETWEEN: LLOYD PATRICK RAYNEY
Plaintiff
AND
DAVID PRICE t/as D G PRICE & CO
First Defendant
CARLOS GASTAO CORREIA
Second Defendant

Catchwords:

Costs - Application that order to produce unlawful - Application dismissed as a result of compromise - Whether second defendant using proceedings as a test case - Whether second defendant acted unfairly - Turns on its own facts

Legislation:

Criminal Investigation Act 2006 (WA), s 50, s 51, s 53, s 55, s 151

Result:

Application for costs dismissed

Category: B

Representation:

Counsel:

Plaintiff:     Mr C P Shanahan SC
First Defendant             :     No appearance
Second Defendant         :     Mr J F O'Sullivan

Solicitors:

Plaintiff:     Timpano Legal
First Defendant             :     No appearance
Second Defendant         :     State Solicitor for Western Australia

Case(s) referred to in judgment(s):

Nil

COMMISSIONER SLEIGHT: The plaintiff, Mr Rayney, is charged in the Supreme Court of Western Australia with the wilful murder of his wife, Corryn Rayney. This decision concerns what costs orders should be made in proceedings by Mr Rayney seeking, inter alia, a declaration that an order to produce dated 19 May 2011 issued pursuant to s 53 of the Criminal Investigation Act 2006 (WA) (CIA) is unlawful.

Background

Mr Rayney was initially arrested on 8 December 2010 and charged with the wilful murder of his wife.
On 23 December 2010, Mr Rayney made an application for bail. During the course of that application, an allegation was made against Mr Rayney that he had refused to allow anybody to interview his two children. Senior counsel appearing for Mr Rayney refuted this suggestion and stated that because of Mr Rayney's mistrust of the police, arrangements were made independently of Mr Rayney with a Queen's counsel and also with a suitably qualified person to interview the two children and take a transcript and record of such interviews. This was done to overcome any suggestion of tampering or influencing the two potential witnesses.
The State Solicitor's Office, acting on behalf of investigating officers, sought access to the transcript of the interviews with the two children of Mr Rayney. The State Solicitor's Office wrote to D G Price & Co, solicitors then acting for Mr Rayney, on 14 February 2011 expressing the view that as the transcripts did not appear to have been conducted for the dominant purpose of anticipated litigation, the transcripts would not be subject to legal professional privilege. The letter to D G Price & Co concluded:
It is open to the WA Police to seek to obtain a search warrant and if need be, proceed by way of section 151 of the Criminal Investigation Act 2006 in the event that Mr Rayney asserted a claim of legal privilege. However, it is obvious to the advantage of both parties if this matter can be resolved by conferral.
According to a file note of the State Solicitor's Office, approximately two weeks prior to 1 April 2011 counsel for the second defendant telephoned the first defendant, Mr Price, and during the conversation Mr Price expressed concern that the police would attend his legal practice premises with a search warrant. The note stated that counsel for the second defendant informed Mr Price that the simplest solution was to provide the statements to the police in a sealed envelope and assert a claim of legal professional privilege. The police would then deliver the envelope to the court and the matter would proceed pursuant to s 151 of the CIA. Mr Price indicated that he would seek instructions from Mr Rayney.
On 3 March 2011, Mr Price wrote to the second defendant expressing the view that the interviews were subject to legal professional privilege and declined to provide the material to the police as requested.
On about 16 March 2011, Mr Rayney instructed Timpano Legal in relation to the wilful murder criminal proceedings. Mr Price continued to act for Mr Rayney in relation to some outstanding issues concerning claims for legal professional privilege in relation to documents seized under search warrants
On 16 May 2011, the second defendant caused to be obtained from a Justice of the Peace an order to produce a business record under s 53 of the CIA. The order to produce was dated 16 May 2011 and directed to the first defendant. The order described the documents to be produced. It is unnecessary for me to repeat the full description of the documents, but it was directed towards the transcript of the interviews of Mr Rayney's two children referred to by senior counsel for Mr Rayney on the bail application.
By letter dated 18 May 2011, Timpano Legal wrote to D G Price and Co. The letter expressed the view that the order to produce was invalid and requested Mr Price not to release any material described in the order to produce until the legality of the order to produce was tested. The letter requested that Mr Price hand over the documents, the subject of the order to produce, to Timpano Legal so that it could take up the issue on Mr Rayney's behalf without involving D G Price & Co. Such a request placed Mr Price in an untenable position. If he had complied with the request and the order was later found to be valid, he faced a risk of being found guilty of an offence under s 55 of the CIA. Section 55 of the CIA provides that a person who is served with an order to produce and who, without reasonable excuse, does not obey, commits an offence. The maximum penalty for the offence is a fine of $12,000 and imprisonment for 12 months. Understandably, Mr Price refused to comply with the request of Timpano Legal. On 18 May 2011, Mr Price sent an email to Mr Anthony Elliott, counsel appearing for Mr Rayney, stating that, in Mr Price's view, he was obliged to comply with the order to produce, but pointing out that he would claim legal professional privilege on behalf of Mr Rayney, the effect of which would be that the documents would be dealt with under s 151 of the CIA. Mr Price also sent a letter to Timpano Legal on 19 May 2011 confirming that he intended to comply with the order to produce unless he was prevented by an order from doing so.
In response to the position taken by Mr Price, Mr Rayney, through his solicitors, commenced these proceedings and, on an urgent basis, sought an interim injunction that the obligation of Mr Price to comply with the order to produce be stayed. Only limited notice was given to the second defendant of this application for an interim injunction. The papers were served on the second defendant at 2.49 pm on 19 May 2011 and the matter came before me for hearing at 3.15 pm that day. No appearance was made by the second defendant and, insofar as the second defendant was concerned, the matter proceeded on an ex parte basis. However, Mr Price attended and indicated he was prepared to surrender the documents to the court and comply with whatever order was made.
On 19 May 2011 the following orders were made :
1.Until further order, no person or entity, except as between the parties and their respective counsel and solicitors, is to communicate or publish to any other person or entity anything said or done in these proceedings.
2.The obligation of the first defendant to comply with the order to produce a business record dated 16 May 2011 purportedly issued pursuant to s 53 of the Criminal Investigation Act 2006, directed to David Price, trading as D G Price & compelling production of certain business records to Carlos Gastao Correia (notice to produce) be stayed pending further order.
3.The first defendant deliver to the court any documents in the possession of the first defendant that fall within the terms of the order to produce dated 16 May 2011.
4.The documents delivered to the court be held in a sealed container which is not to be opened or delivered up without an order of the court.
On 8 June 2011, the second defendant filed a summons for directions seeking to be heard on the suppression order only. The application was listed on 19 September 2011. When the matter came before me on 19 September 2011, the parties had reached an agreement in principle that the issue of the validity of the order to produce would not be decided by the court, subject to appropriate orders being made to enable the second defendant an opportunity to issue a search warrant and have the issue of legal professional privilege of Mr Rayney decided under s 151 of the CIA. The second defendant proposed that the orders made on 19 May 2011 restraining release of the documents be set aside to enable the second defendant to issue a search warrant against the Supreme Court to seize the documents and have the documents dealt with under s 151 of the CIA. Senior counsel for Mr Rayney proposed that the documents be released to Mr Rayney personally so that the search warrant could then issue against him. After pointing out to counsel that I concluded that neither proposal was appropriate, I invited counsel to confer and discuss possibilities of agreeing to an order that the documents be released to Mr Rayney's solicitors, subject to certain embargoes so as to preserve the documents for a sufficient time to enable the police to issue a search warrant and seize the documents. That way, the question of legal professional privilege could be dealt with under s 151 once the police seized the documents under a search warrant. After a conferral, the parties consented to the following orders being made:
On a written undertaking being filed by the 2nd Defendant and the Commissioner of Police not to seek further performance or execution of the Notice to Produce issued to the 1st defendant dated 6 May 2011, the following orders are made:
1.The documents currently held by the court be placed in an envelope by Officers of the Court and the court's seal applied.
2.Both the Plaintiff and the 2nd Defendant be at liberty to witness the application of the Court's seal pursuant to 1 above.
3.The documents so sealed be released on receipt of the aforesaid written undertaking to the solicitors for the Plaintiff on condition that the sealed envelope is to remain unopened for seven days.
4.The solicitors for the Plaintiff to retain the documents in the sealed envelope for a period of seven days after which they are at liberty to deal with the said documents.
5.Orders 2 to 6 of the interim orders made on 19 May 2011 are set aside.
6.There is to be a suppression order [the terms of which need not be set out for the purpose of this decision].

Statutory framework

Under s 53 of the CIA, a Justice of the Peace may issue an order to produce a business record, subject to being satisfied as to certain criteria. A business record means a record prepared or used in the ordinary course of business for the purpose of recording any matter relating to the business. Section 51(1) provides that an order to produce must not be issued to a person in relation to a business record that relates or may relate to an offence that the person is suspected of having committed. Section 51(2) provides that the provision concerning obtaining a business record by an order to produce does not prevent an officer from applying for a search warrant in respect of a business record, whether before or after the issue of an order to produce.
Section 151 provides for a procedure to deal with a claim for legal professional privilege and public interest privilege. If a record is seized pursuant to a search warrant or is produced under an order to produce, and a person entitled to possession of the record claims privilege, the record must be secured and delivered to the custody of the Magistrates Court and the issue of privilege is then decided by the Magistrates Court. If the court decides the record is privileged, then it is made available for collection by the person from whom it was seized.

Costs

Although the orders I made on 19 September 2011 were made by way of a compromise between the parties and led to an order dismissing the application of Mr Rayney without deciding the merits of the application, senior counsel for Mr Rayney sought an order for costs against the second defendant. This application was opposed. It is difficult to envisage a situation where a costs order should be made against a party when the matter has been resolved by a compromise and without the court making a ruling on the merits of the application.
Mr Rayney's challenge to the validity of the notice to produce was on two grounds. Firstly the documents sought to be seized were not a business record within the meaning of s 50 of the CIA. Secondly, the prohibition against an order to produce issuing against a person in relation to a business record that relates or may relate to an offence that that person is suspected of having committed, extends to that person's solicitor. It was accepted by both parties that in deciding the issue of costs, the question of whether or not Mr Rayney would have ultimately succeeded on his application was not to be taken into account. The application for costs made by senior counsel for Mr Rayney was essentially on the basis of fairness. The submission was based on five grounds:
1.Firstly, it was contended that the second defendant had unreasonably forced the plaintiff into commencing and conducting the proceedings to establish a test case as to whether s 53 of the CIA could be used to require a solicitor acting for a person charged with a criminal offence to produce documents. In my opinion, there is no basis for this contention. The evidence before me leads me to infer that because Mr Price was concerned with a search warrant being executed on his legal premises, the police elected to proceed by a less intrusive method in the form of an order to produce. The order to produce meant that Mr Price avoided his legal premises being searched by police officers. Instead Mr Price was required to identify the relevant records himself and produce these to the police. Mr Rayney did not suffer any disadvantage by the police using this alternative process as Mr Rayney was still able to claim legal professional privilege under s 151 of the CIA.
The question of whether the matter was a 'test case' arose initially out of a comment in correspondence from Timpano Legal dated 7 September 2011 to the second defendant as follows:
Our client should not be forced to argue what is essentially a test case (on the power to obtain documents pursuant to a Notice to Produce rather than a search warrant) until after his trial is completed.
The second defendant in correspondence dated 12 September 2011 responded as follows:
The WA Police do not concede that the notice to produce is invalid. As a consequence if either party seeks costs, the question as to the validity of the notice to produce will require consideration. The resolution of that question (even if only for the purpose of costs) would necessarily involve the parties participating in a hearing directed to that issue notwithstanding that both parties appear to agree that the matter can be resolved without the validity of the notice being determined and have an interest in the proceedings being resolved without incurring further cost.
Furthermore, as you point out this will be a test case. The costs involved in researching and arguing in this case will more than likely exceed the costs already expended by both parties to date.
It is clear from this correspondence that the second defendant was simply agreeing with an observation made by Mr Rayney's solicitors that the matter would be a test case if the matter proceeded to a contested hearing. In my view, the evidence does not suggest any inappropriate motive on behalf of the second defendant.
Further, Mr Rayney was not being forced into arguing a test case. Regardless of whether the documents were seized under an order to produce or a search warrant seizure, the issue of legal professional privilege was still available under s 151. Mr Rayney could have easily allowed the documents to be produced by the alternative method of the order to produce and then still have the question of legal professional privilege adjudicated under s 151 (as, in fact, was suggested by Mr Price in his correspondence dated 19 May 2011 to Mr Rayney's solicitors).
2.The second contention of senior counsel for Mr Rayney in support of the application for costs is that the second defendant was required to act as a model litigant and the effect of its opposition to the application or the proposed compromise by Mr Rayney was to create collateral issues to the criminal proceedings against Mr Rayney which would subject Mr Rayney to further legal costs. I reject this submission. I reserve my views about whether in the circumstances the second defendant had obligations as a model litigant, but, in any event, for the reasons given above, the decision to initiate and argue the collateral issue as to the validity of the order to produce was a decision made by Mr Rayney, when, regardless of the outcome of the proceedings, the alternative method of the documents being seized under a search warrant was available to the police. Mr Rayney elected to challenge the notice to produce when it was unlikely to be of any material benefit to him.
3.The third contention of senior counsel for Mr Rayney was that Mr Rayney had entered a proposal to settle which was likened to a Calderbank offer. It was contended that the second defendant had rejected this offer. In my view, the history of negotiations, as is revealed in correspondence between the parties, presents nothing akin to a Calderbank offer. In broad terms, a Calderbank offer arises where an offer of settlement is presented and the matter proceeds to a contested hearing, but the successful party achieves a result no better than the offer that was presented prior to the hearing. In this case, the matter did not proceed to a decision on the merits of the application, but instead a compromise order was made. Without going into detail about the negotiations that took place between the parties, essentially Mr Rayney offered a settlement on the basis that the application be dismissed, with an order that the documents be returned to him. The second defendant rejected this proposal and presented a counter‑proposal that the application be dismissed, but the documents remain in the possession of the Supreme Court to enable the police to execute a search warrant against the Supreme Court to obtain seizure of the documents. Neither proposal reflected entirely the final orders that were made.
4.The fourth contention presented by senior counsel for Mr Rayney in support of the application for costs was that the proposal of compromise by the second defendant that the documents remain in the possession of the court so that a search warrant could be issued by the police against the court was an untenable proposal of settlement which was pointed out to the second defendant in correspondence from Timpano Legal to the second defendant dated 14 September 2011. Although my preliminary view was that such a proposal was unworkable and undesirable, it was not so unreasonable as to warrant an order of costs against the second defendant. In any event, it was simply presented to the court as a possible means of resolving the matter without the matter proceeding to hearing. Having expressed my views to counsel concerning the proposal and having given the parties an opportunity to further confer, orders were ultimately made which were agreed between the parties.
5.The final submission made by senior counsel on behalf of Mr Rayney was that Mr Rayney should not bear the costs of the proceedings as the issue of the order to produce was a mistake by the police. It was further submitted that, given the substantial costs Mr Rayney already faces in relation to the criminal proceedings against him on the charge of wilful murder of his wife, he should not bear the costs of this mistake. This submission, which is premised on the contention that the issue of the order to produce was a mistake, cannot be accepted given that the question of the validity of the order to produce has not been decided.

Accordingly, for the above reasons, I reject the application for costs made by the plaintiff and order that both parties pay their own costs in relation to the proceedings.

[2011] WASC 265

30/09/2011