Re Ansett Australia Holdings Ltd

[1997] QSC 79

IN THE SUPREME COURT
OF QUEENSLAND

Brisbane  No.2693 of 1997

Before the Hon. Mr Justice Mackenzie

[Re Ansett Australia Holdings Ltd]

IN THE MATTER of
  THE SUPREME COURT ACT 1867

and

IN THE MATTER of AN APPLICATION BY
  ANSETT AUSTRALIA HOLDINGS LIMITED

JUDGMENT - MACKENZIE J.

Judgment Delivered 7 May 1997

CATCHWORDS: COSTS - summons to set aside criminal subpoena - whether power to award costs; if so, factors influencing such a decision - whether legislative basis for power - O. VIA Criminal Practice Rules - Ss. 660, 694, 671F(1) and 704 Criminal Code - s.221 Supreme Court Act 1995 -s.58 Supreme Court Act 1867 - O. 91 r. 1 Supreme Court Rules - whether inherent or implied basis for power.

COSTS - whether costs against respondent accused or their solicitors - whether subpoena oppressive, vexatious and an abuse of court - object of jurisdiction to award such costs - scope of solicitor's duty to court - conduct in responding to other side's enquiries.

Counsel:B. Porter (solicitor) for the applicants.

A. Kimmins for the respondents

Solicitors:  Allen Allen & Hemsley for the applicants.
  P.S. Russo & Associates for the respondents.

Date of Hearing:                4 April, 1997

IN THE SUPREME COURT
OF QUEENSLAND

Brisbane  No.2693 of 1997

Before the Hon. Mr Justice Mackenzie

[re: application by Ansett Australia Holdings Ltd]

IN THE MATTER of
  THE SUPREME COURT ACT 1867

and

IN THE MATTER of AN APPLICATION BY
  ANSETT AUSTRALIA HOLDINGS LIMITED

JUDGMENT - MACKENZIE J.

Judgment Delivered 7 May 1997

This is an application for costs of a summons to set aside a subpoena in the matter of the Queen v. Popescu and Poradin.  A subpoena duces tecum was served on Ansett Australia Holdings Limited ("Ansett") requiring, in respect of 26 named persons employed at Sydney airport on 10 October 1995 and 9 such employees at Brisbane airport, all files (including but not limited to personnel files) of the employees.  The subpoena also required the production of all operating procedure manuals directives or information in relation to security at Ansett's domestic terminals (including but not limited to procedures concerning x-ray machines to ascertain whether there are gums or weapons in the luggage) and the power and authority of persons in Ansett's employ or with the authority of Ansett to undertake such security precautions, including but not limited to Sydney airport.  The subpoena also required production of all operating procedure manuals, directives or information in relation to the power and authority of persons in Ansett's employ or with the authority of Ansett to open and search luggage. 
          The subpoena was headed as being issued in the criminal jurisdiction in the matter of the Queen v. Remus Poradin and Stephen Popescu.  The offence alleged was possession of heroin.  Disclosure of any relevant material would principally have been of benefit to Popescu in whose luggage the drug was found.  Poradin's case, as appeared from his trial in which the jury was unable to agree, was that he had merely accompanied Popescu to Sydney for innocent purposes and was unconnected with any enterprise by Popescu to acquire drugs.  However, any evidence tending to suggest plausibly that someone else may have placed the drug in Popescu's luggage while it was out of his physical possession would also have benefited Poradin.  After rulings as to the admissibility of evidence unrelated to the issues implicit in the subpoena Popescu pleaded guilty. 
          To put the present application in context it is necessary to refer to the history of the matter.  The trial was listed to commence at the sittings commencing on 10 March 1997, and at the time of issue of the subpoena, had been listed for some time as the first trial, to commence on 11 March 1997.   As early as 17 October 1996, the question of security of luggage in custody of the airline was perceived by the defence to be a line of enquiry to be followed up.  This is evidenced by a letter of that date and an identical letter of 4 November 1996 to Ansett in which the following request was made:

"We act on behalf of Mr Poradin and Mr Popescu.

Would you please advise us as to whether your company has a register of complaints in relation to either missing baggage or any information in relation (sic) theft from persons baggage by baggage handlers.

Could you also advise us as to whether baggage goes through any type of x-ray machine at Mascot airport to see whether there are any guns or weapons contained in the baggage."

A reply was made on 18 November 1996 in the following terms:

"We refer to your letter dated 4 November 1996, referenced RLD:SLH:CR833/95, advising you act on behalf of Mr Poradin and Mr Popescu.

In respect of missing registered baggage, the Baggage Services Department in the Port at which the report is lodged maintains a record.  In regard to reports of theft from baggage, this information is passed to our Security Department.

In relation to your query regarding baggage screening, we do not make comments on our security procedures."

Nothing in the material before me suggests that there was any further contact with Ansett until the subpoena was served on 4 March 1997.  Ansett sent the subpoena to its solicitors on 5 March and the material before me shows that on 6 March 1997 several phone calls were made to the accused persons' solicitors in an attempt to discuss the subpoena.  A secretary who received the calls said that Mr Russo, the principal of the firm or counsel would contact Ansett's solicitors but that did not happen.  In the second of these phone calls the making of an application to set aside the subpoena if no response was received by 2.30pm that day was foreshadowed.  On 7 March 1997 further attempts were made to speak to Mr Russo.  Another person who was put on the line by the secretary in response to a request to speak to any other solicitor was told of the intention to make an approach to have the matter dealt with in Chambers later that day.  The matter was brought to my attention as trial judge and judge in charge of the criminal list.  When the matter was mentioned before me at 11.15am on 7 March 1997, no-one appeared on behalf of the respondents.  The matter was stood down to allow further communication with the respondents' legal representatives with a view to having someone appear.  At 2.45pm Mr Feeney of counsel appeared and it was ordered by consent that Ansett be relieved of its obligation for the time being to comply with the subpoena.  The obligation to comply would not crystallise until the limits of the range of documents to be supplied had been worked out and clarified.  The mechanics of compliance were to be worked out at a later date. 
          The correspondence exhibited before me shows that following discussion between legal representatives the following agreement was reached:

"We confirm that, notwithstanding the breadth of the terms of the subpoena served on Ansett, the accused's requests for information from Ansett are now limited to a request first, that Mark Clarkson of Ansett in Sydney provide a statement as to our client's procedures for transporting luggage from the hold of Ansett's aircraft to the luggage collection carousels and that he be available to attend to give evidence of this matter if required.  Second, that our client provide, and Mr Clarkson attend to testify in support of, records of the baggage handling staff rostered on the relevant day.

We confirm also that the following information is not required by the accused.  First, any matter contained in any personnel file, and in particular, information about disciplinary proceedings by our client against any baggage handler.  Second, any information about security procedures, security manuals or security powers."

The witness Clarkson gave evidence limited to interpretation of the flight records, identifying the staff member who had checked in the two accused at Sydney airport, the fact that hand luggage was x-rayed on the way to the gate lounge and the fact that the public was excluded from areas through which checked-in baggage went.  He was not cross-examined by Mr Feeney who appeared for Poradin at the trial. 
          The present application is limited to the costs of and incidental to the application to set aside the subpoena.  There is no application in respect of any expenses which may have been incurred in attempting to comply with the subpoena.  It is necessary to consider the power to award costs in such a case and whether there are any factors in the case which influence the decision if power to award costs exist.  There is a second distinct issue, whether costs should be awarded against the solicitor rather than the respondents.
          The Crown is not a party to the present application.  There is a considerable body of authority relating to the power to award costs to or against the Crown.  With respect to indictable offences reference may be made to R. v. Kimmins ex parte Attorney-General (1980) Qd.R 524; Fraser v. The Queen (No. 2) (1985) 1NSWLR 680; Goia (1988) 19 FCR 212; Whitworth (1988) 164 CLR 500; R. v. Foggo ex parte Attorney-General (1989) 2 Qd.R 49; Scott (1992) 59 A Crim. R362; Gummer (1994) 71 A Crim. R140. However because the Crown is not a party to the proceedings these authorities shed no light on the issues to be resolved except in one important respect to which I will refer shortly. However, it is not necessary to explore the present limits of the power to award costs for or against the Crown.
          In Carter v. Managing Partner, Mallesons Stephen Jaques (1994) 11 WAR 159, Malcolm CJ. made the following observation at 178:

"The question whether an accused who has unnecessarily caused a third party to incur costs by the issue and service of a subpoena later found to be oppressive seems, in principle, unaided by relevant authority, to have nothing to do with either the prerogative of the Crown or the right of the accused to a fair trial."

In R. v. Barbaro (1992) 108 ACTR 1 Miles CJ. recognised the special factors involved in criminal prosecutions in the following passage (at 5):

"Of course it is true that a person facing a criminal charge is entitled to use the processes of the court to the full extent that is legitimately possible in order to make answer to the charge and to maintain the presumption of innocence, but even in the defending of criminal charges there is a limit to which legal practitioners can lend their professional support to the obtaining of a peremptory court order when the process is vexatious or oppressive.  When a subpoena is both vexatious and oppressive, I can see no reason why, other things being equal, the party causing it to issue should not pay the costs of an application to set it aside, even when that party is defending a criminal charge or charges."

He had in an earlier passage reproduced dicta of Sheppard J. in Bank of New South Wales v. Withers (1981) 35 ALR 21, 40, 42 concerning the need for subpoenas to be served in a timely fashion and for those issuing them to be circumspect about their breadth. Those remarks remain apposite. The present subpoena was served late despite a perception over a number of months on the part of the defence that some relevant information might be forthcoming from Ansett. Further while the consent order limiting the scope of the material sought from Ansett relieved me of the necessity to rule on the question whether the subpoena should be set aside on either of the grounds that its issue was oppressive, vexatious and an abuse of process of the court or that public interest privilege applied on the basis of security concerns, and the voluntary restriction of the breadth of the subpoena is not necessarily decisive, there is in my view a plain enough indication on the face of the subpoena that it was couched in terms which were unjustifiably wide. This view is reinforced by the evidence as to the kind of files held by Ansett. However that conclusion is merely one aspect of the question whether it was appropriate for the application to set aside the subpoena to be brought when it was. As to this, I am satisfied that having regard to the events which have been set out earlier in these reasons it was appropriate for the applicant to move to set aside the subpoena in the absence of any response to its repeated approaches to the respondents' solicitors.
          It is necessary then to consider whether the power to award costs of the application exists and whether if so, it is a case where costs should be awarded against the respondents' solicitor.  The leading case on the latter issue is Myers v. Elman (1940) AC282. Viscount Maugham said (289) that the primary object of the jurisdiction to award costs was not to punish the solicitor but to protect the client and indemnify a party who has been injured by the solicitor's conduct. He referred (290) to "mere negligence of a serious character the result of which was to occasion useless costs to the other parties" as one category of case in which an order might be made. He said (292) that the jurisdiction should, however, be exercised only when there had been established a "serious dereliction of duty as a solicitor". Lord Atkin said (304) that a breach of duty owed to the court committed by gross negligence may lead to the exercise of punitive jurisdiction. Lord Wright said the following: (319)

"The underlying principle is that the Court has a right and a duty to supervise the conduct of its solicitors, and visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which he is engaged professionally . . . .  The matter complained of need not be criminal.  It need not involve peculation or dishonesty.  A mere mistake or error of judgment is not generally sufficient, but a gross neglect or inaccuracy in a matter which it is a solicitor's duty to ascertain with accuracy may suffice.  . . . . . .  It is impossible to enumerate the various contingencies which may call into operation the exercise of this jurisdiction.  It need not involve personal obliquity.  The term professional misconduct has often been used to describe the ground on which the Court acts.  It would perhaps be more accurate to describe it as conduct which involves a failure on the part of a solicitor to fulfil his duty to the Court and to realize his duty to aid in promoting in his own sphere the cause of justice.  . . . . . .  The jurisdiction is not merely punitive but compensatory.  The order is for payment of costs thrown away or lost because of the conduct complained of.  It is frequently, as in this case, exercised in order to compensate the opposite party in the action."

The opinions expressed in Myers v. Elman  particularly those of Lord Wright were adopted in Broughton v. Broughton (1955) SASR 241. Reference was also made on behalf of the applicant to In re: Bradford (1883) 11 QBD 635, which precedes Myers v. Elman and in which the phrase "misconduct or negligence" was used.  However because there was a dispute, ultimately resolved in favour of the solicitor, as to whether he had a justifiable belief that he had the authority of the client to act as he did, the formulation is in my view coloured by the issue in the case and not of any assistance to the applicant. 
          In addition to those authorities, in Holden & Co. v. Crown Prosecution Service (1990) 1 All ER 368 Lord Lane CJ. when delivering the judgment of the Court of Appeal Civil Division referred to Myers v. Elman as  the locus classicus on the subject.  He said:

"We would define the conduct which gives rise to this jurisdiction as any conduct of a solicitor which involves a serious dereliction on the part of the solicitor of his duty to the court. That formulation takes account of the dictum of Lord Denning MR in R & T Thew Ltd v Reeves (No 2) [1982]3 All ER 1086 at 10898, [1982] QB 1283 at 1286:

'The cases show that it [the jurisdiction] is not available in cases of mistake, error of judgment or mere negligence.  It is only available where the conduct of the solicitor is inexcusable and such as to merit reproof.'"

Holden is also authority for the proposition that there is no distinction in the application of principle between civil and criminal proceedings in deciding whether to order costs against a solicitor. 
          When the matter was argued before me it had been foreshowed adequately that an application for costs against the solicitor would be pursued.   No objection was taken to argument being addressed to the issue.  However, nothing was put in evidence to explain why there had been no response to the telephone calls made on Ansett's behalf.  Mr Kimmins was disposed to "reserve the right" to put in material on the issue if an order adverse to the solicitor were contemplated. 
          Where a matter has apparent urgency it is incumbent on a solicitor to respond with corresponding promptness to the other party.  If, due to lack of a timely response, proceedings are taken and costs are incurred in circumstances where a timely response may have avoided their being incurred the reason for the failure to reply to the other party is relevant.  Inability for good reason to respond by a deadline imposed by the other side or an uncharacteristic breakdown  of an otherwise sufficient system of communication within the solicitors office on a particular occasion is less serious than wilful blindness or a deliberate decision not to respond.  Where a determination as to whether costs ought to be awarded depends on such matters it is not a safe practice to rely on the court giving the indulgence of adjourning the matter further to allow a party to put in evidence of the reason for the failure to respond.  In other words where it is plain that the issue is to arise, all material relevant to it should be placed before the court on the occasion when the hearing is to proceed.  In this respect, too, no distinction exists between the criminal jurisdiction and the civil jurisdiction. 
          Having said that, it is not necessary to decide finally on which side of the borderline this case falls especially as it is academic if there is no power to award costs.
          I turn now to issues relating to the power to award costs.  Order VIA of the Criminal Practice Rules provides for the issue of subpoenas in criminal proceedings and for their form. It contains no provision relating to costs. The Criminal Code includes limited provisions relating to costs. Section 660 is concerned with costs of an aggrieved person in cases of indictable offences relating to the person. Section 694, which is restricted to private prosecutions (R. v. Jackson (1962) WAR 130), provides for payment of costs of an accused person in certain events. Section 671F(1) expressly states that there shall be no costs in criminal appeals. Section 704 declares that no fees can be taken from a person charged with an indictable offence for any proceeding had or taken. Being concerned with fees it is not of any relevance for present purposes.
          There is authority for the proposition that an application to set aside a subpoena issued in criminal proceedings takes its character from the nature of the underlying proceedings and is therefore in the criminal jurisdiction of the court (Carter 174; cf. Barbaro, 6). 
The applicant relied on s.221 of the Supreme Court Act 1995 which is in the following form:

"The Supreme Court shall have power to award costs in all cases lawfully brought before it and not provided for otherwise than by this section."

This reproduces s.58 of the Supreme Court Act of 1867. There is an immediate difficulty with this submission. In Knight v. F.P. Special Assets Ltd (1992) 174 CLR 178, it was held by Mason CJ. and Deane J. with whom Gaudron J. agreed, and Dawson J. that Order 91 rule 1 of the Rules of the Supreme Court was of such breadth that s.58 of the Supreme Court Act of 1867 was deprived of any practical operation. Re‑enactment of s.58 as s.221 of the Supreme Court Act 1995 cannot alter the relationship between the rule and the section.

          If Order 91 rule 1 had application to the case there would be power to make an order in respect of costs against a solicitor in appropriate circumstances.  In Knight that was recognised as one of the clear cases in which such an order might have been made at all times throughout the history of the relevant legislative provisions.  In one respect R. v. Kimmins ex parte Attorney-General sheds some light on the resolution of the matter. In that case the order of the trial judge awarding costs of an adjournment against the Crown was quashed on two bases. One appears to be based on a view of the operation of s.58 of the Supreme Court Act 1867 which is inconsistent with Knight.  However if contrary to what the Full Court decided, Order 91 rule 1 is the substantive basis for granting costs, the other basis for quashing the trial judge's order is unaffected by the decision in Knight.  The two bases are separate and distinct.  As it was held that the Rules of the Supreme Court do not apply to the Criminal Practice Rules except where it is necessary, in the sense that the Criminal Practice Rules themselves call the rules of the Supreme Court in aid (as in Order 4 rule 4), the applicant's argument must fail.  There is nothing in order VIA calling in aid the Rules of the Supreme Court in the relevant sense.  I am bound to follow R. v. Kimmins ex parte the Attorney-General unless and until it is reconsidered at a higher level.
          The remaining question is whether there is an inherent or implied power to award costs.  The proposition appears inconsistent with the result in R. v. Kimmins ex parte the Attorney-General although it is not clear whether an argument was addressed on that issue.  In Barbaro, Miles CJ. (at 4) expressed the opinion that the power of the court to control abuse of its own process as part of its inherent jurisdiction carried with it a power to award costs, ancillary to the power to control abuse of process.  He referred to Darcey v. Pre-Term Foundation Clinic (1983) 2 NSWLR 497, 504 in support of this view. In Crowe v. Bennett; ex parte Crowe (1993) 1 Qd.R 57, 61 Macrossan CJ. declined to follow authorities including Darcey, holding that the specific but limited provision made in the Justices Act for awarding costs had the consequence that if the statutory provisions which were included were not wide enough to carry a relevant power to award costs then none should be implied to supplement those expressly conferred.  McPherson JA. found that there was statutory power to award costs.  Davies JA. identified one of the issues argued as being that the Magistrate had inherent or implied power to order payment of costs but did not specifically refer to it or any of the authorities referred to by Macrossan CJ. in his judgment.  He held, however, that there was no basis in the Act for awarding costs. However in Carter, Malcolm CJ. expressed the view that without finding it necessary to decide whether the decision in Darcey was right or wrong, it was unnecessary in Barbaro to rely on the inherent power because of the existence in the Supreme Court Act of  1933 (ACT) contained provisions which were wide enough to justify an award of costs.  One provision identified was s.23(1) which provides that "the Supreme Court ... shall have jurisdiction to award costs in all matters brought before the court, including matters dismissed for want of prosecution".
Unlike s.221 that provision is not a residual provision extending only to cases not otherwise covered. Reference has already been made to the interpretation which gives a limited application of the Rules of the Supreme Court to criminal matters. It cannot be said that the question of costs in criminal proceedings has been left wholly unaddressed in view of the provisions, albeit very limited, in the Code. In my view an inherent or implied power to award costs in the present case cannot be implied. In the absence of any inherent implied or statutory power to award costs to summons must be dismissed.
          Despite this conclusion to which I have been driven, I am in accord with the remarks of Miles CJ. in Barbaro, with what is implicit in the passage quoted above from Malcolm CJ in Carter and with the underlying motivation for implying an inherent power in Darcey.  There appears to be no good reason why a person whose only connection with a criminal prosecution is that he has been served with a subpoena should not be entitled to costs if he is forced to move to set aside and succeeds in setting aside a subpoena which is oppressive, vexatious or an abuse of process or if, the proceedings to set aside the subpoena having been appropriately commenced, it becomes unnecessary to pursue them to finality because the breadth of the subpoena  has been reduced to a proper level by the person who has issued it.  It is a matter which may bear attention from the legislature or in redrafting the Criminal Practice Rules.  The orders are that the summons is dismissed.  I make no order as to costs.