S and N and D
[2004] FMCAfam 5
•20 February 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| S & N & D | [2004] FMCAfam 5 |
| PRACTICE & PROCEDURE – FAMILY LAW – Costs of third party producing documents pursuant to a subpoena – where the wife requested via a subpoena for the husband's Accountant to produce documents – Accountant was only required to produce but appeared at Court – consideration of Rule 15.20 of the Federal Magistrates Court Rules 2001 and Order 28 of the Family Law Rules 1984 and notably the difficulties associated with Order 28 – wife's financial position. |
Federal Magistrates Court Rules 2001, Rules 15.20, 15.20(1), 15.20(1)(b), 15.20(1)(c), 15.20(2), 15.20(3), 15.20(4)
Federal Magistrates Act 1999 (Cth), s.43(2)
Family Law Rules 1984, Order 28, Rule 4, Order 20, Rules 7, 8, 14, 16, 17 and 18
N & D [2003] FMCAfam5
Ostasheen Pty Ltd v Deputy Director of Child Support (1998) FLC 98-001
In the Marriage of Kennedy, 2BL and Evans CM, Trust Bank (intervener) (1994) FLC 92-514
Pyramid Building Society (in liq) v Farra Finance Corporation (in liq); ex parte Farrar Clarke and Lawson (1995) 7 VR 464
| Applicant: | A S |
| First Named Respondent: | W J N |
| Second Named Respondent: | P V K D |
| File No: | MLM 5981 of 2002 |
| Delivered on: | 20 February 2004 |
| Delivered at: | Melbourne (via telephone) |
| Hearing dates: | 14 May 2003 and 19 February 2004 (via telephone) |
| Judgment of: | Bryant CFM |
REPRESENTATION
| Counsel for the Applicant: | In person |
| Solicitors for the Applicant: | In person |
| Counsel for the First Named Respondent: | Ms Colla |
| Solicitors for the First Named Respondent: | Springvale Monash Legal Centre |
| Counsel for the Second Named Respondent: | Mr Cronin |
| Solicitors for the Second Named Respondent: | Portelli & Co |
ORDERS
THAT the Wife pay to Mr S, Accountant the sum of $500.00 in relation to the documents produced pursuant to subpoena issued on
30 December 2002, such payment to be paid within 60 days.THAT the documents produced under Subpoena to the court be returned to the parties whom produced them.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLM 5981 of 2002
| A S |
Applicant
And
| W J N |
First Named Respondent
| P V K D |
Second Named Respondent
REASONS FOR JUDGMENT
Introduction
The application that I am dealing with is an application by Mr S from an Accountants firm, who seeks costs of complying with a subpoena issued by the wife requiring him to produce the following:
a)Group certificates for the husband for the period July 2001 to June 2002 and any and/or related documents used to support deductions in 2002 tax return.
b)Documents relating to any and/or financial income and dealings pertaining to the husbands' businesses and transactions, property and other investments and superannuation funds.
Mr S contends that upon receipt of the subpoena he incurred costs of $1463.50 in production of the documents required. The subpoena itself did not require him to attend Court but only to produce the documents.
The proceedings themselves were proceedings by the wife seeking a departure from an administrative assessment of child support for a child of the parties. The issue between the parties was that the wife sought an order for $242 per week child support and that that sum be capitalised and paid in a lump sum. The husband opposed that order and offered to pay $135 per week without any capitalisation.
The order ultimately made was that the husband pay child support at the rate of $200 per week. The wife's application for capitalisation was partially successful in the sense that the sums required by the husband are to be paid on a quarterly basis in advance (See N & D [2003] FMCAfam5).
The law
Rule 15.20 of the Federal Magistrates Court Rules 2001 deals with the cost of complying with a subpoena if not a party. The rule says as follows:
“15.20(1)(non-party costs) This rule applies if:
(a)The subpoena is addressed to a person who is not a party in the proceedings; and
(b)Before complying with the subpoena, the person who has given the party on whose behalf the subpoena is issued notice that substantial loss or expense would be incurred in properly complying with the subpoena; and
(c)The Court is satisfied that substantial loss or expense is incurred in properly complying with the subpoena.
15.20(2)(costs payable by a party) Unless the Court or a Registrar otherwise directs, the amount of the loss and expense incurred is payable by the party on whose behalf the subpoena is issued.
15.20(3)(the Court may fix amount) The Court may fix the amount payable having regard to the scale of fees and allowance payable to witnesses in the Supreme Court of the State or Territory where the person is required to attend.
15.20(4)(amount in addition) The amount payable is in addition to any conduct money paid.”
This rule is different from Order 28 of the Family Law Rules. Order 28 of the Family Law Rules relates to subpoenas. Order 28, Rule 4 says:
“Order 20, Rules 14, 16, 17 and 18 apply mutatis mutandis to a subpoena requiring the production of any books, documents or things as if that subpoena were an order made pursuant to order 20, Rule 8.”
Order 20, Rule 17 relates to the costs and expenses of production and says:
“Where in proceedings a person being -
(a)a respondent to an application under rule 7; or
(b)a person required by an order made under rule 8 to produce a document,
reasonably incurs costs or expenses on the hearing of the application or in connection with the production of the documents, as the case may be, a person may apply to the Court for an order as to the assessment and payment of such costs and expenses and the Court may make such an order or give such directions as it thinks fit.”
In Ostasheen Pty Ltd v Deputy Director of Child Support (1998) FLC 98-001, the Full Court of the Family Court of Australia considered the construction of Order 20, Rule 17 of the Family Law Rules in considering costs compliance by third parties to a subpoena. The Full Court expressly approved the findings of the trial Judge, Purvis J, at paragraph 19 of Reasons for Judgment:
“The rule requires the matter to be dealt with in stages or parts (see In the marriage of Kennedy, 2BL and Evans CM, Trust Bank (intervener) (1994) FLC 92-514) in order to determine whether costs or expenses have been reasonably incurred, and if so, to order an assessment as may be appropriate. In regard to the former the present appeal relates. The words "costs or expense" are to be given their normal usage, but they are qualified by the words "reasonably incurred". It is not then sufficient for the Court to ascertain simply whether costs or expenses have been incurred but must also find that the same has been so incurred reasonably. Thus it is not merely for the Court to find or not find that a cost or expense has been incurred in complying with the subpoena; it must have been reasonably so incurred, and if so, and only if so, may then be the subject of assessment and payment. There is to be an examination as to the "processes" (see In the marriage of Kennedy (supra) at 81037) by which the costs and expenses arose (see also Pyramid Building Society (in liq) v Farrar Finance Corporation (in liq); ex parte Farrar Clarke and Lawson (1995) 7 VR 464 at 469).”
(Ostasheen at page 95-115).
Thus the relevant Rules in the Federal Magistrates Court Rules are slightly different. Order 15.20 provides another element. There are thus three elements involved:
(a)before complying with the subpoena the person has given the party on whose behalf the subpoena is issued notice that substantial loss or expense would be incurred in properly complying with the subpoena;
(b)the Court is satisfied that substantial loss or expenses are incurred in properly complying with the subpoena; and
(c)unless the Court otherwise directs the amount of the loss and expense incurred is payable by the party on whose behalf the subpoena was issued
The concept of reasonableness does not appear, but the Court has to be satisfied pursuant to Rule 15.20(1)(c) that substantial loss or expense is incurred in properly complying with the subpoena. That in my view does import an element of reasonableness into the compliance.
It might be thought that the Rule does not apply if notice has not been given in accordance with Rule 15.20(1)(b) that substantial loss or expense will be incurred in complying with the subpoena. However, the Rules themselves do not in my view make it clear that this is intended to be the only way in which a third party can claim costs in relation to a subpoena, if I am wrong, then if in a particular case the Rules are insufficient or inappropriate the Court may apply the Family Law Rules in whole or in part ( See Section 43(2) of the Federal Magistrates Act).
The facts
The subpoena in issue was issued on 30 December 2002 by the Springvale Monash Legal Service on behalf of the wife. The substantive proceeding was heard on 14 January 2003 although it was anticipated that it would commence on 13 January and that was the date in the subpoena shown as the hearing date.
On 6 January 2003 Mr S sent a facsimile transmission to the Springvale Monash Legal Service advising that fees for appearance would be based upon an hourly rate of $280 plus travel and other expenses incurred. The facsimile transmission went on to say:
Your costs estimate should allow for a minimum of three hours to cover attendance and document retrieval in addition to any time spent at Court or waiting at Court.
I confirm that your organisation will be responsible for payment of our fees and ask that you acknowledge same.
The subpoena itself however did not require Mr S to attend Court but only to produce documents. The subpoena itself contained section D which deals with production of documents and says:
Instead of attending Court you may produce books, documents and things listed below to an officer of the Court at least one day before the date below.
(the date was 13th January 2003).
On 8 January 2003 a facsimile transmission was sent by the Springvale Monash Legal Service Inc to the Federal Magistrates Court indicating that they had requested a telephone mention to:
Gain a clear determination of costs and that we have notified via facsimile the parties who are to be subpoenaed, they being Mr Guy Mesina of Portelli & Co Solicitors, Mr S of Accountant firm.
On 9 January Mr S sent a facsimile transmission to the Federal Magistrates Court referring to the subpoena to produce documents and purporting to enclose a copy of the costs schedule:
As notified to the applicant.
The schedule contained information similarly to that previously conveyed to the applicant, namely:
“Please note that our fees will be based upon our usually hourly rate of $280 plus travel and other expenses incurred. Your costs estimate should allow for a minimum of three hours to cover costs, document retrieval in addition to time spent at Court or waiting at Court.”
On 13 January 2003 the documents were produced to the Court and along with the documents was a memorandum from Mr S saying:
“Costs incurred in relation to complying with the subpoena from W J N, file reference MLM 5981/2002,
I request that the Court make an order for costs incurred in complying with the said subpoena. A statement of costs is attached.”
Attached was a detailed statement of costs the total of which was $1463.50.
Mr S appeared personally to produce the documents pursuant to the subpoena, although he could have simply posted them to the Court.
In my view, the second part of the subpoena, which required him to produce –
“Documents relating to any and/or financial income and dealings pertaining to the husband’s businesses and transactions, property and other investments and superannuation funds.”
was clearly too wide and would on application by him have been set aside on that basis. However, he apparently sought no advice and believed it was his obligation to produce the documents. However the documents actually produced were limited to the 2001/2 year and Mr S appears to have taken the Subpoena to have related only to that year.
The actual costs sought by him are as follows:
| File perusal – 1.4 hours 10/1/2003 – principal time at $240.00 per hour | $336.00 |
| Extraction of documents – 1.4 hours 10/1/2003 – junior time at $85.00 per hour | $119.00 |
| File compilation – .5 hours 10/1/2003 – junior time at $85.00 per hour | $42.50 |
| File review – .2 hours – principal time at $240.00 per hour | $48.00 |
| Drafting faxes – .6 hours principal time at $240.00 per hour | $144.00 |
| Telephone calls (3 made 3 received – 1.00 hours principal at $240.00 per hour | $240.00 |
| Attendance at court for document delivery – principal time 1.4 hours at 240.00 per hour | $336.00 |
| Document copying 56 pieces at $1.00 each | $56.00 |
| Faxes to Springvale Monash Legal Service 6/1/2003 9/1/2003 at $20.00 | $40.00 |
| Faxes to Court at request of Springvale Monash Legal Service 8/1/2003 at $20.00 | $20.00 |
| Telephone call to Springvale Monash Legal Service 6/1/2003 9/1/2003 at $2.00 | $4.00 |
| Telephone calls to Court 9/1/2003 at $2.00 | $2.00 |
| Document delivery – Oakleigh to Court and return – taxi 2 $33.00 | $66.00 |
| Stationery | $10.00 |
| Total invoice (Including GST) | $1463.50 |
Conclusion
The first question is whether Rule 15.20 applies at all in this case. I am satisfied that it does for the following reason:-
·Before complying with the subpoena Mr S gave notice to the applicant that there would be expense incurred in properly complying with the subpoena. Whilst the detailed statement was not provided until 13 January 2003 notice of costs incurred was clearly brought to the attention of the applicant and it is clear that Mr S was concerned about the costs that would arise and their payment.
The second element of Rule 15.20(1) is the Court must be satisfied that substantial expense or loss is incurred in properly complying with the subpoena. This involves consideration of the reasonableness in relation to the compliance.
The expense incurred involved the production of a relatively modest folder of documents and the amount of $1463.50 does not appear to be reasonable for the following reasons:
a)The claims being made are for the perusal of the file for 1.4 hours for the principal and then the extraction of the documents by a junior for 1.4 hours. I accept that Mr S as principal of the firm had to go through the file and mark what was relevant having noted the documents. However I do not accept it could have taken a junior person 1.5 hours to extract 56 pages which would have already been marked. The principal’s rate of $240 per hour ($360.00) for 1.5 hours is reasonable in my view for both of these claimed activities. I will add a further $40.00 for file compilation and file review. All that had to occur once the documents were removed, was for holes to be punched in them and they were then placed in a manilla folder. The documents are not bulky or unusual they are simply photocopied pages. In my view the amount claimed for half an hour to compile the task is equally unreasonable. There is a further .2 of an hour for file review claimed. I am assuming this simply means to check that the documents were in the folder I do not think it reasonable to allow a further fee for that.
b)There is the fee for drafting faxes of $144.00 and telephone calls for $240.00. These faxes were made in order to advise that costs would be payable if sought to rely on the Subpoena. The telephone calls were for the same purpose none of them were lengthy. The total payment of $384.00 is in my view completely unreasonable and I propose to allow another $40.00 for this item.
c)The attendance at court was unnecessary. It seems that the attendance at court for the principal to deliver the documents and a return taxi fare has been claimed. The Subpoena as I have already said allows for the production to the court. The documents are not bulky and are in a modest manilla folder. They could have been posted to the court in accordance with the Subpoena, and should have been, in all the circumstances. There was no objection being taken to production and personal attendance by a principal of the firm to deliver the documents to court was unwarranted. I propose to disallow the amount for personal attendance and for the taxi fare. I will allow $10.00 for postage.
I intend to allow document copying, faxes and telephone calls at the rate set out in the Family Law Rules thus I find the reasonable costs of complying with the Subpoena to be as follows:
| File perusal, extraction of documents, photocopying and compilation of a manilla folder for production | $400.00 |
| Telephone calls and faxes | $40.00 |
| Postage | $10.00 |
| Expenses – photocopying 56 pieces at $0.50, 3 telephone calls at $0.50, 2 Faxes at $7.85 | $28.00 $1.50 $15.90 |
| Total | $495.40 |
Thus the amount I propose to allow for reasonable costs incurred in responding to the Subpoena is $500.00.
The third element is Rule 15.20(1) which provides that unless the Court otherwise directs, the amount of the loss and expense incurred is payable by the party on whose behalf the subpoena was issued.
The only element to be considered here is the wife’s capacity to pay the expenses.
In a similar application for costs of complying with a subpoena the husband's solicitors was awarded $50. This did not meet the costs involved but reflected her capacity to pay more. In paragraph 63 of the Reasons for Judgment I said:
"She offered through her Counsel to pay $50. This is in my view an inadequate sum to compensate Mr Messina for the costs of producing the documents but it in all the circumstances having regard to the wife's circumstances and the fact that she has to support Catherine, who lives with her, it is the only amount for which an order can reasonably be made."
The wife was at all times aware that there would be a cost involved in obtaining the information but nevertheless she went ahead and insisted upon its production. I take account of the wife’s difficult financial circumstances.
Having heard further submissions from the parties the wife position has changed somewhat. Catherine has spent some time with the husband and is now living independently of the wife. I refer to my previous findings regarding the wife’s study and the expectation that she will shortly be in employment.
In this case the third party has been put to the expense of producing documents. It was a matter in which the wife was given adequate warning that she would be required to meet some payment and in all the circumstances the third party ought to be remunerated.
I considered whether the husband should make any contributions to the wife’s costs incurred in respect of the Subpoena. However I do not consider he should. The husband commenced his business on the
31 June 2002. The wife sought a departure from Child Support from the 1 December 2002 to December 2004. Thus for the entirety of the period in which she sought a departure the husband’s income from his new business was relevant. At the time of hearing in January 2003 the relevant year was the 2003/2004 financial year. Whilst I accept that the husband’s prior earning capacity was relevant, the documents subpoenaed by the wife for the previous year had limited relevance therefore to the matters to be determined which arose from the husband’s new employment in June 2002. I have also set out in my reasons for judgment delivered on the 16 January 2003 the attitude of the wife to the husband’s evidence about his financial position, to her suspicions about his income and to her contentions that he was generally unreliable as a payer which she did not substantiate. The material subpoenaed by her was not directly relevant to the matters to be determined in the end and therefore I do not intend to place any obligation upon the husband to contribute to these costs.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Bryant CFM
Associate: Peter Smith
Date: 2 March 2004
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