Simpson v Monteith

[2009] NSWSC 156

CITATION:	Simpson v Monteith and Ors [2009] NSWSC 156
HEARING DATE(S):	10 March 2009
JUDGMENT DATE :	18 March 2009
JUDGMENT OF:	Hoeben J
DECISION:	Order 7 in the fifth defendant’s Notice of Motion of 19 December 2008 is refused. Fifth defendant is to pay the plaintiff’s costs of arguing this question.
CATCHWORDS:	PRACTICE AND PROCEDURE - Subpoena - costs of responding to subpoena - matters relevant to such consideration - what conduct is relevant - when recipient of subpoena subsequently becomes a party to the proceedings - COSTS - subpoena - entitlement to costs of party answering subpoena - what considerations should be taken into account - what conduct is relevant - when recipient of subpoena subsequently becomes party to proceedings.
LEGISLATION CITED:	UCPR 33.11(1)
CATEGORY:	Procedural and other rulings
CASES CITED:	Fuelxpress Limited v LM Ericsson Pty Limited (1987) 75 ALR 284 Marsden v Amalgamated Television Services Pty Limited [2001] NSWSC 77
PARTIES:	Calandre Julia Theresa Simpson - Plaintiff Richard Bruce Monteith - First Defendant Frederick William Henry - Second Defendant Gail Jacqueline Simpson - Third Defendant William Charles Simpson - Fourth Defendant Perpetual Trustee Company Limited - Fifth Defendant
FILE NUMBER(S):	SC 20072/2008
COUNSEL:	Mr DJ Higgs SC/Mr DE Graham - Plaintiff Mr D Davies SC - First and Second Defendants Ms V Evans - Third and Fourth Defendants Mr R Dubler SC/Mr T Maltz - Fifth Defendant
SOLICITORS:	Turner Freeman Lawyers - Plaintiff Yeldham Price O'Brien Lusk - First and Second Defendants Uther Webster & Evans - Third and Fourth Defendants TressCox Lawyers - Fifth Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
PROFESSIONAL NEGLIGENCE LIST

HOEBEN J

Wednesday, 18 March 2009

20072/2008 - Calandre Julia Theresa SIMPSON v Richard Bruce MONTEITH & Ors

JUDGMENT

1 HIS HONOUR:

Nature of Application
The fifth defendant, Perpetual Trustee Co Ltd (“Perpetual”), moves by motion dated 19 December 2008 for the following orders:

(7) That pursuant to UCPR 33.11(1), the plaintiff pays the costs of Perpetual Trustee Co Ltd, now the fifth defendant, incurred in responding to the subpoena issued by the plaintiff, within 28 days.

(8) That the costs of this motion be paid by the plaintiff.

By consent the balance of the motion did not proceed.

Factual Background

2 The plaintiff is now 29 years of age. From birth she has suffered from spastic quadriplegic cerebral palsy. The effect of this condition is that the plaintiff is severely disabled, lacks mobility and requires 24 hour care, seven days per week. She is unable to speak. Her only means of communication is by the use of a communication board accessing words, phrases and letters manually, or by a laser light pointer mounted on the peak of her baseball cap. Such communication requires considerable time, focus and concentration on the part of the plaintiff and the person with whom she is communicating.

3 The plaintiff is not intellectually impaired and has an intelligence quotient of near normal. There are, however, significant gaps in her schooling particularly in the areas of mathematical skills, general knowledge and the experience of normal daily life.

4 The plaintiff brought proceedings against her obstetrician who delivered her and the hospital where she was born. Her father was her tutor. Judgment at first instance was handed down on 21 November 2001 in the amount of $14,202,000. The defendants appealed and were successful. On 7 April 2003 the Court of Appeal set aside the original judgment and entered judgment in favour of the plaintiff for $10,998,692. Because the plaintiff was not intellectually impaired, no amount was allowed, either at first instance or on appeal, for funds management. On 7 March 2002 the Calandre Simpson Trust (CST) deed was signed. The plaintiff’s mother, Gail Simpson, and Perpetual were appointed trustees. On 8 March 2002 the trustees received the amount of $10,166,889.

5 In July 2004 the plaintiff retained new solicitors, Messrs Adams Leyland (AL). The solicitors who had previously acted for her were Messrs Harris Hyde Page (the principals of whom were Messrs Harris and Monteith). By letter dated 2 July 2004 AL advised Perpetual that they were now acting on behalf of the plaintiff and that the plaintiff wished to immediately revoke her mother’s power of attorney. They advised that the plaintiff had asked them to investigate the terms of the trust with a view to removing her mother as a trustee. Perpetual was asked to provide a copy of the trust deed. Perpetual did not respond to that letter.

6 By letter dated 6 August 2004 AL wrote to Perpetual advising that the plaintiff had little knowledge of the operation of the trust and foreshadowing a request by her for detailed information about its financial operations. By letter dated 9 August 2004 Perpetual responded, noted the contents of the previous communications and advised that it had taken its own legal advice following receipt of the initial letter. It referred to a letter from the plaintiff of 1 July 2004.

7 Although that letter was not placed before the Court, it is clear from other correspondence that the plaintiff complained to Perpetual about the way the trust was being conducted and in particular about the lack of information coming to her and the failure of the trustees to consult with her. By letter dated 12 August 2004 addressed to the plaintiff, Perpetual said that whilst it was sympathetic to her point of view, it was required by law to comply with the trust deed which included an obligation to consult with the plaintiff’s mother as a co-trustee.

8 On 1 September 2004 a meeting took place at the offices of Perpetual between Mr Cameron of AL and Mr Gorsuch from Perpetual. Mr Cameron advised that the plaintiff wished her mother to be removed as trustee, but wished Perpetual to continue in that role. He said that since Mrs Simpson refused to retire, the plaintiff realised that she would have to go to court in order to remove her as trustee. Mr Cameron also communicated a number of complaints which the plaintiff had about how her mother had used trust monies.

9 By letter dated 30 September 2004, AL wrote to Perpetual raising questions about the plaintiff’s ongoing care and a payment of $310,808 made to her mother. By letter dated 22 October 2004 Perpetual advised that the payment of $310,808 represented interest on past gratuitous services rendered by her mother to the plaintiff which had been included as a head of damage in the first instance proceedings.

10 By letter dated 26 June 2007 AL requested from Perpetual copies of the financial records of the trust since its establishment on 7 March 2002 and copies of communications between Perpetual and the plaintiff’s mother. Eighteen categories of documents were specified. On 29 June 2007 Perpetual acknowledged receipt of that letter. By email dated 12 July 2007 Perpetual requested from AL “written proof that your firm acts for Calandre for our files”. By letter of 3 August 2007 AL requested that Perpetual provide the information and documents sought. By email dated 13 August 2007 Perpetual requested from AL written proof that they acted for the plaintiff. By letter dated 16 October 2007 AL requested a response from Perpetual to their letter of 26 June 2007.

11 By email dated 23 October 2007 Perpetual responded:

“Perpetual as a co-trustee of the above trust is more than happy to review your inquiry once our below reasonable request has been satisfied. Until then, I respectfully advise Perpetual will not be incurring further trust costs in correspondence with you.”

The “below reasonable request” was a reference to Perpetual’s request for “written proof that your firm acts for Calandre”.

12 By email dated 3 December 2007 the plaintiff advised Perpetual as follows:

“Could you please provide the information requested by Don Cameron from Adams Leyland in their letter to you dated 26 June 2007. The letter requests copies of various documents. I can offer that they are working on my behalf and that the requested information is required as a matter of urgency.”

Perpetual did not respond to the plaintiff but sent an email dated 7 December 2007 to AL as follows:

“I refer to my emails of 13 August 2007 and 23 October 2007 as well as the below Perpetual received this week from Calandre.
As previously advised, Perpetual is more than happy to discuss your correspondence with its co-trustee once our reasonable request as to confirmation that your firm continues to act for Calandre is met.”

13 By letter dated 7 February 2008 AL responded to Perpetual:

“We note:
1) That we provided you with written authority when we first started acting for Ms Simpson. A copy of that authority is enclosed.
2) Over the years we have had a number of meetings and discussions with you to discuss our client’s affairs and you have never questioned our authority previously.
3) We understand that our client emailed you on 3 December 2007 requesting that you provide documents that we require.
Despite this situation you’ve still not complied with our request to provide the documents and information particularised in our letter dated 26 June 2007. Unless you comply with our request and supply these documents and information prior to 4pm on Friday 15 February 2008 we shall seek instructions to make an application to the Court to make appropriate orders.”

14 Perpetual replied by email dated 15 February 2008:

“Given the origins of the trust fund and the nature of Ms Simpson’s injuries, Perpetual as trustee considers it is reasonable to have your firm periodically confirm that you are able to take instructions. Note this is something quite different to a trustee like Perpetual presuming Ms Simpson does not have capacity in this regard (and Perpetual makes no such presumption in this case). Indeed, I note the presumption of capacity as the foundation of the solicitor/client relationship. The facts in this matter may, however, create an element of uncertainty as to capacity which may be addressed between practitioners.
I reiterate my below comments that Perpetual will promptly action your client’s request, including necessary discussions with its co-trustee, on confirmation that you remain of the view Ms Simpson is able to instruct your firm. A brief note in this regard will provide the necessary comfort to the trustees that they will be acting prudently in disclosing confidential trustee information. Perpetual does not seek to be inappropriately difficult or obstructive in this regard and notes that the written authority you first obtained from Ms Simpson is now nearly four years old.
I trust the above will avoid any potential court application as mentioned in your most recent correspondence.”

15 On 7 March 2008 the plaintiff commenced proceedings against her previous solicitors, Messrs Henry and Monteith. On 27 March 2008 the subpoena, the subject of this application, was issued. The subpoena was served on Perpetual on 2 April 2008. By this time Messrs Turner Freeman (TF) were acting on behalf of the plaintiff. The subpoena sought the same documents as were sought in the letter from AL to Perpetual of 26 June 2007 but also sought the complete file for the trust.

16 By letter dated 7 April 2008 Perpetual wrote to TF in respect of the subpoena. In that letter Perpetual asked that the documents be more clearly identified and advised that costs of $5,000 - $10,000 would be incurred in complying with the subpoena. Perpetual suggested that it might be more cost effective for it and the plaintiff to agree on what files should be made available for inspection, although any such agreement would be subject to the consent of the co-trustee, the plaintiff’s mother. Perpetual requested that compliance with the subpoena be extended to 25 April 2008.

17 It is apparent from internal emails of Perpetual that nothing had been done to collect the documents requested by AL until the subpoena was received. The emails show that thereafter some urgency was involved in the identification and collection of the documents. On 11 April 2008 the subpoena was stood over to 6 June 2008.

18 On 30 April 2008 emails passed between Perpetual and TF. Perpetual complained that no one from TF had sought to discuss the subpoena with it. Reference was made to compliance costs. TF responded by querying what was meant by “compliance costs”. On 2 May 2008 the following exchange of emails took place between TF and Perpetual.

TF to Perpetual:

“As you aware, the subpoenas were issued as a last resort when all attempts to obtain documents informally were unsuccessful.
Where are the results of your “compliance efforts”? To my knowledge nothing whatsoever was produced to the Court by the initial return date. Have documents now been produced?
In the absence of any documents being produced to the Court, we strenuously object to any claim by Perpetual to charge our client for “compliance efforts”.

Perpetual to TF:

“No documents have been produced and as previously advised Perpetual is not devoting further resources to the subpoena prior to discussions with you.
Calandre as beneficiary of the above trust is clearly entitled at law to certain trust documentation. I am more than happy to discuss and action this with Perpetual’s co-trustee (once contact is resumed with Gail Simpson) if you would like to specifically detail the requested trust information.”

TF to Perpetual:

“Matthew, as you are aware, there is absolutely NO need for you to have the consent of Gail Simpson – particularly in circumstances where her performance as co-trustee has been so demonstrably unsatisfactory – in order to provide the documents that have been repeatedly requested over several years.”

Perpetual to TF:

“With respect I am not aware of that. I confirm that the deed of trust whereby Perpetual and Gail Simpson were appointed specifically provides that the trustees must act jointly on all matters. Perpetual is not able to provide Calandre with voluminous trust documentation on its own account (without seeking the view of its co-trustee) as if it were sole trustee.
With respect to the subpoena specifically, I note you have a view on compliance by the trustees and I look forward to discussing this with you in due course.”

19 On 15 May 2008 Messrs TressCox (TC) advised TF by telephone that they acted for Perpetual. TF responded that there was no need for them to do anything.

20 By facsimile dated 20 May 2008 Perpetual reiterated its position on the costs of complying with the subpoena and added:

“5. Putting aside the Subpoena for a moment and as previously advised, Perpetual is more than happy to discuss with its co-trustee the provision of trust documentation to which your client is clearly entitled at law. Noting both Perpetual and yourself seek to continue to act in the best interests of Calandre, I recommend this option to you. Should this occur the documentation provided may, at least partly, alleviate the subpoena process? …”

That letter confirmed that TC was now acting on behalf of Perpetual.

21 Further emails passed between Perpetual and TF culminating in an email from Perpetual to TF dated 27 May 2008 as follows:

“Monique has asked me to review the file and respond to you.
Perpetual is aware of its obligations to comply with the terms of any subpoena served on it. These obligations include a duty on Perpetual to ensure that the documents being sought are relevant to the issues in the proceedings. You will appreciate that Perpetual, as trustee, has a duty to ensure that only those documents which it is compelled to provide are in fact provided. To ensure this Perpetual is entitled to question the terms of the schedule to any subpoena where appropriate.
In this regard I understand that Perpetual has sought to clarify with you the substance of the litigation and thereby determine the relevance of the documents sought. Perpetual’s request isn’t unreasonable, they ask that you please confirm the substance of the claim so we can review the documents in the context of the proceedings and then provide the relevant documents to you.
I would appreciate if you could reply directly to me so this request can be expedited.”

22 On 3 June 2008 solicitors from TC attended Perpetual’s offices to assist its in-house counsel with the task of reviewing the trust files. In-house counsel spent 80 hours reviewing the documents.

23 By email sent at 4.43pm on 5 June 2008 TF responded to Perpetual:

“My apologies for not responding to your email sooner. I had been hoping to find some time to meet with you this week but won’t be able to do it this week I’m afraid Ian. …
Simpson – with respect to your letter dated 27 May 2008, perhaps we should just forget the subpoena (which will be stood over for a further period tomorrow) and again remind you that Calandre and her representatives are entitled to information about her affairs, irrespective of any proceedings that may be on foot. Perpetual have repeatedly resisted legitimate requests for information without proper basis. I left a message some time ago for Phillip Gorsuch, indicating that I wished to speak to him about inspecting documents, I spoke to Michele and then Monique/Brad about this issue again recently.
We are happy to make arrangements to come and inspect documents, however, in the interim, I would ask that you provide, via facsimile or email, copies of the following documents:
(1) All statements of Advice/Reports in relation to the Calandre Simpson Trust.
(2) All financial statements including those setting out all portfolio transactions in relation to the Calandre Simpson Trust …
I remain hopeful that these issues can be resolved informally and look forward to hearing from you.”

24 At 6pm on 5 June 2008 TC sent to TF the following email:

“We act for Perpetual whom your client has subpoenaed to produce documents in the context of proceedings which she has brought against Richard Bruce Monteith and others.
Upon return of the subpoena tomorrow, our client:
(1) Will advise the Court that approximately five boxes of documents have been produced to the Court; and
(2) Will seek a further two weeks to produce any other documents that it locates in that period of time.
Please advise whether your client consents to the subpoena being stood over for a further two weeks.
Finally we note that in its letter dated 7 April 2008 our client estimated the reasonable costs which it expected it would incur in complying with your client’s subpoena. Our client has complied and will continue to comply with this subpoena on the assumption that that estimate is accepted.”

25 Some eight minutes later TF responded:

“I informed you when you contacted me some time ago that:
(1) We had agreed to inspect documents informally before seeking compliance with the subpoena.
(2) It was not necessary for you to pursue the matter.
I have also told a number of people at Perpetual that we were content with informal production/inspection, at least initially.
Consequently, we continue to oppose any costs associated with compliance with the subpoena being charged to our client.
Our clerk was instructed some time ago to have the subpoena stood over for a further two months to allow time for informal production and inspection.”

26 On 6 June 2008 Perpetual produced to the Supreme Court Registry four boxes of documents and two packets of documents marked “privileged” in answer to the subpoena. The Registrar granted access, except for the privileged documents, and stood the subpoena over to 1 August 2008. Unfortunately, due to an error on the part of the court registry staff, two of the boxes of documents as well as the two packets were marked “privileged”. This was the state of the documents when TF sought to inspect them.

27 As a result of that inspection TF wrote to TC by letter dated 6 June 2008:

“We refer to the above matter and to the large number of documents (two boxes and two packets) produced by Perpetual over which a claim for privilege has been made.
As you are aware, Perpetual is required to justify such a claim and we therefore request that you provide, as a matter of urgency, all of the usual particulars (date nature author and where applicable, addressee), together with full particulars of the reason privilege has been claimed, in relation to each document over which a claim for privilege has been made.
We reiterate that, in circumstances where Perpetual has elected to comply, albeit in a selective manner, with the subpoena rather than allow the plaintiff’s representatives to inspect documents informally – as it is indeed obliged to do, irrespective of these proceedings and the subpoena we were forced to issue due to Perpetual’s failure to comply with its obligations to our client, we will seek to recover any fees charged to our client’s Trust in relation to formal production of documents.”

28 By email dated 17 June 2008 TF sought a response from Perpetual to their email of 5 June 2008 requesting an informal inspection of documents. Perpetual did not respond.

29 On 22 July 2008 the plaintiff filed a Notice of Motion seeking to join Perpetual to the proceedings. That motion was served on Perpetual on 24 July 2008.

30 By facsimile dated 31 July 2008 TC advised TF:

“We confirm that our client has produced four boxes of documents and two packets of privileged documents in answer to the subpoena issued by your client.
Our client claims legal professional privilege (LPP) under sections 118 or 119 of the Evidence Act 1995 over the two packets of privileged documents.
We note that in your letter dated 6 June 2008 you have requested the particulars of each documents for which privilege has been claimed. As you would now be aware from your inspection of the documents, each privileged document has been replaced with a coloured file note which details the particulars of the privileged document which that coloured file note replaced. We assume that this satisfies your request for further particulars. If not, please let us know what further particulars you require.
We also note that in your letter dated 6 June 2008 you allege that our client has chosen to comply with the subpoena in a selective manner rather than allow the plaintiff’s representatives to inspect the documents informally. We are instructed that at no stage has our client objected to Calandre Simpson inspecting Trust documents which she is entitled to inspect under the Trust Deed. That continues to be our client’s position.
We repeat our client’s position on costs as outlined in our letter to you dated 5 June 2008.
Upon the return of subpoena tomorrow, our client will seek to have the subpoena stood over until your client’s Notice of Motion seeking to join our client as a defendant to these proceedings has been determined.”

31 On 1 August 2008 on the plaintiff’s application, the Registrar ordered Perpetual to serve an affidavit by 22 August 2008 outlining the grounds for claiming privilege over the two packets of documents produced and the subpoena was stood over to 26 August 2008. It was on this occasion that it was discovered that the Registry had incorrectly marked the two boxes previously produced by Perpetual as “privileged”. TC arranged for that error to be remedied.

32 On 6 August 2008 the plaintiff’s motion to join Perpetual was heard. I granted leave to the plaintiff to file an Amended Statement of Claim by 9 September 2008 which added Perpetual as the fifth defendant.

33 By facsimile dated 12 August 2008 TF advised TC:

“We refer to our letters dated 6 June 2008 and 15 July 2008 and to the subsequent order made in the Supreme Court on 1 August 2008 that your client file and serve an affidavit by 22 August 2008 particularising its claims for privilege.
We note that on 6 June 2008 you produced on behalf of Perpetual, four boxes and two packets of documents and claimed privilege over two of the boxes and both of the packets (as set out in our letter dated 6 June 2008). We understand that on 1 August 2008 the Court was informed that privilege was now claimed in respect of the two packets of documents only.
Furthermore, your representative on 6 June 2008 indicated to the Court that a further two weeks was required to produce any further documents.
Please ensure that all documents falling within the scope of the subpoena are produced to the Court prior to the next return date and that an affidavit is filed and served particularising your client’s claim for privilege in respect of all documents over which it seeks to claim privilege.”

34 On 25 August 2008 TC filed and served on behalf of Perpetual an affidavit which identified those documents in relation to which it was claiming privilege and specified the basis for that claim. It is clear that this document would have taken a considerable amount of time to prepare.

35 By letter dated 17 November 2008 and marked “without prejudice except as to costs” TC provided TF with its claim for costs in relation to the subpoena. TC assessed the costs at $55,000 but agreed to accept $35,000. That offer was to remain open for 28 days. Included in that letter was the following:

“Perpetual holds approximately 37 files in relation to its involvement with your client and her representatives. Those files span the period from when your client (through her representatives) first approached Perpetual about the creation of a trust to hold the proceeds of her legal proceedings against Dr Dimond and the Sisters of Mercy to today. They touch upon every imaginable fact of this matter over that period including client advisory, investments, property, taxation, trust administration, paraplanning and legal matters.
Although Perpetual made every effort to clarify what document or documents your client was seeking, those attempts were unsuccessful. Perpetual found itself in no position to do anything other than comply with your client’s broad and onerous subpoena.
Compliance involved reviewing all of its files and ascertaining which contained documents that fell within the terms of your client’s subpoena. It involved ascertaining which of those documents attracted client professional privilege and, once that had been determined, it involved arranging for those documents to be delivered to Court and in the face of your client’s various applications for adjournments, formally responding to the subpoena in Court. …”


The offer was not accepted and the matter was heard by the Court on 10 March 2009.

Submissions

36 Perpetual submitted that the principle set out in Fuelxpress Limited v LM Ericsson Pty Limited (1987) 75 ALR 284 and applied in such cases as Marsden v Amalgamated Television Services Pty Limited [2001] NSWSC 77 – Levine J – was applicable, i.e. that if an expense was reasonably incurred substantially in excess of conduct money in order to comply with a subpoena, that expense was recoverable from the party issuing the subpoena. Perpetual submitted that such reasonable expense included the cost of obtaining legal advice in relation to issues of confidentiality and privilege. The plaintiff did not dispute that prima facie that principle applied to the facts of this case.

37 Perpetual submitted that there was a particular complexity in this matter because the party seeking the documents was a beneficiary. This meant that documents which would have been privileged as between a trustee and a stranger, might not be so classified as between a trustee and a beneficiary. That was a matter which required legal advice.

38 Perpetual submitted that applying that principle, it was prima facie entitled to the reasonable costs it had incurred in responding to the subpoena unless the plaintiff could identify matters which would prevent the application of the principle. Accordingly, it was necessary for the plaintiff to persuade the court that the principle did not apply. I did not understand the plaintiff to demur from this approach.

39 On this question the plaintiff raised three arguments. The first was that the plaintiff was forced to issue the subpoena because Perpetual had consistently refused to make available documentation to which she was entitled as a beneficiary. Secondly, despite attempts by the plaintiff’s legal advisers to negotiate informal access to the documents, Perpetual did not agree and insisted on a formal response to the subpoena. The third argument was that from 24 July 2008 Perpetual was on notice that it was likely to be joined as a defendant and was in fact so joined. That gave rise to a significant change in circumstances in that as a party Perpetual was required to produce substantially the same documents either by way of discovery, notice to produce or subpoena. The cost of producing documents in those circumstances would be costs in the cause.

40 In relation to the first argument, Perpetual responded that it had not refused to produce the documents requested but had made a reasonable request that the plaintiff’s instructions to that effect be confirmed. That request could have been easily complied with. More importantly, it submitted that the right of access of a beneficiary under a trust was quite different to compliance with a subpoena, which was an order of the Court in proceedings. Perpetual submitted that the solicitors for the plaintiff made a considered choice to issue a subpoena when they could have sought relief in the Equity Division in relation to trust documents. It would have been improper to issue the subpoena for any purpose other than that of advancing the plaintiff’s case against her former solicitors. The issue of the subpoena was a stand-alone process and considerations of what went before were irrelevant.

41 In relation to the second argument, Perpetual submitted that at best the correspondence between the plaintiff and Perpetual was equivocal and no firm proposal for informal access had ever been made by the plaintiff. The Court was reminded that the subpoena process involved an order by the Court, failure to comply with which can amount to a contempt. In the circumstances of this matter, Perpetual had no alternative but to incur the expenditure of complying with the subpoena as it did on 6 June 2008.

42 In relation to the third argument, Perpetual submitted that there had already been substantial compliance with the subpoena before notice was received by Perpetual of the plaintiff’s intention to join it as a party. In the absence of any specific authority on the point, Perpetual submitted that the Court should approach the question by applying first principles, i.e. that at the time the subpoena was issued Perpetual was not a party and that when it sought to comply with the subpoena on 6 June 2008, it was still not a party. Perpetual also submitted that even now the ambit of the claim against Perpetual had not been made clear, and no categories of documents have been agreed or identified. Accordingly, it was by no means obvious that documents which Perpetual would be required to produce by way of discovery would be the same as those required under the subpoena. When the subpoena was issued the proceedings were against the previous solicitors.

Consideration

43 The relevant rule is UCPR 33.11(1) which provides:

“33.11(1) The Court may order the issuing party to pay the amount of any reasonable loss or expense incurred in complying with the subpoena.
…”

44 Perpetual’s submission that there is a significant difference between a beneficiary’s right to access documents from his or her trustee and the obligation of a person to respond to a subpoena is undoubtedly correct. As Perpetual pointed out, the most obvious distinctions are that a subpoena is an order of the Court requiring production of documents by compulsion of law and different considerations of relevance apply.

45 That, however, does not provide a complete answer to the plaintiff’s first argument. In exercising my discretion under UCPR 33.11(1), I am entitled to have regard to the reality of the situation which confronted the plaintiff and her legal advisors at the time the subpoena issued and to subsequent events. The focus is not solely upon the subpoena; the surrounding circumstances need to be considered.

46 What emerges clearly from the communications between Perpetual and the plaintiff’s legal advisers between 26 July 2007 and the service of the subpoena on 2 April 2008, is that Perpetual despite its protestations to the contrary, was not co-operating in producing the documents requested.

47 Perpetual’s email of 15 February 2008, apart from being internally contradictory, can only be regarded as discriminatory and patronising. On reading it, one could not help but ask would a person without the plaintiff’s physical disabilities be required to periodically reconfirm their retainer of solicitors as a condition for being provided with co-operation by their trustee.

48 In my opinion it was quite apparent to the plaintiff’s legal advisers by 15 February 2008 that Perpetual was not going to produce the documents requested unless some pressure was brought to bear on it.

49 The plaintiff commenced proceedings against her former solicitors on 7 March 2008. This enables an inference to be drawn that one of the reasons documents were sought from Perpetual was to enable those proceedings to be pursued. The issue of a subpoena for the production of documents against Perpetual fits neatly with that inference. There is no basis for suggesting that the issue of the subpoena had some collateral or improper purpose unrelated to the proceedings against those solicitors. The schedule to the subpoena is consistent with those documents being relevant to those proceedings.

50 In those circumstances I consider the issuing of the subpoena to be a reasonable response to the approach of Perpetual. The suggestion that the plaintiff should have commenced separate proceedings in the Equity Division to require the production of documents by Perpetual would not only have been time consuming but would have involved a needless expenditure of legal costs. In view of what we now know, i.e. the underlying intention of the plaintiff to bring proceedings against her previous solicitors or to at least consider the advisability of such a course of action, justified the issue of the subpoena against Perpetual.

51 It follows that the conduct of Perpetual leading up to the commencement of proceedings against the previous solicitors cannot be separated from the issuing of the subpoena and it is a matter which I can properly take into account in the exercise of my discretion under UCPR 33.11.

52 In relation to the second argument, there were undoubtedly confused signals being sent by both TF and Perpetual from the time when the subpoena was served. The problem was exacerbated when TC came into the matter on 15 May 2008. Thereafter, communications took place between TF and Perpetual and between TF and TC. This culminated in the misunderstanding which occurred in the days leading up to the production of the documents on 6 June 2008. What occurred was the inevitable result of not having a single point of contact but rather two separate organisations (TC and the legal section of Perpetual) communicating with TF on behalf of Perpetual. In saying that, I make no criticism of TC who came into the matter late. In that regard it seems tolerably clear from the email from TF on the evening of 5 June 2008 that Perpetual’s legal department was not passing on information to TC (see [25] above).

53 The conclusion I have arrived at is that TF was not insisting on compliance with the subpoena on 6 June 2008 but that as a result of miscommunication (probably more on the side of Perpetual than TF) TC felt obliged to protect the interests of Perpetual by making sure that it was in a position to respond to the subpoena on that date. Given the somewhat imperfect nature of the evidence on this issue, I am not prepared to hold either side responsible for the miscommunication which occurred leading up to 6 June 2008. I do, however, conclude that TF was not insisting on compliance with the subpoena on that date and that is a matter which I take into account in the exercise of my discretion.

54 In relation to the plaintiff’s third argument, I consider that the subsequent joinder of Perpetual as a party to the proceedings is relevant to the outcome of the motion. While it is clear that these proceedings have a long way to go (the parties are still in dispute over the form of the Statement of Claim), the overall areas of dispute are clear. It seems obvious that Perpetual as a party to the proceedings, will now have to produce either in answer to an order for discovery or a notice to produce, a wider range of documents than was required by the subpoena. That wider range of documents is likely to include the documents already produced. Given the close relationship between the allegations made against the previous solicitors and those made against Perpetual, it is difficult to see how documents relevant to the claim against those solicitors would not also be relevant to the claim against Perpetual.

55 It follows that Perpetual would have had to produce these documents and obtain legal advice in relation to them in any event. This is particularly so in relation to the claim for client legal privilege which led to the creation of Mr Sheller’s affidavit of 25 August 2008.

56 It is true that when the subpoena issued and was served, Perpetual, potentially at least, gained an independent right to have its reasonable expenses of complying with the subpoena paid. It is that right which Perpetual now seeks to exercise. In considering that question, the Court is entitled to take into account what has actually happened following the issue of the subpoena, rather than to proceed on some hypothetical basis. Perpetual has now been joined as a party in the proceedings and I am satisfied that it will now have to produce by way of discovery or notice to produce a range of documents which will include those documents which it has already produced in answer to the subpoena. That is a matter which I take into account. Its cost of producing those documents would normally be part of its costs in the cause.

57 I have concluded that the plaintiff has displaced the prima facie entitlement of Perpetual to its reasonable costs of answering the subpoena served on it on 2 April 2008. For the reasons already outlined, the conduct of Perpetual left the plaintiff with little alternative other than to issue the subpoena and it was reasonable for the plaintiff to do so. The requirement for Perpetual to urgently answer the subpoena on 6 June 2008 arose as a result of miscommunications between it, TC and TF. Importantly, however, compliance with the subpoena on that date was not something insisted on or required by the plaintiff. Finally, the fact that Perpetual is now a party to the proceedings means that most probably it would have been obliged to produce all of these documents in any event.

58 It follows that I am not prepared to make an order in favour of Perpetual under UCPR 33.11(1). This does not mean that Perpetual is prevented from recovering its reasonable costs from the plaintiff in responding to the subpoena. The fairest result in the circumstances of this case, which was conceded on behalf of the plaintiff, is that Perpetual’s reasonable costs in responding to the subpoena should be costs in the cause.

59 I should say something about the costs which have been claimed by Perpetual. Their initial assessment was $5,000 - $10,000 for responding to the subpoena. The claim ultimately made was for $55,000. From the affidavit of Mr Sheller of 25 February 2009 and from my own reading of the correspondence, I have concluded that much of those costs were incurred in the preparation of the “privilege” affidavit of 25 August 2008. At the time when that affidavit was prepared Perpetual knew it was going to be a party to the proceedings. In determining what documents were privileged and what were not and in providing the grounds for the claim of privilege, Mr Sheller would have had this clearly in mind. Accordingly, even if Perpetual had persuaded me to make the order sought in its motion, I would only have allowed part of the costs claimed and I would not have allowed anything for the costs claimed in respect of the preparation of the “privilege” affidavit. That document it seems to me was as much a product of the proposed joinder of Perpetual to the proceedings as it was a response to the subpoena.

60 Since the plaintiff has succeeded on this issue, I see no reason why she should not have her costs. Those costs, however, should be restricted to those incurred in dealing with this issue only.

Orders

61 The orders which I make are as follows:

(1) Order 7 in the fifth defendant’s Notice of Motion of 19 December 2008 is refused.

(2) The fifth defendant is to pay the plaintiff’s costs of arguing this question but only to the extent that the plaintiff has incurred additional costs. In making that qualification I am mindful of the fact that I have already made an order that the plaintiff pay the fifth defendant’s costs in respect of orders 1 – 6 of the motion which related to the provision of particulars of the Amended Statement of Claim and pleading issues.

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