Taylor v Dixon Advisory Ltd
[2010] ACTSC 161
•22 December 2010
RICHARD TAYLOR v DIXON ADVISORY LIMITED & ORS
[2010] ACTSC 161
(22 December 2010)
CIVIL PROCEDURE – disclosure – notice for non-party production – similarity to subpoena – costs – quantum of costs – indemnity basis
COSTS – notice for non-party production – similar to costs payable on subpoena – indemnity basis
Court Procedures Rules 2006 (ACT), rr 660, 664, 665, 667, 1752, 6611, Div 2.8.7
Supreme Court Rules 1937 (ACT)
Better Building Services Pty Limited v Dyer [2004] ACTSC 65
Inglis v Moore (1981) 51 FLR 293
J v Australian Capital Territory (2009) 172 ACTR 1
Canberra Data Centres Pty Ltd v Vibe Constructions (ACT) Pty Ltd (2010) 4 ACTLR 114
Lebon v Lake Placid Resort Pty Ltd [1995] 1 Qd R 24
Collins v Godefroy (1831) 1 B & Ad 950; 109 ER 1040
Bank of New South Wales v Withers (1981) 35 ALR 21
Triotas Pty Ltd v Rohn (NSWSC 1903 of 1993, Young J, 20 May 1993, unreported)
Xstrata Queensland Ltd v Santos Ltd and Ors [2005] QSC 358
Charlick Trading Pty Ltd v Australian National Railways Commission (1997) 149 ALR 647 Cadbury Schweppes Pty Ltd v Amcor Limited (No 3) [2008] FCA 1668
Fuelxpress Ltd v L M Ericsson Pty Ltd (1987) 75 ALR 284
Marsden v Amalgamated Television Services Pty Ltd [2001] NSWSC 77
Deposit & Investment Co Ltd (Receivers Appointed) & Ors v Peat Marwick Mitchell & Co (1996) 39 NSWLR 267
Boensch v Pascoe (No 2) [2008] FCA 1127
Kelleher v Anderson [2008] Fam CA 113
Moorehead Nominees Pty Ltd & Ors v Barclays Australia Securities Ltd & Ors (FCA, Hill J, VG63 of 1989, 17 May 1991, unreported)
NMFM Property Pty Ltd v Citibank Ltd (No 9) [1999] FCA 638
Re Bond Corporation Holdings Ltd (1990) 1 ACSR 350
Simpson v Monteith & Ors [2009] NSWSC 156
Pyramid Building Society (In Liq) v Farrow Finance Corporation (In Liq); Ex parte Farrow, Clarke and Lawson [1995] 1 VR 464
In the matter of Bauhaus Pyrmont Pty Ltd (in liq) [2006] NSWSC 268
No. SC 456 of 2009
Judge: Refshauge J
Supreme Court of the ACT
Date: 22 December 2010
IN THE SUPREME COURT OF THE )
) No. SC 456 of 2009
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:RICHARD TAYLOR
Plaintiff
AND:DIXON ADVISORY LIMITED
First Defendant
AND:DIXON ADVISORY & SUPERANNUATION SERVICES PTY LTD
Second Defendant
AND:ALAN DIXON
Third Defendant
AND:DARYL DIXON
Fourth Defendant
ORDER
Judge: Refshauge J
Date: 22 December 2010
Place: Canberra
THE COURT ORDERS THAT:
Upon the completion of the work to be done under the order made on 4 November 2010, the defendants pay the costs of Ord Minnett Limited on an indemnity basis in accordance with r 1752(4) of the Court Procedures Rules 2006 (ACT) insofar as they have been reasonably incurred of:
(a)Ord Minnett Limited’s consideration of the Notice of Non-Party Production dated 21 June 2010 and its opposition to it, including any legal advice obtained about or legal work done in respect of those issues;
(b)Ord Minnett Limited’s consideration of the draft Notice of Non-Party Production attached to the e-mail of Elizabeth Mukherji dated 16 July 2010 and its opposition to it, including any legal advice obtained about or legal work done in respect of those issues;
(c)Ord Minnett Limited’s canvassing of a compromise in respect of the production of documents sought by the defendants, including any legal advice obtained about or legal work done in respect of those issues;
(d)Ord Minnett Limited’s consideration of the application of r 667 of the Court Procedures Rules 2006 (ACT), including any legal advice obtained about or legal work done in respect of those issues; and
(e)Ord Minnett Limited’s costs of searching for, marshalling, where necessary copying any documents to be produced to the defendants in accordance with the order of 4 November 2010 and any necessary consideration of the documents and attendances to produce them.
The defendants pay the costs of Ord Minnett Limited on a party and party basis of:
(a)Ord Minnett Limited’s consideration of the claim by the defendants that its solicitors should cease to act because of a conflict of interest; and
(b) Ord Minnett Limited’s preparation of the affidavit of 23 August 2010.
The defendants pay the costs of Ord Minnett Limited on an indemnity basis of the Application in Proceedings dated 25 October 2010, but such costs not to include the costs of amendment of that Application.
This application concerns the Notice of Non-Party Production under Division 2.8.7 of the Court Procedures Rules 2006 (ACT) (Court Procedures Rules). This procedure was first introduced into the Supreme Court Rules 1937 (ACT) in 1997 as Order 34B. A brief history is set out in Better Building Services Pty Limited v Dyer [2004] ACTSC 65 (at [8]).
The factual background
In order to understand the application, it is necessary to set out the factual background to these proceedings and some details of the proceedings themselves.
These facts are taken largely from the pleadings. Some allegations made by the plaintiff in his Statement of Claim are admitted in the defendants’ defence. Where they are not, I make, of course, no final finding but, if necessary for the purposes of this application, preliminary findings.
I note that the defence has fallen prey to the common but undesirable habit of purporting to admit (or not admit) paragraphs, a practice which Connor J described as “meaningless” in Inglis v Moore (1981) 51 FLR 293 (at 296). See also J v Australian Capital Territory (2009) 172 ACTR 1 (at [97]) and Canberra Data Centres Pty Ltd v Vibe Constructions (ACT) Pty Ltd (2010) 4 ACTLR 114 (at [9]).
The first and second defendants are companies which, it appears, are in the business of providing financial advice to their clients. The third and fourth defendants were officers or agents of the first and second defendants and employees of the first defendant.
The plaintiff was a financial adviser employed by the first and second defendants as a “financial services adviser” between mid-2004 and 27 September 2008. He then left the employment of the first and second defendants and, it appears, joined another firm, Ord Minnett Limited (Ord Minnett).
On or about 14 April 2009, the defendants sent a letter to what appears to be a large number of people referring to the cessation of the plaintiff’s employment and making allegations about his conduct in the course of him leaving their employment.
The proceedings
On 8 May 2009, the plaintiff commenced these proceedings by Originating Claim in which he sought damages from the defendants for what he said were defamatory comments in the letter of 14 April 2009.
The defendants have pleaded defences of justification, qualified privilege and set-off. They have also counter-claimed for the damages said to have been caused by what are claimed to be the plaintiff’s breaches of contractual, equitable and statutory duties.
The plaintiff has also commenced separate proceedings against the first defendant apparently seeking money due to him under his contract of employment. On 26 February 2010, Master Harper ordered that the two proceedings be heard together and that the evidence in one be evidence in the other.
On 21 June 2010, the defendants caused a Notice for Non-Party Production to be issued under r 660 of the Court Procedures Rules directed to Ord Minnett. The notice sought the following documents be produced:
a) All correspondence including, but not limited to, emails, letters and file notes between Ord Minnett and Mr Richard Taylor prior to the commencement of Mr Taylor’s employment at Ord Minnett in or around October 2008.
b) All documents provided to Ord Minnett by Mr Taylor, prior to the commencement of Mr Taylor’s employment at Ord Minnett in or around October 2008.
c) All documents produced by Mr Taylor during his employment at Ord Minnett, including but not limited to, client lists, client factfinders, financial modelling tools and calculators and statements of advice.
Ord Minnett objected to producing the documents in paragraph c) on the following grounds, namely that compliance with the notice:
· would involve the production of a majority of documents not relevant to any issue that may legitimately arise at the hearing;
· required the disclosure of commercial-in-confidence material;
· constituted an undue and oppressive burden on Ord Minnett;
· would cause undue expense and inconvenience to Ord Minnett’s business operation;
· was an abuse of process; and
· that the notice had been issued for an improper or ulterior purpose and not for purpose of determining the matters in issue in the proceedings.
As a result of that objection, the defendants proposed an amended notice which would replace paragraph c) with the following:
c) All documents including, but not limited to, emails, letters and file notes created following the commencement of Mr Taylor’s employment at Ord Minnett in or around October 2008 and relating to Dixon Advisory Limited, Dixon Advisory & Superannuation Services Pty Limited, Alan Dixon or Daryl Dixon.
d) 5 complete working files including, but not limited to, factfinders, workpapers, calculators, benefit estimates, file notes, emails and statements of advice of Public Sector Superannuation scheme clients who Mr Taylor has provided a full range of services to since October 2008.
e) 5 complete working files including, but not limited to, factfinders, workpapers, calculators, benefit estimates, file notes, emails and statements of advice of Commonwealth Superannuation Scheme clients who Mr Taylor has provided a full range of services to since October 2008.
f) 5 complete working files including, but not limited to, factfinders, workpapers, calculators, benefit estimates, file notes, emails and statements of advice of clients that Mr Taylor has provided a full range of services in relation to commencement of a self managed super fund since October 2008.
g) 5 complete working files including, but not limited to, factfinders, workpapers, calculators, benefit estimates, file notes, emails and statements of advice, of clients that Mr Taylor has provided a full range of services in relation to the transfer of an existing self managed super fund since October 2008.
h) All documents, including, but not limited to, emails, file notes, and database entries relating to the following people:
In paragraph h), there was a list with more than 100 named persons.
There was further debate in correspondence between the solicitors for the defendants and the solicitors for Ord Minnett. A suggestion for further narrowing the range of documents sought was proposed and rejected.
As a result, on 23 August 2010, Ord Minnett filed an affidavit under r 664 of the Court Procedures Rules because of the demand by the solicitors for the defendants on 16 August 2010, that Ord Minnett comply with the notice within 14 days. Failure to either file the affidavit or produce the documents would have exposed Ord Minnett to an application under r 665.
In response, the solicitors for the defendants proposed that the concerns expressed by Ord Minnett could be resolved by an undertaking to be given on behalf of the solicitors for the defendants that the only documents sought would be those in the proposed Amended Notice of Non-Party Production and that the documents produced would only be inspected by the legal representatives of the defendants, be kept confidential to them and, if any were identified as being relevant, consent to release to the defendants would be sought. If no consent were forthcoming, the question would be referred to the Court.
The approach was agreed to in principle by Ord Minnett but subject to the defendants paying the reasonable costs of compliance, such costs to include:
· the affidavit of 23 August 2010;
· collating, copying and producing the documents; and
· dealing with the notice.
The defendants agreed to pay costs but only at a rate of:
· $2.80 per page for the first 10 pages;
· $1.20 per page for each additional page up to 100 pages; and
· $0.40 per page for each page over 100 pages.
This appears to be based on Item 16 in Schedule 4 of the Court Procedures Rules and thus, only relevant to the actual copying of the documents. The terms, however, suggested it would be paid whether or not the document produced was copied or not. They objected to any additional legal costs as sought. Ord Minnett, however, maintained their demand for legal costs and, in the absence of agreement, this application was made to the Court.
The application
On 25 October 2010, Ord Minnett applied to the Court for orders:
1. That the first defendant pay Ord Minnett Limited’s legal costs, on a solicitor-client basis, of dealing and complying with the first defendant’s notice for non-party production dated 21 June 2010.
2. That the first defendant pay Ord Minnett Limited’s costs of the application.
3. Any other orders that the Court considers appropriate.
The grounds of the application were said to be as follows:
1. Ord Minnett Limited (“Ord Minnett”) is the respondent to a notice for non-party production dated 21 June 2010 (“the Notice”) that has been issued by the first defendant in these proceedings.
2. Ord Minnett has previously objected to the Notice and a draft amended notice for non-party production. An affidavit of objection made pursuant to Rule 664 of the Court Procedures Rules 2006 (ACT) has previously been filed in these proceedings [see Affidavit of Benjamin Tallboys affirmed on 23 August 2010].
3. Subsequent to an affidavit of objection being filed on behalf of Ord Minnett, the first defendant has put forward, and Ord Minnett has accepted, a compromise means of production subject to the first defendant paying Ord Minnett’s legal costs of dealing and complying with the Notice [Affidavit of Benjamin Tallboys affirmed on 25 October 2010].
4. Ord Minnett has incurred legal costs in dealing and complying with the Notice from the date of the Notice until 30 September 2010 in the amount of $5,446.10 plus disbursements to Queen’s Counsel in the amount of $1,925.00.
5. Ord Minnett will incur legal costs in dealing and complying with the Notice from 1 October 2010 to 25 October 2010, but excluding the costs of this application, in the amount of $609.40.
6. On 5 October 2010, Ord Minnett’s solicitors gave notice under Rule 667(3) of the Court Procedures Rules 2006 (ACT) of Ord Minnett’s intention to make an application to this Court to decide the amount of Ord Minnett’s legal costs of dealing and complying with the Notice.
7. The first defendant has failed or refused to agree to pay Ord Minnett’s actual legal costs of dealing and complying with the first defendant’s notice for non-party production and has further failed or refused to suggest an alternative amount to settle the issue.
The Application in Proceedings also sets out the following question of law:
1. Whether the legal costs of a respondent to a notice for non-party production arising from:
(a) considering and opposing a notice for non-party production;
(b) considering and opposing a draft amended notice for non-party production;
(c) considering and opposing an allegation of conflict of interest concerning a respondent’s solicitors;
(d) preparing and filing an affidavit of objection to a notice for non-party production;
(e) canvassing a compromise means of production by way other than through compliance with a filed notice for non-party production; and
(f) considering the application of Rule 667(1) of the Court Procedures Rules 2006 (ACT),
are costs reasonably incurred by a respondent in complying with a notice for non-party production under Rule 667(1) of the Court Procedures Rules 2006 (ACT).
The Application relied on the affidavit of 23 August 2010 made by Ord Minnett’s solicitor, but also a further affidavit of 25 October 2010 which annexed the correspondence between the solicitors after 23 August 2010 together with details of the costs claimed to date.
Preliminary matters
It became clear during the hearing of the Application that the defendants and Ord Minnett were prepared to proceed with the disclosure of the documents now identified in the draft Amended Notice of Non-Party Production on the basis and according to the arrangements set out in the correspondence: see [16] above. Ord Minnett were concerned, however, that their costs of this arrangement should still be paid. The order sought in the Application in Proceedings, however, did not encompass that and I directed that the prayer for relief be amended. It was, and now reads:
1. That the first defendant pay Ord Minnett Limited’s legal costs, on a solicitor-client basis, of dealing and complying with the first defendant’s notice for non-party production dated 21 June 2010 and of dealing and complying with the first defendant’s draft amended notice for non-party production attached to the email of Elizabeth Mukherji dated 16 July 2010, a copy of which is annexed to the affidavit of Benjamin Tallboys affirmed on 23 August 2010.
Ord Minnett’s solicitors also sought to make a small modification to the question of law as follows:
1A. That included in such costs should be the legal costs incurred by Ord Minnett Limited in relation to
a. considering and opposing the first defendant’s notice for non-party production;
b. considering and opposing the first defendant’s draft amended notice for non-party production;
c. considering and opposing an allegation of conflict of interest on the part of the solicitors for Ord Minnett Limited;
d. preparing and filing an affidavit of objection to a notice for non-party production;
e. canvassing a compromise means of production by way other than through compliance with a filed notice for non-party production; and
f. considering the application of Rule 667(1) of the Court Procedures Rules 2006 (ACT).
I permitted both amendments to be made.
As a consequence, I then ordered on 4 November 2010:
On the undertaking of the defendants’ solicitors that any documents produced will be kept confidential and only seen by the defendants’ solicitors or counsel until Ord Minnett Ltd consent[s] to further inspection or the court orders otherwise, that Ord Minnett Ltd produce, in accordance with Div 2.8.7 of the Court Procedures Rules 2006 (ACT), those documents set out in the first defendant’s draft amended notice for non-party production attached to the email of Elizabeth Mukherji dated 16 July 2010, attached to the affidavit of Benjamin Tallboys affirmed on 23 August 2010, within 28 days.
I reviewed my decision about the costs claimed by Ord Minnett, which I now deliver.
Costs in non-party production
Rule 667 of the Court Procedures Rules makes provision for the costs of complying with a Notice of Non-Party Production. It provides:
667 Notice for non-party production—costs
(1)The applicant for a notice for non-party production must pay any expenses reasonably incurred by the respondent to the notice in complying with the notice.
(2)If the respondent has not been paid by the applicant for the notice an amount that the respondent considers adequate to cover the expenses reasonably incurred, or expected to be reasonably incurred, in complying with the notice, the respondent may apply to the court to decide the amount that the applicant is to pay the respondent.
(3)Before making an application to the court under subrule (2), the respondent must give the applicant for the notice not less than 7 days notice of the intention to make the application.
(4)A decision of the court on an application under subrule (2) is taken to be a judgment of the court for the amount decided against the applicant for the notice and may be enforced accordingly.
(5)Subrule (1) does not affect the discretion of the court to order that the costs of and incidental to an application for a notice for non-party production (including any amount paid to the respondent under that subrule) are to be paid by any other party to the proceeding.
In applying this rule, it seems to me that it is not inappropriate to look to the jurisprudence developed in relation to subpoenas. After all, as Lee J said in Lebon v Lake Placid Resort Pty Ltd [1995] 1 Qd R 24 (at 30) of the approach to be taken by the non-party who is required to respond to a Notice for Non-Party Production:
The officer producing the document needs to be satisfied that the document is relevant to an issue in the civil proceeding and that the agency, principal officer, or other person or employee could be ordered on application of a party, to produce the document in the proceeding i.e. pursuant to a subpoena duces tecum.
Though part of the regime of disclosure, the Notice for Non-Party Production has close similarity to the subpoena to produce documents.
At common law, it appears that absent express agreement between the addressee of a subpoena and the issuing party, no costs beyond the conduct money required to be tendered was payable: Collins v Godefroy (1831) 1 B & Ad 950; 109 ER 1040 (at 1042). See also Bank of New South Wales v Withers (1981) 35 ALR 21 (at 37-8), where it was held that the matter was governed by the court rules and, in the absence of rules entitling the addressee of the subpoena to costs, none were payable.
The costs of understanding the obligations of compliance with subpoena and other costs of compliance other than those met by payment of conduct money, are, in general, simply costs of complying with the law, which is the duty of the citizen: Triotas Pty Ltd v Rohn (NSWSC 1903 of 1993, Young J, 20 May 1993, unreported).
In relation to subpoenas, however, the obligation to pay costs has now been extended by r 6611 of the Court Procedure Rules which provide for costs to be payable for compliance with a subpoena.
There are, however, it seems to me, two different costs issues here. The costs of the affidavit of Ord Minnett’s solicitor of 23 August 2010 and certain other costs are not costs “in complying with the notice” (see Xstrata Queensland Ltd v Santos Ltd and Ors [2005] QSC 358 (at [2])). They are costs of the relevant parties as litigants and should be dealt with as such. This is a similar distinction to that made in Charlick Trading Pty Ltd v Australian National Railways Commission (1997) 149 ALR 647 (at 649) (Charlick). See also Cadbury Schweppes Pty Ltd v Amcor Limited (No 3) [2008] FCA 1668 (at [24]).
The costs of complying with the notice include the searching for, collating, copying if necessary (for example, to enable business to continue while the documents are produced and inspected), and producing the documents.
What more is to be included? An issue arises in respect of the legal costs incurred by a respondent to a subpoena or Notice for Non-Party Production. In Charlick, Mansfield J said (at 649), after reviewing a number of authorities:
In my view [those cases] establish that the scope of the rule is sufficient to encompass, if the expense is otherwise reasonable in the circumstances, the expense incurred in seeking advice as to the validity of the subpoena, including whether to comply with it at all or in part; correspondence or attendances on a party issuing the subpoena, regarding its terms, and including with a view to narrowing or clearly identifying the scope of documents to be produced; advice as to whether documents are confidential or properly subject to claims for privilege; correspondence and attendances and negotiations with the party issuing the subpoena, as to the terms upon which access to the documents should be permitted by the court, including the negotiation of and formulation of any undertakings as to confidentiality; attendances in court when the subpoena is called on or when it is stood-over, including attendances to assert and make out any claim that the documents subpoenaed should be protected from unrestricted access due to their confidential character and to seek orders restricting access to the document or documents produced; and steps to ensure that any confidentiality undertakings proposed to be entered into have, in fact, been properly given: [Hadid v Lenfest Communication Inc and Ors (1996) 65 FCR 350]. That list may not be exhaustive.
As Gordon J said in Cadbury Schweppes Pty Ltd v Amcor Limited (No 3) (at [24]):
... a party responding to a subpoena is entitled to its actual costs of searching for and producing the information requested in the subpoena.
In Fuelxpress Ltd v L M Ericsson Pty Ltd (1987) 75 ALR 284, Lockhart J said (at 286):
The intent of r 4 A [the relevantly equivalent rule to r 667(1) of the Court Procedures Rules] is to compensate a person subpoenaed to produce documents for expense or loss reasonably incurred in complying with the subpoena. It is not the case of a successful party to litigation seeking recovery of costs where the distinction of solicitor and client costs on the one hand and party and party costs on the other is observed by taxing officers. It is a case of a third party seeking compensation for what it has actually cost it in expense or loss in complying with the subpoena. In those circumstances I think it is appropriate in this case that the legal costs and expenses incurred by DMR in and about compliance with the subpoena (including its costs of this motion) and in and about the preparation of the bill for taxation and attending to the taxation should be on a solicitor and client basis.
This approach has been consistently followed since then, namely that the costs of complying with a subpoena are payable in the amount of the actual costs incurred. See, for example, Marsden v Amalgamated Television Services Pty Ltd [2001] NSWSC 77 (at [33]); Deposit & Investment Co Ltd (Receivers Appointed) & Ors v Peat Marwick Mitchell & Co (1996) 39 NSWLR 267; Boensch v Pascoe (No 2) [2008] FCA 1127; Kelleher v Anderson [2008] Fam CA 113 (at [35]).
It seems that even if a subpoena is not called upon, the addressee is still entitled to any costs reasonably incurred in purported compliance: see Moorehead Nominees Pty Ltd & Ors v Barclays Australia Securities Ltd & Ors (FCA, Hill J, VG63 of 1989, 17 May 1991, unreported). This, however, was said not to include the costs of seeking to set aside the subpoena, which were not costs of compliance. I am strengthened in this view by the decision of Lindgren J in NMFM Property Pty Ltd v Citibank Ltd (No 9) [1999] FCA 638.
The next issue is the basis on which the costs are to be paid. Various terms have been used, not always with clear meanings. For instance, Ipp J (as his Honour then was) appeared in Re Bond Corporation Holdings Ltd (1990) 1 ACSR 350 to use (at 364) the terms “solicitor and client” costs and “indemnity costs” interchangeably. This was, at one stage, not uncommon.
The Court Procedures Rules have now made the distinction somewhat clearer. Thus r 1752(3) and (4) respectively define these bases for assessing costs in terms that are relatively easily able to be applied by a taxing officer.
In particular, r 1752(4) provides:
(4)In assessing costs on an indemnity basis, the registrar—
(a)must allow all costs other than costs unreasonably incurred (with the party paying the costs having the onus of proving that the costs were unreasonably incurred); and
(b)may have regard to any costs agreement between the party to whom the costs are payable and the party’s solicitor.
The basis seems also to accord with the principles in cases such as Fuelxpress Ltd v L M Ericsson Pty Ltd, where what is provided is that the addressee of the subpoena (here the notice), not otherwise a party to the litigation, should be compensated by payment of the actual costs incurred, subject to the overriding principle that such costs should not be unreasonable, either in the sense of unreasonable in amount or unreasonably incurred. This seems to me to be an appropriate approach to the quantification of costs both on authority and in principle.
All of this, of course, depends upon the circumstance of each case. See, for example, Simpson v Monteith & Ors [2009] NSWSC 156, where Hoeben J refused to order the party issuing a subpoena to pay the costs of the subpoena because of the particular circumstances of the case.
Thus, the principles to be applied seem to be that the costs of compliance with a Notice for Non-Party Production, payable on an indemnity basis so long as they have been reasonably incurred, include:
· if the matter is complex and more so than the ordinary case, the costs of advice about its validity and the extent of compliance required;
· correspondence or attendances with the issuing party about its terms and whether they can be narrowed or production of the documents completed in a particular way;
· advice about whether documents are confidential or subject to legal professional privilege;
· correspondence and attendance to negotiate the terms of access to the documents sought, including the formulation of undertakings as to confidentiality;
· attendances when the documents are produced, though this will be ordinarily by post;
· any necessary attendances at court to ensure those arrangements are effected;
· attendances to ensure undertakings have properly been given and compliance is secured; and
· preparing, negotiating and having taxed a bill of costs for such costs and attending on such taxation.
Costs of work which is not to be characterised as compliance with the Notice, such as challenges to its validity, the filing of an affidavit under r 664, and correspondence on attendances in relation to other matters, with an enforcement of a costs order following taxation, should be paid on an ordinary party/party basis, unless the court considers in the particular circumstances that some other order is warranted.
In the ordinary case, however, it is unlikely that respondents to a notice would require advice or legal assistance and, if they did seek and receive it, the cost of it would not be recoverable.
Consideration
Turning to the particular areas of claim made by Ord Minnett, I make the following determinations:
Considering the notice and opposing it(a)
It seems to me that some of the costs here would fall in the class that was described in the following way by Young J in Triotas Pty Ltd v Rohn (at 3):
It is not to be thought that Pt 37 r 9 is to cover every expense which a person who gets a subpoena has to pay. The community still expects people to assist in the ascertainment of truth in actions before the Court, even though it is inconvenient.
In Marsden v Amalgamated Television Services Pty Ltd, Levine J agreed with this approach. See also Pyramid Building Society (In Liq) v Farrow Finance Corporation (In Liq); Ex parte Farrow, Clarke and Lawson [1995] 1 VR 464 (at 469). It seems to me that advice about the notice and the obligations under it are part of the community’s costs. No costs should be payable for that.
When, however, the advice enters into the area of advising about its width and validity, especially where it requires production of documents which are not properly to be produced because of confidentiality, privilege or oppression, then the costs of that advice is recoverable and recoverable in full so long as the costs are not unreasonable, that is, as indemnity costs. It is, however, likely in this case to be impossible to separate out such costs, and so, in my view, all the costs under this heading should be paid on an indemnity basis.
Considering and opposing the draft amended notice(b)
The costs of this work seem to me to fall directly within the costs of compliance identified by Mansfield J in Charlick and are, therefore, payable in full, so long as they are not unreasonable, that is, as indemnity costs.
Considering and opposing the allegation of conflict of interest(c)
Ord Minnett retained the same solicitors as the plaintiff had retained. Initially, the defendants’ solicitors objected to the plaintiff’s solicitors acting for Ord Minnett as they asserted that there was a conflict of interest. This was initially raised briefly in a letter dated 16 August 2010.
It was apparently not adequately addressed, or perhaps addressed at all, in subsequent correspondence from the solicitors for Ord Minnett and the defendants’ solicitors raised it again briefly in a letter dated 3 September 2010, commenting:
... we intend to deal with this issue more fully in due course.
The matter does not seem to have surfaced again. It is not entirely clear to me that much time and effort was spent on this aspect.
While the matter is borderline, it seems to me that so far as Ord Minnett is concerned this is part of what was called in Xstrata Queensland Ltd v Santos Ltd and Ors (at 2) “its costs as a litigant” and not of compliance with the notice. It seems to me that any such costs should be payable but on a party/party basis.
Given the potential width of an order for costs on an indemnity basis, I do not consider it should be made except when clearly justified, either by statute or principle. Parties should not be encouraged to explore what may be peripheral issues in the belief that they may be fully indemnified for the costs of doing so.
Preparing and filing an affidavit of objection(d)
Again, this work seems to me to fall within the area that is not compliance with the notice but, in fact, opposition to it. Once such an affidavit is filed, the respondent is no longer bound to produce the documents sought unless and until an order of the court directs that.
Accordingly, in my view, the costs of this work are payable only if there is no such order and then, only on a party/party basis. Here there is no such order in respect of that notice, so the costs are payable, but only on a party/party basis.
Canvassing a compromise method of production(e)
The costs for the items of advice and work are clearly comprised in what fell from Mansfield J in Charlick and I consider the costs of this work to be properly payable on the basis of actual cost, so long as they are not unreasonable, that is, as indemnity costs.
The application under r 667(f)
It is difficult to see that much time and effort may have been allocated to this matter outside the Application in Proceedings with which I am dealing. Nevertheless, insofar as such work was done, it seems to me to be included in the concept of compliance with the notice and thus, to be payable in the amount of which the costs are actually incurred, so long as they are not unreasonable, that is, as indemnity costs.
The Application in Proceedings(g)
In Fuelxpress Ltd v L M Ericsson Pty Ltd, it was held (at 286) that the costs of preparing a bill of costs and taxation were included in those costs which should be paid on a full recovery basis.
In Charlick, it was held that discussions aimed at narrowing or clearly identifying documents to be produced and negotiating and formulating undertakings as to confidentiality were included in the costs of compliance with the subpoena which should be paid on a solicitor/client basis.
On the other hand, in Cadbury Schweppes Pty Ltd v Amcor Limited (No 3) the court refused to order that the costs payable on the notice of motion there dismissed should be paid on a solicitor/client basis. That situation, however, was somewhat different in that the motion there concerned a dispute as to whether the documents were privileged. Such an application is akin to that referred to in Xstrata Queensland Ltd v Santos Ltd and Ors. These applications are not part of the compliance and so do not come under the principle that costs are recorded at the amount of the actual costs.
In my view, the Application was one that was part of the compliance with the subpoena and not part of the challenge to it or an attempt to resist it. Insofar as it included some submissions and a final order that made provision for the production of documents, it was in the same category.
Accordingly, I consider that the actual costs of the Application should be paid by the defendants, so long as they are not unreasonable, that is, as indemnity costs.
I have given careful thought as to whether I should make orders as sought to give effect to these reasons. In In the matter of Bauhaus Pyrmont Pty Ltd (in liq) [2006] NSWSC 268, Austin J declined to make costs orders when the work for which the costs were claimed had not been completed as may be so here.
His Honour, however, was concerned (at [17]) that the court should not make an order that “does no more than establish ... the obligation of the respondents to meet the reasonable expenses of the applicant in complying with the subpoena” (a principle that is well-known in law) and so declined to make it. This is significantly different from the situation here where there is a dispute about the entitlement of Ord Minnett to costs and an order is needed to resolve that issue.
I shall therefore make orders in accordance with these reasons as follows:
i.Upon the completion of the work to be done under the order made on 4 November 2010, the defendants pay the costs of Ord Minnett Limited on an indemnity basis in accordance with r 1752(4) of the Court Procedures Rules 2006 (ACT) insofar as they have been reasonably incurred of:
(a)Ord Minnett Limited’s consideration of the Notice of Non-Party Production dated 21 June 2010 and its opposition to it, including any legal advice obtained about or legal work done in respect of those issues;
(b)Ord Minnett Limited’s consideration of the draft Notice of Non-Party Production attached to the e-mail of Elizabeth Mukherji dated 16 July 2010 and its opposition to it, including any legal advice obtained about or legal work done in respect of those issues;
(c)Ord Minnett Limited’s canvassing of a compromise in respect of the production of documents sought by the defendants, including any legal advice obtained about or legal work done in respect of those issues;
(d)Ord Minnett Limited’s consideration of the application of r 667 of the Court Procedures Rules 2006 (ACT), including any legal advice obtained about or legal work done in respect of those issues; and
(e)Ord Minnett Limited’s costs of searching for, marshalling, where necessary copying any documents to be produced to the defendants in accordance with the order of 4 November 2010 and any necessary consideration of the documents and attendances to produce them.
ii.The defendants pay the costs of Ord Minnett Limited on a party and party basis of:
(a)Ord Minnett Limited’s consideration of the claim by the defendants that its solicitors should cease to act because of a conflict of interest; and
(b)Ord Minnett Limited’s preparation of the affidavit of 23 August 2010.
iii. The defendants pay the costs of Ord Minnett Limited on an indemnity basis of the Application in Proceedings dated 25 October 2010, but such costs not to include the costs of amendment of that Application.
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Refshauge.
Associate:
Date: 22 December 2010
Counsel for the plaintiff: Mr Salmon QC
Solicitor for the plaintiff: Griffin Legal
Counsel for the defendants: Mr S Whybrow
Solicitor for the defendants: Slater & Gordon Lawyers
Date of hearing: 4 November 2010
Date of judgment: 22 December 2010
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