Telstra Corp Ltd v AAPT Ltd

[1999] FCA 1410

FEDERAL COURT OF AUSTRALIA

Telstra Corp Ltd v AAPT Ltd [1999] FCA 1410

PRACTICE & PROCEDURE - application by a non-party to the proceedings seeking an order for costs for compliance with two subpoenas and for a motion seeking to set aside the first subpoena - whether claim can include costs for seeking legal advice - whether there should be no order as to costs on the motion

Federal Court Rules, O 27 r 4A, O 27 r 10

Fuelxpress Ltd v L. M. Ericsson Pty Ltd (1987) 75 ALR 284
Australian Securities Commission v Austhome Investments Limited & Ors [1993] 11 ACSR 136
Pyramid Building Society (in Liq.) & Ors v Farrow Finance Corporation (in Liq.) & Ors; Ex Parte Farrow, Clarke & Lawson (1995) 1 VR 464

TELSTRA CORPORATION LIMITED v AAPT LIMITED

NG 484 OF 1997

EINFELD J
21 OCTOBER 1999
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 484  OF   1997

BETWEEN:	TELSTRA CORPORATION LIMITED APPLICANT
AND:	AAPT LIMITED RESPONDENT
JUDGE:	EINFELD J
DATE OF ORDER:	21 OCTOBER 1999
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.   the respondent pay Hansen Corporation Ltd’s costs of its motion dated 15 February 1998 and of compliance with the respondent’s subpoenas of 3 February and 9 September 1998 in the sum of $45,561.65 within 14 days.

Note:Settlement and entry of orders are dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 484 OF 1997

BETWEEN:	TELSTRA CORPORATION LIMITED APPLICANT
AND:	AAPT LIMITED RESPONDENT

JUDGE:	EINFELD J
DATE:	21 OCTOBER 1999
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. Hansen Corporation Limited (Hansen) seeks an order that AAPT pay the costs incurred in Hansen’s compliance with two subpoenas issued by AAPT on 3 February and 9 September 1998, and on its motion dated 18 February 1998 which sought to set aside the first subpoena.  The application is made pursuant to my orders on 13 August 1998 that:

   1.Hansen's notice of motion dated 18 February 1998 be dismissed

   2.Costs of the motion and those incurred by Hansen in compliance with the subpoenas be reserved

   3.There be liberty to apply in respect of the issue of costs before the Registrar upon three days written notice

2. Hansen relies on Order 27 rule 4A of the Federal Court Rules which provides that where a party which is not a party to the proceedings incurs substantial expense or loss in complying with a subpoena, the Court may order that the party who issued the subpoena pay the costs of compliance.  Hansen claims that this provision can also include costs for seeking legal advice. 

3. It is not necessary to set out the terms of either subpoena.  It will suffice that the first subpoena sought a large number of documents in very broad terms and that the second much narrower subpoena reflected the results of negotiations between Hansen and AAPT to arrange a satisfactory compromise which I urged upon the parties.  Hansen argues that the very issue of the second subpoena represents a concession of the defects of the first subpoena, justifying its motion and claim for costs.  In its submissions Hansen stated:

   …because of the unnecessary breadth of the Respondent's First Subpoena, as later demonstrated by the Respondent's narrower and more focussed Second Subpoena, Hansen was justified in seeking legal advice as to how it might answer the subpoena.

4. AAPT conceded that Hansen is entitled to costs incurred on the subpoenas but not to the legal costs of complying with the subpoenas because costs must be reasonably incurred.  In relying on the authority of Fuelxpress Ltd v L. M. Ericsson Pty Ltd (1987) 75 ALR 284, Byrne J in the Victorian Supreme Court in Pyramid Building Society (in Liq.) & Ors v Farrow Finance Corporation (in Liq.) & Ors; Ex Parte Farrow, Clarke & Lawson (1995) 1 VR 464 at 468 stated that:

   Where the recipient incurs costs in collating documents, copying them and seeking advice as to privilege or as to a claim for restrictive access or use, it is well-established that such costs are recoverable.

5. In a letter from Hansen's solicitors to AAPT's solicitors dated 22 December 1998,  Hansen claimed a total of $45,561.65 in relation to its compliance with the subpoenas and the motion, of which $14,896 is referable to costs of compliance.  No challenge to the figures has been made.  Hansen submitted that nothing has been put by AAPT to suggest that the costs claimed by Hansen are unreasonable.

6. In response to Hansen's suggestion that the second subpoena was issued because of the "unnecessary breadth of the first subpoena", AAPT claimed that this subpoena was served because after a review of the documents produced by Hansen in response to the first subpoena, it saw that documents within certain categories had not been produced because Hansen had contended that those documents did not fall within the first subpoena.  This was explained to Hansen in a facsimile from AAPT's solicitors of 10 August 1998 which stated:

   We note that we have not received confirmation from you that the documents referred to in our facsimile transmission dated 29 July 1998 will be produced.  Accordingly we are instructed to cause a fresh subpoena to be issued calling for those documents.

7. AAPT therefore alleges that Hansen did not properly comply with the first subpoena, and in producing as many documents as it did, it could not be said that the negotiations arising from Hansen's motion to set aside the first subpoena made that motion successful.  AAPT claims that there should be no order as to costs on the motion, relying on Australian Securities Commission v Austhome Investments Limited & Ors [1993] 11 ACSR 136 in which Justice Hill stated at 141 that:

   Costs of interlocutory proceedings are dealt with generally in o 62 r 3 of the Federal Court Rules.  The rules, however, lay down no criteria to determine how costs should be awarded.  No more can, or should, I think be said than that ultimately costs in interlocutory proceedings, like costs in the main proceedings, lie in the discretion of the court, which discretion must be exercised judicially.

8. At 136 Justice Hill held in relation to making orders as to costs where no final order is made:

   There has been no determination on the merits… As the order for interlocutory relief was continued by consent for some time each party should pay its own costs.

9. That case was not a motion by a non-party to the proceedings under Order 27 rule 10 of the Federal Court Rules but the principles referred to by his Honour are not particularly controversial and are, it seems to me, of general application. 

10. I have again looked at the subpoenas involved.  To my mind, the first subpoena was issued more in hope than with good and pertinent judgment.  As such, it is quite typical of the way this litigation has been conducted by its parties from the outset where expense, commonsense and balanced responsible judgment in case preparation and case management terms have given way to a paper and forensic “war” designed to bully, wear down or outspend the antagonists.  That this approach extended to a non-party such as Hansen should therefore not be surprising.  But it has the consequence that no sense of joint culpability for a particular situation is an appropriate approach.  The first subpoena was in my view a harassment of a non-party.  Hansen was entitled to take defensive measures to protect it from this and continuing harassment in a matter in which it was not otherwise involved.  If instead of writing their letter of 10 August 1998 and issuing the second subpoena, AAPT’s solicitors had organised a meeting with Hansen’s representatives to negotiate a sensible outcome to the first subpoena, the situation may well have been different.  It preferred formality and confrontation, causing, as was inevitable, a chain response which significantly increased Hansen’s costs.  Clearly these costs must be AAPT’s responsibility.

11. I order that AAPT pay Hansen’s costs of the motion and of compliance with the subpoenas in the sum of $45,561.65 within 14 days.

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marcus Einfeld.

Associate:

Dated:             21 October 1999

Counsel for Hansen Corporation Ltd:	Mr P. J. Hayes
Solicitor for Hansen Corporation Ltd:	Barker Gosling
Counsel for Respondent:	Mr M. J. Slattery QC, Mr I. M. Jackman and Mr R. A. Dick
Solicitor for Respondent:	Clayton Utz
Written submissions completed:	1 October 1999
Date of Judgment:	21 October 1999