The Grateful Palate Inc v Joshua Tree Imports LLC - [2008] SASC 191

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
THE GRATEFUL PALATE INC & ORS v JOSHUA TREE IMPORTS LLC
[2008] SASC 191
Reasons of Judge Lunn a Master of the Supreme Court
17 July 2008
PROCEDURE
Persons examined by the Court under s 59F of the Evidence Act on a request from an overseas court - application by examinees for their legal costs and compensation for their time in giving evidence and preparing to give it - held as subpoenas had been served on examinees 6R 181 applied and costs and expenses were recoverable under that Rule - what legal and witness expenses were recoverable.

THE GRATEFUL PALATE INC & ORS v JOSHUA TREE IMPORTS LLC
[2008] SASC 191
Examinees’ application for costs.

JUDGE LUNN: The Grateful Palate Inc and others (“the plaintiffs”) have instituted proceedings in the United States District Court, Central District of California (“the Californian Court”), against Joshua Tree Imports LLC (“the defendant”). Under the Hague Convention on the Taking of Evidence Abroad (“the Convention”) this Court has received from the Commonwealth Attorney-General’s Department a request from the Californian Court to take evidence and obtain production of documents from three South Australian residents, and a South Australian company, with which they are associated (“the examinees”). That request initiated this proceeding in this Court. (Although the plaintiffs and the defendant are referred to in this proceeding by those designations, strictly speaking they are not parties in those capacities in this Court, but it is convenient to give them those titles).
The Honourable Justice Gray made orders, which as subsequently amended, were as follows:
I order that:
1A Master of the Supreme Court of South Australia be appointed examiner.
…..
3The representative of the plaintiffs in the foreign proceedings have leave to issue a subpoena for the production of the documents referred to in the Letter of Request, such subpoena to be returned prior to the examination date.
4The representative of the plaintiffs in the foreign proceedings have leave to issue subpoenas for attendance of witnesses as requested in the Letter of Request.
He published reasons on 29 February 2008 [2008] SASC 51 for making these orders. He made his orders pursuant to s 59F of the Evidence Act, the relevant parts of which are as follows:
(1)Where a foreign court requests an authorised South Australian court to take evidence in this State for the purpose of proceedings before that foreign court the South Australian court may summon any person to appear before it for the purpose of giving evidence or for the purpose of producing documents.
(2)A witness summoned to appear before an authorised South Australian court under this section may be examined, cross-examined or re-examined before that court.
(3)Subject to this Part, the South Australian court in taking evidence under this section shall have the same powers as if the proceeding originated in that court.
Pursuant to that Order the South Australian solicitors for the plaintiffs requested the Registrar to issue subpoenas against the examinees, returnable before me. Such subpoenas were duly issued under 6R 172 in the form prescribed by 6R 173 and Form 26 under Part 2 of the Supreme Court Practice Directions 2006. The examinees attended at the various hearings pursuant to those subpoenas.
I completed the examinations of the examinees on 22 May. Counsel for the examinees then sought an order for costs in the following terms:
1The Plaintiffs pay to Mollydooker Wines Pty Ltd, Njal Marquis, Sarah Louise Marquis and Janet Gawith (the Marquis Parties) their costs of complying with the subpoenas, being:
(a)their reasonable costs of obtaining legal advice in connection with an complying with the subpoenas for the production of documents and examinations, served by the Plaintiffs on:
(i)Mollydooker Wines Pty Ltd, Njal Marquis and Sarah Louise Marquis on 3 March 2008; and
(ii)Janet Gawith on 2 May 2008;
including costs incurred by:
(i)seeking and obtaining advice regarding the validity of the subpoenas and the necessity for the Marquis Parties to comply with the subpoenas in whole or in part;
(ii)seeking and obtaining advice as to which documents fell within the categories specified in the subpoenas;
(iii)communicating with the solicitors for the Plaintiffs about the time, place and manner of attendance;
(iv)attending at Court to produce the documents in compliance with the subpoenas for the production of documents;
(b)the loss of income of Njal Marquis, as a result of his inability to work, based on the loss of profit to the business, Mollydooker Wines Pty Ltd, and qualifying fees for extra time spent becoming acquainted with the particular facts of this case;
(c)the loss of income of Sarah Marquis, as a result of her inability to work, based on the loss of profit to the business, Mollydooker Wines Pty Ltd, and qualifying fees for extra time spent becoming acquainted with the particular facts of this case;
(d)the loss of income of Janet Gawith, as a result of her inability to work, at her standard rate of pay, and qualifying fees for extra time spent becoming acquainted with the particular facts of this case.
Any order for costs was opposed by counsel for the plaintiffs.
Counsel for the examinees based his application on 6R 181 which empowers the Court to order “the issuing party pay the amount of any reasonable loss or expenses incurred in complying with the subpoena”. Counsel for the plaintiffs contested that 6R 181 applied. He pointed out that legislation interstate, generally equivalent to s 59F for the implementation of the Convention, made specific provision for the payment of expenses to persons summoned and he argued that the omission of a similar provision from the South Australian equivalent legislation was an indication that the South Australian Parliament did not intend that such expenses should be recoverable. It may be that the use of “summons” in s 59F(1) envisages a procedure other than the issue of a subpoena, but that it not what occurred here. Counsel for the examinees argued that s 59F(3) incorporated the subpoena rules, but I need not rule on that.
The Order of Gray J expressly authorises the issuing of subpoenas against the examinees. There has been no appeal against it and no application to Gray J to vary it. I am bound by it and cannot go behind it. The plaintiffs’ solicitors acted on that Order in requesting the Registrar to issue the subpoenas. The subpoenas, as prepared by the plaintiffs’ solicitors, invoked Division 4 of the Supreme Court Rules 2006 which includes 6R 181. Those subpoenas contained the following endorsement under the heading “Loss or expense of compliance”:
13If you are not a party to the proceedings, you may apply to the Court for an order that the issuing party pay an amount (in addition to conduct money and any witnesses’ expenses) in respect or the loss or expense, including legal costs, reasonably incurred in complying with the subpoena.
Accordingly, the examinees are entitled to the costs and expenses allowable under 6R 181.
An order under 6R 181 could have been limited to the first three lines of the order sought with the quantification of those witness fees being left to the procedures under Chapter 12 Part 3 of the Rules. However, as I have heard argument on the terms of the proposed order it is convenient to rule on whether an order is to be made in those terms.
The leading authority in this State on the recoverable costs of witnesses for their reasonable loss or expenses is Mancorp Pty Ltd v Baulderstone Pty Ltd (1993) 169 LSJS 165. That was a decision on the similar R 81.09 of the 1987 Rules. It was not suggested that there was any material difference between the operation of that Rule and 6R 181. The ratio of that case is that what is recoverable depends on the particular circumstances of the case.
I rule on sub-paragraphs 1(a)(i)-(iv) of the order sought as follows:
(i)While the reasonable costs of instructing the solicitors to act includes some costs for advice as to the validity of the subpoenas the costs of advice on the obligation of the examinees to comply with them is not to be allowed. If the examinees had challenged the validity of the subpoenas, the application would have failed and the costs would have been ordered against them.
(ii)These costs are allowable. The terms of the subpoenas were general and broad and required legal assistance to determine what documents fell within the categories in question.
(iii)On 21 January 2008, and before the subpoenas had been issued, I had directed that the examinations proceed in the week of 17 March 2008. The Californian court had requested that the taking of the depositions be completed by 2 April 2008. After the subpoenas had been served the examinees sought to postpone the hearings because they had major commitments in their business at the time set for the examinations. The plaintiffs and the defendant did not oppose the adjournment of the examinations, and ultimately a date was set which was acceptable to all involved. However, usually a witness is expected to attend on the date fixed by the Court for the hearing. If the Court extends the indulgence of postponing that hearing for the witness’ convenience, then the witness has to bear the cost of it.
(iv)Such costs are allowable. There was a special hearing convened prior to the oral examinations for the documents to be produced so that they could be inspected by the plaintiffs and the defendant before conducting the oral examinations. On that hearing the documents were produced by a solicitor for the examinees. This was appropriate as the solicitor was in a better position to answer any queries about the adequacy of the response to the subpoena for documents than could have been done by the examinees in person.
Accordingly the order will include 1(a)(ii) and (iv) but not (a)(i) and (iii).
In relation to paragraph 1(b) of the orders sought there were two particular grounds of objection raised by the plaintiffs. The first was that on what was said by Debelle J in Mancorp Pty Ltd v Baulderstone Pty Ltd the allowance for the time occupied by an employee or party was not to include a component for loss of profit. There Debelle J was considering a claim based on the “charge out” rate of the employer to other parties for the services of its employees. That is not the basis upon which examinees here seek to calculate their loss. It is to be an amount which reflects what they would be respectively paid for the period in which they were occupied in preparing, or giving, their evidence and that is allowable.
The second objection was that the examinees should only be entitled to compensation for the period in which they gave evidence and not for preparing to give their evidence. In Dalgety Australia Operations Ltd v FF Seeley Nominees Pty Ltd (No 2) (1988) 49 SASR 75 at 90, Bollen J held that I had been correct in allowing “qualifying fees” for witnesses to prepare themselves to give their evidence. However, I make no comment at present about the quantum of what is being claimed for these “qualifying fees”.
The plaintiffs also complain that there was no evidence that Mrs Gawith had lost any earnings by having to give her evidence. The usual taxing practice is that if the employer has paid witnesses their ordinary wages for the periods in which they gave evidence the employer is entitled to be paid the appropriate witness fee and an undertaking will be extracted from the witness to account to the employer for it.
The quantification of (b)-(d) is best left to the processes of an adjudication. In view of the ruling of Debelle J in Mancorp Pty Ltd v Baulderstone Pty Ltd the order here in 1(b) and (c) should not refer to loss of profit.
Counsel for the plaintiffs made an oral application that if any compensation was ordered to the examinees, this Court should order that the defendant pay half of it. He cited no authority for making such an order. 6R 181(1) says that the order is to be made against the party issuing the subpoena. That was the plaintiffs. The Letter of Request which initiated the proceedings in this Court stated that the plaintiff and the defendant desired to take the depositions. If any order is to be made as between the plaintiffs and the defendant about these expenses, it apparently cannot be done by the Californian Court. I am not sure of the legal basis upon which the plaintiffs make this application. It raises difficult issues. I consider I should not deal with it on an informal oral application, but leave it for the plaintiffs to bring a properly constituted application for such an order.
The examinees should submit revised minutes of order and I will hear the parties on them.