VISCARIELLO v MACKS (No 8) - [2012] SASC 68

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
VISCARIELLO v MACKS (No 8)
[2012] SASC 68
Reasons of Judge Lunn a Master of the Supreme Court
27 April 2012
PROCEDURE
Application by plaintiff under 6R 146 for disclosure by non-party dismissed.
Held: Norm that such costs should be on solicitor and client scale - no factor to displace the norm.

VISCARIELLO v MACKS (No 8)
[2012] SASC 68
JUDGE LUNN:
Reasons on application by Iles Selley for costs to be as between solicitor and client

Iles Selley are a legal firm which acted for the defendant in relation to a subpoena issued to him in proceedings in the Federal Magistrates Court between Tanya Hamilton-Smith and Heidi George. Those proceedings had some potential relevance to the matters in issue in this action. The defendant made discovery in this action of the file of Iles Selley in relation to it acting for him in relation to the subpoena, but claimed legal professional privilege for its contents.
On 13 October 2009 the plaintiff issued an interlocutory application in this action against Iles Selley under 6R 146 seeking disclosure of documents relating to that firm having acted for the defendant.[1] Iles Selley maintained all relevant documents had been given back to the defendant and had already been disclosed by him. The plaintiff nevertheless pursued his application that Iles Selley make formal disclosure under 6R 146 of the relevant documents which it either had, or had had, in its possession. On 27 October 2010 I dismissed the application.[2] I ordered that the plaintiff pay to Iles Selley its costs of the application as adjudicated or agreed and gave liberty to it to apply that the costs be as between solicitor and client.
[1] There were five other similar applications made by the plaintiff which I dealt with at the same time, but the present application only concerns the application against Iles Selley.
[2] See my reasons (No 6), [2010] SASC 303.
By an application of 21 October 2011 (FDN125) Iles Selley has applied that its costs be on a solicitor and own client basis.[3] The only issue which I need to determine is whether the costs ordered should be on a solicitor and client or on a party and party scale. It was agreed that the application would be dealt with solely on written submissions.
[3] In their written submission Iles Selley only seek an order on a solicitor and client basis and I deal with the application on that basis.
The issue is whether the Court should exercise its discretion under 6R 264(5)(a) to order costs as between solicitor and client as defined in sub‑paragraph (5)(a). The relevant parts of that Rule provide:
264—Basis for awarding costs
(1)The Court may, in the exercise of its discretion as to costs, award costs on any basis the Court considers appropriate.
(2)As a general rule, however, costs are awarded as between party and party (that is, on the basis that the party entitled to the costs will be reimbursed for costs reasonably incurred by the party in the conduct of the litigation to an extent determined by reference to the scale of costs in force, under these rules or the pervious rules, when the costs were incurred).
…
(5) In exercising its general discretion as to costs, the Court may—
(a) award costs as between solicitor and client (that is, on the basis that the party will be fully reimbursed for costs reasonably incurred by the party in the conduct of the litigation); or
6R 146, which deals with applications for disclosure of documents by a non-party, makes no provision about what, if any, costs should be ordered to a non-party who successfully resists the order for disclosure. Accordingly, that question is to be determined on the general discretion conferred by s 40 of the Supreme Court Act 1935 and 6R 264(1), (2) and (5)(a). I am not aware of any reported authority on it.
In Mancorp Pty Ltd v Baulderstone Hornibrook[4] Debelle J dealt with what order should be made in favour of the addressee of a subpoena for documents for legal costs incurred by the addressee in complying with the subpoena.[5] Debelle J based his decision on the now repealed 87R 81.09, which relevantly provided:
(1)Where a person named in a subpoena … is not a party to the proceedings and he incurs, or will incur, substantial expense or loss in complying with the subpoena the Court … may order that the party who requested the issue of the subpoena pay to that person … an amount which is sufficient to compensate him for such loss or expense as is reasonably incurred or lost by that person in complying with the subpoena.
Debelle J stated at pp 166-7:
… a person required to answer a subpoena should not be required to be out of pocket. It is, therefore, the intention of the Rule to compensate a party for any outgoings reasonably incurred in complying with the subpoena … In accordance with the intention expressed in Rule 81.09, any legal costs properly incurred will be awarded on a solicitor and client basis and not on a party and party basis.[6]
[4] (1993) 169 LSJS 165.
[5] In that case the subpoena was complied with and was not set aside.
[6] He followed the decision of the Federal Court in Fuel Xpress v L M Ericsson Pty Ltd (1988) 75 ALR 284.
The present 6R 181(1) is the equivalent of 87R 81.09, but more succinctly provides:
(1)The Court may order the issuing party to pay the amount of any reasonable loss or expense incurred in complying with the subpoena.
I consider that what Debelle J said in Mancorp Pty Ltd v Baulderstone Hornibrook about 87R 81.09(1) applies equally to 6R 181(1), and thus means that legal costs properly incurred in complying with the subpoena should be awarded on a solicitor and client basis.
87R 81.09 and 6R 181(1) are confined to where the addressee complies with the subpoena and are silent on what costs are to be awarded where the addressee has lawfully not complied with it. In Danieletto v Khera[7] it was held, apparently under the Court’s general discretion to award costs, that the addressee should be awarded his costs for the work which he had done in preparing to comply with the subpoena before he was no longer required to do so.[8] Although there is no authority directly on point, it must follow from that decision that where an addressee who does not comply with a subpoena for lawful reason has properly incurred legal costs he should be awarded those costs.
[7] (1995) 35 NSWLR 68.
[8] The decision does not deal with whether those costs should be on a solicitor and client scale or not.
On these authorities, if the plaintiff had issued a subpoena returnable before the Registrar under 6R 173 for the documents in question, and that subpoena had been set aside for similar reasons to those for which the application under 6R 146 was refused, Iles Selley would have been entitled to its costs of setting aside the subpoena on a solicitor and client basis. In principle there should be no difference in the costs consequences where a non-party successfully resists either a subpoena for documents or an application for non-party disclosure under 6R 146. Thus, on the Court’s exercise of its costs discretion where an R 146 application is dismissed, the norm should be that the successful non-party should be awarded its costs as between solicitor and client.
I put the entitlement of a non-party to solicitor and client costs as a norm because ultimately the Court has an unfettered discretion under s 40 of the Supreme Court Act and 6R 264 about what costs should be ordered.[9] In analogous cases of subpoenas for documents there are instances of solicitor and client costs being awarded.[10] Both parties cited the reasons of Wilson DCJ in Howe v State of South Australia and Belperio (No 2).[11]There, Wilson DCJ dealt with costs under 87R 60[12] without saying whether he was awarding the costs on a solicitor and client basis, but his reasons suggest that was his approach.
[9] Advance Resource Services Pty Ltd (t/as Progress Couriers and Taxi Trucks) v Charlton (2008) 100 SASR 388.
[10] See Chapman v Luminis (No 3) (2000) 104 FCR 358; Kennedy v Wallace (2004) 136 FCR 114. I am not aware of any decision where in such a case a Court considered whether it should order solicitor and client or party and party costs and only awarded party and party costs.
[11] (1998) 197 LSJS 98.
[12] The general equivalent of the present 6R 146.
There is nothing in the facts of this matter to justify exercising the discretion of the Court on costs other than in accordance with the norm that they should be as between solicitor and client. From an early stage Iles Selley made it clear that it had sent all its relevant papers back to the defendant. A partner in the firm swore an affidavit that it did not hold any other relevant papers. The plaintiff was unable to justify the making of an order for disclosure in those circumstances.
In his written submissions the plaintiff sought to raise a number of matters which had occurred in this litigation since the making of the costs order on 27 October 2010. They are irrelevant to whether the costs ordered on 27 October 2010 should be on the greater solicitor and client scale. There was no application by the plaintiff to vary or discharge the costs order of 27 October 2010.
I have today made the following orders:
1The costs ordered on 27 October 2010 in favour of Iles Selley are to be paid by the defendant on a solicitor and client basis.
2The costs of FDN125 as agreed or adjudicated are to be paid by the plaintiff to Iles Selley.
3Iles Selley is to file an itemised schedule of their costs by 18 May 2012.
4The plaintiff is to file his notice of dispute to that schedule within 28 days of service.
5Further directions hearing about the adjudication of the costs of Iles Selley set for Tuesday 3 July 2012 at 9.50am.