Willoughby City Council v Randall Pty Limited t/as Monkey Bar Car Park

[2005] NSWLEC 38

Land and Environment Court

of New South Wales

CITATION:

Willoughby City Council v Randall Pty Limited t/as Monkey Bar Car Park [2005] NSWLEC 38

PARTIES:

APPLICANT (Notice of Motion to set aside subpoena)
Space Health Clubs Pty Limited

RESPONDENT
Randall Pty Limited t/as Monkey Bar Car Park

FILE NUMBER(S):

41220 of 2003

CORAM:

Talbot J

KEY ISSUES:

Costs :- whether claim for costs and expenses incurred in complying with and foreshadowed challenge to subpoena is reasonable.
Practice and Procedure:- subpoena - whether costs and expenses incurred reasonable.

LEGISLATION CITED:

Supreme Court Rules Part 37, Rule 11.

DATES OF HEARING:

31/1/2005

 
DATE OF JUDGMENT: 

02/10/2005

LEGAL REPRESENTATIVES:

APPLICANT
Mr M K Hughes (Solicitor)
SOLICITORS
Bruce Stewart Dimarco

RESPONDENT
Mr P R Clay (Barrister)
SOLICITORS
Moloney Lawyers

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Talbot J

10 February 2005

41220 of 2003 Willoughby City Council v Randall Pty Limited t/as Monkey Bar Car Park

JUDGMENT

1 Talbot J: On 18 November 2004 Randall Pty Limited trading as Monkey Bar Car Park (“the respondent”) caused a subpoena to be issued requiring Space Health Clubs Pty Limited to produce the documents described in the schedule to the subpoena as follows:-

1. All financial records for the business known as Space Health Club, 24 Endeavour Street, Chatswood (“the business”) for the period 1 July 2001 to date.

2. All documents recording the number of members of the business for the period 1 July 2001 to date.

3. Any internal memoranda relating to the operation or the proposed operation known as Living Well Health Club 350 Eastern Valley Way, Willoughby.

For the purposes of this subpoena, financial records means all records, including electronically recorded documents, of the financial transactions of the business including cheque books, deposit books, bank statements, income tax returns, profit and loss statements, balance sheets, budgets, projections and business plans.

2 Time for service of the subpoena was abridged and it was made returnable on 23 November 2004 at 9.00am. 18 November 2004 was a Thursday and 23 November 2004 was a Tuesday, thereby effectively allowing only two full business days for the company to respond.

3 On 23 November 2004 one archive box was produced in response to the documents referred to in paragraphs one and two of the Schedule and three archive boxes were produced in response to paragraph four. No documents were produced in respect of paragraph three.

4 At the return of the subpoena Space Health Clubs Pty Limited appeared through its solicitor and filed a Notice of Motion seeking that the subpoena be wholly set aside or in the alternative that it be set aside in part. Having regard to the production of what appeared to be a significant number of documents, the respondent requested that argument in relation to the Notice of Motion be deferred until such time as the documents had been examined to ascertain whether it would press for the production of further documents. The latter course was not taken and the documents produced on 23 November 2004 have been returned to Space Health Clubs Pty Limited, notwithstanding that the proceedings remain part heard.

5 Mr Clay, who appears for the respondent, relies upon an affidavit sworn by Michiel Nicholas Smuts, the Chief Executive Officer (“CEO”) of Space Health Clubs Pty Limited, filed in support of the applicant Council’s case to justify the issue of the subpoena. The CEO had referred to generous child-minding facilities for members, the use of which could be detrimentally affected if the utilisation of the car park by the respondent, in the manner complained of by the Council, continues. Furthermore, he asserted there had been a loss of membership of the club attributable to the change in operation of the car park.

6 The issue of setting aside the subpoena is no longer pressed. However, Space Health Clubs Pty Limited is seeking an order for costs in relation to its Notice of Motion and the attendance of its solicitor on the return of the subpoena and advice in connection therewith, as well as the expense incurred by the company in complying with the subpoena.

7 Pursuant to Part 37, Rule 11 of the Supreme Court Rules, which applies to proceedings in this Court, the Court may order the issuing party to pay the amount of any reasonable loss or expense incurred in complying with a subpoena.

8 There is no dispute between the parties that the Court may order the payment of an allowance for the time and expenses incurred in dealing with subpoena as well as the cost of legal advice reasonably incurred, assessed on a solicitor – client basis. The issue to be resolved is whether the amount claimed by Space Health Clubs Pty Limited on both accounts is reasonable in the circumstances.

9 In relation to the internal costs the respondent accepts the rate of charge for time involved, but challenges the duration of the time and the status of the employee engaged having regard to the nature of the task. Furthermore, Mr Clay challenges the quantum of legal costs incurred and questions the necessity for the preparation and filing of the Notice of Motion.

10 In an affidavit sworn on 22 November 2004 Leigh Warren Drake, the Finance Manager of Space Health Clubs Pty Limited, outlined the method of record keeping and location of the records referred to in the subpoena. He then made the following observation:-

In order to locate, identify, review and print all of the documents required by paragraph 1 of the Schedule to the Subpoena (as amended), I estimate that it would take at least two days and possible (sic) three days or more doing nothing than other than locating, identifying, reviewing and printing the documents called for.
However, it is not possible for me to do this as I have other responsibilities which will also require my attention at the same time as searching for the large volume of material required by the Subpoena. The responsibilities that I have and the operations of the business make it impossible for me to focus only on the process of gathering documents and I estimate that it would actually take approximately one week to obtain the material required by paragraph 1 of the Schedule to the Subpoena, as amended.

11 He was unable to make an accurate estimate of the time required to produce documents and to record the number of members. He also raised objection to the production of the child-minding register on the basis of the company’s obligation to maintain the privacy of the information contained therein. Mr Drake spent 14 hours searching for and obtaining documents and a further hour was spent attending Court. A separate claim has been lodged in respect of the time spent by the CEO searching, reviewing, sorting and collating documents as well as attendance on the company’s solicitors to give instructions. Time spent by the CEO in this respect was seven hours. The cost of the time spent by Mr Drake is calculated at the rate of $59.56 per hour by reference to salary plus on costs of superannuation, payroll tax and workers’ compensation insurance. Using a similar formula the cost of the time spent by the CEO has been calculated at the rate of $112.03 per hour.

12 An itemised schedule of legal costs has been provided to support a claim for $7,190. The rate charged for the time the solicitors were engaged is not challenged but Mr Clay submits that a significant part of the work was in the circumstances unnecessary and therefore the amount does not represent a reasonable expense incurred in complying with the subpoena as contemplated by Part 37, Rule 11.

13 The parties agree that I should assess the costs and expenses on a global basis after considering the demands of the subpoena and the respective itemised schedules of the costs and expenses incurred. The Court is therefore left to make its own judgement after having regard to the whole of the evidence provided in support of the claim by Space Health Clubs Pty Limited and a responsive affidavit by the solicitor representing the respondent.

14 The submissions made by Mr Clay embrace a question of whether the actual production of documents belies the claim that the company was entitled to have the subpoena set aside and that until the morning of the hearing the only indication given to the respondent was that an application would be made to set aside the subpoena. In response to that indication the solicitors for the respondent amended the ambit of the category of documents the company was required to produce. Subsequently, after production of documents on 23 November 2004 the respondent’s solicitor advised the solicitor for Space Health Clubs Pty Limited that no further documents were required in answer to the subpoena.

The assessment

15 In the absence of evidence to the contrary, and without the benefit of cross examination of witnesses, the Court is placed in a position where it must make an informed but arbitrary assessment based upon its own judgement of what is reasonable in the circumstances.

16 In the light of the limited time allowed for searching, checking, collating and other preparation for production of documents it was in my view reasonable for the company to seek the urgent advice of its solicitors. Furthermore, I am not persuaded that the company was unreasonable to engage more than one of its officers to carry out the tasks, nor that it should have left the task to an employee of comparatively junior rank to the CEO. Based on the evidence before me, the nature of the documents required an intensive search and in many respects related to sensitive matters in respect of the conduct of the company’s business and personal details of its customers. Accordingly, the time spent discovering and producing the documents and conferring with the company’s solicitors was in my opinion justified and accordingly the claim for the internal expenses in that respect requires no adjustment.

17 The rate of charge by the solicitors ranges from $4.66 per minute up to $6.25 per minute according to the seniority of the solicitor involved. This equates to $280 per hour and $375 per hour respectively. I am prepared to accept, there being no evidence to the contrary, that these rates are in accordance with current practice. However, there is some substance in the argument put by Mr Clay that a more practical approach could have been taken by the solicitors by explaining to the respondent the difficulties involved with strict compliance, the extent to which compliance could be achieved in the time and whether production of documents as far as practicable would be acceptable on the basis that consideration of whether further production was required could be deferred until those documents that could be made available had been inspected.

18 The unilateral decision to take pre-emptive action to set aside the subpoena in circumstances where the client was in the process of identifying and searching for the documents that answered the description in the Schedule to the Subpoena in my opinion, was not justified. The evidence is that costs were incurred drafting the form of the Notice of Motion in the initial stages and before contact had been made with the solicitors acting for the respondent. A tactical resistance was envisaged, reinforced by collaboration with the solicitors acting for the applicant. That the company had an interest in the outcome of the proceedings is evident from the contents of the affidavit sworn in support of the applicant Council’s case by the CEO. As a consequence it is my view that steps were taken by the solicitors which in other circumstances would not have been considered necessary.

19 Legal expenses incurred subsequent to 23 November 2004 are generally reasonable as they appear to relate to the outstanding issue of costs. The company was entitled to instruct its solicitors to pursue the claim for costs by preparing evidence in support thereof and appearing at the hearing on 31 January 2005. It has not been totally successful in that claim.

20 Taking all of the above matters into account and making an appropriate allowance for those charges, which in my opinion were not costs incurred reasonably for the purpose of complying with the subpoena, I assess the legal costs that the respondent should pay in the circumstances at the sum $4,500.

Orders

21 I make the following orders:-

1. The respondent pay the expenses of the Space Health Clubs Pty Limited reasonably incurred in complying with the subpoena in the sum of $1,618.05.

2. The respondent pay the solicitors’ costs reasonably incurred by Space Health Clubs Pty Limited in complying with the subpoena including costs incurred in relation to the making of these orders in the sum of $4,500.

3. The exhibits may be returned.