Y Firm and Sands
[2007] FamCA 1742
•3 May 2007
FAMILY COURT OF AUSTRALIA
| Y FIRM & SANDS | [2007] FamCA 1742 |
| FAMILY LAW – COSTS – compliance with subpoena; objection to subpoena. |
| Family Law Act 1975 (Cth) | |
| Family Law Rules 2004 (Cth) ch 15 | |
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; 118 ALR 248; 28 IPR 561
| APPLICANT: | Y Firm |
| RESPONDENT: | Mr Sands |
| FILE NUMBER: | SYF | 4058 | of | 2003 |
| DATE DELIVERED: | 3 May 2007 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | Loughnan JR |
| HEARING DATE: | 22 March 2007 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr R. Lethbridge SC with Mrs J. Baxter |
SOLICITOR FOR THE APPLICANT: | Y Firm, Office of General Counsel |
| COUNSEL FOR THE RESPONDENT: | Mr M. Broun QC |
SOLICITOR FOR THE RESPONDENT: | Broun Abrahams Burreket, Family Lawyers |
Orders
1.Within 14 days from the date of these orders Mr Sands shall pay to Y Firm the sum of $32,452.66 being Y Firm’s costs of complying with a subpoena issued to Y Firm on 20 October 2006.
2.Mr Sands shall pay the costs of Y Firm of and incidental to the proceedings commenced by the Notice of Objection filed on 19 December 2006, on an indemnity basis, such costs being as agreed or as assessed.
3.The Response to an Application in a Case filed on 20 February 2007 on behalf of Mr Sands is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Y Firm & Sands is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 4058 of 2003
| Y Firm |
Applicant
And
| Mr Sands |
Respondent
REASONS FOR JUDGMENT
Y Firm seeks that the husband pay its costs of complying with and objecting to a subpoena. The husband opposes that order and seeks his costs of the objection and these proceedings.
Applications
By an Application in a Case filed 7 February 2007, Y Firm seeks:
1. An order that pursuant to Pt 15 r 23 of the Family Law Rules 2004 [Mr Sands] pay to [Y Firm] conduct money in the sum of $32,482.66 being [Y Firm’s] costs of complying with a subpoena issued to [Y Firm] on behalf of [Mr Sands] and filed 20 October 2006 (“the subpoena”) a copy of which is annexed and marked with the letter “A”.
2. Alternatively an order that pursuant to Pt 15 r 23(3) of the Family Law Rules 2004 [Mr Sands] pay to [Y Firm] such money for [Y Firm’s] costs of complying with the subpoena as this Honourable Court sees fit.
3. That [Mr Sands] pay to [Y Firm] costs including all costs associated with the relief sought in the “Part F” application filed on 19 December 2006 on an indemnity basis.
4. Such further and other orders as this Honourable Court sees fit.
By a Response to an Application in a Case filed 20 February 2007, the husband seeks:
1. That the Form 2 application in a case filed by [Y Firm] on 7 February 2007 be dismissed.
2. That [Y Firm] pay the applicant husband’s costs associated with the Notice of Objection filed by [Y Firm] on 19 December 2006 and the Form 2 application in a case filed on 7 February 2007.
The evidence
The only sworn evidence was that filed in the case of Y Firm:
Affidavit of Mr M sworn 18 December 2006
Affidavit of Mr M sworn 23 January 2007
Affidavit of Mr M sworn 21 March 2007
Affidavit of Ms F sworn 7 February 2007
Affidavit of Mr D sworn 7 February 2007
The hearing
The hearing was conducted on 22 March 2007. Two of the witnesses were cross-examined: Mr M and Mr D. Senior Counsel for the husband required further time to address the written submissions relied on by Y Firm and the hearing concluded on the basis that any further submissions on behalf of the husband were to be lodged and served within 7 days and any submissions in reply within 7 days thereafter.
The husband’s submissions were received under cover of a letter dated 29 March 2007 and those of Y Firm in reply were provided by email on 13 April 2007.
Issues for determination
Issues for determination are:
Is Y Firm entitled to any further costs arising from the subpoena;
If so, to what extent if any, is Y Firm entitled to charge for work done after the filing of a Notice of Objection on 19 December 2006;
Was the hourly rate paid to Mr D a proper rate;
Were the photocopying charges proper, there apparently being different rates of charge for two lots of copying;
Is the component of charges relating to GST properly claimable.
Chronology
Orders for settlement of property were made in terms agreed between the husband and the wife on 10 September 2003.
Proceedings were later commenced arising out of the earlier property proceedings. I gather that the later proceedings involved an application under section 79A and issues of enforcement. I will refer to those proceedings as the substantive proceedings. They involved the husband and the wife and five other parties. Later X Inc and C Pty Limited were also joined as parties.
On 14 September 2006 leave was granted to the parties in the substantive proceedings to issue subpoenas.
At the request of the husband a subpoena issued to Y Firm on 20 October 2006. The subpoena was served on 23 October 2006 and conduct money of $30 was provided at the time of service. The subpoena required production of the following:
To assist in identifying the documents in the following schedule they arise as the result of [Y Firm] promoting raising funds to commercialise an [process] (“the project”):
1. A Business Plan for the [process] prepared by [Y Firm] or distributed by [Y Firm] on behalf of [H] Pty Ltd or prepared and/or copied to directors of the various corporate parties. The document subpoenaed is Version 2 or later version. Version 2 dated 4 September 2002 and any later version.
2. Any documents or bundles of documents or a promotion package prepared or distributed by [Y Firm] including references to the tax advantages of contributors making an investment in the project, including prospectus, share application, or the documents offered to investors.
3. Any material distributed by [Y Firm] to any prospective contributors in relation to the project.
4. Any correspondence to or from [Y Firm], to or from [Mr Sands], to or from [Mr G].
5. All correspondence between [Y Firm] and Mr [R] relating to [Z] Investments Pty Ltd and/or [N] Pty Ltd. 6. A copy, including photocopy of the signed agreement described as the Exclusive Licence and Distribution Agreement executed in about March 2003 between [C] Pty Ltd, [N] Pty Ltd, [E] Pty Ltd, [T] Pty Ltd, [Z] Investments Ltd, [S] Pty Ltd, [P] Pty Ltd and [L] Investments Pty Ltd.
7.
A Participation Agreement dated 16 April 2003 being both an original Participation Agreement and a Variation Agreement by which {Mr Sands] and [Mr G] would retire from the Participation Agreement and be replaced by [O] Pty Ltd.
8. A copy of the Agreement of 4 August 2004 being a signed copy between [Mr Sands] and Mr [G], and a schedule of people who have contributed or subscribed funds or entered into other arrangements and the amounts subscribed or contributed.
9. A copy of a signed copy of a Sale Agreement believed to have been dated about 18 August 2004 between [Z] Investments Pty Ltd, [C] Pty Ltd, [E] Pty Ltd, [Mr Sands], [Mr G] and [N] Pty Ltd.
10. An executed or signed copy of a Deed between [Mr G], [E] Pty Ltd, [Mr Sands], [W] Limited, [Y Firm] and [O] Pty Ltd believed to have been dated approximately August 2004.
11. A list of subscribers or proposed shareholders or investors and the amount of each in the project.
12. Correspondence, accounts or other documents showing how much money was contributed or collected in relation to the project and to whom that money was paid or accounted for.
13. All correspondence between [Y Firm] and [Z] Investments Pty Ltd including any reference to the Sale Agreement of 18 August 2004 and money to be paid or payable pursuant to that agreement to [Mr Sands] or to Mr [G] or [E] Pty Ltd or [C] Pty Ltd.
14. Correspondence or records or diary notes or accounts showing how much money [O] Ltd paid to [N] Pty Ltd for any transactions.
The subpoena was first returnable on 6 November 2006 when the matter was mentioned by consent by Ms Felton on behalf of the husband and the subpoena was adjourned to 4 December 2006.
On 2 November 2006 Y Firm wrote to the husband’s solicitors as follows:
We refer to the Subpoena for Production in the Family Court of Australia proceedings number SYF4058 of 2003, Sydney Registry, filed 20 October 2006, which is returnable on 6 November 2006 at 9.15am (Subpoena).
We make the following comments in respect of the Subpoena:
(a)We are in the process of carrying out the various searches to ascertain what documents [Y Firm] has (if any);
(b)At this stage we believe the requests contained in the Subpoena are wide oppressive and lack particularity. We ask that you specify a date range and describe the documents you require with greater specificity, particularly items 1, 2, 3, 4 and 13;
(c)the persons involved in the matter – the subject of the Subpoena - have since left the Firm. The partner who subsequently looked after the matter has retired. We require his assistance to ensure [Y Firm] properly complies with the Subpoena. The engagement partner’s rate is $350 per hour plus GST. At this stage, we estimate he will spend between twelve and twenty hours reviewing the files. Please let us know whether your client agrees to paying these expenses;
(d)the definition of documents in the Evidence Act 1995 (Cth) includes (but is not limited to) electronically stored documents. To ensure [Y Firm] complies with its obligations under the Subpoena we will need to carry out searches for documents stored electronically. Until we agree on the scope of the requests in the Subpoena, it is not possible to provide you with an accurate estimate of the cost associated with carrying out the electronic searches. We can indicate, however, that [Y Firm] charges $80 per hour per person plus GST to carry out the electronic searches. Please let us know if your client would like electronic searches to be carried out. We will only be able to provide you with an estimate of the costs of the electronic searches once we have reached agreement on the reasonableness of the requests contained in the subpoena.
In the circumstances, [Y Firm] is not able to comply with the Subpoena on or before 6 November 2006. We would be grateful if you could mention our appearance and obtain a further date, say, not before Friday1 December 2006.
In the interim, we look forward to receiving your response to the above and would be grateful if you could inform us of the further return date at your earliest convenience.
On 3 November 2006 the husband’s solicitors acknowledged that letter and agreed to mention the matter and have it adjourned. On 8 November 2006 the husband’s solicitors wrote back as follows:
We refer to your letter to this firm dated 2 November 2006.
As to sub-paragraph (b) of the comments made in your letter as to the Subpoena we do not accept that complaint. As to the date range of the documents we will provide the following additional assistance:
(a) As to item 1 of the Subpoena it is obvious enough from the terms of the Subpoena that Version 2 dated 4 September 2002 and any later version of the document is sought. So the timeframe begins from 4 September 2002 and it would be estimated that later versions would be dated prior to December 2003.
(b) The documents described in item 2 of the Subpoena are with respect properly identified and as is clear enough from the Subpoena the date of the documents is not known to the applicant husband who issued subpoena.
(c) In relation to Item 3 any more detailed description of the documents can only be supplied by Y Firm.
(d) In relation to Item 4 the Subpoena is quite specific. Presumably [Y Firm] has some record of correspondence from [Mr Sands] or Mr [G] to [Y Firm] and any correspondence from [Y Firm] to those correspondents. It is also clear that the correspondence from [Mr Sands] and Mr [G] or to those correspondents relates to the efforts of [Y Firm] to raise funds to commercialise a [process], as indicated by the opening paragraph of the Subpoena.
(e) As to Item 13 it is also clear from the opening paragraph of the Subpoena that the relevant period is that during which [Y Firm] were promoting “the project”.
As to your comments in paragraphs (c) and (d) of your letter we do not understand the apparent costs claim since it is made clear in your letter that [Y Firm] does not at this stage know whether it has any documents for production at all.
Further to those claims as to costs we note that the issue must be the actual cost to which [Y Firm] claim to be indemnified. The decision of Lea v Lea (1990) FLC 992-172 makes it clear that an application for costs of answering a subpoena is to be made after the documents have been brought to Court, but that it is to be noted that a claim for time by the solicitor does not include profit costs (see page 78,175).
We look forward to your response.
On 17 November 2006 Y Firm wrote back:
We make the following comments in respect of your response.
(a) in respect of item 1 of the Subpoena, if you are unable to detail with specificity the documents sought, we will be unable to comply with the Subpoena. The terms of the Subpoena lack particularity and if your client cannot clarify the documents they seek then clearly the Subpoena should be set aside. Please specify the documents sought.
(b) in respect of the documents described in item 2 of the Subpoena, if your client cannot properly identify the documents sought, then the Subpoena may be viewed as a “fishing expedition” in which case we are not required to comply with this request.
(c) in respect of item 3 of the Subpoena, if you are not able to provide any more detailed description of the documents required, we understand that the Subpoena may be viewed as a “fishing expedition” as indicated in the paragraph above.
(d) In relation to item 4 of the Subpoena, we will begin our searches for the wide range of correspondence requested. Given your agreement that our system may contain electronic records, we assume you agree to the charges per hour per person as specified in our previous letter and will proceed on that basis unless we are advised to the contrary within forty-eight (48) hours.
(e) In relation to item 13 of the Subpoena, while you have noted that the relevant period is that during which [Y Firm] were allegedly promoting “the project”, we require greater specificity of the documents required under this item in order to properly comply with the Subpoena. If you are unable to provide details with any greater specificity as to the documents required under this item, we understand that this request may be viewed as a “fishing expedition”, and that we will not be able to comply with this request.
We reiterate our previous request for particularity on the documents sought. With respect, the response that the terms of the Subpoena “speak for themselves” is an inadequate response. We request specificity on the documents requested, failing which we take the view that the Subpoena is a “fishing expedition” and should be set aside. We await a full and proper response.
With respect your comments in relation to paragraphs (c) and (d) of our letter dated 2 November 2006, the issue of whether or not we have documents for production is irrelevant to our costs that will be incurred to comply with the terms of the Subpoena. We seek a positive undertaking that your client will meet our costs in complying with the terms of the Subpoena. If we do not receive such confirmation we will understand that you do not intend to meet our reasonable costs of complying with the Subpoena and will accordingly approach the court for orders that your client provide such an undertaking to meet our costs of compliance.
Please note that if this matter becomes the subject of a Notice of Motion, we intend to draw this letter to the attention of the court and seek an order for the costs of the application to be paid by your client on an indemnity basis.
The decision in Owners Strata Plan 58577 v Banmor Developments Finance Pty Ltd – BC200602015 [9 March 2006] considers the obligation of the issuing party of a subpoena to meet the reasonable costs that the recipient of the subpoena incurs in complying with the subpoena:
“It is a fundamental requirement of any person who serves a subpoena that they pay not only conduct money, but also the amount required by Part 33 Rule 11 Uniform Civil Procedure Rules, namely, the amount of any reasonable loss or expenses incurred in complying with the subpoena. It is unacceptable to exercise the court’s power for someone who has issued a subpoena and is met with a reasonable request for payment as the price of complying with the subpoena, to say that they will pay the amount of conduct money they think is appropriate and leave the recipient of the subpoena to come to court and seek more if they want more”
Campbell J
Clearly your client has a legal obligation to meet our costs of complying with the terms of the Subpoena. We require your client’s confirmation that they will meet our costs of compliance. Please note that your client’s delays and refusal to properly particularise the documents sought is prejudicing our ability to comply with the date for production of documents.
We look forward to receiving your response so that we may properly comply with the Subpoena.
On 30 November 2006 the husband’s solicitors wrote:
We refer to your letter dated 17 November 2006 in relation to the Subpoena directed to [Y Firm] filed on 20 October 2006 in the Family Court of Australia.
The Subpoena and our subsequent letter dated 8 November 2006 particularise the documents sought with sufficient specificity. We deny your allegation that the Subpoena may be viewed as a fishing expedition.
We note to date a Notice of Objection to the subpoena has not been filed.
Please comply with the Subpoena and produce documents held by [Y Firm] as sought.
We note this matter is listed for return of Subpoena on Monday, 4 December 2006 at 9.15am. Any argument as to your costs of complying with the Subpoena can be heard by the Registrar on this date.
On 1 December 2006 Y Firm wrote:
We refer to your letter dated 30 November 2006 in respect of the above Subpoena for Production served on [Y Firm] (“Subpoena”).
We note that we wrote to you on 17 November 2006 seeking clarification on the documents sought. We received your letter in response today, being 1 December 2006. We note your client requests the production of an extremely wide range of documents under the Subpoena. In the circumstances given the late reply to our correspondence, we will not be able to comply with the return date of 4 December 2006.
We are currently seeking advice from Counsel in respect of the terms of the Subpoena. We are willing to offer to mention your appearance on 4 December 2006 and request that the matter be stood over for two weeks, subject to the possibility of a Notice of Objection or Notice of Motion being filed in the interim, in relation to the Subpoena.
Please advise if you would like us to mention your appearance on Monday, 4 December 2006.
On 1 December 2006 the solicitors for the husband wrote back consenting to that course.
On 4 December 2006 the matter was mentioned by consent by Mrs Baxter of counsel for Y Firm and was adjourned to 19 December 2006.
On 15 December 2006 Y Firm wrote to the solicitors for the husband as follows:
We refer to the above Subpoena for Production served on [Y Firm] (“Subpoena”). We note the Subpoena has been allocated a further return date on 19 December 2006, at 9.15 am (“Further Return date”).
We confirm we intend to comply with the Further Return Date. We are currently continuing the ongoing process of attempting to retrieve the documents which may be able to be produced in respect of the Subpoena. As previously indicated in our correspondence, we will also be putting on a Notice of Objection in respect of the documents requested. We note the items previously identified in our correspondence, as requiring greater particularity, will be the subject of our Notice of Objection.
In order to assist us in our ongoing efforts to comply with the Subpoena, can you please advise:
(a) whether [Z] Investments Pty Ltd and/or [E] Pty Ltd are parties to the proceedings;
(b) the relationship of [QS] to the proceedings;
(c) the relationship of [XS] to the proceedings; and
(d) the relationship of [PS] to the proceedings;
We look forward to receiving your prompt response to the above queries.
On 15 December 2006 the solicitors for the husband wrote back as follows:
We refer to your letter dated 15 December 2006 in relation to the Subpoena now returnable on 19 December 2006.
In relation to your request for further information we respond as follows:
(a) [Z] Investments Pty Ltd is the Fifth Respondent in these proceedings and [E] Pty Ltd is the Fourth Respondent in these proceedings.
(b) We do not know who [QS] is.
(c) [XS] is the Respondent Husband [Mr Sands] in these proceedings.
(d) [PS] is [Ms Sands], the Applicant Wife in these proceedings
Notwithstanding that response, it was later conceded that QS is Ms Q Sands, the husband’s second wife and the second respondent in the substantive proceedings.
On 19 December 2006 Mr Broun QC appeared for the husband and Mrs Baxter, of counsel for Y Firm. Documents were produced in Court by Y Firm and leave was granted for those documents to be inspected. A Notice of Objection was filed by Y Firm. The matter was adjourned to 24 January 2007.The annexure to the Notice of Objection contained the following:
Annexure A to Part F - Notice of Objection
In the Matter of [Mr Sands] v [Ms Sands] SYG 4058/2003
Notice of Objection
18 December 2006
Per rule 15.26 and per rule of 15.31 of the Family Law Rules 2004 the subpoenaed party [Y Firm] seeks to set aside in part the subpoena annexed herein and objects to production and inspection / copying in part on the following basis, adopting the same numbering in the Schedule. Due to the matters set out in the supporting affidavit (s) the searches undertaken by [Y Firm] to date have not included full electronic searches or a full perusal of files held by “[Y Firm] Law”
Accordingly [Y Firm] seeks:-
a) further time to carry out the said searches and enquiries; and
b) an undertaking from the Applicant or the Applicant’s solicitors that [Y Firm] will be reimbursed for all reasonable costs and expenses incurred by [Y Firm] for the said searches and enquiries carried out and to be carried out
1. With respect to the documents sought by the Applicant in paragraph 1 [Y Firm] objects:-
a. to the production of the documents sought on the grounds of a lack of apparent relevance
b. to the inspection / copying of any documents that must be produced on the grounds that the documents contain or may contain confidential and commercially sensitive information
2. With respect to the documents sought by the Applicant in paragraph 2 [Y Firm] objects:-
a. to the production of the documents sought on the grounds of:-
i. the request is oppressively wide; and
ii. a lack of apparent relevance
b. to the inspection / copying of any documents that must be produced on the grounds that the documents contain or may contain confidential and commercially sensitive information; save for those documents that are in the public domain
3. With respect to the documents sought by the Applicant in paragraph 3 [Y Firm] objects:-
a. to the production of the documents sought on the grounds of:-
i. the request is oppressively wide; and
ii. a lack of apparent relevance
b. to the inspection / copying of any documents that must be produced on the grounds that the documents contain or may contain confidential and commercially sensitive information
4. With respect to the documents sought by the Applicant in paragraph 4 [Y Firm] objects:-
a. to the production of the documents sought on the grounds of:-
i. the request is oppressively wide; and
ii. with respect to the correspondence to or from [Mr G], a lack of apparent relevance
b. to the inspection / copying of any documents that must be produced on the grounds that the documents contain or may contain confidential and commercially sensitive information
5. With respect to the documents sought by the Applicant in paragraph 5 [Y Firm] objects:-
a. to the production of the documents sought on the grounds of:-
i. the request is oppressively wide; and
ii. a lack of apparent relevance
b. to the inspection / copying of any documents that must be produced on the grounds that the documents contain or may contain or may confidential and commercially sensitive information
6. With respect to the documents sought by the Applicant in paragraph 6 [Y Firm] objects to the production of the documents sought on the grounds of a lack of apparent relevance however says further that [Y Firm] has no documents to produce per the searches carried out to date
7. With respect to the documents sought by the Applicant in paragraph 7 [Y Firm] is producing documents found per the searches carried out to date but objects to the inspecting or copying of any documents that must be produced on the grounds that the documents contains confidential and commercially sensitive information
8. With respect to the documents sought by the Applicant in paragraph 8 [Y Firm] has no documents to produce per the searches carried out to date
9. With respect to the documents sought by the Applicant in paragraph 9 [Y Firm] has no documents to produce per the searches carried out to date
10. With respect to the documents sought by the Applicant in paragraph 10 [Y Firm] has no documents to produce per the searches carried out to date
11. With respect to the documents sought by the Applicant in paragraph 11 [Y Firm] is producing documents found per the searches carried out to date but objects to the inspecting or copying of any documents that must be produced on the grounds that the documents contains confidential information
12. With respect to the documents sought by the Applicant in paragraph 12 [Y Firm] has no documents to produce per the searches carried out to date
13. With respect to the documents sought by the Applicant in paragraph 13 [Y Firm] has no documents to produce per the searches carried out to date
14. With respect to the documents sought by the Applicant in paragraph 14 [Y Firm] objects:-
a. to the production of the documents sought on the grounds of:-
i. the request is oppressively wide; and
ii. a lack of apparent relevance
b. to the inspection / copying of any documents that must be produced on the grounds that the documents contain or may contain or may confidential and commercially sensitive information
15. Further or alternatively [Y Firm] says that to the extent that the subpoena effectively seeks discovery against [Y Firm], a non-party to the proceedings, the paragraphs in the subpoena objected to by [Y Firm] should be set aside
16. Further or alternatively [Y Firm] says the subpoena should be set aside in part as an abuse of process
17. Further or alternatively [Y Firm] says the subpoena should be set aside on the basis that the Applicant failed to comply with Rule 15.28 of the Family Law Rules 2004 and failed serve with the subpoena a copy of a brochure styled “Subpoena (Information for Named Person)”
Application for Conduct Money
18. Further [Y Firm] says that given the scope of documents sought it ought to have been apparent to the Applicant and / or the Applicant’s solicitors that conduct money in the sum of $30.00 did not constitute a reasonable sum of conduct money which amount was the amount received
19. [Y Firm] says that [Y Firm] is entitled to be provided with a reasonable sum by way of conduct money with liberty to further apply to this Honourable Court for an indemnity from the Applicant for all reasonably incurred expenses associated with complying with the subpoena
On 8 January 2007 Y Firm wrote to the husband’s solicitors seeking a copy of any application or form indicating that the documents sought in the subpoena “are relevant to a particular matter in issue”.
On 10 January 2007 Y Firm emailed an offer to host a meeting in relation to the subpoena on 17th or 18th January 2007 at their offices. On 11th January the husband’s solicitors emailed acceptance on behalf of the husband’s solicitor and counsel for a meeting at Y Firm on 17th January 2007.
On 16 January 2007 the husband’s solicitors sent a letter by facsimile transmission to Y Firm. Omitting the formal parts that letter provides:
We refer to the above matter and in view of the claims that [Y Firm] have indicated are the expected costs of answering the Subpoena issued on behalf of our client we are instructed as to the following:
1. No further documents will be called for in respect of the subpoena other than the documents already produced by [Y Firm];
2. Our client will oppose any application by [Y Firm] for costs incurred, if any, in respect of the documents produced;
3. That the previous directions made by Registrar Cameron in the Family Court of Australia as to photocopying and confidentiality are to continue in relation to the documents already produced.
On 24 January 2007 a Registrar gave leave to the parties to obtain a hearing date (the estimated hearing time being half a day) in relation to the issue of the costs of the subpoena. As a result the matter was listed for hearing for half a day on 22 March 2007. [Y Firm] was ordered to file and serve any further material in support of its application for costs within 14 days of 24 January and the husband was to file a Response and any material in support within a further 14 days thereafter.
On 1 March 2007 orders were made by consent in the substantive proceedings which had the effect, among other things, of vacating the operative provisions of the orders for settlement of property made on 10 September 2003 and making new orders for settlement of property. That is to say, the substantive proceedings were finalised by agreement.
Credit and Submissions
The evidence of the witnesses
The only witnesses called for cross-examination were Mr M, legal counsel with Y Firm and Mr D, a consultant accountant.
No issues of credit arise in the proceedings. Neither witness resiled from his written testimony.
Submissions
In the spirit of the entire proceedings, there were four lots of written submissions.
On behalf of the husband the initial submissions, both written and oral were to the following effect:
1. [Y Firm] only ever produced 3 documents.
2. “It is of course a known tactic of defeating a subpoena by asserting an exorbitant amount of costs to be incurred to discourage the party who issued the subpoena from pursing their rights to inspect documents.”
3. “The allegations of extraordinary costs which would be incurred in relation to compliance with the subpoena must raise a concern whether the actions of [Y Firm] was really an attempt to pervert the course of justice by preventing the presentation to the Court of informative documents relevant to the issues in the proceedings.”
4. Some work was claimed (Mr [D] preparing bills and some photocopying) after the subpoena was withdrawn.
5. The photocopying charges are covered by two invoices. The invoice of 15 January 2007 relates to 3,450 pages and was $598.50 being $288 for labour and $310.50 for printing. The invoice of 22 January 2007 was for $958.86 and does not show a number of pages. It is submitted that by reference to the charges in the first invoice, the second bill would extrapolate out to 5,640 pages.
6. There was no need for [Y Firm] to undertake company searches, all they had to do was search their own records.
7. Mr [D’s] hourly rate of $350 is more than the Family Law Rules scale rate and inappropriate.
8. Mr [D’s] charges for travelling to and from the offices of [Y Firm] should not be allowed.
9. As a former tax partner Mr [D’s] expertise was not required in searching for documents or in relation to confidentiality issues.
10. Confidentiality concerns could adequately be dealt with by a restriction on photocopy access.
11. Because only three documents were produced the claim for costs must be very small.
12. The husband’s solicitors responded promptly and appropriately to [Y Firm’s] request for information about the proceedings.
13. No work should have been undertaken by [Y Firm] after it lodged the Notice of Objection.
The submissions made on behalf of Y Firm in response are to the following effect:
1. There are two matters of dispute – the entitlement of [Y Firm] to the costs of applying to set aside the subpoena and the entitlement of that firm to the costs and expenses incurred in complying with or taking steps to comply with the subpoena.
2. As to the first issue dealing with the costs of the Notice of Objection, because the subpoena was withdrawn, costs should follow the event. It is submitted that there is no probative evidence as to the real reason for the withdrawal. The Court is entitled to infer that the reasons were the settlement of the substantive proceedings and the merit of the contentions outlined in the Notice of Objection.
3. As to the costs of compliance it is submitted that [Y Firm], being a stranger to the substantive proceedings is entitled to its costs and it is just a question of quantum. The husband says the claim is excessive but it is submitted that a claim of this magnitude is not unknown. [Y Firm] takes extreme umbrage at a suggestion in the husband’s submission of an intention by [Y Firm] to defeat the subpoena by asserting exorbitant costs of compliance or to pervert the course of justice by restricting a court’s access to relevant documents. In that context it is submitted that [Y Firm] attempted to refine the categories of documents sought and offered to host a meeting to resolve the problems and that those offers were generally rejected.
4. It is noted that some documents were produced and the costs claimed relate, to an undefined extent, to that production.
5. A subpoena to a third party should give sufficient detail to enable relevant documents to be identified.
6. [Y Firm] properly sought advice as to confidentiality and privilege.
7. The husband’s subpoena was more like a demand for discovery.
8. It was necessary and appropriate for [Y Firm] to retain the services of Mr [D]. Although he had left the firm, he was familiar with the transactions and documents. In circumstances where requests for access to applications and affidavits in the substantive proceedings were refused extensive searches were needed to explore the potential relevance of [Y Firm’s] documents. Mr [D] was only retained after other options were explored. If in house counsel or partners had done the work it would have been more expensive.
9. Mr [D’s] charges were incurred as a disbursement by [Y Firm].
10. [Y Firm] is entitled to charge for work done in attempting to comply with the subpoena, not just the costs of compliance.
11. [Y Firm] should not bear any costs arising from service of the subpoena.
On behalf of the husband the submissions in reply were as follows:
1. The estimate of time was at 12-20 hours and yet the final charge is for 80 hours and some warning should have been given. If the analogy with a solicitor’s charges is taken up then [Y Firm] should have given full notice to the husband as to what he was letting himself in for.
2. The husband thought about the estimates and with some delay due to the time of year, withdrew the subpoena on 16th January 2007.
3. As a matter of fairness [Y Firm] cannot now charge for 80 hours work when the husband had no real opportunity to pull out. The most [Y Firm] can charge for is 20 hours.
4. $350 per hour was an arbitrary rate of charge and the most [Y Firm] can charge is the scale rate for solicitors under the Family Law Rules - $192.90 per hour. The husband never agreed to Mr [D’s] rate.
5. [Y Firm] have input credits to claim against Mr [D’s] GST charge and therefore 10% should come off his charges.
6. There was no need for three copies of each document. The copy for the Court is proper but further copies for [Y Firm] and their barrister were not proper claims. Therefore the charge for copying should be reduced to one copy of each document.
On behalf of Y Firm there were final submissions in reply as follows:
1. [Y Firm] was under no obligation to provide an estimate of cost of compliance.
2. The husband sought no estimate of costs.
3. The husband was not a client of [Y Firm] and the analogies that are sought to be drawn between solicitor and client are not apposite.
4. It is suggested that it did not take the husband 4 weeks to consider the estimates before he withdrew the subpoena. He withdrew the subpoena because the substantive matter settled.
5. $350 per hour is a proper rate and there is no basis for arbitrarily substituting the scale rate for a solicitor.
6. Mr [D’s] evidence to the effect that $350 is the market rate is unchallenged.
7. The complexity of the issues is reflected in the fact that the husband retained Queens Counsel to argue the costs issue.
8. [Y Firm] rejects the argument about GST and it must be paid.
9. The copies were necessary, the originals being scattered through different records.
10. The company searches were necessary as the subpoena potentially involved a range of corporate entities and [Y Firm] was trying to identify relevant documents.
11. The costs claimed are:
Mr [D] $30,800
Photocopying $1,557.36
Searches $125.30
Less $30 conduct money
12. The questions of the subpoena being objectionable were resolved by its withdrawal.
13. The Notice of Objection did not stay the subpoena.
14. The costs of the Notice should be paid on an indemnity basis. Costs should follow the event.
The approach in proceedings for costs of complying with subpoenas
The claim is made pursuant to R.15.23 of the Family Law Rules 2004. The Rule provides:
Conduct money and witness fees
15.23
(1)A named person is entitled to be paid conduct money by the issuing party at the time of service of the subpoena, of an amount that is:
(a)sufficient to meet the reasonable expenses of complying with the subpoena; and
(b)at least equal to the minimum amount mentioned in Part 1 of Schedule 4.
(2)A named person served with a subpoena to give evidence and a subpoena to give evidence and produce documents is entitled to be paid a witness fee by the issuing party in accordance with Part 2 of Schedule 4, immediately after attending court in compliance with the subpoena.
(3)A named person may apply to be reimbursed if the named person incurs a substantial loss or expense that is greater than the amount of the conduct money or witness fee payable under this rule.
Thus I am to identify the reasonable expenses of Y Firm of complying with the subpoena.
The exercise of discretion
38.Y firm seek a payment of $32,452.66[1]. That is said to be made up as follows:
[1] The application seeks $32,482.66 but it is clear from the final written submissions on behalf of Y Firm that the conduct money in the sum of $30 should be taken off that total.
Mr D$30,800.00
Photocopying $1,557.36
Searches $125.30
$32,482.66
Less
conduct money $30.00
$32,452.66
A subpoena is, in effect, an ex parte order that binds a person or entity to produce documents and or to give evidence, under threat of penalty. As is usually the situation, in this case the addressee was a stranger to the proceedings in which the subpoena issued. Pursuant to Rule 15.23 the addressee (Y Firm in this instance) is entitled to the reasonable expenses of complying with the subpoena. The Rule allows Y Firm to apply to be reimbursed for any substantial loss or expense that is greater than the amount of the conduct money or witness fee payable under the Rule.
I note that a reason for the withdrawal of the subpoena is identified in the letter of the 16 January 2007. The subpoena was withdrawn “in view of the claims that [Y Firm] have indicated are the expected costs of answering the Subpoena”. Although acceptance is not required, in my view that reflects tacit acceptance of the sustainability of the claim for those expenses. The husband would have been advised about the costs for which he could be liable. Why would he be deterred from pursuing compliance with a subpoena by the threat of costs he could not be required to pay?
It is argued on behalf of the husband that he gave assistance to Y Firm when it sought information to assist with the search for documents and that he gave it promptly. Some information was provided but the tenor of the correspondence from the husband’s solicitors was that the subpoena was sufficiently specific. The husband neither provided copies of documents from the substantive proceedings nor meaningful detail of the issues before the Court. That could have been done. For example, the first five paragraphs of the original submissions lodged in these proceedings on behalf of the husband provide a nice summary of those issues. Because they dealt with the background facts I have not included the contents of those paragraphs in these reasons. No such detail was ever provided to Y Firm before the subpoena was withdrawn.
There is no explanation as to why the husband did not initiate a dialogue with Y Firm about the cost of compliance. It was left to Y Firm to seek to narrow the scope of the subpoena and to bring the likely costs of compliance to the attention of the husband.
As to the issues for determination.
Is Y Firm entitled to any further costs arising from the subpoena?
There is no doubt that Y Firm is entitled to further costs.
The subpoena was properly issued and served;
Y Firm has performed substantial work associated with the subpoena;
Y Firm incurred significant expenses in performing that work;
Y Firm has received only the initial payment of $30 in conduct money;
The costs incurred are substantially in excess of the value of that conduct money.
There is no basis for the argument that Y Firm’s claim must be limited to the costs associated solely with the three documents it actually produced. The entitlement under the Rule is to “the reasonable expenses of complying with the subpoena”.
Y Firm was under no obligation to do so but it warned the husband of the likely costs associated with the subpoena and tried to reduce the scope of the task. The steps it took were:
At several points Y Firm wrote to the husband’s solicitors seeking to limit the scope of the subpoena in order to reduce the magnitude (and so the cost) of the task involved;
At several points Y Firm warned the husband’s solicitors as to the basis on which the work associated with the subpoena would be undertaken, the reasons for that basis and the relevant hourly rate of charges;
On 10 January 2007 Y Firm offered to host a meeting with the husband’s lawyers in relation to the subpoena.
If so, to what extent if any, is Y Firm entitled to charge for work done after the filing of a Notice of Objection on 19 December 2006?
The filing of a Notice of Objection is not a relevant event. The filing of a Notice of Objection does not stay the operation of a subpoena.
Rule 15.25 provides:
[r 15.25] r 15.25 Discharge of subpoena obligation
15.25 (1) A subpoena remains in force until the earliest of the following events:(a)the subpoena is complied with;
(b)the issuing party or the court releases the named person from the obligation to comply with the subpoena;
(c)the hearing or trial is concluded.
(2)For paragraph (1)(c), a trial or hearing is concluded when all parties have finished presenting their case.
The husband did not tell Y Firm that he would not further call on the subpoena. Therefore at all times until the subpoena was effectively withdrawn on 16 January 2007, Y Firm was obliged to comply with the subpoena. By the letter of 15 December 2006 the husband was put on notice that Y Firm was working on compliance with the subpoena notwithstanding its intention to object to the subpoena. The letter included:
…
We confirm we intend to comply with the Further Return Date. We are currently continuing the ongoing process of attempting to retrieve the documents which may be able to be produced in respect of the Subpoena. As previously indicated in our correspondence, we will also be putting on a Notice of Objection in respect of the documents requested. ……
If the husband wanted some other outcome, pursuant to Rule 15.25(1)(b) he could have told Y Firm to stop work on the subpoena.
The only thing a Notice of Objection stays is the right to inspect or copy documents produced. Rule 15.31 provides:
[r 15.31] r 15.31 Objection to inspection or copying of document
15.31 (1) This rule applies if the named person, or a person having sufficient interest in a subpoena for production:(a)objects to the production of a document identified in the subpoena; or
(b)objects to a document identified in the subpoena being inspected or copied by any of the parties.
(2)The person must, as soon as practicable after being served with the subpoena and at least 10 days before the court date, give written notice of the objection, or other order sought, in accordance with Part F of Form 14, to:
(a) the Registry Manager;
(b) the named person, if applicable;
(c) the other parties; and
(d) any independent children’s lawyer.(3) A notice under this rule operates as a stay on the operation of the parties' and independent children’s lawyer’s right, under subrule 15.30(4), to inspect and copy a document produced under a subpoena.
Was the hourly rate paid to Mr D a proper rate?
The rationale for having Mr D personally undertake the work of identifying relevant documents is explained in the evidence of Mr M. Mr D handled the relevant files before he retired from the firm. The original project involved a number of people and the documents were scattered in different files. He is familiar with the files. I accept that evidence of Mr M that Mr D was the best person for the job. Given that he had left the firm, there was some inefficiency in having Mr D perform the work, such him being able to charge for travelling. On the other hand his current charges are a little more than one third of his charge out rate while he was with the firm. The net effect is that there was a considerable saving in having Mr D undertake the work. Mr D and Mr M contracted for the rate of $350 per hour plus GST. Mr D fixed the rate after ascertaining that it was a proper rate of charge and Mr M accepted that rate.
Submissions were made to the effect that Mr D was not qualified to pursue the issue of legal professional privilege in relation to documents and that any time spent on issues of confidentiality and on the firm’s internal policy was not necessary. Mr D does not claim to have spent time assessing questions of privilege. In relation to confidentiality he explained and I accept that the firm has obligations to other clients in relation to the information of those clients. He explained that the original project involved several clients. Irrespective of the question of admissibility, there may be obligations to other clients resulting from the subpoena.
Were the photocopying charges proper, there apparently being different rates of charge for two lots of copying?
The evidence about the copying is a little confusing. It transpires that on 14 December 2006 2,449 pages of black and white copying and 83 pages of colour copying were ordered. The invoice issued to the Y Firm Print Room the next day by the copying company was for that copying and associated costs in the total sum of $958.86. It is not clear how many originals were involved. There is evidence elsewhere that Y Firm had three copies made of each document, one to produce, one for counsel and one for the legal branch of Y Firm. However, neither 2,449 nor 83 are divisible by 3. Just to confuse things the relevant job statement from Y Firm describes the work as 958.86 units at $1 per unit. It also says the job was received at 10.53 am on 22 January 2007, was due at 12.55 pm on 22 January 2007 but was shipped at 11.01am on 22 January 2007. This is a relevant issue because there is limited scope for expenses to be claimed if they were incurred after the subpoena was withdrawn. In a letter dated 8 March 2007 to the husband’s solicitors, Y Firm say that 22 January 2007 was the date the invoice was rendered, not the date of the work. Assuming that would be the evidence given on the issue, that seems to be consistent with the documents.
The second claim is under cover of an Y Firm invoice dated 15 January 2007 that claims a total of $598.50 for three copies of 1,150 originals. The claim is said to be made up of $310.50 for materials and $288 for 8 hours of labour.
The question of whether the copied documents fell within one of the 14 categories of documents sought in the subpoena was not the subject of specific challenge. The two lots of charges are calculated differently and that may be because one was conducted in house and the other was farmed out. In any event there is nothing objectionable about the claim or the rate of charge.
As to the need for three copies, the evidence is that the copies were made of flagged pages located in a number of folders. The printing instructions given with one of the orders corroborate that evidence. In those circumstances three copies were needed. It was not going to be practicable for the Court, counsel or the legal department to manage the originals in that form. The withdrawal of the subpoena put to an end any opportunity to actually produce the documents.
In my view the claim is proper.
Is the component of charges relating to GST properly claimable?
It is submitted on behalf of the husband that the claim for GST is not payable. I do not understand this argument. There is no evidence of GST credits that could be claimed against Mr D’s claim. Y Firm reject the proposition. One of the submissions made in the husband’s case is that the scale rate for a solicitor from the Family Law Rules would be a more appropriate rate for Mr D’s work. Putting to one side the applicability of a scale for the work of a solicitor to the work of an accountant, the scale is expressed to be inclusive of GST. Why would the GST be claimable pursuant to the scale and not on Mr D’s hourly rate?
Y Firm are entitled to recover the disbursement, which includes a component for GST.
Conclusion
Y Firm was a stranger to the substantive proceedings. It was served with a subpoena, in effect an ex parte order under threat of penalty. It incurred costs in seeking to comply with the subpoena and those costs exceed the conduct money provided at the time of service. It is entitled to its costs. In my view each of the components of the claim were incurred and in the circumstances of this case constitute reasonable expenses of complying with the subpoena.
The approach in proceedings for costs of proceedings
The issue of costs of proceedings is addressed in s 117 of the Act. It provides:
[s 117] s 117 Costs
117 (1) [Each party bears own costs] Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) [Costs order as court thinks just] If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A) [Considerations relevant] In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
The general position is that parties bear their own costs. These are unusual proceedings in the context of the Family Law Act. So many proceedings under the Act involve a contest between two applicants. That is usually the case in parenting and property proceedings. The dispute here is very different to that. Y Firm was not a party to substantive proceedings. It was an involuntary participant in the proceedings. The general position should not apply.
Going to the components of section 117(2A) - there is no evidence about the financial circumstances of the parties. There is no suggestion that either of the parties was in receipt of legal aid. There was no relevant breach of a court order. The husband was wholly unsuccessful in the proceedings commenced by the Notice of Objection. The other relevant matters are the questions of conduct and of offers of settlement.
As to written offers of settlement there was no offer by either party that could have resulted in a final resolution of the controversy. However, on 8 January 2007 Y Firm wrote to the husband’s solicitors seeking a copy of any application or form indicating that the documents sought in the subpoena “are relevant to a particular matter in issue”. On 10 January 2007 Y Firm emailed an offer to host a meeting in relation to the subpoena on 17th or 18th January 2007 at their offices. On 11th January the husband’s solicitors emailed acceptance on behalf of the husband’s solicitor and counsel for a meeting at Y Firm on 17th January 2007. It was Y Firm that continued to seek some compromise in relation to the subpoena.
As to conduct, on 16 January 2007 the husband advised Y Firm that the subpoena would not be further pressed.
As is noted above, by what amounted to the withdrawal of the subpoena, the husband resolved all issues about the propriety of the subpoena. I note that the reason for the withdrawal is identified in the letter of the 16 January 2007. The withdrawal did not relate to the settlement of the substantive proceedings but was “in view of the claims that [Y Firm] have indicated are the expected costs of answering the Subpoena”. The subpoena was withdrawn because Y Firm said, and the husband accepted, that full compliance would be expensive. A costs order is warranted.
It is submitted for Y Firm that the assessment of costs should be on an indemnity basis. No further matters are put in support of that submission. Generally, costs are assessed on a party and party basis, whereby there is a partial indemnity for the recipient of the order geared to costs that were necessary and proper. The Court has power to award costs on a different basis, including on the basis of a full indemnity.
As to circumstances that may justify indemnity costs, in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; 118 ALR 248; 28 IPR 561 Sheppard J noted that the normal basis of the assessment of costs is party and party and noted that there is a discretion to award indemnity costs. His Honour summarised the position as follows at FCR 233; ALR 257; IPR 570:
….
Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152); evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo Holdings Pty Ltd v Keeprite unreported, Fed C of A, French J, WAG55/88, 3 May 1991); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata Developments Pty Ltd v Westpac Banking Corp unreported, Fed C of A, Davies J, G255/91, G654/91, 14 December 1998; BC9203211) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (No 2) (1993) 46 IR 301); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724; Crisp v Keng (unreported, NSW C of A, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry VC in EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59; [1982] 2 All ER 980). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
There are none of those features in the proceedings before me. The husband has suggested that Y Firm sought to frustrate the Court process and engaged in a tactic intended to avoid compliance with the subpoena but those suggestions were made in the course of submissions on costs, not during the proceedings commenced by the Notice of Objection.
At the end of the day Y Firm should be fully indemnified in relation to the costs of the proceedings commenced by the Notice of Objection. It incurred costs in objecting to a subpoena. It was not a party to the substantive proceedings. It made repeated attempts to make compliance easier for it and so, cheaper for the husband. It was not greatly assisted in those attempts by the husband. The husband was wholly unsuccessful in the proceedings in respect of the subpoena. I will order that the husband pay the costs of Y Firm of and incidental to the proceedings commenced by the Notice of Objection filed on 19 December 2006, on an indemnity basis. Such costs to as agreed or as assessed.
I certify that the preceding seventy one (71) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.
Associate:
Date: 3 May 2007
Key Legal Topics
Areas of Law
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Civil Procedure
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Commercial Law
Legal Concepts
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Costs
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Summary Judgment
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Remedies
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