Federal Court Orders Costs for Subpoena Compliance

OUTCOME: Allowed in Part

FEDERAL COURT OF AUSTRALIA

[NAME] v [COMPANY] [2002] FCA 1225 PRACTICE AND PROCEDURE – subpoenas – costs of complying with – whether legal costs recoverable – recovery of costs on solicitor and client basis – Federal Court Rules O 27 r 4A. Federal Court Act 1976 (Cth), s 43 Federal Court Rules O 27 r 4A

[COMPANY] v [COMPANY] (1987) 75 ALR 284 followed [COMPANY] v [COMPANY] (NG 750 of 1994, 23 July 1996, unreported) referred to

[NAME], CHIEF EXECUTIVE OFFICER OF [NAME] COMMISSION & AUSTRALIAN SECURITIES

AND INVESTMENTS COMMISSION v [COMPANY] (ACN [PHONE]) & [COMPANY] (ACN [PHONE]) & [NAME] & [COMPANY] (ACN [PHONE])

N3011 of 2001

JACOBSON J 3 OCTOBER 2002 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 3011 of 2001

BETWEEN: [NAME]

CHIEF [NAME] COMMISSION

FIRST APPLICANT

AUSTRALIAN SECURITIES

AND INVESTMENTS COMMISSION

SECOND APPLICANT

AND: [COMPANY] [PHONE]

FIRST RESPONDENT

[COMPANY] [PHONE]

FOURTH RESPONDENT

[RESPONDENT] & [COMPANY] [PHONE]

FIFTH RESPONDENT

JUDGE: JACOBSON J

DATE OF ORDER: 3 OCTOBER 2002

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The legal costs and expenses incurred by [COMPANY] and [COMPANY] in compliance with the subpoenas, issued on 25 July 2002, be paid by the first and second applicants on a party and party basis. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 3011 of 2001

BETWEEN: [NAME]

CHIEF [NAME] COMMISSION

FIRST APPLICANT

AUSTRALIAN SECURITIES

AND INVESTMENTS COMMISSION

SECOND APPLICANT

AND: [COMPANY] [PHONE]

FIRST RESPONDENT

[COMPANY] [PHONE]

FOURTH RESPONDENT

[RESPONDENT] & [COMPANY] [PHONE]

FIFTH RESPONDENT

JUDGE: JACOBSON J

DATE: 3 OCTOBER 2002

PLACE: SYDNEY

REASONS FOR

JUDGMENT (MOTION FOR COSTS OF COMPLIANCE WITH SUBPOENAS) 1 [COMPANY] and [COMPANY] ("the [NAME]") seek to recover under O 27 r 4A of the Federal Court Rules their legal costs incurred in compliance with subpoenas issued by the applicants. The only issue, which arises, is whether the costs should be ordered on a solicitor and client basis or a party and party basis. 2 No evidence was filed in support of the application but I was informed from the Bar table that the [NAME] were required to obtain legal advice as to the scope of the subpoenas. I was informed that the [NAME]' solicitors were of the view that the subpoenas were too broad and that significant legal costs were incurred in responding to the subpoenas. [ADDRESS] file shows that three directions hearings were held and it seems that the width of the subpoenas was considered at those directions hearings with the result that a relatively small number of documents were produced. 4 Order 27 r 4A provides that where a person named in a subpoena is not a party to the proceedings and incurs expense in compliance with a subpoena, the Court may order the party who issued the subpoena to pay an amount to compensate the person "for such expense or loss as is reasonably incurred or lost by that person in complying with the subpoena." 4 The [NAME] were named as the first and fourth respondents to the proceedings but, on 3 July 2002, consent orders were made for declaratory and injunctive relief against them. The orders also provided for the proceedings to be discontinued against the [NAME]. 5 The subpoenas were issued on 25 July 2002. Thus, at the time when the [NAME] were named in the subpoenas, they were not parties to the proceedings. 6 I have looked at the subpoenas in the Court file. They are very wide but there is no evidence before me as to the amount of the costs, which were incurred, or the legal work, which was carried out. 7 In [COMPANY] v [COMPANY] (1987) 75 ALR 284, at 286 ("[NAME]"), Lockhart J said:- "The intent of r 4A is to compensate a person subpoenaed to produce documents for expense or loss reasonably incurred in complying with the subpoena. It is not the case of a successful party to litigation seeking recovery of costs where the distinction of solicitor and client costs on the one hand and party and party costs on the other is observed by taxing officers. It is a case of a third party seeking compensation for what it has actually cost it in expense or loss in complying with the subpoena." 8 [NAME] was followed by Tamberlin J in [COMPANY] v [COMPANY] (NG 750 of 1994, 23 July 1996, unreported). 9 It therefore seems to me to be clear that if I exercise my discretion under r 4A, the order, which I make, should be for payment of the [NAME]' costs on a solicitor and client basis. 10 However, in the absence of any evidence as to the amount of the costs, which were incurred, or the legal work, which was carried out, it would, in my view, be unsafe to exercise my discretion to make an order under O 27 r 4A. I note that in [NAME] there was evidence of the costs, which had been incurred. Also, Lockhart J noted that the work, which was carried out, had been succinctly identified in an affidavit in support of the motion. 11 Moreover, in my view, I am entitled to take into account the fact that the [NAME] were parties to the proceedings up to 3 July 2002 and that the subpoenas were issued approximately 3 weeks after the discontinuance. 12 It seems to me that the purpose of O 27 r 4A is to compensate strangers to the litigation for their expenses. The [NAME] were not complete strangers because of their involvement prior to the issue of the subpoenas. They could therefore be expected to have had knowledge of the issues and to have been able to make a judgment as to most of the questions that arose as to whether, and if so, what documents were required to be produced without the need to closely consult their solicitors. 13 Accordingly, I do not propose to make an order under O 27 r 4A. Nevertheless, the applicants have agreed to pay the costs of the [NAME] on a party and party basis. I have power to make such an order under s 43 of the Federal Court of Australia Act 1976 (Cth). 14 Accordingly, I propose to order that the legal costs and expenses incurred by the [NAME] in compliance with the subpoenas be paid by the first and second applicants on a party and party basis. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Associate: Dated: 3 October 2002 Counsel for the Applicant: [redacted]

Solicitor for the Applicant: [redacted]

Solicitor for the First and Second Respondents [COUNSEL]

Counsel for the Fifth Respondent: [redacted]

Solicitor for the Fifth Respondent: [redacted]

Date of Judgment: 3 October 2002