CATCHNORDS PRACTICE AND PROCEDURE - scope of the expense or loss recoverable under Order 27 Rule 4A - whether legal costs incurred in complying with subpoena fall under Rule - whether such costs should be taxed on solicitor and client basis. Federal Court Rules: Order 27 rule 4A. RESS LIMITED v. L.M. ICSSON PTY. LIMITED WAG 35 of 1986 LOCKHART J. 17 JULY 1987 SYDNEY 18 AUG 1987 FEDERAL COURT AUSTRALIA. On PRiy mais IN_THE NEW SOUTH WALES DISTRICT REGISTRY FFDERAL COURT OF AUSTRALIA NO. WAG 35 of 1986 GENERAL DIVISION BETWEEN: FUELXPRFESS LIMITED Applicant/Cross Respondent AND: L.M. ERICSSON PTY. LIMITFD Respondent /Cross-Claimant JUDGE MAKING ORDER: LOCKHART J. DATE OF ORDER: 17 JULY 1987 WHERF ORDER MADE: SYDNEY MINUTE OF ORDERS THE COURT ORDERS THAT: NOTE: Pursuant to Order 27 Rule 4A the respondent L.M. Ericsson Pty. Limited pay to DMR & Associates Aust. Pty. Limited an amount which is sufficient to compensate it for the expense or loss which it reasonably incurred or lost in complyina with the subpoena issued by the respondent and served on DMP and that the amount shall be fixed by the Court's taxing officer; and The amount so certified by the taxing officer be paid to DMP by the respondent within 21 days after the certificate of taxation has issued. 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 NO. WAG 35 of 1986 www ww GENERAL DIVISION BETWEEN: FUELXPRESS LIMITED Applicant/Cross Respondent AND: L.M. ERICSSON PTY. LIMITED Respondent /Cross-Claimant 17 July 1987 REASONS FOR JUDGMENT LOCKHART J. A subpoena was issued by L.M. Ericsson Pty. Limited ("the respondent") directed to DMR & Associates Aust. Pty. Limited ("DMR") which is not a party to the litigation. The subpoena has been answered this morning. DMR was represented by its solicitor. Farlier this morning I made orders to protect the interests of DMR from disclosure of certain of the documents which it claimed were commercially sensitive and therefore confidential. I also made certain other orders with respect to other documents at the request of Fuelxpress Limited ("the applicant") restricting inspection by the respondent on the basis of the applicant's claim for legal professional privilege. Otherwise the bulk of the documents are to be inspected by both parties. These orders were: l. I make orders in accordance with the short minutes of order initialled by me and placed with the papers. It is an order by consent by both parties and it relates to the inspection 2. of some of the documents produced on subpoena by DMR & Associates Aust. Pty. Limited which are the subject of a claim on its part for confidentiality; In addition to the orders made in the short minutes I order further that the legal advisers of both the applicant and the respondent, who will in fact inspect or who have in fact inspected the documents; treat the documents as confidential and not to disclose the documents, until further order, in whole or in part, to any other persons and to use them only for the purposes of these proceedings; As to the balance of the documents produced under subpoena by DMR, objection 1s taken on behalf of the applicant to the inspection of certain of them by the respondent on the ground of legal professional privilege. This 1s not in issue. Access to these documents 1s, until further order, refused to the respondent; Otherwise the documents produced by DMR may be inspected by both parties; and Other than the documents which have been the subject of a claim for legal professional privilege and those that have been the subject of a claim for confidentiality the documents produced by DMR may be uplifted for copying by either party and returned to the Registry as soon as_ practicable thereafter. 3. A notice of motion has been filed in Court, returnable instanta, by DMR seeking an order, pursuant to Order 27 Rule 4A of this Court's rules, that the respondent pay to PMR the sum of $6,276.77 or, in the alternative, an order pursuant to the same rule that the respondent pay to DMR an amount which is sufficient to compensate it for the expense incurred 1n complying with the subpoena. In support of the motion an affidavit has been filed in court by Mrs. Gourley the solicitor for DMR. Mrs. Gourley, a member of the firm of Messrs. Minter Ellison, solicitors, has the conduct of this matter on behalf of DMR. The claim for costs made by DMR in complying with the subpoena has two essential components: (a) a claim primarily for time spent by various officers of DMR 1n collecting the documents and otherwise ensuring that the subpoena was complied with. Some S1x people appear to have been involved in the task of complying with the subpoena and they range in position and salary from a clerk at $6.08 per hour to senior officers and consultants at $110 per hour. The total claim for time spent is $3,736.77 and a small sum of $90 is claimed additionally for couriers and photocopying; and (b) a claim for $2,450 which are the legal costs of DMR's solicitors for acting and advising 1n relation to compliance with the subpoena. The particular work done has not been specified, although it has been succinctly identified in Mrs. Gourley's affidavit. The solicitor for the respondent has said that his client has no objection to paying the reasonable costs and expenses of DMR for complying with the subpoena but as the matter has only arisen at short notice and the evidence is not elaborate in support of the claim he prefers an order to be made that his client pay to DMR the quantum of costs fixed by a taxing officer. It has not been argued that legal costs do not fall within the scope of the expense or loss that is recoverable under Order 27 Rule 4A. Whether they are in fact recoverable depends, of course, on the circumstances of each case. Where, as in a case like the present, a third party is subpoenaed to produce a large number of documents (some of which are agreed as being confidential and others may raise questions of legal professional privilege) if a third party seeks legal advice with respect to those and other related matters, the cost that advice answers the description of expense or loss incurred by the third party in complying with the subpoena. In principle, therefore, the claim for legal costs is not impermissible. I say nothing about the quantum as I have no knowledge of those matters. The other outstanding question concerns the submission hy Mrs. Gourley on behalf of DMR that the legal costs incurred by her firm in advising and otherwise acting in relation to the subpoena, as well as the costs of and incidental to the preparation of any bill for taxation and attendance on taxation, should be determined by the taxing officer on the basis, not of party and party costs, but solicitor and client costs. 5. The intent of Rule 4A is to compensate a person subpoenaed to produce documents for expense or loss reasonably incurred in complying with the subpoena. It 18 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. In those circumstances I think it is appropriate in this case that the legal costs and expenses incurred by DMR in and about compliance with the subpoena (including its costs of this motion) and in and about the preparation of the bill for taxation and attending to the taxation should be on a solicitor and client basis. Accordingly I order that: 1. pursuant to Order 27 Rule 4A the respondent L.M. Ericsson Pty. Limited pay to DMR & Associates Aust. Pty. Limited an amount which is sufficient to compensate it for the expense or loss which it reasonably incurred or lost in complying with the subpoena issued by the respondent and served on DMR and that the amount shall be fixed by the Court's taxine officer; and nN 6. the amount so certified by the taxing officer be paid to DMP by the respondent within 2] days after the certificate of taxation has issued. I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Lockhart Dated: 17 July 1987 iy Associate