FEDERAL COURT OF AUSTRALIA Cassidy v Nrma Health Pty Ltd [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 Fuelexpress Limited v LM Erickson Pty Limited (1987) 75 ALR 284 followed Mowie Fisheries Ltd v Switzerland Insurance Australia Limited (NG 750 of 1994, 23 July 1996, unreported) referred to BRIAN CASSIDY, CHIEF EXECUTIVE OFFICER OF AUSTRALIAN COMPETITION AND CONSUMER COMMISSION & AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v NRMA HEALTH PTY LIMITED (ACN 075 799 236) & NRMA INSURANCE LIMITED (ACN 000 016 722) & SAATCHI & SAATCHI AUSTRALIA PTY LTD (ACN 001 720 921) 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: BRIAN CASSIDY CHIEF EXECUTIVE OFFICER AUSTRALIAN COMPETITION AND CONSUMER COMMISSION FIRST APPLICANT AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION SECOND APPLICANT AND: NRMA HEALTH PTY LIMITED ACN 075 799 236 FIRST RESPONDENT NRMA INSURANCE LIMITED ACN 000 016 722 FOURTH RESPONDENT SAATCHI & SAATCHI AUSTRALIA PTY LTD ACN 001 720 921 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 NRMA Health Pty Limited and NRMA Insurance Limited 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: BRIAN CASSIDY CHIEF EXECUTIVE OFFICER AUSTRALIAN COMPETITION AND CONSUMER COMMISSION FIRST APPLICANT AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION SECOND APPLICANT AND: NRMA HEALTH PTY LIMITED ACN 075 799 236 FIRST RESPONDENT NRMA INSURANC LIMITED ACN 000 016 722 FOURTH RESPONDENT SAATCHI & SAATCHI AUSTRALIA PTY LTD ACN 001 720 921 FIFTH RESPONDENT JUDGE: JACOBSON J DATE: 3 OCTOBER 2002 PLACE: SYDNEY REASONS FOR JUDGMENT (MOTION FOR COSTS OF COMPLIANCE WITH SUBPOENAS) 1 NRMA Health Pty Limited and NRMA Insurance Limited ("the NRMA companies") 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 NRMA companies were required to obtain legal advice as to the scope of the subpoenas. I was informed that the NRMA companies' solicitors were of the view that the subpoenas were too broad and that significant legal costs were incurred in responding to the subpoenas. 3 The Court 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 NRMA companies 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 NRMA companies. 5 The subpoenas were issued on 25 July 2002. Thus, at the time when the NRMA companies 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 Fuelexpress Limited v LM Erickson Pty Limited (1987) 75 ALR 284, at 286 ("Fuelexpress"), 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 Fuelexpress was followed by Tamberlin J in Mowie Fisheries Ltd v Switzerland Insurance Australia Limited (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 NRMA companies' 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 Fuelexpress 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 NRMA companies 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 NRMA companies 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 NRMA companies 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 NRMA companies 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: Mr S Rares SC and Ms M Painter Solicitor for the Applicant: Australian Government Solicitor Solicitor for the First and Second Respondents Blake Dawson Waldron Counsel for the Fifth Respondent: Mr S Gageler SC Solicitor for the Fifth Respondent: Clayton Utz Date of Hearing: 18 September 2002 Date of Judgment: 3 October 2002