Supreme Court New South Wales Medium Neutral Citation: Frontier Assets Pty Ltd v Fishburn [2011] NSWSC 187 Hearing dates: 21 March 2011 Decision date: 22 March 2011 Before: Harrison J Decision: Parties to bring in short minutes of order to reflect these reasons Catchwords: PRACTICE & PROCEDURE - subpoenas - UCPR 33.11 - entitlement of third party to claim loss and expense incurred in complying with subpoena Legislation Cited: Civil Procedure Act 2005 Uniform Civil Procedure Rules Cases Cited: Danieletto v Khera (1995) 35 NSWLR 684 J Aron Corporation Pty Ltd v Newmont Yandal Operations Pty Ltd [2005] NSWSC 1280 Marsden v Amalgamated Television Services Pty Ltd [2001] NSWSC 77 Category: Procedural and other rulings Parties: Frontier Assets Pty Ltd (Plaintiff) Michael George Fishburn (First Defendant) John James Watson (Second Defendant) Christopher Martin O'Brien (Third Defendant) Sam Couper (Fourth Defendant) Stephen Campbell (Fifth Defendant) Michael Bigelow (Sixth Defendant) Todd Ritchie (Seventh Defendant) Bernard Coles QC (Eighth Defendant) Representation: Counsel: G George (Plaintiff) I R Pike (Applicant) Solicitors: Kalfus Legal (Plaintiff) Gilbert + Tobin (Applicant) File Number(s): 2008/289361 Judgment 1HIS HONOUR : On 12 November 2010 William Paul Renton Wavish sought orders by notice of motion filed that day in these terms: 1. The subpoena issued at the request of the plaintiff to William Paul Renton Wavish dated 13 October 2010 be set aside. 2. The plaintiff pay Mr Wavish's costs of and incidental to this motion on an indemnity basis. 3. Such further order as the Court sees fit. 2When the matter came before me, counsel for Mr Wavish sought to file in Court and to rely upon an amended notice of motion in substantially different terms. It sought orders as follows: 1. The plaintiff pay Mr Wavish's costs of and incidental to this motion (Including his costs of and incidental to the subpoena issued at the request of the plaintiff to Mr Wavish dated 13 October 2010) on an indemnity basis in the amount of $84,179.87, or alternatively as assessed or agreed. 2. The plaintiff pay Mr Wavish's costs of and incidental to the subpoena issued to Mr Wavish's former solicitors Djekovic Hearne Walker by the plaintiff on 13 October 2010 in the amount of $15,418, or alternatively as assessed or agreed. 3It will be apparent that the difference was that the amended notice of motion sought the costs of compliance with the subpoenas, whereas the original notice of motion only (on the plaintiff's argument) sought the costs of the motion to set aside the subpoena issued to Mr Wavish. That motion was ultimately settled on 11 February 2011 when the subpoena was set aside by consent. The costs issue remains. 4The plaintiff at first opposed the filing of the amended notice of motion on two principal grounds. First, that Mr Wavish sought to have me determine the amount of the costs pursuant to UCPR 33.11 and that even though notice had been given of an intention to do so, the amount of the claim for these costs had increased from $75,961.05 as referred to in Mr Wavish's written submissions filed on 8 March 2011, so that the plaintiff was to that extent taken by surprise. Secondly, that the second prayer for relief was fundamentally misconceived in that the Court did not have power to make such an order, so that the application to amend was futile. 5By agreement between the parties following a useful discussion between counsel and me, the first issue dissipated. Mr George of counsel for the plaintiff indicated that he accepted that Mr Wavish was entitled to his reasonable costs of complying with the subpoena and, provided that I was not asked to fix the amount of the costs in a specified amount pursuant to UCPR 33.11, but that I instead direct the costs be fixed in accordance with the Court's usual procedure in relation to costs, he was content for the quantum of the costs claimed to be referred to a costs assessor in accordance with the rules. In those circumstances Mr Pike of counsel for Mr Wavish did not press for me to fix the amount of those costs and they are now to be referred to Ms Vine-Hall in a fashion that will be reflected in a consent order, which I will in due course be asked to make. 6The second issue remains to be determined by me. By way of background, Mr Wavish was at one time sued as the guarantor of a transaction entered into by the plaintiff for the sale of a property that it owned at Byron Bay. The purchaser defaulted and the contract went off. The plaintiff commenced proceedings for the recovery of the (unpaid) deposit but did not sue for loss of the bargain. It settled those proceedings, including an order made by consent that Mr Wavish pay the unpaid deposit in his capacity as a guarantor. (As a matter of coincidence, the professional indemnity insurer of his own solicitors in the original transaction met Mr Wavish's liability to the plaintiff in accordance with the settlement). The plaintiff commenced the present proceedings against its former legal representatives for negligence claiming that it had a claim for loss of the difference between the market price and the contract price of the land, for which the legal representatives negligently had made no claim in the original proceedings. Once the original proceedings were compromised, the plaintiff's ability to recover such losses from the purchaser or Mr Wavish was gone and its associated loss was crystallised. It issued the subject subpoenas in these proceedings in order to establish, if it could be established, that its claim against Mr Wavish would have been successful, in the sense that he could be shown to have had assets sufficient to meet the plaintiff's theoretical claim against him for damages, so as to be able to demonstrate that the alleged negligence of the solicitors caused the plaintiff to suffer loss. 7As appears above, the plaintiff did not ultimately take issue with the validity of the claim by Mr Wavish for the costs of complying with the subpoena issued to him personally. It does take issue with Mr Wavish's entitlement to the costs associated with compliance with the subpoena issued to his former solicitors. It is accepted that Mr Wavish has paid those costs even though he was not the party obliged by the terms of the subpoena to produce the documents sought or otherwise to respond to it. 8The subpoena is addressed to Milan Djekovic. Without being exhaustive, the subpoena seeks the production of all documents executed by Mr Djekovic as Mr Wavish's attorney, all documents concerning the execution of the original option by Mr Wavish, all documents concerning the proposed purchase of the land by Mr Wavish or his nominee and all documents concerning his execution of the guarantee. No issue arises before me about the width or the appropriateness of that subpoena in the circumstances. 9Mr Wavish instructed Gilbert + Tobin to review the documents referred to in the subpoena with respect to any possible claims for confidentiality or privilege. Gilbert + Tobin did that work. The documents were then provided by Djekovic Hearne Walker including privileged and confidential documents marked accordingly. They issued a bill for their work, which was paid by Mr Wavish. The plaintiff did not challenge in the proceedings the claims concerning the privileged or confidential nature of the documents that were produced. Mr Wavish contends that the documents sought in this subpoena could equally have been sought in the subpoena addressed to him personally. Mr Wavish's submissions 10UCPR 33.11 provides as follows: " 33.11 Costs and expenses of compliance (1) The court may order the issuing party to pay the amount of any reasonable loss or expense incurred in complying with the subpoena. (2) If an order is made under sub-rule (1), the court must fix the amount or direct that it be fixed in accordance with the court's usual procedure in relation to costs. (3) An amount fixed under this rule is separate from and in addition to: (a) any conduct money paid to the addressee, and (b) any witness expenses payable to the addressee." 11The rule does not require that the applicant for costs be the named recipient of the subpoena. The equivalent rule in the former Supreme Court Rules included a requirement that the person seeking to recover the costs of complying with a subpoena was necessarily the named recipient of the subpoena. Mr Wavish contends that the removal, or the absence, from UCPR 33.11 of the words "person named" as it appeared in former Part 37 Rule 9 gives effect to a clear intention to entitle parties other than the named recipient of the subpoena to claim compensation for loss and expenses incurred in complying with it. Mr Wavish submitted that such an approach was supported by judicial comments about the role of the court in ensuring that persons whose attention is required, and whose liberty is interfered with, in connection with the service of a subpoena should be compensated accordingly. See, for example, J Aron Corporation Pty Ltd v Newmont Yandal Operations Pty Ltd [2005] NSWSC 1280. Mr Wavish contended that the clear and unambiguous words of UCPR 33.11(1) made it clear that a party issuing a subpoena may become subject to a court order that it pay the amount of any reasonable loss or expense incurred in complying with the subpoena without limitation upon who the subpoena was issued to or how the loss or expense may have been incurred. 12Mr Wavish also contended that the Court in its inherent jurisdiction had power to order that the reasonable loss or expense incurred by Mr Wavish in complying with the subpoena addressed to his former solicitors, which he has paid or for which he would otherwise have been liable, were recoverable by him even notwithstanding that a subpoena was not addressed to him personally. See Danieletto v Khera (1995) 35 NSWLR 684 at 686-687. 13In support of these submissions Mr Wavish contended that a review by him, or on his behalf, of documents that were the subject of the subpoena issued to his former solicitors was or became a necessary part of discharging the obligations created by the subpoena. Accordingly, Mr Wavish ought to be entitled to recover his costs of doing so. By way of example, Mr Wavish submitted that the issue of a subpoena issued to his former solicitors necessitated the expenditure of costs by him because it was necessary for him to review documents to be produced in response to the subpoena to ensure that his claims for client legal privilege and confidentiality were identified and that appropriate steps to maintain and protect that confidence and privilege were taken. The plaintiff's submissions 14The plaintiff submitted that neither the terms of UCPR 33.11 nor the inherent power of the Court authorised the making of an order in favour of Mr Wavish for the reasonable loss or expense incurred in complying with the subpoena to be paid to Mr Wavish. He was not a party named in the subpoena. He was not liable personally to comply with it. Any sanctions attaching to a failure by a named recipient of a subpoena to comply with its terms were not capable of applying to him. Any reasonable losses or expenses incurred by his former solicitors in complying with the subpoena addressed to them would have been recoverable by them from the plaintiff as the issuing party. Consideration 15I am informed by counsel that there is no authority directly on point, either in favour of the contention that a third party may recover reasonable loss or expense incurred in complying with a subpoena or against it. In forming a view about the meaning and effect of any provision of the rules, such as UCPR 33.11, I am required to seek to give effect to the overriding purpose to facilitate the just, quick and cheap resolution of the real issues in dispute, when exercising any power given to me by the Civil Procedure Act 2005 or by the rules and when I interpret any provision of that Act or any such rule: s 56(2). 16Putting the present matter in that context, it seems to me to be somewhat technical, if not even artificial, to treat Mr Wavish's claim to be compensated for the reasonable loss and expense incurred by his former solicitors of complying with the subpoena as one that he cannot maintain because he is not the named recipient of it. It seems to me that Mr Wavish's involvement in the task of responding to the subpoena was a reasonable product of the terms of the subpoena that was issued. If his involvement in the task of responding to the subpoena was a reasonable product of the terms of the subpoena that was issued, it also seems to me to be reasonable to assume that he would meet the costs incurred by his solicitors. In this case the subpoena was directed, with only minor exceptions, to documents that were clearly referable to Mr Wavish's role and involvement in the relevant transaction: paragraph 10 of the subpoena was in a different category. The documents would appear to have been Mr Wavish's documents even if physically in the care or custody of his former solicitors. They were legally in the control of Mr Wavish. In that sense, I accept the submission that a subpoena addressed or directed to Mr Wavish personally for the same documents would have caught the documents that were physically in the hands of these solicitors. 17It is also not without significance in my opinion that UCPR 33.11 speaks of "loss or expense" rather than costs. The rule anticipates that an issuing party will be liable for the consequences of requiring work to be performed to answer a subpoena, to the end that an order of the Court might be complied with in the better administration of justice, and by implication that any party issuing a subpoena should only do so in the clear knowledge or expectation that any claim for the loss or expense occasioned by compliance with the subpoena will be directed to it. The amount to which the rule relates is expressed by the rule to be separate from conduct money paid to the addressee of the subpoena. More particularly, the expenses that may be compensated for include the cost of legal advice reasonably incurred in obtaining advice in relation to confidentiality and privilege issues concerning the subpoenaed documents: see, for example, Marsden v Amalgamated Television Services Pty Ltd [2001] NSWSC 77. That necessarily involves the need for the recipients of a subpoena, such as that issued in this case, to confer and consult with the real owner of the documents and to take instructions. It is to my mind artificial in the modern era of litigation to exclude a claim for loss or expense incurred by a former client of a firm of solicitors, issued with a subpoena to produce the former client's documents, when that client is necessarily and inevitably, if not at the very least highly likely to be, the ultimate bearer of the cost burden thus created. 18Finally, I consider that a comparison between the present rule and its predecessor indicates a legislative shift from only the limited recovery of "expense or loss" reasonably incurred by the person named in the subpoena, to a wider situation where the obligation of the issuing party to pay the amount of any reasonable "loss or expense" is incurred or undertaken at large. I consider that the Court's inherent power would in any event extend to the making of an order to compensate a person who reasonably incurred loss or expense in order to assist an addressee to comply with a subpoena to produce documents in the legal control of that person, even if UCPR 33.11 itself did not do so in terms. I consider that the rule, however, extends to cover the recovery of loss and expense reasonably incurred by a third party such as Mr Wavish as a result of a subpoena issued to his former solicitors for the production of his documents. Orders 19Because there may be some benefit in hearing further from the parties about the form of the orders that I should make, I will ask them to bring in short minutes to reflect these reasons in due course. ********* DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 March 2011