Karen Morris v David Trodden t/as David Trodden & Associates Solicitors [2016] NSWSC 873

Supreme Court New South Wales

Medium Neutral Citation: Karen Morris v David Trodden t/as David Trodden & Associates Solicitors [2016] NSWSC 873 Hearing dates: 3 June 2016 Date of orders: 03 June 2016 Decision date: 03 June 2016 Jurisdiction: Common Law Before: Campbell J Decision: (1) Each party to bear its own costs of the notice of motion Catchwords: COSTS– contempt proceedings – where subpoena not complied with – where subpoena onerous and respondent obstructionist– where subsequent agreement between parties as to form and scope Legislation Cited: Uniform Civil Procedure Rules 2005, rr 33.4, 42.1 Cases Cited: Advan Investments Pty Limited v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201 Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; 53 NSWLR 116 Rochfort v Trade Practices Commission [1982] HCA 66; 153 CLR 134 Category: Costs Parties: Karen Morris (Plaintiff/Applicant) Fady Abdullah (Respondent) Representation: Counsel: D C Eardley (Plaintiff/Applicant) R D Marshall (Respondent)

Solicitors: Mercantile Legal (Plaintiff/Applicant) Lander & Rogers (Respondent) File Number(s): 2014/00123641

Judgment 1. The principal proceedings in which this dispute arises are an action by the plaintiff against the defendant, a legal practitioner, for professional negligence. The allegation, in broad terms, is that the solicitor failed to take steps to protect her interest in the former matrimonial home, which was lost due to a former husband being able to deal with it as security for loans raised by him in his professional endeavours. 2. The dispute before me relates to costs of proceedings on a subpoena issued by the plaintiff to a third party for the production of documents, which the plaintiff says was not complied with. It is common ground that documents were not produced in answer to the subpoena. In order to compel compliance the plaintiff brought a motion charging the third party with contempt. That motion was listed for hearing today. 3. Mr Eardley of counsel appears for the plaintiff and Mr Marshall for the third party, a firm of chartered accountants. I have been taken through the affidavits filed in support of the charge, which are contained within the Court book that Mr Eardley handed up and, in particular, the affidavits of the plaintiff's solicitor Christopher John Morris of 2 May 2016 and of 24 May 2016. 4. It is evident that from the correspondence Mr Morris attaches that there was a dispute about the correct form of the subpoena, in terms of the person to whom it was addressed; its apparent width; and a legal question about whether the documents could be said to be within the firm's power, possession, custody or control. In that regard I think it is undisputed that the documents were in fact in the firm's storage facility, having been left there by a former partner of the firm who was the liquidator of a company which had been subject to a creditors' voluntary winding up. 5. Counsel have been able to agree upon a revision of the subpoena and a date for the production of the documents. Issues about the expenses of the firm remain outstanding but are not pursued today. Given their agreement, Mr Eardley of counsel accepts that the motion for contempt should be dismissed. However, what remains outstanding is the question of the costs of the motion. 6. I think it appropriate to remind myself of some basic principles in relation to subpoenas for the production of documents. In Rochfort v Trade Practices Commission [1982] HCA 66; 153 CLR 134, in a statement of what must be taken to be basal principle, Mason J (as the Chief Justice then was), at p 143, said: "A party to litigation can compel a stranger to produce documents by serving on him a subpoena duces tecum. Once served with the subpoena and provided with the proper conduct money, he must obey it and bring to court the documents described in the subpoena if he has them, unless the writ is set aside on the ground that it is oppressive, and produce them to the court, unless he can establish some good reason why they should not be produced. A person called on by a subpoena duces tecum may be asked, without being sworn, whether he has brought the documents, and if so, whether he produces them. If he objects to produce them, he should state the grounds of his objection on oath so that the court may determine their sufficiency." (Citations omitted). 1. To the same effect Gibbs CJ stated at p 138: "A person who is properly served with a subpoena duces tecum in due form requiring him to produce specified documents must (subject to payment of any necessary conduct money) attend at the place directed by the subpoena and produce such of the specified documents as are in his possession. If the documents are not in his possession, however, he is not obliged to endeavour to acquire them from the person who has possession…" 1. Looking at the nature of the dispute, it is necessary to refer to the form of the subpoena and its mode of service. The subpoena was addressed to Fady Abdallah. Mr Abdallah's address was given as BDO East Coast Partnership, of a street address in the City of Melbourne in the State of Victoria. The schedule to the subpoena was in the following terms: "1. All documents dated on or after 1 December 2006 concerning or referring to the administration of finances of Minc Financial Services Pty Limited (ACN omitted). 2. All documents dated on or after 1 December 2006 concerning or referring to the administration of finances of Minc Financial Services Holdings Pty Limited (ACN omitted). 3. All documents dated on or after 1 December 2006 concerning or referring to the finances of Mark Morris." Mr Morris is the husband. 1. A number of issues were taken in the correspondence between the parties. There seems to be no doubt, as I have said, that the partnership had physical possession of the records. So much was made clear in a telephone conversation between the plaintiff's solicitor and a senior employee of the firm after the subpoena was received by the latter. However, that senior employee expressed the opinion that if the documents held were the documents of the former liquidator, whilst they were in the firm's "storage facility" they were under the former liquidator's control. 2. The point was taken by the plaintiff's lawyers, correctly in my view, that the fact that they were in the possession of the firm was sufficient to require it to produce the documents, provided the conditions expressed by Mason J were satisfied. The dispute escalated somewhat and eventually was put in the hands of the firm's lawyers Messrs Lander & Rogers, who instruct Mr Marshall. By letter dated 22 March a number of objections were raised to production under the subpoena. Some of them related to form. There was no doubt that Mr Abdallah was a partner in the firm but the point was taken that the correct form of the subpoena was that it be addressed to all partners rather than an individual partner and reference was made to Rochfort. I am not sure that this is, with respect, a correct understanding of what the Chief Justice said in Rochfort. What his Honour did say at p 139 was that: "…one partner has been held not compellable to produce books which were partnership property when the other partners would not consent to their production…" (Citation omitted). That is a different situation from this. 1. The solicitors also pointed out that the documents had come into the firm's possession, as I have said, because a former partner obtained them in his capacity as liquidator. It was pointed out that no other partner of the firm had been a co-liquidator. It seems to me, with great respect, that that objection having regard to the reasoning in Rochfort is misguided. For instance, even an employee can be compelled to produce documents in his possession "…notwithstanding that he has no authority from his employer to do so or he has been instructed not to do so". 2. However, the point was made that the subpoena was oppressive on a number of grounds. First, the requirement to produce documents concerning or referring to the administration of finances of the company was too broad; it amounted essentially to requiring the addressee of the subpoena to provide a form of discovery, which is impermissible. Secondly, the subpoena went back 10 years and it was difficult for the addressee to see how those broad categories over a long period of time could be relevant to the proceedings. It was also said that the subpoena was unduly onerous because there were apparently, as often occurs in liquidations, about 140 boxes in its archives, which could be covered by the breadth of the subpoena. 3. The subpoena was served under cover of a letter sent by Express Post. "A cheque in the amount of $25 in respect of conduct money" was attached. There was no express statement of any undertaking to pay the addressee's costs or expenses in complying with the subpoena, which, on any basis, were likely to be considerable. 4. Attempts were made to resolve these differences, and I will not descend into all the detail of them; they were not undertaken in the best spirit of co-operation which ought to characterise interactions between members of learned professions. In particular, in the attempt of the plaintiff's solicitor to recast the categories of documents more narrowly than those originally sought there was a slip and the date of December 2016 was referred to rather than 2006. This, it seems to me, would have been obvious to anybody as a typographical error and I think Mr Marshall concedes as much. However, rather than pointing out the obvious mistake, which must have been clear to the firm's solicitors, in accordance with the principles discussed by Heydon J in Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; 53 NSWLR 116, the solicitor simply said there were no such documents within the firm's possession. It was not a high point in the annals of professional comity. 5. The negotiations continued nonetheless and the return of the subpoena was adjourned a number of times. One can understand the frustration of the plaintiff's solicitor who seemed to be diligently going about preparing his client's case and the difficulty with the subpoena was an impediment to that process. It is also relevant to note that although the validity of the subpoena was contested, no steps were taken to have it set aside in accordance with the usual practice described by Mason J and indeed allowed for by the rules of Court (see for example, r 33.4 Uniform Civil Procedure Rules 2005). Nor was it denied that documents in the firm's possession were relevant. 6. It is true enough to say, as Mr Eardley submits that at least bringing the motion for civil contempt brought the parties to court, and agreement has now been reached for compliance albeit on a more narrow ground, very similar if not the same as that proposed by the plaintiff's solicitor when the oppressive nature of the original subpoena was pointed out to him. 7. I accept the force of Mr Marshall's argument based upon the decision of Gillard J in Advan Investments Pty Limited v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201 at [91] that any charge of contempt is serious. One should hesitate before commencing such proceedings. That being so, his Honour did acknowledge that the main purpose for bringing contempt proceedings where there has been an alleged breach of an order of the Court is remedial in the sense of compelling compliance. Contempt proceedings do vindicate, as his Honour says, judicial authority. 8. However, I think given the matters raised by the addressee of the subpoena there was a real issue about whether proceedings for contempt could get to first base, mainly because I am of the view that the subpoena was so wide in its original form as to be oppressive. I am also of the view that tendering $25 without giving a proper undertaking to be responsible for reasonable costs incurred in complying with the subpoena was insufficient as conduct money. Those matters would be significant in deciding whether the conditions necessary to prove non-compliance could found an action for contempt. In accordance with Mason J's explanation of the basal principle these questions were unlikely to be answered in favour of the plaintiff. This is especially so as when the deficiencies were pointed out to the plaintiff's solicitor he appeared to accept them. 9. I understand the frustration of the plaintiff's solicitor and his proper motivation to progress the preparation of his client's case. I would not say that bringing a motion for contempt was an unreasonable step for him to take, especially given the neglect of the addressee of the subpoena to take steps to have it set aside. I also acknowledge that he made reasonable attempts to arrive at an accommodation with the addressee in the interests of progressing the matter. Reading the correspondence as a whole, I think it fair to say he did balk at the estimate given by the addressee of its costs in complying with the subpoena. 10. Both sides claim victory. Mr Eardley said the motion has done its work and documents will be produced and the case will move on. Mr Marshall says the order is that the proceedings be dismissed. That order favours his client and r 42.1 is engaged. 11. I have not found it easy to decide, in the circumstances of this case, where the interests of justice lie. As I have said, I think there were defects in the original subpoena, which were validly pointed out by the addressee. However, to some extent, with respect, the addressee's stance was obstructionist and the firm, through its solicitors, did not take adequate steps to arrive at a resolution of the subpoena dispute before the motion was filed. Some of the grounds of opposition the firm advanced were erroneous and did not justify its opposition. 12. For these reasons there is much to be said on either side of the record. I accept the argument that the Court will be slow to deprive a successful defendant of its costs and it is certainly true that the form of the order, as I have acknowledged, favours the addressee of the subpoena. In my judgment the justice of the case is somewhat more in favour of the plaintiff. Having said that, had it not been for the agreement reached, which the notice of motion provided the occasion for, the case of contempt, given the problems with the original subpoena and its service, was not a strong one. 13. I am of the view that the proper order to make is that each party bear their own costs of the notice of motion and I direct counsel to bring in short minutes of order giving effect to their agreement, including an order in that form as to costs.