Boensch v Pascoe

REASONS FOR JUDGMENT BUCHANAN J: 1 On 13 December 2007 I dismissed an application by Mr Boensch seeking the removal of Mr Pascoe as his trustee (Boensch v Pascoe [2007] FCA 1977). In a later judgment, on 27 March 2008, I made orders as to costs of those proceedings (Boensch v Pascoe [2008] FCA 412). 2 During the course of the proceedings Mr Boensch, through the solicitors then acting for him, issued two subpoenas to the solicitor acting for the petitioning creditor who had obtained a sequestration order against Mr Boensch. The solicitor was Ms Karen McLean. Ms McLean subsequently commenced to act for Mr Pascoe in his administration of Mr Boensch's bankrupt estate. The second of the subpoenas was issued on 2 May 2007. The issue of the subpoenas generated correspondence between Ms McLean and the solicitors then acting for Mr Boensch. Ms McLean put those solicitors on notice that she would seek her costs of complying with the subpoena by reference to professional fees normally charged by her in bankruptcy matters. An offer to meet costs of a lesser amount was rejected. Both Ms McLean and Mr Wright, a partner in the solicitors then acting for Mr Boensch, swore and filed affidavits in relation to a bill of costs which was, on 1 June 2007, served by Ms McLean upon the solicitors then acting for Mr Boensch. Those solicitors objected to the bill of costs. The bill of costs was filed in this Court on 4 September 2007 in an unamended form. It sought costs for professional fees (including GST) of $4,675 and disbursements (including counsel's fees of $550) of $616.28, a total (including GST) of $5,291.28. 3 On 8 July 2008 a Registrar of the Court ordered that costs be fixed in accordance with O 27 r 11 of the Federal Court Rules in the amount of $4,560. 4 Mr Boensch, who now represents himself, has filed a notice of motion seeking a review by the Court under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) ('the FCA Act') of the order made by the Registrar. He also seeks that execution of the order be stayed. The notice of motion is supported by affidavit. Apart from recounting some of the history Mr Boensch simply advanced his belief that the costs as assessed and fixed by the Registrar were excessive. 5 Section 35A(5) and (6) of the FCA Act provide as follows: '(5) A party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection (1) may, within the time prescribed by the Rules of Court, or within any further time allowed in accordance with the Rules of Court, apply to the Court to review that exercise of power. (6) The Court may, on application under subsection (5) or of its own motion, review an exercise of power by a Registrar pursuant to this section and may make such order or orders as it thinks fit with respect to the matter with respect to which the power was exercised.' 6 The procedure envisaged is that of a hearing de novo (see, for example, Re Kwiatek & Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374). 7 The only evidence before the Registrar were the affidavits sworn by Ms McLean and Mr Wright (which annexed the correspondence between them as well as the bill of costs and the notice of objection which set out the basis of the objection to specified items in the bill of costs). The only further evidence is the affidavit sworn by Mr Boensch in support of the notice of motion. Mr Boensch had no further evidence to provide and neither did Ms McLean. In the absence of further evidence it is the material I have identified which provides the foundation for the review which Mr Boensch has sought and the only material available with which to assess the costs claimed. 8 Order 27 r 11, in relation to the costs and expenses of compliance with a subpoena, provides: '(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 subrule (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.' 9 Order 27 r 11(1) is similar in form to an earlier O 27 r 4A(1) which was considered in the two cases referred to hereunder. In FuelXpress Ltd v L M Ericsson Pty Ltd (1987) 75 ALR 284 ('FuelXpress') Lockhart J said (at 286): '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. 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.' 10 FuelXpress was applied by Tamberlin J in Mowie v Fisheries Pty Ltd and Switzerland Insurance Australia Limited [1996] FCA 608. 11 Ms McLean, although the solicitor for the petitioning creditor, and later for the trustee, was a third party to the proceedings so far as the subpoena issued to her was concerned. She is therefore entitled to have the costs of compliance with the subpoena assessed on a solicitor/client basis. The fact that she acted for herself does not, in my view, disqualify her in that respect, particularly in light of the fact that solicitors then acting for Mr Boensch were put clearly on notice that she would apply, and charge for, her professional skills in that way. A lay third party could hand all possibly relevant documents to a solicitor and act on advice thereafter as to what should be produced. On this basis professional scrutiny and the application of judgment about whether particular documents need, or need not, be produced would be allowable to such a lay third party and in my view, therefore, should be allowed to Ms McLean. Similarly, in my view, she was entitled to seek and receive advice from counsel with respect to compliance as well as to claim the costs of general correspondence about the subpoena and any normal aspect of compliance. A lay third party would be so entitled. 12 Approaching the matter this way some judgment must be made about specific matters claimed in the itemised bill of costs. I do not think that correspondence concerned with negotiating positions about a foreshadowed claim for the costs of compliance should be regarded as falling within the costs to be allowed. There are six items which appear, on their face, or having regard to the correspondence identified, to fall into this category: '2. 28.04.07 Email to Scott Pascoe; email to Michael Costin; undertake a preliminary review of the files to ascertain possible time to comply with the subpoena (KMC 0.4 hrs at $350) $140.00 … 5. 11.05.07 Fax to Wright Pavuk in relation to the costs of complying with the subpoena; email draft copy of correspondence to Counsel for consideration and comment (KMC 0.2 hrs at $350) $ 70.00 6. 11.05.07 Peruse email from Counsel; amend and finalise facsimile to Wright Pavuk; send facsimile to Wright Pavuk; email to Michael Costin; email to Scott Pascoe (KMC 0.2 hrs at $350) $ 70.00 7. 15.05.07 Email to Counsel in relation to lack of response from Wright Pavuk and notifying Counsel of intention to seek an adjournment of the proceedings (KMC 0.1 hrs at ($350) $ 35.00 13. 17.05.07 Email to Counsel (KMC 0.1 hrs at $350) $ 35.00 15. 17.05.07 Peruse email from Counsel; send reply in relation to correspondence from Wright Pavuk; peruse copy of judgment provided by Counsel in relation to the issue of costs (KMC 0.2 hrs at $350) $ 70.00 13 I also do not think that any allowance should be made for Ms McLean's professional time in communication with her clients or discussion with them about the documents which she was obliged, by reason of the subpoena, to produce. Accordingly I would exclude the following matters identified in the bill of costs: '14. 17.05.07 Letter to Scott Pascoe and Michael Costin; email to Scott Pascoe; email to Michael Costin $175.00 16. 18.05.07 Email to Scott Pacoe and to Michael Costin in relation to the compliance with the subpoena and seeking meeting to review the documents to be produced (KMC 0.4 hrs at $350) $140.00 17. 18.05.07 Peruse reply email from Scott Pascoe (KMC 0.4 hrs at $350) $ 35.00 18. 21.05.07 Peruse reply email from Michael Costin (KMC 0.1 hrs at $350) $ 35.00 19. 22.05.07 Telephone attendance on SimsPartners, Scott not available; telephone attendance on Michael Costin in relation to meeting to go through the documents to be produced to the Court, the documents and the procedure regarding the subpoena (KMC 0.6 hrs at $350) $210.00 22. 22.05.07 Telephone attendance on Michael Costin in relation to advice on documents and meeting to review documents to be produced under subpoena; email to Michael Costin in relation to meeting; email to Scott Pascoe in relation to meeting (KMC 0.3 hrs at $350) $105.00 $1,120.00' 14 As to the disbursements I would not allow matters which appear to relate to the professional fees I would disallow. They are: '4. 11.05.07 Facsimile to Wright Pavuk (1 pages at $0.50 per page) $1.10 5. 17.05.07 Facsimile from Wright Pavuk (1 page at $0.50 per page) $0.55 6. 18.05.07 Facsimile to Wright Pavuk (1 page at $0.50 per page) $0.55 8. 22.05.07 Mobile telephone call costs (10 minutes at $0.50 per minute) $5.50 9. 22.05.07 Mobile telephone call costs (10 minutes at $0.50 per minute) $2.20 $9.90' 15 The bulk of the disbursements are made up of counsel's fees. Those fees are supported, to some extent, in my view, by the following item in relation to Ms McLean's professional fees which indicates that the fees in question related to the issue of compliance: '31 23.05.07 Email to Counsel requesting account for the purposes of a bill of costs (KMC 0.1 hrs at $350) $ 35.00' 16 However, it is clear from items 5 and 6 of Ms McLean's professional fees, set out above, that some of the fees for counsel were generated by consideration of, and advice about, the negotiating position Ms McLean proposed to take with respect to her professional costs of complying with the subpoena. I have already indicated I would not allow those costs. Neither, in principle, will I allow counsel's fees in relation to that matter. One difficulty I have in assessing this matter is that counsel's fees are not itemised. Mr Miles, who appeared for Ms McLean, was not in a position to assist me further with respect to that issue. I shall return to it shortly. 17 Mr Boensch expressed concern that perhaps the amount of counsel's fees included fees for matters which were unrelated to any question of compliance with the subpoena. He referred to the correspondence between Ms McLean and his earlier solicitors where Ms McLean referred to the need to consider questions of client legal privilege arising from the fact that she acted for both Mr Costin and Mr Pascoe. Mr Boensch conjectured that fees for other matters also, where he was in dispute with his trustee, Mr Pascoe, might have been included. There is no evidentiary basis for the suggestion and I will give it no weight. 18 The items in the bill of costs referring to a contribution by counsel (apart from the reference to counsel's fees of $550) are items 5, 6, 7, 13 and 15 (already set out) and the following: '11. 16.05.07 Meeting with Counsel to discuss the matter (KMC 0.5 hrs at $350) $175.00 20. 22.05.07 Telephone attendance on Scott Pascoe to Reschedule meeting; telephone attendance on Counsels Chambers in relation to meeting with Counsel (KMC 0.1 hrs at $350) $ 35.00 28. 23.05.07 Meeting with Counsel, Scott Pascoe and Michael Costin to review documents to be produced under subpoena and discuss all issues in relation to those documents (KMC 1 hr at $350) $350.00 19 Doing the best I can with these entries it appears that there was a 30 minute meeting with counsel on 16 May 2007 to discuss matters in relation to compliance with the subpoena, a short discussion on 20 May 2007 to arrange a meeting with counsel and a one hour meeting on 23 May 2007 to conduct a final review of documents. One question which has exercised my mind is whether I should allow an amount for counsel's fees on 23 May 2007 in light of my conclusion that I should not allow Ms McLean's professional fees related simply to discussions with her clients. 20 Although Ms McLean's correspondence warns that it may be necessary to obtain advice about the question of client legal privilege, there is nothing in the correspondence to suggest that any such issue actually arose or that any claim for such privilege was made. However, a final review of documents, as occurred in a meeting with counsel on 23 May 2007, together with Ms McLean and her clients, seems a legitimate cost to claim. 21 It seems to me, therefore, that about l½ hours of counsel's time should be allowed. Without any guide to the rate charged by counsel I propose to allow 75% of counsel's fees, reducing those fees from $550 to $412.50 for the purpose of assessing Ms McLean's costs of compliance with the subpoena. 22 The result of my own consideration of the matter on the review sought by Mr Boensch is that I would reduce the amount claimed for professional fees (before GST) of $4,250 to $3,130. To that amount GST of $313 must be added, bringing the total to $3,443. I would reduce the amount claimed for disbursements from $616.28 to $468.88 which I round up to $469. 23 The total amount which I would allow, therefore, is $3,912.00. 24 Mr Boensch has sought costs of the notice of motion. As he is now self-represented it is not clear that he has incurred any professional costs which might be recovered. However, that is a possibility. As he has succeeded in reducing the amount ordered by the Registrar I will make an order for costs, if any, those costs to be taxed if not agreed. 25 The orders which I will make, therefore, are: 1. The order made by Registrar Hannigan on 8 July 2008 is set aside and in lieu thereof it is ordered that Karen McLean's costs of complying with the subpoena returnable to the Court on 16 May 2007 are fixed in the sum of $3,912.00. 2. The applicant's costs of the notice of motion, if any, are to be paid by Ms McLean, such costs to be taxed if not agreed. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan.