RELEVANT RULES AND THE ACT
5 Rule 24.15 of Federal Court Rules 2011 (the Rules) provides:
24.15 Setting aside or other relief
(1) The Court may, on the application of a party or any person having a sufficient interest, set aside a subpoena in whole or in part, or grant other relief in relation to it.
(2) An application under subrule (1) must be made on notice to the issuing party.
(3) The Court may order that the applicant give notice of the application to any other party or to any other person having a sufficient interest. (emphasis added)
6 The Court is thus empowered to make orders about the scope of a subpoena. Rule 24.15(1) does not expressly empower the Court to make an order for security for anticipated legal costs in favour of an addressee of a subpoena. However, r 24.22 provides:
24.22 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 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.
7 There is also power, however, under s 56 of the Federal Court of Australia Act 1976 (Cth) (the Act) to make an order in respect of security for the payment of costs. It provides as follows:
56 Security
(1) The Court or a Judge may order an applicant in a proceeding in the Court, or an appellant in an appeal under Division 2 of Part III, to give security for the payment of costs that may be awarded against him or her.
(2) The security shall be of such amount, and given at such time and in such manner and form, as the Court or Judge directs.
(3) The Court or a Judge may reduce or increase the amount of security ordered to be given and may vary the time at which, or manner or form in which, the security is to be given.
(4) If security, or further security, is not given in accordance with an order under this section, the Court or a Judge may order that the proceeding or appeal be dismissed.
(5) This section does not affect the operation of any provision made by or under any other Act or by the Rules of Court for or in relation to the furnishing of security. (emphasis added)
8 Mr Rambal relies particularly upon that part of r 24.15(1) of the Rules indicating that the Court may, on application of a party or any person having a sufficient interest, set aside a subpoena in whole or in part 'or grant other relief in relation to it'. These words would then, it is contended, work with r 24.22 of the Rules which expressly contemplates (subrule (1)) that the Court may order the issuing party to pay the amount of any reasonable loss or expense incurred in complying with the subpoena and by subrule (2) must fix the amount or direct that it be fixed in accordance with the Court's usual procedure in relation to costs. Subrule (3) makes it clear that such an amount is separate from and in addition to conduct money or witness expenses.
9 There appears to be no authority directly in point supporting Mr Rambal's application. Mr Rambal's argument is to some extent supported by a change in the former Rules in 2003 permitting since that time not only an application by a person having a sufficient interest to set aside a subpoena but also an application to seek any 'other relief' in respect of it. It is argued that in the context of the present case, it is appropriate for the Court to grant a stay unless and until appropriate arrangements are put in place whereby the expense of compliance can be met.
10 Although there is no precise precedent for the relief sought, several key cases touch on relevant considerations. As Bryson J noted in Danieletto v Khera (1995) 35 NSWLR 684 (at 686-688):
The power of superior courts by subpoena to order witnesses to attend and persons to produce documents has existed for centuries and is based on the inherent power of the Court, because power to compel attendance and production is necessary for the determination of the facts on which decisions are based and for the attainment of justice. There can be no effective proof of facts unless attendance and production can be compelled. … ; the court's inherent power to administer justice includes as an incident of the subpoena power the power to order a party to pay such expenses and to assess the amount. I am not aware of any reported authority for the making of such orders, but I have long experience of their having been made. The law would be ineffectual if the court could bring a trial to a halt and not require a witness to speak until the witness is paid, but did not have power to carry on and make an order that the witness be paid, and later to enforce that order.
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In the circumstances including the extensive requisitions in the subpoena, his wish to apply to set it aside was reasonable and the expenses which he incurred to that end were also reasonable. Mr Khera did not ever put the subpoena to the test. On the merits, Mr Jones has a strong claim to be paid the expenses which he claims by Mr Khera and an order for their payment ought in justice to be made.
11 In Australian Prudential Regulation Authority v Rural and General Insurance Ltd [2004] FCA 933, Gyles J held (at [5]) that O 27 r 11, which was the predecessor of the current r 24.22, should not be given a narrow interpretation, particularly in circumstances where a third party to the litigation was involved. The motion for costs in that case, pursuant to O 27 r 11 of the former Rules involved 'a novel question, namely, whether taking steps to prepare to give oral evidence where subpoenaed to attend for that purpose, including the obtaining of legal advice and assistance, [was] a loss or expense incurred in complying with the subpoena'. In that case 14 hours had been spent by solicitors in preparing an affidavit for the subpoenaed client. The case settled and she sought recovery of the amounts paid. Gyles J rejected the claim saying (at [5]-[6]):
5 O 27 r 11 is not to be given any narrow interpretation, particularly in circumstances where a third party to litigation is involved. That is established by the decision in Chapman v Luminis Pty Ltd (No 3) [2000] FCA 1120; (2000) 104 FCR 368 at [28]-[33], and the authorities there reviewed relating to the predecessor to O 27 r 11 (O 27 r 4A). I am sympathetic towards the problem that faced Benfield and its employees in this situation. They had nothing to gain from the litigation and there is no reason in principle why they should be put to expense because of the interests of the litigants. I am also sympathetic to the situation of a party who is subpoenaed to attend and give evidence in relation to past events of some complexity. The witness will almost certainly require reference to documents if memory is to be refreshed. The witness might well feel unable to do justice to giving evidence without having that opportunity. However, I do not think that O 27 r 11 can be stretched far enough to cover a claim such as the present which effectively involves solicitor/client costs for preparation of a statement of evidence. A witness who is subpoenaed has no obligation to produce such a statement or to be prepared to give evidence in that way and, correspondingly, has no right to visit the costs of doing so upon an unwilling party who has issued a subpoena.
6 The authorities to which I have referred do contemplate a reasonable opportunity for the witness to obtain advice as to her position and for some negotiation with the party issuing the subpoena. It is also appropriate to allow an amount for the business disturbance that the witness suffered, although not actually called upon to attend and give evidence. Benfield has paid the amounts in question. In my opinion, an amount of $750 would reasonably cover those items and I would so order. (emphasis added)
12 In Chapman v Luminis Pty Ltd (No 3) (2000) 104 FCR 368, Von doussa J granted solicitor/client costs on an application for an order in respect of the costs incurred in instructing solicitors and counsel in relation to the subpoenas served upon a non-party. His honour said (at [28]-[36]):
… This rule has been considered in a number of decisions, including Fuelxpress Ltd v L M Ericsson Pty Ltd (1987) 75 ALR 284 (Fuelxpress), Hadid v Lenfest Communications Inc & Others (1996) 144 ALR 73 (Hadid) and Charlick Trading Pty Ltd v Australian National Railways Commission & Another (1997) 149 ALR 647 at 649 (Charlick).
29 In both Fuelxpress and Hadid a non-party to the proceedings who had been served with a subpoena to produce documents was awarded costs. In Fuelxpress, Lockhart J ordered that the legal costs and expenses incurred by a non-party in compliance with a subpoena should be on a solicitor and client basis. Lockhart J also stated that, "[t]he intent of r 4A is to compensate a person subpoenaed to produce documents for expense or loss reasonably incurred in complying with the subpoena." In Hadid, Hill J endorsed a wide interpretation of r 4A and held in circumstances where a court has ordered that subpoenaed documents may be inspected by persons who have given appropriate confidentiality undertakings, that ensuring that the undertakings had been given before delivering up the documents is an expense incurred in complying with the subpoena, as long as the amount of the expenses is reasonable.
30 In Charlick Mansfield J declined to order costs to non-parties under O 27, r 4A(1) in the following circumstances. Two companies who were not parties to the proceedings had delivered documents to the Court in compliance with subpoenas. Thereafter, they attended at the trial to ensure that the confidential information contained within those documents was not publicly disclosed. His Honour held that the costs of attending the trial were costs incurred after the process of complying with the subpoena for production had been completed, and accordingly were not within the scope of the rule. After referring to Fuelxpress and Hadid, Mansfield J at 649 said:
"In my view [those cases] establish that the scope of the rule is sufficient to encompass, if the expense is otherwise reasonable in the circumstances, the expense incurred in seeking advice as to the validity of the subpoena, including whether to comply with it at all or in part; correspondence or attendances on a party issuing the subpoena, regarding its terms, and including with a view to narrowing or clearly identifying the scope of documents to be produced; advice as to whether documents are confidential or properly subject to claims for privilege; correspondence and attendances and negotiations with the party issuing the subpoena, as to the terms upon which access to the documents should be permitted by the court, including the negotiation of and formulation of any undertakings as to confidentiality; attendances in court when the subpoena is called on or when it is stood-over, including attendances to assert and make out any claim that the documents subpoenaed should be protected from unrestricted access due to their confidential character and to seek orders restricting access to the document or documents produced; and steps to ensure that any confidentiality undertakings proposed to be entered into have, in fact, been properly given: Hadid's case. That list may not be exhaustive."
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Hill J nevertheless allowed NZI part of its costs. His Honour (at 5-6) said:
"When one examines rule 4A it is obvious that it is concerned with costs of compliance with the subpoena. Not all costs incurred by a party subpoenaed as a consequence of being subpoenaed fall within the scope of these words. The costs in question must be costs of compliance. Of course as well they must be reasonably incurred.
Whether particular costs are costs of compliance is obviously a matter of fact. Put in general terms, it seems to me that costs of compliance will include the costs incurred by the party subpoenaed in seeking advice as to the validity of the subpoena, that is to say, as to whether he has to comply with all or but a part of it ...
On the other hand, I do not think that all of the expenditure which has been incurred by the applicant before me can be said to have been incurred in complying with the subpoena."
13 The costs involved in the present case (putting quantum aside) are to be incurred directly in compliance with the subpoena to produce documents. It is not a case where extraneous additional services which are not direct compliance with the subpoena are being claimed. Given the precedents for the award of legal costs for assisting in the direct compliance with a subpoena, including whatever negotiations may be necessary in relation to terms of a subpoena, the only question is whether the words 'or any other order' should permit security to be given in advance for those expenses in the case of a stranger to the litigation who is subpoenaed by a party who has left the jurisdiction and in respect of whom there is no evidence of the likelihood of returning. In my view, the words are of substantial width and sufficient to protect the interests of a stranger to the litigation in the particular circumstances where an extensive body of documents is sought on subpoena by a party who has left the jurisdiction.
14 As to s 56 of the Act, Mr Oswal says that the provisions of s 56 provide a comprehensive statement of the power of the Court to order security for costs and therefore no scope for an inherent power is left: Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297 (at 308). Section 56 has simply no application for the present circumstance because Mr Rambal is not 'an applicant in a proceeding'. For the purpose of s 56(1), a 'proceeding' is defined in s 4 of the Act as, relevantly, a proceeding in the Court whether between parties or not. It includes an incidental proceeding in the course of or in connection with a proceeding. Mr Oswal argues (and I accept) that an application for leave to issue a subpoena without notice under r 24.01 of the Rules does not constitute Mr Oswal 'an applicant in a proceeding' for the purposes of s 56(1) of the Act (see Re Amalgamated Metals Foundry and Shipwrights Union; Ex parte Adamson (1984) 4 FCR 319 (at 331-333) per Gray J).
15 In addition to this difficulty, Mr Oswal argues that Mr Rambal is not seeking security 'for the payment of costs that may be awarded against him'. Costs in that context can only be referring to costs incurred by a party in the conduct of litigation or in the conduct of a proceeding and not costs in the sense of any reasonable loss or expense incurred in complying with the subpoena to which r 24.22 is directed: Danieletto.
16 For those reasons, Mr Oswal argues that nothing in the Act or the Rules empowers the Court to make an order for security for costs in favour of an addressee of a subpoena. Neither Danieletto nor Australian Prudential Regulation Authority can stand for the proposition that the Court has power to order that Mr Oswal give security for any order that the Court may make under r 24.22 of the Rules for the reimbursement by Mr Oswal of 'any reasonable loss or expense' incurred with compliance with the subpoena. Rule 24.22, it is said, is not prospective in nature providing only for an order for the payment of any reasonable loss or expense 'incurred in complying with the subpoena'. Thus, in Denieletto the relevant 'costs' had already been incurred.