Estate Pamplin; Irwin v Pamplin

Judgment

This judgment concerns the costs of an interlocutory application by the plaintiff. The application, which was made by way of notice of motion, sought orders for the examination of the defendant and two representatives of an accounting firm which acted for the defendant and various companies which she controlled.
The proceedings arose out of a family dispute. For convenience and without disrespect, I will refer to the parties and other members of the family by their given names.
The motion for examination followed allegations by the plaintiff ("Ann") that each of the defendant ("Marie"), the companies which she controlled, and the accounting firm, had failed to comply with requests to produce documents pursuant to a notice to produce (in the case of Marie) and subpoenas (in the case of the companies and the accounting firm). The Court made examination orders as sought in December 2020 and the examination occurred in February 2021.
Marie now seeks that her costs of the motion be paid by Ann. Marie contends that the examination proved to be a pointless exercise and was ultimately a waste of the Court's resources. Ann disputes Marie's claim for costs, contending that the examination was necessary and clearly demonstrated that the requests for documentation had not been complied with.

Costs of examination motion

In written submissions, counsel for Marie argued that Ann should pay her costs of the motion for four main reasons. I will deal with those arguments in turn, albeit in a different order.
First, counsel submitted that on balance, notwithstanding the order for the examination of Marie, Ann had been largely unsuccessful in her motion filed 16 November. Counsel focused on the court's discretion to order costs under CPA, s 98 and the general rule in UCPR, r 42.1 that costs follow the event unless the court considers that some other order should be made.
There were three main bases for counsel's submission that Ann had been largely unsuccessful in the motion. First, counsel submitted that, of the five orders sought by Ann, two were not made (prayers (2) and (4)); second, although leave was granted to access the Court's files, leave would have been required whether or not the application had been opposed; and third, Marie had no forensic interest in whether the examinations of Mr Pizzolato and Mr Aboud were ordered.
I do not accept the contention that Ann was "largely unsuccessful" in her motion. It is true that prayer (2) was not granted in the form originally sought, but the minute prepared by the parties provided for a re-drafted version and an order was made accordingly. Ann also obtained orders in accordance with prayers (4) and (5). Most importantly, Ann obtained an examination in accordance with prayers (1) and (3).
It may be that not all of the relief sought by Ann was obtained. But that is not enough to deprive her of her entitlement to costs. The simple fact is: she brought an application to the Court; that application was contested; and, as a matter of substance and practical reality, she won something of value.
I do accept, however, that Marie had no forensic interest in whether the examinations of Mr Aboud and Mr Pizzolato took place. For that reason she should not bear any cost consequences of the applications brought against them. Any order I make will exclude the costs that are exclusively referable to the orders sought against Mr Aboud, Mr Pizzolato and Aboud: see Dimos v Willetts (2000) 2 VR 170 at 187 [45].
Next, counsel for Marie raised a technical point. Counsel noted that the Court's order of 10 December required Marie, Mr Pizzolato and Mr Aboud attend to be examined about compliance with the notice to produce "dated 19 December 2017" and subpoenas "dated 19 December 2017". Counsel pointed out that in fact the notice to produce was actually dated 18 December 2017 and the subpoenas were recorded as having been filed on 19 November 2017.
Counsel for Ann responded that this error had previously been explained by Mr Mersal in his affidavit dated 27 February 2020 in which he deposed that both the notice and subpoenas were in fact filed manually on 19 December 2017, but the Registry had incorrectly recorded that they were filed on 19 November. Counsel submitted that in any event, it was clear to the examinees which documents were being referred to.
In reply, counsel for Marie pressed the point further. He submitted that whether or not the examinees were aware of which documents were the subject of the orders was beside the point. UCPR, Part 36 made it clear that the Court's record is a fundamental aspect of its operation and existence. Counsel submitted that the examination ought not to have proceeded until the record was amended to properly reflect the dates of the notice and subpoenas. Counsel submitted that this was not merely a pedantic point, nor was it a matter of form over substance; it was a fundamental matter of practice and procedure which should be strictly observed, otherwise "anarchy would reign".
As I see it, if there is an error in the Court's record, the simple solution would be for me now to correct it. But I am not satisfied there is any such error. Internal investigations reveal that the subpoenas were in fact filed on 19 December 2017, but were stamped by the Registry with the wrong month. Similarly, although the notice was signed on 18 December, it too was stamped as being filed on 19 November. Given the Court's record does not show that any documents were actually filed on 19 November, I am inclined to think that both the notice and the subpoenas were filed together on 19 December. Thus, the date recorded in the orders is not erroneous at all.
But even if there was an error on the Court's record, that is a matter that could have been raised by either party prior to the examination. The orders were made in accordance with a minute agreed by the parties in December 2020, and the hearing before Registrar Milligan did not take place until some three months later. If, as counsel for Marie so strongly submits, the hearing could not have properly taken place until the record was corrected, it is not clear to me why that was not raised earlier.
When counsel did eventually raise the issue at the hearing before Registrar Milligan, his argument was dismissed. The Registrar pointed out that counsel had been on notice of the examination for a significant period of time and there was ample opportunity to put on a motion if he felt it was necessary. She did not think that the examination was an appropriate time or place to deal with such issues.
I respectfully agree with the Registrar's comments and adopt her reasoning here. Even if there was an error in the Court's record, now is not the appropriate time to deal with it. As the Registrar observed, any application to amend the orders should have been brought well before the examination. I reject counsel's argument on this point.
Counsel's third argument was that the examination was simply an attempt by Ann to gather further evidence. It was submitted that an examination under CPA, s 68, has a limited purpose and cannot be employed as a means to locate documents, find out what records a person has, or uncover information so as to allow further subpoenas to be issued.
CPA s 68 provides: Subject to rules of court, the court may, by subpoena or otherwise, order any person to do either or both of the following - (a) to attend court to be examined as a witness, (b) to produce any document or thing to the court.
Counsel referred me to the decision of Brereton J (as his Honour then was) in Hexiva v Lederer [2006] NSWSC 591 in which his Honour cited (at [14]) an article by Moffitt J (as his Honour then was) in H Glass, Seminars on Evidence (1970, Law Book Co. for New South Wales Bar Association) at 10-11. Counsel submitted that Ann had been intent on using the examination as a means to gather evidence which, according to Moffitt J, is not a proper purpose.
In support of this submission, counsel relied on paragraph 207 of Mr Mersal's affidavit sworn 27 February 2020, which stated: The plaintiff is unable to prove her claim without the benefit of a variety of business documents which are likely to be in the defendants' possession.
Counsel also relied on paragraphs 69-70 of Mr Mersal's affidavit sworn 16 November 2020, which stated: Plaintiff in need of examination orders 69. As stated above: (a) The plaintiff is unable to properly and completely plead her case in the absence of certain documents caught by the subpoenas; (b) It's very unlikely the corporate defendants don't have access to the documents sought in view of the legal obligations to hold them; (c) The documents sought are few in number and inexpensive to produce. 70. The plaintiff should be granted the opportunity to examine the witnesses in order to determine the location of the said documents.
Counsel further pointed out that there had been no complaints about the adequacy of compliance with the notice to produce and various subpoenas for nearly three years. He submitted that Ann's motion for examination coincided with deadlines for her to file evidence in the 2018 proceedings, which supported the contention that it was simply an attempt to gather evidence. Counsel also argued that Ann did not seek an order that Marie be examined about production in respect of all subpoenas issued (two of the Pamplin companies were excluded) and that this reflected a targeted strategy.
I reject counsel's argument. In the first place, I do not think that the passage from Seminars on Evidence to which I was referred goes as far as counsel's submission took it.
The passage focused principally on the importance of preventing the infringement of a subpoena recipient's right against self-incrimination. Of course, to use an examination under s 68 simply as a means to build a case for contempt against a subpoena recipient would be contrary to the legislative purpose. But there was no suggestion that that was the purpose of the examination in this case. And although the passage did indicate that there were, or might be, other limitations on the use of an examination to gather evidence, it was expressed somewhat tentatively and the precise extent of the limitation, if any, was left unclear.
This costs application is an unsuitable vehicle for resolving these questions. If counsel had an objection to his client's examination on the ground that, according to the passage from Seminars on Evidence, such an examination was not for a purpose authorised by s 68, then the appropriate time to raise that was at the hearing before me on 1 December. Or if counsel wished to object to any specific question being asked of his client on the ground that such a question exceeded the permissible scope of examination under s 68, then that ought to have been done at the examination itself.
Finally, although Mr Mersal in his affidavits sought to justify the application on the basis that it would assist in gathering evidence for the 2018 proceedings, that was not the reason why I decided on 1 December to make the orders sought. I did so because material had been presented to the Court which suggested that subpoenas and a notice to produce might not have been properly complied with, and I thought it would be wrong to leave the matter hanging. It is important that orders for production made by the Court should be obeyed, fully and without any reservation. In my view it was proper to order an examination so that the adequacy of production could be clarified. If that was an improper purpose for making an examination order then the proper course for the examinees would have been to seek leave to appeal.
This brings me to counsel's final submission. It was argued that Marie should be entitled to costs because in the end, nothing came of the examination and it was a waste of time and resources. Counsel submitted that the transcript revealed that Marie had conducted searches after she was served with the notice and had produced documents following discussions with her solicitor. She had been advised that Aboud was also going to produce documents.
In response, counsel for Ann submitted, in effect, that the examination was justified because it revealed that compliance with the notice and subpoenas had been insufficient. Counsel referred me to a number of exchanges that took place at the hearing.
At one point, Marie gave evidence that she did not check to ensure emails were produced in accordance with a subpoena category. The hearing also raised questions as to whether she had produced documents called for in respect of the purchase of a property at Russell Island. It was also suggested that Marie had failed to produce documents in relation to the sale of two companies. DGP was the majority shareholder of these companies at the time of sale and counsel submitted that it would ordinarily have held copies of the documents called for in the subpoena.
The hearing also revealed that in November 2017, Aboud had been the subject of a "hack attack" in which significant data was lost. Counsel for Marie submitted that it could be inferred that this data was never recovered and that as a result, the firm's ability to produce documents was affected. On the other hand, counsel for Ann submitted that notwithstanding the data incident, there was evidence that Aboud held hard copy files at the time of receipt of the subpoena which contained documents that were called for but not produced.
In my view, Ann was justified in bringing an application to test the sufficiency of compliance with the orders for production. At the very least, the transcript revealed that there were serious questions to be asked of both Marie and the representatives of Aboud as to whether the requests for documentation had been fully complied with. For that reason, I do not accept counsel's submission that it was a pointless exercise or a waste of time, such that Ann would not be entitled to an order for costs.

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Judgment (5 paragraphs)

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Legislation Cited (3)

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