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[2024] FCA 509
Federal Court of Australia
2024-05-16
Colvin J
Original judgment source is linked above.
COLVIN J: 1 Mrs and Mr Frigger have brought proceedings against Ms Trenfield, the trustee of their bankrupt estates, seeking her removal. Broadly speaking, they claim that the arrangements between Ms Trenfield and her employer FTI Consulting (Australia) Pty Ltd (FTI) mean that she is acting in a position of conflict and for that reason her appointment is invalid or that an order should be made removing her as trustee and requiring loss and damage to be paid. 2 Leave was given to Mrs and Mr Frigger to issue a subpoena to FTI. It was issued on 28 November 2023. The subpoena required the production of the professional indemnity insurance policy and the fidelity insurance policy that was maintained in respect of Ms Trenfield's activities as trustee of the bankrupt estates of Mrs and Mr Frigger. 3 A dispute arose as to the terms of confidentiality orders to be made in respect of documents produced in answer to the subpoena. Confidentiality orders were made on the application of FTI. At the time of the making of those orders, liberty was reserved to FTI to apply as to the costs of the subpoena and as to the issue of confidentiality. 4 FTI now applies for an order that Mrs and Mr Frigger pay to FTI the amount of any reasonable loss or expense incurred by it in complying with the subpoena dated 28 November 2023 including submissions in relation to confidentiality. Further, it seeks an order fixing those costs in the amount of $17,000 or that they be assessed. 5 Before the return of the subpoena, FTI invited Mrs and Mr Frigger to consent to the making of confidentiality orders as to the documents to be produced. They did not respond. On the return of the subpoena, FTI sought orders as to confidentiality limiting access to the documents produced to persons who had signed an undertaking as to confidentiality. The return of the subpoena and the request for confidentiality orders were referred to me as case managing judge. My associate communicated a request to FTI that it provide a copy of the proposed orders as to confidentiality together with submissions of no more than three pages to support the making of those proposed orders. 6 Lawyers acting for FTI sought the consent of Mrs and Mr Frigger to the making of confidentiality orders. They refused to consent to the proposed orders. 7 In support of its application for confidentiality orders, a solicitor for FTI deposed as follows concerning the policies the subject of the subpoena: I am informed by … Senior Advisor, Risk and Operations at FTI, and believe that: (a) as a global professional services firm, some insurances are maintained in each local country and/or at a global level by FTI Consulting, Inc (FTI's ultimate parent entity, incorporated in the United States of America); (b) a fidelity insurance policy for each of the years mentioned in the Subpoena is not - and was not - maintained by FTI, but was maintained by FTI Consulting, Inc; (c) a professional indemnity insurance policy was - and is - maintained by FTI for each of the years mentioned in the Subpoena (PI Policies); (d) the PI Policies contain highly sensitive and confidential information concerning FTI's insurance arrangements, deductibles, and exclusions for coverage; and (e) FTI therefore seeks orders only permitting the Applicants and the Respondent (and their lawyers) to uplift and inspect the PI Policies after they have executed a confidentiality undertaking (discussed below). 8 A lawyer acting for FTI has deposed to the legal costs incurred by FTI in complying with the subpoena. They are said to have been $7,776.50 for costs up until the first return and $13,189.70 for costs after the first return including the preparation of submissions and the preparation of the application for costs orders. The amounts include counsel's fees. 9 By way of written submission in support of the application for costs it was said that the costs incurred included the following: (a) seeking advice in relation to any confidentiality claims in relation to the production of documents under the Subpoena; (b) costs for corresponding with the Applicants in relation to the confidentiality regime; (c) attendance by Counsel at the first return date of the Subpoena on 11 December 2023; (d) advising FTI in relation to confidentiality claims for the production of documents under the Subpoena; (e) preparing and filing the submissions of 15 February 2024, including the preparation of supporting affidavit material (as well as earlier affidavit material); (f) preparing these submissions and associated affidavit material. 10 There is no other information provided to support the quantification of the amounts. 11 Mrs and Mr Frigger oppose the application on the following basis: (1) they claim that FTI is an interested person in the proceedings and, in effect, should be treated as a party to the proceedings; (2) the application for the issue of the subpoena was brought because Ms Trenfield did not comply with an obligation to discover the insurance documents that relate to liabilities that arise from her activities as trustee; (3) the costs claimed have been incurred by the same firm who acts for Ms Trenfield in the conduct of the defence of the substantive application; (4) in those circumstances, the costs of complying with the subpoena should be treated as if they were costs of discovery and form part of the costs of the proceedings; (5) if costs are to be ordered, then the order should provide for the costs to be taxed at the same time as a bill of costs that has been filed by FTI pursuant to a separate order as to the costs in respect of a separate subpoena issued to FTI at the request of Mrs and Mr Frigger (see Frigger v Trenfield (Subpoena to FTI Consulting) [2023] FCA 1001); and (6) if costs are fixed, then they should be no more than $5,000. 12 Some other submissions were advanced by Mrs and Mr Frigger concerning the application of funds by Ms Trenfield 'to pay her employer, FTI'. Those submissions raise aspects of the substantive claim. I do not consider them to be matters that properly bear upon the present application.
Relevant principles 13 Ordinarily, a third party to the litigation is entitled to the reasonable costs and expenses of complying with a subpoena with that cost burden to fall upon the party at whose request the subpoena was issued (subject to the possible recovery of those costs as part of the costs of the proceedings). Issues may arise as to whether those costs include the costs of a contested application arising from the issue of a subpoena such as an issue as to whether documents are the subject of legal professional privilege. 14 As to the costs of complying with a subpoena that may be covered by an order, Mansfield J said in Charlick Trading Pty Ltd v Australian National Railways Commission (1997) 149 ALR 647 at 649 (in a list that 'may not be exhaustive'): … 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 …
Application of principles to present case 15 FTI is not a party to the proceedings. In separate reasons to be published at the same time as these reasons, I explain what has occurred in relation to whether FTI should be made a party to the proceedings: Frigger v Trenfield (Application to Amend) [2024] FCA 508 at [14]-[16]. Mrs and Mr Frigger have not sought to join FTI. They say that decision was made on the basis of the terms of the policies of insurance as produced which they have concluded cover Ms Trenfield for the liabilities that they say arise if their claims in these proceedings are upheld. 16 Therefore, I am not persuaded that FTI should be approached on the basis that, in substance, it is a party to the proceedings. Nor should the costs be treated as if they were costs of seeking discovery in the proceedings. 17 Nevertheless, FTI appears to have a substantial interest in the outcome of the substantive proceedings because the arrangements between Ms Trenfield and FTI (and their consequences for whether Ms Trenfield can arrange for services to be provided by FTI for the purposes of the administration of the estates of Mrs and Mr Frigger) are at the heart of the proceedings. Further, it appears that the insurance arrangements that were the subject of the subpoena were arrangements that Ms Trenfield was required to have in place. These are matters which mean that, in my view, it would be appropriate to take into account the outcome of the substantive application in determining the appropriate order. 18 Further, although I am satisfied that the costs sought are for costs and expenses of complying with a subpoena, there appears to me to be insufficient information provided which would enable me to fix those costs. Therefore, any order as to costs should provide for some mechanism by which the quantum of those costs would be determined by a registrar. 19 In those particular circumstances, I propose to reserve the question of the terms of any order as to the costs sought by FTI in complying with the subpoena until the event of the proceedings is known. I will reserve liberty to FTI to apply in case, for some reason, there is no such event or it is delayed unduly. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Colvin.
Frigger
Trenfield