Hawksford v Hawksford

Judgment 1The recipients of three subpoenas issued under the Evidence on Commission Act 1995 ("EOC Act") ss 32 and 33 apply for orders that they be reimbursed for the costs and expenses of complying with the subpoenas. In a surprising twist to what seemed otherwise to be a routine application under the EOC Act, the moving party behind the summons for the issue of the three subpoenas now says to the Court that she is not liable to pay these costs. These reasons conclude that there is no merit in the moving party's argument and enters judgment against her for those costs. 2This novel situation arises from a history, which is well recorded in two previous judgments of the Court and is not repeated in detail again here. It is sufficient to say for present purposes that the requests under the EOC Act arises out of divorce proceedings in the Commonwealth of Virginia, in the U.S.A. between Laura Dunlop as plaintiff and Cameron Dunlop as defendant. Laura Dunlop was the moving party in the Virginia proceedings in seeking the issue of requests under the Hague Convention on the Taking of Evidence Abroad in Civil and Commercial Matters concluded on 18 March 1970 ("Hague Convention"). Laura Dunlop was also the moving party on the summons in these proceedings in New South Wales, although the name of the trial judge in the Virginia proceedings, Judge Jan L. Brodie, has been included in the title to these proceedings. There were actually three requests in identical terms from her Honour Judge Brodie (one for each subpoena) but they will be considered in these reasons as a single request. 3On 9 May 2013 McCallum J made orders for the issue of the three subpoenas for the production of documents in these proceedings: In the Application of Laura Dunlop; request for international judicial assistance [2013] NSWSC 634. Davies J made orders extending the time for service of the subpoenas to 29 May 2013 and made the subpoenas returnable on 3 June 2013. The lawyers for Laura Dunlop, eventually achieved undisputed service on the parties named in the three subpoenas, Stuart Critchley Dunlop, Andrew Critchley Dunlop and Vardun Pty Limited. But these recipients (referred to herein as "the applicants") brought a motion to set the subpoenas aside. The motion first came before this Court on 3 June 2013, and was adjourned part-heard to 4 June, and became the subject of my judgment of that date: The Application of Jan L. Brodie (Judge of the Circuit Court of Fairfax County, Commonwealth of Virginia, United States of America) v. ex parte Laura E. Dunlop [2013] NSWSC 793 [2013] NSWSC 793. Events matters and things are referred to in this judgment in the same way that they are in the earlier two judgments. All three judgments should be read together. 4The applicants now seek the assessment of their expenses of compliance with the three subpoenas and judgment for these expenses against Laura Dunlop, who is the respondent to the applicant's motion. Through her New South Wales lawyers Laura Dunlop resists this relief on several grounds that raise the present issues for determination. Laura Dunlop submits that (1) this Court may not enter judgment for these costs against her, as she is not the plaintiff in the proceedings, (2) the costs have not been sufficiently ascertained to permit the entry of judgment against her, and (3) she has no assets in this jurisdiction against which judgment could be enforced. These reasons deal with those three issues. (1) Judgment against Laura Dunlop 5Laura Dunlop submits that Judge Brodie is the plaintiff in these proceedings and that judgment could only be entered against Judge Brodie for that reason, not against Laura Dunlop. I do not accept this argument. 6Since the time these proceedings commenced before McCallum J they have had many characteristics of an application brought by Judge Brodie, herself. The Attorney General for the State of New South Wales did not commence the proceedings, which would be the usual procedure for application to the Court if the requesting authority under the Hague Convention had not nominated a person to commence proceedings in the state of execution: cf UCPR r 52.1. This rule allows that where a matter is "pending before a requesting Court" it may be commenced in the Supreme Court "by a person nominated for that purpose by the requesting Court", or otherwise by the Attorney General. And UCPR r 52.1 reflects the terms of the Hague Convention that a requesting authority may request a special method or procedure for execution of the request under Hague Convention Art. 9, which allows, in the following terms, a requesting authority to specify a procedure for executing the letter of request which is not incompatible with the law of the state of execution: Article 9 The judicial authority, which executes a Letter of Request shall apply its own law as to the methods and procedures to be followed. However, it will follow a request of the requesting authority that a special method or procedure be followed, unless this is incompatible with the internal law of the State of execution or is impossible of performance by reason of its internal practice and procedure or by reason of practical difficulties. A letter of request shall be executed expeditiously. 7Although the Hague Convention contemplates that the request will be made between the central authorities of states, as defined under the Convention, nevertheless Art. 9 may be utilised to permit the request to be effected through private channels. Parties use Hague Convention Art. 9 procedures in cases where speedy execution of the request is required. It shortens lines of communication so that parties can effectively deal Court-to-Court, rather than going through diplomatic or consular channels. 8That is what happened here. Clause 11 of the request from Judge Brodie asked for the following Art. 9 "special methods or procedures" to be followed: It is requested that: (1) Mr Dion Vertzayas, the Australian counsel (solicitor) for plaintiff, located at [address], in the State of New South Wales, 2031, be notified of the time and place of the execution of the Request, and be permitted access to inspect and copy the documents. 9The request did not specifically nominate Mr Vertzayas to be the plaintiff in the proceedings but under the authority of the clause 11 of this request he took the initiative in filing the proceedings, no doubt so he could by that means be "notified of the time and place of the execution of the request". But as the author of the request was her Honour Judge Brodie, Mr Vertzayas seems, not unreasonably perhaps, to have taken the view that that her Honour was intended to be the plaintiff here. 10But even if that were right, the true moving party in this Court and who has an interest in the outcome is Laura Dunlop. The form of the Summons Mr Vertzayas filed in these proceedings makes this clear. Although the Summons is entitled "Application of Jan L Brodie, Judge of the County Virginia Circuit Court", it is said to be "Filed for - Laura Elisabeth Dunlop", by "Dion Vertzayas of VC Lawyers". It is signed by Mr Vertzayas and provides his address as the plaintiff's address for service. At the hearing counsel announced an appearance for Laura Dunlop, not for Judge Brodie. I infer from this that Laura Dunlop is the moving party and is bringing the proceedings in the name of her Honour Judge Brodie. 11The request makes clear an intention as to who will bear burden of the reimbursement of expenses associated with its execution. Clause 12 of the request provides: The fees and costs incurred that are reimbursable under the second paragraph of Article 14, or under Article 26 of the Convention will be borne by the: Plaintiff. 12Clause 12 of the request engages Hague Convention Articles 14 and 26. Its purpose is to ensure that "the Plaintiff" will bear "fees and costs" incurred that are "reimbursable under the second paragraph of Article 14, or under Article 26" of the Hague Convention. The request generally refers to Laura Dunlop as "the plaintiff", using her title in the Virginia proceedings. 13Hague Convention Art. 14, second paragraph provides, for the reimbursement of costs consequent upon deploying Art. 9, second paragraph, as follows: Article 14 The execution of the Letter of Request shall not give rise to any reimbursement of taxes or costs of any nature. Nevertheless, the State of execution has the right to require the State of origin to reimburse the fees paid to experts and interpreters and the costs occasioned by the use of a special procedure requested by the State of origin under Article 9, paragraph 2. The requested authority whose law obliges the parties themselves to secure evidence, and which is not able itself to execute the Letter, may, after having obtained the consent of the requesting authority, appoint a suitable person to do so. When seeking this consent the requested authority shall indicate the approximate costs which would result from this procedure. If the requesting authority gives its consent it shall reimburse any costs incurred; without such consent the requesting authority shall not be liable for the costs. 14Here the "special procedure" requested under Art. 9 is the procedure by which Mr Vertzayas gains access to the documents here in New South Wales, presumably so he can then transmit them directly to Laura Dunlop's attorneys in the Virginia proceedings. Were this special procedure not nominated Mr Vertzayos would have no authority to appear on the execution of the request and the documents would be returned to the USA via government-to-government means. The request clearly contemplates that Laura Dunlop will bear all costs associated with commencing these proceedings and getting access to the documents sought. And they also include in my view any costs consequent upon execution of the subpoenas here. 15Hague Convention Article 26 speaks to the reimbursement of expenses on a State to State basis, as follows: Article 26 A Contracting State, if required to do so because of constitutional limitations, may request the reimbursement by the State of origin of fees and costs, in connection with the execution of Letters of Request, for the service of process necessary to compel the appearance of a person to give evidence, the costs of attendance of such persons, and the cost of any transcript of the evidence. Where a State has made a request pursuant to the above paragraph, any other Contracting State may request from that State the reimbursement of similar fees and costs. 16It is unclear on the evidence before this Court whether any Art. 26 "constitutional limitations" exist here, and I do not consider it any further. But for the nomination of an Art.9 special procedure here, the Attorney-General would be the plaintiff and different costs issues would arise that do not need to be further addressed. 17It is open to the Court make a costs order in favour of the applicants. Civil Procedure Act 2005 s 98 has long been recognised as a source of power to make costs orders against non-parties where justice requires that to be done: Arden Shipping Ltd v Interbulk Ltd (1986) AC 965, Knight v FP Special Assets Limited (1992) 174 CLR 178. There are many examples of non-parties who fund and who take the benefit of litigation being ordered to pay costs, including company directors (Access Services Group Pty Ltd v McLoughlin [2006] NSWSC (532) and third party litigation funders (Manderson M&F Consulting (a Firm) v Incitec Pivot Ltd (No.3) [2011] VSC 441. 18Here the relevant considerations favour making a costs order against Laura Dunlop even though she is not a party to these proceedings. She is merely using Judge Brodie's name. I infer from the form of Judge Brodie's request and Hague Convention Art. 14 that Judge Brodie, intended that Laura Dunlop bear such costs. Arts 14 and 26 make clear that unless special Art. 9 procedures are engaged that each state will bear its own costs of execution under the Hague Convention. It would not be just for the applicants to bear these costs when Laura Dunlop has engaged Art. 9 procedures and seeks to take the benefit of this litigation. Indeed, I would regard it as an abuse of process: Jeffrey and Katauskas Pty Limited v SST Consulting Pty Limited (2009) 239 CLR 75, [2009] HCA 43, especially at [43]. 19What is the alternative? It was argued that the applicants could have a costs order against Judge Brodie. I firmly reject this idea. It is incompatible with the request and with Hague Convention Arts 14 and 26. Moreover it is incompatible with the comity that exists between the requesting and executing Courts of signatory states to the Hague Convention. The Courts of an executing State should view letters of request benevolently: Gredd v Arpad Busson [2003] EWHC 3001 at [27] cited in British American Tobacco Aust Services Limited v Eubanks for the United States of America (2004) 60 NSWLR 483 at [42] per Spigelman CJ. And under the Hague Convention it is the pleasure and duty of the Courts of executing states to assist the Courts of requesting states in the just and fair determination of their litigation: Gredd v Arpad Busson [2003] EWHC 3001 at [27] cited in British American Tobacco Aust Services Limited v Eubanks for the United States of America (2004) 60 NSWLR 483 at [42] per Spigelman CJ. Making costs orders against judges of requesting Courts is hardly compatible with those objectives. 20There is no procedural obstacle to the Court making a cost order against Laura Dunlop, a non-party, in the circumstances of this motion. (2) The Costs of Compliance 21Laura Dunlop next disputes that there is sufficient evidence to enter any judgment for costs against her. I do not accept this argument. The applicants have adduced evidence of their costs of complying with the three subpoenas and they have taken the procedural steps required before judgment for these costs can be entered in their favour. 22I accept that the applicants have incurred the following costs of compliance with the three subpoenas up to and including 4 June. They incurred legal fees to Mr David Swan, solicitor, in the sum of $4,972.50. They incurred legal fees of $4,250.00 to their barrister Mr Michael Heath who has appeared for their motion. They incurred additional disbursements for printing and copying ($366), parking ($98), and the hand delivery of documents to Wollongong ($150), totalling $614. One of the applicants, Andrew Dunlop received $20 in conduct money on 30 May, which should be deducted from these additional disbursements, leaving a net balance owing of $584. Thus the total costs and expenses the three applicants occurred in complying with the subpoenas are $9,806.50 (being $4,972.50, plus $4,250, plus $584). That these expenses were properly incurred in complying with the subpoenas is supported by the result of the applicants' motion in which the scope of the material sought in the subpoenas was considerably narrowed. 23The applicants have taken the necessary procedural steps before seeking judgment for their costs in complying with the three subpoenas. The Court may order the party seeking the issue of a subpoena to pay the amount of "any reasonable loss or expense incurred in complying with a subpoena": UCPR 33.11(1). I regard the disbursements and other legal expenses the applicants have actually incurred here as "reasonable" expenses within this rule. I accept they were incurred to comply with these subpoenas. The "Court must fix the amount" itself, or direct it "to be fixed in accordance with the Court's usual procedure" in relation to costs: UCPR 33.11(2). The Court's usual procedures would allow the Court in appropriate circumstances to award a specified gross sum instead of assessed costs: Civil Procedure Act s 98(4)(c). 24Here the relatively small quantum of the costs and the dictates of Civil Procedure Act s 56 would make costs assessment an impractical and unnecessary burden. In my view the costs can be directly fixed under the authority of UCPR 33.11(2). The full quantum of costs the applicants claim can be slightly rounded down to reflect some of the discounts that would have occurred were the issue referred to costs assessment. In my view the appropriate total figure to be recovered from Laura Dunlop is $9,000. 25The EOC Act s 33(7) specifically entitles persons such as the applicants, who are recipients of subpoenas issued under the authority of that Act, "to similar conduct money and payment for expenses and loss of time on attendance as is a witness in proceedings before the Supreme Court". Although expressed in language more apt for subpoenas to give oral evidence it seems to me that this provision applies equally to subpoenas for the production of documents. But even without the authority of the EOC Act, the subpoenas issued here were issued under the ordinary process of the Court for the issue of subpoenas UCPR r 33.2 and attract the provisions of UCPR r 33.11, which will authorise the recovery of the costs and expenses incurred in compliance with the subpoenas. 26Special rules govern the fixing of costs claimed by the recipient of a subpoena, such as the applicants. The rules require that a costs order cannot be made under UCPR r 33.11 unless the Court is satisfied that the parties concerned "have attempted, but failed, to agree upon the amount of costs to be paid": UCPR r 42.33. I am satisfied that the parties have attempted to agree upon the applicants' costs and have failed to do so. On 3 June the Court directed that the parties attempt to agree upon the quantum of the applicants' costs of compliance with the subpoenas. On 4 June the applicants' legal representatives announced that agreement had been reached only to withdraw the announcement before 7 June. I am satisfied that the parties made attempts but failed to agree upon the applicants' costs of compliance with the subpoenas. Therefore no UCPR r 42.33 obstacle prevents the Court now making the costs order that the applicants seek. 27Accordingly there will be judgment for the applicants against Laura Dunlop in the sum of $9,000.00. There will be no separate judgment for costs in addition to this figure, as it includes all the applicants' costs on the motion including appearances. (3) Enforcing the Judgment 28Laura Dunlop further submits that there is little point in giving any judgment against her now because she has no assets in the jurisdiction. But this is not an obstacle to the entry of judgment. If it turns out to be true it may present a difficulty in enforcement of the judgement. As there is a proper basis in law for giving judgment against Laura Dunlop, judgment will be given, and the applicants will be at liberty to enter it accordingly. 29But the special circumstances of this case call for some comment about enforcement of this judgment. First, I propose to grant liberty to the applicants to restore these proceedings to my list to deal with any enforcement issues that may arise after this judgment is entered. The restoring of the proceedings to a judicial officer familiar with the background of this Hague Convention proceeding is consistent with the objective of the just and efficient disposition of proceedings, which Civil Procedure Act s 56 mandates. 30Secondly, it is not clear that Laura Dunlop has no assets in this jurisdiction. In the course of argument on 4 June, Mr Heath called, as upon subpoena under Evidence Act 1995 s 36, for any copy in the possession of Laura Dunlop's legal representatives of the terms of settlement of the Virginia proceedings. A set of terms of settlement was produced under the compulsory processes of Evidence Act s 36. The Court marked the terms "MFI1" and placed them in an envelope marked "confidential" now on the Court's file. To aid enforcement of the judgment entered today the applicants may wish to apply for access to those terms, which may reveal the existence of tangible or intangible assets of Laura Dunlop in this jurisdiction. Should it be necessary, the proceedings can be relisted for the applicants to apply for access to these terms. 31Thirdly, if Laura Dunlop does not have assets in this jurisdiction, some kind of enforcement of this judgment may yet be possible in the Virginia proceedings. This Court has been told that the Virginia proceedings have now settled. It would certainly not be unusual in proceedings commenced in this Court for it to entertain applications by third-party recipients of subpoenas for reimbursement of their costs, notwithstanding the settlement of the underlying proceedings. As a result of the settlement of the Virginia proceedings this Court has not executed Judge Brodie's request under the Hague Convention. The terms of Hague Convention Art. 14 certainly contemplate that state of execution may have to communicate back to the state of origin about issues of fees. But this appears to be at the diplomatic level. Her Honour Judge Brodie's request has not been withdrawn, so some response to her Honour's request may still be appropriate as a matter of comity, to explain what has happened. Even though Laura Dunlop no longer presses for execution of the request, if enforcement of the applicants' judgment against Laura Dunlop becomes a continuing issue, I am minded to respond to her Honour Judge Brodie's request by forwarding these judgments to her Honour. The applicants may perhaps be able to move under procedures of the Circuit Court of Fairfax County, Virginia to enter judgment in the Virginia proceedings against Laura Dunlop. Her Honour should certainly have material from this jurisdiction, to assist her Honour in considering such an application. 32Finally, these proceedings presented a disturbing picture. Laura Dunlop's lawyers wrote to the applicant's lawyers on 4 June, "We have received instructions from our client advising that the costs of Mr Swan and Mr Heath are not unreasonable and that the costs of compliance will be covered." Mr Swan had attached all the costs claimed to a letter on 3 June, pointing out that some sort of security for those costs would be required because Laura Dunlop was not resident in the jurisdiction. Consistently with their written expression of agreement Laura Dunlop's lawyers represented to the Court on 4 June that the quantum of the applicants' costs of compliance with the three subpoenas were "agreed". Laura Dunlop's lawyers represented on that day to the Court and to the applicants that there would be no dispute about the quantum of the subpoena compliance costs the applicants were claiming. This arguably represented a binding agreement, although I have not been asked to determine that question. But this representation was effective in moving the courtroom debate away from the applicants' seeking security for their compliance costs before any work was done to comply with the subpoena. The legal argument moved instead onto the need to produce documents in time for a trial in the Virginia proceedings on 10 July. The Court was not informed about the precise quantum of the parties' agreement. But it is quite understandable that the applicants rapidly undertook the work that they did in response to the three subpoenas, to produce the documents requested. Their aim was to comply with the timetable of the approaching hearing in the Virginia proceedings, without further seeking security for their costs. 33But by the time the matter came back to Court on 7 June, after the Virginia proceedings had settled, Laura Dunlop's lawyers denied that they had made any agreement about the applicants' costs of compliance with the subpoenas. The applicants may now be able to argue that Laura Dunlop's lawyers' conduct in representing that there was agreement about compliance costs induced them to continue attempting to comply with the subpoenas without further seeking security. Should enforcement of the judgment given in these reasons not be possible against Laura Dunlop in this jurisdiction, it seems to me arguable in light of this surprising conduct, that orders for the recovery of these costs may possibly be made against Laura Dunlop's Australian lawyers. Of course, when the matter is examined more closely they may have a good explanation for the representations, which they made. 34The Court's power to make such costs orders against legal practitioners is broad. Although whether or not such an order is made will depend upon the legal practitioner's precise conduct and personal responsibility in the circumstances: Civil Procedure Act s 99. Certainly, a legal practitioner who takes unauthorised steps in litigation may be ordered to personally pay the costs the parties were forced to incur as a result: Hawksford v Hawksford [2005] NSWSC 463 at [111], RDCW Diamond Pty Limited v Da Gloria [2007] NSWC 1325 and Hillig v Darkinjung Pty Limited (No 2) [2008] NSWCA 147 at [47]. The solicitors for Laura Dunlop now seem to concede that their earlier statements that the applicant's compliance costs were agreed were based on an error or some misunderstanding of their instructions. 35This discussion indicates that the applicants have remedies available to assist the enforcement of their money judgment for $9,000. Although with the benefit of hindsight the Court should perhaps on 3 June have required Laura Dunlop to give a second undertaking to pay the applicant's costs of compliance. 36In the result the Court will make the following orders: (a)Judgment for the applicants on the motion of 30 May 2013, Stuart Critchley Dunlop, Andrew Critchley Dunlop and Vardun Pty Limited, against Laura Dunlop in the amount of $9,000. (b)Grant liberty to restore the proceedings to my list on one week's notice. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 June 2013