Kenny & Anor v Gippsreal Ltd [2015] VSC 284

96 The principles are of long standing. In their contemporary form they can be traced to Commissioner for Railways v Small[29] where Jordan CJ described the procedure and the governing rules which are of some relevance to the present applications The Chief Justice said:[30]

A writ of subpoena duces tecum may be addressed to a stranger to the cause or to a party. If it be addressed to a stranger, it must specify with reasonable particularity the documents which are required to be produced. A subpoena duces tecum ought not to be issued to such a person requiring him to search for and produce all such documents as he may have in his possession or power relating to a particular subject matter. It is not legitimate to use a subpoena for the purpose of endeavouring to obtain what would be in effect discovery of documents against a person who, being a stranger, is not liable to make discovery. A stranger to the cause ought not to be required to go to trouble and perhaps to expense in ransacking his records and endeavouring to form a judgment as to whether any of his papers throw light on a dispute which is to be litigated upon issues of which he is presumably ignorant.

And if a subpoena duces tecum is issued to such a person in an objectionable form, the witness may apply to the Court to have it set aside.

If duly served with such a writ and provided with the proper conduct money, the person served must obey it and bring to the Court the documents mentioned in the subpoena if he has them, unless he procures the writ to be set aside as oppressive; and he must produce to the Court the document which he has brought unless he satisfies the Court that some good reason exists why they should not be produced: this he is always at liberty to do if he can.

A witness called on subpoena duces tecum may be asked, without being sworn, whether he has brought the documents, and if so, whether he produces them to the Court. If he states that he objects to produce them, he should be sworn and the grounds of his objection stated on oath so that the Court may judge of their sufficiency: e.g. that they constitute his title deeds, or would incriminate him. The Court may allow a stranger who is a witness to be represented by counsel for this purpose if it things that the circumstances warrant it.

If the witness produces the documents, he produces them to the Court and not to the parties he may, if he chose, state that he objects to their being handed to the parties for inspection. If so, it is for the Judge to make such examination of them as he thinks proper, and he may order such of them as he considers relevant to be read, or handed to the parties for inspection, as he may think desirable, with a view to their being tendered in evidence.

Where the subpoena is addressed to a party, it is still necessary that it should state with reasonable particularity the documents which are to be produced.

It is true that a party, unlike a stranger, can be required to give discovery; but it is not legitimate to use a writ of subpoena duces tecum as a substitute for an application for discovery of documents, or as an alternative to an application for further and better discovery.

Discovery applications should be made at the proper time and place. It would greatly impede the trial of actions at nisi prius, and impose an intolerable burden upon the presiding judge, if he were required from time to time to suspend proceedings and wade for himself through masses of documents for the purpose of endeavouring to determine whether any of them are relevant. Especially is this so when the documents may be called for whilst the case is still at the stage when it is difficult or perhaps impossible for the Judge to know what may become relevant and what may not.

97 The Solicitors and the Barrister submitted that it is self-evident that Gippsreal, through the subpoenas, seeks to have access to documents that ordinarily would be the subject of a client privilege. However, as Jordan CJ in Small outlines in the passages cited above, documents produced on subpoena are produced to the court, not to a party. When they are so produced, applications can then be made, if warranted, for the documents that are properly the subject of a privilege to be protected. The issue as to whether a client legal privilege arises is an issue to be addressed on the inspection of documents. It is not an issue which will arise in the usual case at the stage of production of documents to a court in answer to a subpoena. For these reasons, I will put to one side any issue as to privilege which might be subsequently claimed in documents to be produced in answer to the subpoenas.

98 However, the principal ground relied upon here to set aside the subpoenas is that they serve no legitimate forensic purpose.

99 In considering this question, by reason of my ruling that the summonses issued by Gippsreal for orders for costs and compensation under s 29 CPA cannot stand, the summonses can only have force and effect for the purposes of the subpoenas in relation to the applications for costs against the Solicitors and the Barrister made under r 63.23 of the Rules.

100 Rule 63.23 relates to the costs liability of a lawyer and is in the following terms:

1. Where a solicitor for a party, whether personally or through a servant or agent, has caused costs to be incurred improperly or without reasonable cause or to be wasted by a failure to act with reasonable competence and expedition, the Court may make an order that -

1. all or any of the costs between the solicitor and the client be disallowed or that the solicitor repay to the client the whole or part of any money paid on account of costs; 2. the solicitor pay to the solicitor's client all or any of the costs which the client has been ordered to pay to any party;

1. the solicitor pay all or any of the costs payable by any party other than the client.
2. Without limiting paragraph (1), a solicitor fails to act with reasonable competence and expedition for the purpose of that paragraph where any application in or trial of a proceeding cannot conveniently be heard or proceed, or fails or is adjourned without any useful progress being made, by reason of the failure of the solicitor to -

a) attend in person or by a proper representative;

b) file any document which ought to have been filed;

1. lodge or deliver any document for the use of the Court which ought to have been lodged or delivered;

d) be prepared with any proper evidence or account; or

e) otherwise proceed.

1. The Court shall not make an order under paragraph (1) without giving the solicitor a reasonable opportunity to be heard.
2. The Court may, before making an order under paragraph (1), refer the matter to a Costs Judge or another Associate Judge for inquiry and report.

1. The Court may order that notice of any proceeding or order against a solicitor under this Rule be given to the client in such manner as the Court directs.
2. This Rule shall, with any necessary modification, apply to a barrister as it applies to a solicitor.

101 Rule 63.23 may operate in circumstances where it is found that a solicitor or barrister for a party, whether personally or through a servant or agent, has caused costs to be incurred improperly or without reasonable cause or to be wasted by a failure to act with reasonable competence and expedition. If any of these circumstances is found to have arisen, a discretion is then enlivened for the Court to make any of the specified costs orders against the lawyer in question. The exercise of the discretion is left at large, however it would be required to be undertaken judicially and in the interests of justice.

102 Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (a firm)[31] concluded from his analysis of the cases relating to the Court's jurisdiction to order a solicitor to pay costs, that the jurisdiction is enlivened when the solicitor has:[32]

unreasonably initiated or continued an action when it had no or substantially no prospects of success but such unreasonableness must relate to reasons unconnected with success in the litigation or to an otherwise ulterior purpose or to a serious dereliction of duty or serious misconduct in promoting the cause of and the proper administration of justice. Further, the cases establish the proposition that it is a relevant serious dereliction of duty or misconduct not to give reasonable or proper attention to the relevant law and facts in circumstances where if such attention had been given it would have been apparent that there were no worthwhile prospects of success

103 White Industries illustrates the potential breadth of circumstances where the jurisdiction of a court to order costs against a lawyer may arise.

104 In the present case the description of the documents sought to be produced under the subpoenas fall into two categories, namely, any documents created between the defined dates (being 24 February 2012 and the date of the orders made on 7 August 2012):

1. containing or evidencing instructions from the defined clients (being Action Cycles Pty Ltd or the natural persons on its behalf) relating to a defined matter (being entry by them into the defined Deed of Settlement); and
2. containing or evidencing legal advice given to the defined clients (being Action Cycles Pty Ltd or the natural persons on its behalf) relating to two defined matters, being

a) the enforceability by Gippsreal Ltd against Action Cycles Pty Ltd of the Deed of Settlement; and/or

b) the right of Action Cycles Pty Ltd to avoid or set aside the Deed of Settlement.

105 I take into account the relative specificity of the documents sought to be produced, and the potential relevance of those documents to the question as to whether r 63.23 should be applied.

106 I also take into account the context of the proceedings, in which it is alleged that the Solicitors and the Barrister contravened one or more of the overarching obligations of the CPA found in Part 2.3 of the Act in relation to the proceedings instituted to set aside the deeds of settlement. Both the instructions received from the clients, and any advices given to them by the lawyers in relation to these matters, in my view would be likely to be of direct relevance to the applicability of r 63.23 and would serve legitimate forensic purposes, being:

1. in relation to client instructions received, the provision of potentially critical evidence as to the factual basis upon which the lawyers determined to proceed with the actions; and
2. in relation to any advices given to the clients, the soundness of the decision to proceed, and the attention given to the relevant law and facts, as potentially evidenced in such advices, if any exist.

107 I further take into account the apparent breadth of r 63,23 and the circumstances which may legitimately be taken into account in the exercise of the Court's discretion if the threshold matters are established.

108 The Solicitors and the Barrister pointed to the proper basis certification executed by the solicitor acting for Gippsreal in its applications for costs, submitting in effect that this evidenced that Gippsreal already had the necessary material to make its applications, and that an inference should be drawn that the subpoenas were unnecessary and were merely a fishing expedition. I do not accept this submission. There may be many circumstances where a proper basis certification is legitimately provided, but where further documents of relevance are properly sought, either by way of discovery or subpoena, to support a case at trial. This may well prove to be such a case.

109 For these reasons I do not find that the subpoenas are examples of a mere fishing exercise and I am unable to find that the subpoenas will serve no legitimate forensic purpose.

110 The applications of the Solicitors and the Barrister to set the subpoenas aside must therefore be dismissed.

(1) It is declared that the applications of Gippsreal Ltd made by summonses filed 22 December 2014 in the 2011 and 2012 Proceedings, insofar as they seek relief pursuant to s 29 of the Civil Procedure Act 2010 but not otherwise, are incompetent by reason that, contrary to s 30(2) of the Act, the applications were not made prior to the finalisation of the civil proceedings to which the applications related;

(2) The applications of the Plaintiff, Caroline Kenny, and the Plaintiff Ian Symonds & Associates to set aside the subpoenas issued by Gippsreal Ltd dated 3 February 2015 are dismissed.

[1] [2013] VSCA 337 ('Yara').

[2] Yara [2013] VSCA 337 [5]-[11].

[3] Yara [2013] VSCA 337 [9]-[11].

[4] Yara [2013] VSCA 337 [17].

[5] Yara [2013] VSCA 337 [18].

[6] Yara [2013] VSCA 337 [20]-[21].

[7] See Hudspeth and Scholastic Cleaning and Consultancy Services (No 4) [2013] VSC 14 [5]-[7] (Dixon J).

[8] Yara [2013] VSCA 337 [26].

[9] Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd & Ors (No 8) [2014] VSC 567 [245] (Dixon J).

[10] See s 7 CPA.

[11] [2013] VSCA 337 [9-11].

[12] [1949] VicLawRp 68; [1949] VLR 383.

[13] [1949] VicLawRp 68; [1949] VLR 383 (Herring CJ, O'Bryan and Fullagar JJ).

[14] See s 17D Supreme Court Act 1986; See also r 63.38(6) Supreme Court (General Civil Procedure) Rules 2005.

[15] Commissioner of Australian Federal Police v Magistrates' Court of Victoria & Ors [2011] VSC 3 [28].

[17] [2013] VSCA 270.

[18] [2013] VSCA 270 [16].

[19] R v Saleam (1989) 16 NSWLR 14 18; R v Mokbel (Ruling No 1) [2005] VSC 410 [45]; Principal Registrar of the Supreme Court of New South Wales v Tastan (1994) 75 A Crim R 498, 504; R v Sergi [1998] 1 Qd R 536; NSW Commissioner of Police v Tuxford [2002] NSWCA 139 [22]; Re Don [2006] NSWSC 1125 [26].

[20] Attorney-General for NSW v Stuart (1994) 34 NSWLR 667, 681.

[21] Alister v The Queen [1984] HCA 85; (1984) 154 CLR 404, 414.

[22] DPP v Selway (Ruling No 2) [2007] VSC 244; (2007) 16 VR 508 [10]; Ragg v Magistrates' Court of Victoria [2008] VSC 1; (2008) 18 VR 300 [96].

[23] Attorney-General (NSW) v Chidgey [2008] NSWCCA 65; (2008) 182 A Crim R 536 [5], [62], [64]; R v Mokbel (Ruling No 1) [2005] VSC 410 [45]; R v Saleam [1999] NSWCCA 86 [11]; Alister v The Queen [1984] HCA 85; (1984) 154 CLR 404, 414; R v Saleam (1989) 16 NSWLR 14, 18.

[24] Alister v The Queen [1984] HCA 85; (1984) 154 CLR 404; R v Saleam (1989) 16 NSWLR 14, 17; Commissioner for Railways v Small [1938] NSWSt Rp 29; (1938) SR (NSW) 564, 575; Re Don [2006] NSWSC 1125 [26].

[25] Attorney-General (New South Wales) v Chidgey [2008] NSWCCA 65; (2008) 182 A Crim R 536 [59].

[26] Carroll v Attorney-General (NSW) (1993) 70 A Crim R 162, 181.

[27] Sankey v Whitlam[1978] HCA 43; (1978) 142 CLR 1 42, 62; Alister v The Queen [1984] HCA 85; (1984) 154 CLR 404, 414, 454-456; R v Saleam (1989) 16 NSWLR 14, 17; R v Mokbel (Ruling No 1) (2005) VSC 410 [40].

[28] R v Saleam (1989) 16 NSWLR 14, 18. See also R v Sergi [1998] 1 Qd R 536; R v Saleam [1999] NSWCCA 86 [11].

[30] Small (1938) 38 SR 564, 573-575.

[31] [1998] FCA 806; (1998) 156 ALR 169 ('White Industries ').

[32] White Industries [1998] FCA 806; (1998) 156 ALR 169 239.