Marsden v Amalgamated Television Services Pty Ltd [2001] NSWSC 77 | Case summary

judgment (Subpoena to third party - Managing Partner, Corrs Chambers Westgarth - SCR Pt 37 r 9) 1 By Notice of Motion filed on 14 May 1999 the applicant, the Managing Partner, Corrs Chambers Westgarth ("Corrs") seeks the following relief: "1. The defendant pay the Applicant's costs of: (a) obtaining legal advice concerning the subpoena served on the applicant on 16 April 1999 (" the subpoena "); and (b) the application precluding production to and inspection by the defendant of the documents delivered to the Court in answer to the subpoena. 2. The costs payable by the defendant to the Applicant pursuant to order 1 be assessed on an indemnity basis and be assessable and payable forthwith. 3. Such further or other order as the Court deems fit". 2 The evidence in support of the Motion is constituted by the affidavits of Michael B J Lee sworn 13 May 1999, 31 May 1999 and 25 July 2000. Exhibit A (T3280) is a bundle of correspondence. 3 The application arises out of the matters leading to the judgment delivered by me on Friday 7 May 1999 (DLJT: 39 - NSWSC 428) in relation to a subpoena issued by the solicitors for the defendant in the action (Mallesons Stephen Jaques) to the applicant. 4 That subpoena was served on the applicant on Friday 16 April 1999 and called for production on Monday 19 April of the following material: "All documents (or copies thereof) provided or shown by Michael Lee, or any assistant or agent acting on his behalf, to Detective Superintendent Woodhouse in the period from 25 November 1998 to date (inclusive) in relation to any anticipated criminal proceedings concerning MR JOHN ROBERT MARSDEN ". 5 The judgment just referred to was the subject of an application for leave to appeal to the Court of Appeal. That application was refused ([1999] NSWSCA 312 - 17 August 1999). 6 The hearing leading to the judgment of myself took place over the period 27 April - 3 May 1999. 7 The outcome of the application leading to my judgment of 7 May 1999 was that inspection by the defendant in the action of the documents produced by the third party under subpoena was declined on discretionary grounds (Waind v Hill (1978) 1 NSWLR 372). Three other bases argued against the right of inspection namely, legal professional privilege, common interest privilege and public interest immunity advanced by and for the third party, were rejected. 8 A Notice to Produce had been served on the solicitors for the plaintiff in the action (Phillips Fox) and during the hearing above referred to Mr McHugh for the plaintiff argued the discretionary ground (T1245.45), his submissions were adopted (without objection) by Mr Pembroke S.C. for the third party and, as I have said, ultimately were successful. 9 The only aspect of my judgment of 7 May 1999 to which reference, for present purposes, should be made is to that part of it constituted by paragraphs 38-47. This concerned submissions with respect to s 125 of the Evidence Act 1995 that client legal privilege had been lost by reason of "misconduct". "Misconduct" for the purposes of the section was attributed to Mr Lee of Corrs and that submission was rejected. 10 Another matter to be mentioned at this stage is a statement in the judgment of the Court of Appeal (supra) in paragraph 1: "It is clear that the matter can be revisited if the plaintiff gave evidence in advance of the witnesses referred to by pseudonyms or in the context of an application for inspection following discovery". 11 In the course of submissions no reference was made to any development that would fall within the second component of their Honours remarks. The plaintiff did not give evidence in advance of the defendant's witnesses. 12 Historically, the subpoena was served on Friday 16 April 199 and was returnable (by leave granted by myself in Chambers) on Monday 19 April 1999. 13 The evidence discloses that within a very brief time of the service of the subpoena the applicant foreshadowed to the defendant's solicitors for the first time a required confirmation that the defendant's client would agree to pay the expenses reasonably incurred in complying with the subpoena (affidavit of Michael B J Lee 31 May 1999 paragraph 10 and Annexure A). The applicant sought that confirmation and expressed the anticipation that the costs would include the obtaining of legal advice in relation to confidentiality and privilege issues concerning the documents and referred to Fuel Express Limited v L M Ericsson Pty Limited (1987) 75 ALR 284; and the searching for and collating of the documents. A further inquiry was made of the defendant after the delivery of judgment and on 7 May 1999 (see Annexure B to Mr Lee's affidavit); on 11 May 1999 (see Annexure C to the same affidavit) a further inquiry was made which received a response on the same day from the solicitors for the defendant to the effect that the costs arising out of the subpoena should await the outcome of the application for leave and any subsequent appeal. 14 The bundle of correspondence constituted by Exhibit A on the applicant's Motion contains a letter dated 3 September 1999 from the defendant's solicitors which refers to the passage cited from the judgment of the Court of Appeal above. 15 The matter came on for preliminary submissions on Tuesday 14 December 1999 (T3274). Certain directions were given. On 25 July 2000 Mr Lee swore the last affidavit which annexes, inter alia, correspondence between the parties and in particular a letter dated 19 January 2000 from the defendant's solicitors requesting an estimate or assessment of costs; a letter dated 11 May 2000 from the applicant's solicitors indicating a total assessment of $41,000 (in round figures) and inviting the defendant's solicitors to obtain instructions as to the payment of $25,000 in resolution of the matter. Clearly there was no such resolution. 16 The following observations can be made: First, Corrs was a third party. It is a firm of solicitors and not a party to the action between Mr Marsden and the defendant. Secondly, the subpoenaed material were documents held by Corrs in their capacity as solicitors for Mr Marsden in respect of his dealings with the Police Service. 17 Thirdly, the reality that Mr Marsden as a client of Corrs in that respect cannot be divorced from the reality that Mr Marsden is the plaintiff in the action. Fourthly, it was not argued on behalf of the defendant, as it could not be, that there was no compliance with the subpoena. It is the fact that the recipient did not move to have the subpoena set aside but rather mounted the arguments against inspection to which I have referred. The recipient of the subpoena, however, complied with it as an order of the Court to produce the documents to the Court. 18 Finally, as I have remarked, the three grounds advanced by the recipient in opposition to inspection failed; the recipient succeeded on a ground advanced for the plaintiff (whose firm had received a Notice to Produce, as I have said, in identical terms) and which were adopted by the recipient without objection. 19 The relief the applicant seeks is for orders under Pt 37 r 9 of the Supreme Court Rules which provides: "Where a person named is not a party and, in consequence of service of the subpoena, reasonably incurs expense or loss substantially exceeding any sum paid under r 3, the Court may order that the party who requested the issue of the subpoena pay the person named an amount in respect of the expense or loss". 20 For the applicant it was argued that the conduct of applicant was "reasonable" within terms of the Rule. It conforms with authority (Fuel Express (supra)) that "expense" includes the cost of obtaining legal advice in relation to issues of confidentiality and privilege. These are "expenses" in addition to costs that may have been incurred for photocopying, collating the required material and to be by way of recompense for the time spent by employees in doing so. 21 To this proposition I am prepared to accede. I am also prepared to accede to the proposition advanced on behalf of the applicant that it is usual practice that any order ultimately made is made upon a solicitor/client basis (Kumagai Australia Finance v Avarton Limited (Bryson J, unreported, 7 June 1991; see also Fuel Express (supra)). 22 Further, although this case is starkly different to that with which Bryson J was concerned in Danieletto v Khera (1995) 35 NSWLR 684, the observations of his Honour at 688A, in a general way, in my respectful view, are apposite to the present application. His Honour said: "The right approach in my view is that the Court decides whether to order a witness to attend, and ought to do so on a basis which is just to the witness, and it is not just to make the witness give attention to someone else's litigation without being paid for his time. In my opinion resort to principle shows that it is a necessary incident of the exercise by the Court of its subpoena power that the Court should deal with the question of paying persons whose time and attention are involved in the exercise, and the Court has power to order payment of expenses incurred by witnesses and also compensation for their time, whether before or after the subpoena is complied with, and whether or not it is complied with or set aside or compliance is dispensed with. A limit to compensation for time actually spent in attendance at court is not reasonably based whether for professional persons or for any others. If the Court is invoked by a party to use public power to compel a person to give attention to preparation to hear litigation, there is a just entitlement to payment for the time of the person whose attention is thus required and whose liberty and freedom of action are thus interfered with. A law which entitled a party to conscript the time and attention of others without paying for it would be oppressive. It would also be very poor policy as it would tend to generate resistance to the ordinary administration of justice". 23 His Honour was concerned with a case of "non-compliance". His Honour's remarks as to expenses incurred and time spent "whether before or after" the subpoena is complied with are not here applicable in view of my conclusion as to the significance of the grounds upon which the applicant failed and the peculiar status of the ground upon which it succeeded. Otherwise, one could not seriously disregard the observations of general principle made by his Honour. 24 When the facts in Triotas Pty Limited v Rohn (Young J, unreported, 20 May 1993: BC 931725) are borne in mind the observations his Honour made at the foot of page 3 and 4 in my respectful view are inapposite in the present circumstances. 25 In a brief judgment his Honour was concerned with a motion for relief under Pt 37 r 9 in which, so far as I understand it, there was a complete want of evidence. His Honour referred to the decision of Lockhardt J in Fuel Express (supra) and stated: "If a person has so conducted his affairs that his confidential information which he wishes to protect, again, it would seem to me to be quite a strong case for saying that the legal advice is not in connection with complying with the subpoena, but rather in respect of the private rights which are threatened by the issue of the subpoena" (page 2). With respect I cannot agree with this observation in the context of the present litigation. Even taking into account the "reality" to which I have referred as to the status of Mr Marsden vis-a-vis Corrs and vis-a-vis Phillips Fox, it was the issue of the subpoena constituting an order of the Court that triggered, in my view, properly, considerations in relation to "private rights" which could be comprised or affected by the issue of the subpoena constituting an order of the Court. 26 His Honour further remarked having dealt with the lack of evidence before him: "It is not to be thought that Pt 37 r 9 is to cover every expense which a person who gets a subpoena has to pay. The community still expects people to assist in the ascertainment of truth in actions before the Court, even though it is inconvenient. It seems to me that it is only in the Withers type case where a substantial amount of time and trouble is spent in searching for material and photocopying it, and obtaining legal advice in connection with complying with the subpoena, that there is a valid claim within this rule". 27 Here, I generally agree with what his Honour said but, again, add that save for the matters which I have come to exclude, the ambit of the operation of the rule as described by his Honour does apply in this case. 28 I do not accept the submission advanced for the applicant that there was an additional factor involved by reason of the recipient of the subpoena being an officer of the Court. By reason of being such an officer the recipient would, of course, be peculiarly sensitive to the nature of the subpoena as an order of the Court and the requirements for compliance with it and the rights of the recipient (not exercised on this occasion), for example, to have the subpoena set aside. If there be an additional factor at all it is the one that quite often arises were the officer of this Court has to reconcile the transcending duty to the Court with the duty he owes to his client. That exercise in reconciliation however does not, in my view, provide a basis or a special basis that by itself warrants the making of an order under the Rule. 29 Nor do I accept the submission advanced that there is some peculiar feature favourable to the applicant by reason of the s 125 of the Evidence Act 1995 argument that involved Mr Lee personally. That was an incident (albeit found to be unmeritorious) of the defendant's resistance to the claims of the applicant to protect the produced material from inspection. Mr Lee's position was "vindicated" in my judgment. What is really sought is a mechanism of "punishment" of the defendant for an successful though personalised component of its forensic position. 30 The difficult component of this application is that accepting that the applicant is entitled to be recompensed under the Rule for the obtaining of legal advice in relation to what clearly were, I accept, complex and delicate questions in respect of privilege and confidentiality, does that entitlement extend to the issuing party being obliged to pay for the costs and expenses of the unsuccessful litigation by the recipient of the three grounds advanced to preclude inspection by the issuing party? This is not withstanding that the exercise upon which the applicant embarked in seeking to preclude inspection was technically successful but for reasons advanced by the plaintiff and formally adopted by the applicant. Certainly in regard to this component, no order for costs or expenses can fairly be made in the applicant's favour save for one what would incorporate a notional or nominal allowance consequent upon the formal adoption by the applicant of the plaintiff's submissions. 31 I am of the view that the applicant should be entitled to the costs of the preparation of the material for production to the Court, the actual production of the material to the Court and for the obtaining of legal advice from senior counsel on questions of confidentiality and privilege. And there the matter should end. The corollary to which Mr Lee referred in his submissions namely, the arguing of the matters was, in fact, unsuccessful and as I have indicated I cannot see any basis in justice for the successful issuing party to have to pay any costs in regard thereto (see Hagan v Waterhouse [No 2] (1992) 34 NSWLR 400 at 405B per Kearney J). 32 The defendant's position is that it does not object to paying the applicant's reasonable costs but excluding costs in relation to the issues upon which it was unsuccessful. In this regard, nothing, in my view, turns on the fact that one of the issues argued unsuccessfully had a short while before been the subject of decision by the Court of Appeal in an interlocutory appeal namely, [1999] NSWCA 97 - 15 April 1999. The simple point is that the ground advanced was unsuccessful. 33 I am not persuaded that anything raised by the defendant, the issuing party, would preclude the practice of awarding indemnity costs or solicitor/client costs. However, as can be seen from what I am stated above, I am overall persuaded by the defendant's submissions that the limitations to be imposed upon the ambit of the order are quite severe (components of the claim) by reason of the outcome of the arguments advanced by the recipient which I have held , in the circumstances, not to have been part of the "compliance" with the subpoena in the strict sense. In this regard the third party was unsuccessful except upon the most formal of bases (the adoption of the plaintiff's submissions, submissions which, I add in general agreement with the propositions advanced by Mr Wheelhouse, were founded and could only be founded in the plaintiff's perspective). 34 The other matter is, of course, the quantification of any order. The correspondence to which I have referred above sets out figures without any detail at all. The conclusion to which one reasonably could come is that the figures arrived at by the claimant at the time of that letter were founded upon every aspect of its involvement in relation to that subpoena including costs and counsel's fees for the many days of argument. 35 Whilst I expressed some view that quantification might have to be otherwise resolved depended upon the outcome of this particular Motion, the ultimate conclusion at which I have arrived in relation to the extent of the applicant's entitlement demands that this "loose end" in this extraordinary litigation be finalised without further and expensive Court appearances (at least before me). 36 Accordingly, I am of the view that the applicant is entitled to Order 1(a) in the Notice of Motion; Order 1(b) should be refused. Order 2 should be made and that each party should pay its and his own costs of the Motion of 14 May 1999. 37 Accordingly, the formal orders are:

Marsden v Amalgamated Television Services Pty Ltd

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Judgment (13 paragraphs)

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