Regina v Obeid

Supreme Court of NSW|2018-06-22|Before: Beech-Jones J

6] NSWCCA 386 Sasterawan v Morris [2010] NSWCCA 91 Shepherd v Bowen (1986) 4 NSWLR 475 Smith v Commissioner of Corrective Services [1978] 1 NSWLR 317 Stanizzo v Complainant [2013] NSWCCA 295 Category: Principal judgment Parties: KEPCO Bylong Australia Pty Ltd (Applicant) Moses Edward Obeid (Respondent) Representation: Counsel: TG Howard SC; S Healy (Applicant) P Lange (Respondent)

Solicitors: MinterEllison (Applicant) HannaLegal (Respondent) File Number(s): 2015/212851

The Subpoena

On 6 October 2017, the accused was arraigned in this Court on an indictment that charged that between 1 September 2007 and 31 January 2009 he conspired with two other persons, being his father, Edward Moses Obeid, and a former Minister in the New South Wales government, Ian Macdonald, for Mr Macdonald to misconduct himself in public office in relation to the grant of a mining exploration licence at Mount Penny in the Bylong Valley. The accused pleaded not guilty as did his two co-accused. Their trial is fixed to commence in May 2019.
In brief, the Crown Case Statement alleges that in November 2007 a property known as "Cherrydale Park" ("Cherrydale") in the Bylong Valley was purchased by Locaway Pty Ltd ("Locaway") being a company associated with the accused, his father and members of their family from John Cherry. The Crown alleges that the object of the conspiracy was to cause Mr Macdonald to issue a mining exploration licence in respect of an area of property that included some or all of Cherrydale in order to significantly increase its value so that it would be acquired by the licensee at a profit for the accused and his family. The Crown alleges that an exploration licence was awarded to Mount Penny Coal Pty Ltd in October 2009 which was a wholly owned subsidiary of Cascade Coal Pty Ltd ("Cascade Coal"). The Crown contends that some months later a put and call option was executed between various landowners including Locaway to facilitate the sale of affected properties for significant sums to an entity associated with Cascade Coal. After these events came to light, on 13 January 2013 the Mount Penny exploration licence was cancelled. In the end result Cherrydale was not sold.
Kepco is a wholly owned subsidiary of the Korean Electric Power Corporation. In December 2010 Kepco acquired two exploration licences under the Mining Act 1992 in respect of areas that include part of Cherrydale and are otherwise near Cherrydale. Kepco is the proponent of a project to construct and operate a coal mine in the Bylong Valley over an area that is adjacent to Cherrydale (the "Project").
On 1 February 2018, the accused's solicitors caused to be issued the subpoena which, as stated, was addressed to Kepco's proper officer. The subpoena was returnable on 9 February 2018. The subpoena sought the production of documents in 13 categories which were widely drafted. The documents sought included documents relating to the grant of Kepco's exploration licences as well as documents referring to the accused, his co-accused, or companies relating to them. The time periods for the categories sought ranged between 18 years and 4 years. Four of the categories sought documents dated or created between January 2006 and the date of the subpoena and related to the acquisition of any real property owned by any of Mr Cherry including Cherrydale and the acquisition of any property from the accused or any of the entities associated with him.
On this application Kepco read an affidavit sworn by Colin James Bailey who is an environmental consultant advising Kepco in relation to the Project. Mr Bailey stated that on 2 February 2018 he attended a meeting with representatives of Locaway including a relative of the accused. He stated that during the meeting the accused's relative reiterated a desire for Kepco to purchase Cherrydale and also stated that "if Cherrydale is not purchased by Kepco, Locaway would use all legal means to oppose the project including court proceedings".
In the meantime, Kepco retained solicitors, Minter Ellison, to act on its behalf in relation to the subpoena. On 5 February 2018, Minter Ellison wrote to the accused's solicitors suggesting the subpoena was prima facie oppressive and seeking, inter alia, an explanation of the forensic purpose of the documents sought by the subpoena. The letter threatened to file a notice of motion setting aside the subpoena if an adequate response was not received by 5.00pm on 7 February 2018. The letter also stated that Kepco had commenced the "lengthy and uncertain task of attempting to identify the precise scope of the subpoena and to find and collate documents within its scope".
Having received no answer, on 8 February 2018 Kepco filed and served the notice of motion seeking to set aside the subpoena. As noted, the subpoena was returnable on 9 February 2018. At the request of the accused's solicitors the return date for the subpoena was adjourned to 23 March 2018.
On 12 February 2018, Minter Ellison again wrote to the accused's solicitors. They sought a response to their 5 February 2018 letter by no later than 23 February 2018. Minter Ellison stated that was necessary to ensure sufficient time to "facilitate discussions between the parties regarding the scope of the subpoena".
There was no further communication until 12 March 2018 when Minter Ellison sent a further letter in relation to the subpoena. The letter stated that, in the absence of any response to their earlier correspondence, Kepco intended to press the notice of motion to set aside the subpoena and have it listed for hearing. The accused's solicitor responded by email on the same day. He stated that the "subpoena is pressed" but noted that he was seeking counsel's advice in relation to the matters referred to in Minter Ellison's correspondence and stated that he would "advise you of our position regarding legitimate forensic purpose in due course". The accused's solicitors' email noted that the trial was not due to commence until March 2019 and contended that there was "little urgency in litigating this matter at this stage". It was suggested that, in the interest of keeping Kepco's costs "at a minimum", that it "not press the motion until such time as a response is provided to … correspondence re legitimate forensic purpose".
Minter Ellison responded to the email with a letter dated 15 March 2018. Minter Ellison complained that its client had received a subpoena that "prima facie placed an enormous administrative burden upon it and prima facie demanded the production of confidential documents" and in those circumstances it could not be expected to defer "indefinitely resolution of its rights and obligations under the subpoena". Minter Ellison advised that they would press for the hearing of the notice of motion at the next return date of the proceedings.
On 16 March 2018, I directed the accused's solicitors to provide the information sought in the 5 February 2018 letter from Minter Ellison on or before 29 March 2018 and stood the matter over before me for directions on 10 April 2018. On 23 March 2018, the Registrar adjourned the subpoena to 10 April 2018 before me.
At around 4.40pm on 9 April 2018, the accused's solicitor advised Minter Ellison by email that they had been instructed to withdraw the subpoena.
On 10 April 2018, I ordered (by consent) that the subpoena be set aside. I granted Kepco liberty to apply on three days' notice in respect of any ancillary application. I advised the parties of my preliminary view that, on a perusal of the Supreme Court Rules, it appeared that a party such as Kepco was entitled to recover their costs of complying with their subpoena but not recover its costs of applying to set it aside.
It appears that Minter Ellison misconstrued the reference to liberty to three days' notice as being a requirement that they file any motion seeking recovery of Kepco's costs within three days. On 13 April 2018 Kepco filed the notice of motion the subject of this judgment.
At this point, it is necessary to address a submission made by Senior Counsel for Kepco, Mr Howard SC. He contended that the Court should infer that the accused procured the issue of the subpoena for an improper purpose namely to assist Locaway's efforts to negotiate a sale of Cherrydale to Kepco. Mr Howard SC pointed to the coincidence in timing of the meeting on 2 February 2018 with the issue of the subpoena on the previous day, the repeated failure of the accused's solicitors to be able to point to any legitimate forensic purpose for the issue of the subpoena and the categories of documents sought by the subpoena. However, Mr Howard expressly disclaimed any suggestion that the accused's solicitors shared any such improper purpose.
Counsel for the accused, Mr Lange, submitted that the suggested inference was highly speculative. He submitted that the material by the subpoena was potentially relevant to so much of the Crown case that contended that the amount of coal underlying Cherrydale was not generally known at the time of the events that are alleged to give rise to the alleged conspiracy. However, Mr Lange accepted that that would never justify obtaining documents created after 2010 up to the date of the subpoena.
Although I am troubled by the matters that Mr Howard referred to, in the end result I am not satisfied to the requisite degree of precision that the inference he seeks should be drawn (Evidence Act 1995, s 140). The subpoena was drafted by legal representatives but, as stated, Mr Howard expressly disclaimed any suggestion that they shared in any collateral purpose. It is unlikely that the accused could convince them to issue a subpoena in such wide terms without revealing to them the alleged collateral purpose. However, even if he did, I also consider it unlikely that there would be a shared belief that somehow the documents could be extracted without Kepco, at the very least, insisting that a proper basis for their production be identified and becoming suspicious if it was not. Nevertheless, to guard against any improper purpose affecting the issue of any further subpoena to Kepco I will order that such a subpoena cannot be issued without the leave of a judge of the Court.

Statutory Provisions

In light of the parties' submissions it is necessary to first identify the statutory provisions relevant to a determination of the Court's power to award costs in relation to subpoenas in proceedings on indictment.
Section 22 of the Supreme Court Act 1970 operates to continue the status of this Court as a superior court of record in New South Wales (Keriamianakis v Regional Publishers Pty Ltd (2009) 237 CLR 268; [2009] HCA 18 at [36] per French CJ; Commissioner of Corrective Services v Liristis [2018] NSWCA 143 at [10] per Beazley P; "Liristis"). Section 23 provides, or at least confirms, that this Court "shall have all jurisdiction which may be necessary for the administration of justice in New South Wales". These provisions allow for the continued exercise of the jurisdiction that this Court possessed in respect of civil proceedings prior to the enactment of the Supreme Court Act.
The Civil Procedure Act 2005 ("CPA") and the Uniform Civil Procedure Rules ("UCPR") made under it only operate to regulate the conduct of "civil proceedings" in this Court (s 4(1) CPA). "Civil proceedings" are defined as proceedings "other than criminal proceedings" (s 3(1) CPA). "Criminal proceedings" are defined as "proceedings against a person for an offence (whether summary indictable)" and include committal proceedings, proceedings relating to bail, proceedings relating to sentence and proceedings on an appeal against conviction or sentence (s 3(1) CPA).
Section 17 of the Supreme Court Act provides: "17 Criminal proceedings (1) Except as provided in this section this Act and the rules do not apply to any of the proceedings in the Court which are specified in the Third Schedule, and no claim for relief lies to the Court against an interlocutory judgment or order given or made in proceedings referred to in paragraph (a1) or (a2) of that Schedule. (2) Rules may be made under this Act: (a) for regulating and prescribing the practice and procedure of the Court, and (b) without limiting the generality of paragraph (a), for: (i) providing for the regulation of the sittings and order of business of the Court and the regulation of the vacations and holidays to be observed by the Court and in the offices of the Court, and (ii) prescribing the duties and functions of the Prothonotary and other officers of the Court and the records to be kept by them, in relation to any of the proceedings in the Court which are specified in the Third Schedule. (2A) The provisions of this Act, including Part 9 (subsections (1) and (4) of section 124 excepted), apply in relation to rules made pursuant to subsection (2) as they apply in relation to other rules. (3) Subsection (1) does not affect the operation of sections 1, 2, 5, 6, 7, 41, 53, 54, 55, 72, 101 (5) and 130." (emphasis added)
The proceedings "specified in the Third Schedule" ("Third Schedule proceedings") referred to in s 17(1) of the Supreme Court Act include "proceedings in the Court for the prosecution of offenders on indictment" (Third Schedule paragraph (A)) ("proceedings on indictment"). The prosecution of the accused and his co-accused are proceedings on indictment. Third Schedule proceedings also include proceedings in the Court under the Criminal Appeal Act 1912 (Third Schedule paragraph (D)). Unless otherwise stated the following discussion does not address those proceedings.
It is notable that the effect of s 17 of the Supreme Court Act is that neither s 22 nor s 23 of the Supreme Court Act are made applicable to Third Schedule proceedings. This confirms, if confirmation is necessary, that the Supreme Court Act is not the source of this Court's jurisdiction to try accused persons on indictment. Instead, the source of that authority is the Letters Patent issued pursuant to the New South Wales Act 1823 (Imp) (4 Geo IV c 96) (the "Charter of Justice") and that which follows from their issue (Shepherd v Bowen (1986) 4 NSWLR 475 at 478D per Mahoney JA). The exclusion of Third Schedule proceedings from most of the Supreme Court Act effected by s 17 also applies to "interlocutory applications and orders as may be taken in the course of and as part of" proceedings on indictment (Shepherd v Bowen at 479C per Mahoney JA).
In Liristis, Beazley P noted that judgments of the Court of Appeal and the High Court have considered the "inherent jurisdiction" (or the inherent powers) of this Court and s 23 "in tandem when discussing the purported bases for a particular exercise of judicial power" (at [23]). However with Third Schedule proceedings, the inherent powers of the Court and s 23 cannot operate "in tandem" as s 23 has no application. As a consequence, it may be that the inherent powers of the Court in proceedings on indictment are no different to the "implied powers" of any Court exercising criminal jurisdiction. If that is so, then the Court clearly has power to control abuses of its own processes by, inter alia, ordering a stay of a prosecution including ordering a stay pending the provision of legal assistance (Dietrich v The Queen (1992) 177 CLR 292; [1992] HCA 57) or pending payment of the accused's costs thrown away from a previous trial (R v Mosley (1992) 28 NSWLR 735 at 741) or pending the provision of adequate facilities for the accused to defend themselves (Smith v Commissioner of Corrective Services [1978] 1 NSWLR 317). However, if that is the nature of the Court's powers in proceedings on indictment, then it is doubtful that, absent any legislative authority, it has the power to make orders imposing positive obligations or liabilities such as costs orders (Mosely) or enforceable orders against the corrective services authorities requiring them to provide the accused with facilities in prison (see Liristis at [86] per Basten JA).
An adoption of this approach would lead to the conclusion that, in proceedings on indictment, the Court does not have power to order an accused person to pay the costs of a recipient of subpoena they cause to be issued that is set aside but instead must control any abuse of the capacity to cause a subpoena to be issued by other means such as those suggested above (at [20]). However it is unnecessary to consider this further because, for the reasons explained below, that conclusion is supported by a path of reasoning which involves a consideration of the statutory provisions governing the issue of subpoenas and the application of the Court of Criminal Appeal's decision in Stanizzo v Complainant [2013] NSWCCA 295 ("Stanizzo") which is binding on me at first instance.
Consistent with s 17(2)(a) of the Supreme Court Act, rules have been made "regulating and prescribing the practice and procedure" of this Court in proceedings specified in the Third Schedule, namely, the Criminal Appeal Rules in respect of proceedings under the Criminal Appeal Act and Part 75 of the Supreme Court Rules. Part 75 is entitled "criminal proceedings". Part 75 rule 2 specifies that certain provisions of the Supreme Court Rules apply to Third Schedule proceedings (other than proceedings under the Criminal Appeal Act) and to proceedings invoking the summary jurisdiction of the Supreme Court. Part 75 sub rule 3(1) provides: "(1) The following provisions of the Uniform Civil Procedure Rules 2005 apply, so far as applicable, to proceedings specified in the Third Schedule to the Act (except clause (d) of that Schedule) and to proceedings to which Division 2 applies: (a) Part 1 (preliminary matters), (b) rules 2.1 and 2.2, (c) Part 4 (preparation and filing of documents), other than rules 4.2, 4.9 and 4.12, (d) Part 10 (service of documents generally), other than rules 10.7 and 10.16, (e) rule 29.13 (record of trial to be kept), (f) rules 31.7, 31.11, 31.12, 31.21 and 31.22, (f1) Division 3 of Part 32 and rule 32.13, (g) Part 33 (subpoenas), other than: (i) rules 33.3 (1), 33.3 (8), 33.6 (1) and 33.7, and (ii) if the issuing party is the Crown, rules 33.2 (3), 33.5 and 33.11, (h) Part 35 (affidavits)."
Thus, most of Part 33 of the UCPR which deals with subpoenas is made applicable to Third Schedule proceedings (other than proceedings under the Criminal Appeal Act) including the prosecution of the accused. This includes UCPR 33.4 and, in respect of a subpoena issued on behalf of the accused, UCPR 33.11. Those rules respectively provide: "33.4 Setting aside or other relief (1) The court may, on the application of a party or any person having a sufficient interest, set aside a subpoena in whole or in part, or grant other relief in respect of it. (2) An application under subrule (1) must be made on notice to the issuing party. (3) The court may order that the applicant give notice of the application to any other party or to any other person having a sufficient interest." "33.11 Costs and expenses of compliance (1) The court may order the issuing party to pay the amount of any reasonable loss or expense incurred in complying with the subpoena. (2) If an order is made under subrule (1), the court must fix the amount or direct that it be fixed in accordance with the court's usual procedure in relation to costs. (3) An amount fixed under this rule is separate from and in addition to: (a) any conduct money paid to the addressee, and (b) any witness expenses payable to the addressee." (emphasis added)
Nothing in Part 75 of the Supreme Court Rules, or any other statutory provision, expressly makes applicable to Third Schedule proceedings any provision of the CPA or the UCPR which concerns the awarding of costs such as s 98 of the CPA or UCPR Part 42.
There is a well recognised distinction between the costs incurred by a party in seeking to set aside a subpoena and the costs and expenses incurred in complying with a subpoena (see Frontier Assets Pty Ltd v Fishburn [2011] NSWSC 334 at [40]; "Frontier Assets"; A Pty Ltd v Z [2007] NSWSC 999 at [48]; "A v Z"). Thus, on its face, Part 75 rule 3 of the Supreme Court Rules appears to reveal an intention to empower the Court in hearing proceedings on indictment to order the accused reimburse a third party for their reasonable costs of complying with a subpoena they caused to be issued but not the costs of any application made to set the subpoena aside. This appears to reflect a choice to balance the interests of third parties that suffer the disruption occasioned by answering a subpoena against the interests of accused persons by providing that they will not be impeded in seeking evidentiary material to defend themselves by the prospect that they will incur costs orders in disputes over the validity and scope of any subpoena they cause to be issued.
In relation to UCPR 34.11 it has been held that a "reasonable loss or expense" incurred in complying with a subpoena extends to the cost of obtaining legal advice concerning its scope and contents (J Aron Corporation v Newmont Yandel Operations [2004] NSWSC 996 at [24]; "J Aron"; A v Z at [45]) as well as legal advice reasonably incurred in relation to confidentiality and privilege issues that arise in relation to the subpoena (A v Z at [45]) and such reasonable costs as are incurred in "searching, considering and organising documents" to answer the subpoena before being relieved of the obligation to comply (J Aron at [23]). Further, in circumstances where a recipient of a subpoena provides professional services at a cost then the charge out rates incurred by its staff in complying with the subpoena have been held to be recoverable (Deposit and Investment Co Ltd (receivers appointed) v Peat Marwick Mitchell & Co [1996] 39 NSWLR 267 at 289, 292 to 293; "Deposit and Investment Co"; J Aaron at [19] and [26]). Otherwise, management time is recoverable on the basis that the amount allowed for recovery includes the marginal costs of the person's employment and a contribution towards the fixed costs of their employment to the extent that is estimable (Deposit and Investment Co at 290 to 291).
Nevertheless, the relevant loss or expense that is incurred and sought to be recovered must be "reasonable". An assessment of what is reasonable will extend to a consideration of the entirety of the conduct of the parties and the proportionality of the costs and expenses that are incurred (Frontier Assets at [36] to [39]). Simply because a party files a motion seeking to set aside the subpoena will not automatically lead to a conclusion that the costs incurred thereafter only relate to the application to set aside or were not reasonably incurred in complying with the subpoena (Frontier Assets at [40]). In some circumstances a recipient of a subpoena can pursue "two fronts" (Frontier Assets id).

Prayer 1 of the Motion: Costs of Setting Aside the Subpoena

Kepco contends that this Court has the power to order the accused to pay the costs of setting aside the subpoena on three bases.

First Basis: UCPR 33.4 - "Other Relief"

In oral submissions Mr Howard SC submitted that the source of this Court's power to order the accused to pay its costs of the setting aside of the subpoena is so much of UCPR 33.4(1) as enables the Court to "grant other relief". Mr Howard submitted that the "other relief" referred to in the rule included an order for costs. He accepted that there was no authority concerning this contention which is not surprising given that the rule is usually engaged in civil proceedings where s 98 of the CPA and UCPR Part 42 confers ample power to award costs.
UCPR 33.4 has the same scope in civil proceedings and criminal proceedings, to the extent it is applicable. Given that costs are dealt with elsewhere in the CPA and the UCPR it follows that the phrase "other relief" should be read by reference to the words that precede it, namely "set aside a subpoena in whole or in part". Thus, the rule is not an independent source of power to order costs. Instead the phrase "other relief" refers to relief of a kind similar to the setting aside of a subpoena in whole or part; that is relief which limits or regulates the effect of the subpoena so as to ameliorate the burden of compliance on the subpoenaed person. This could include, for example, orders staggering the time for production of various classes of documents under the subpoena, orders restricting the scope of a particular paragraph or paragraphs of the subpoena or orders limiting the search obligations imposed on a person in responding to a subpoena such as excluding documents held overseas or limiting searches for emails to key words.

Second Basis: Civil Proceeding?

Kepco contended that the "curial process activated by the application to set aside the subpoena is a civil proceeding" as defined in the CPA and thus the power conferred by s 98 of the CPA to make a costs order is enlivened in such proceedings. Kepco submits that the application to set aside the subpoena "activated a claim for relief [of a] nature that is separate to the criminal proceeding between the Crown and the accused in which the subpoena was issued". [1]
In support of this contention, Kepco's written submissions referred to Director of Public Prosecutions v Deeks (1994) 34 NSWLR 523 ("Deeks") in which the Court of Appeal held that the District Court did not have the power to make an award for costs against the Crown in relation to an unsuccessful application for a forfeiture order under the Confiscation of Proceeds of Crimes Act 1989 (Cth) following a plea of guilty. The Court held that the application was allocated by law to the criminal jurisdiction of the District Court (at 534) and the District Court had no implied power to award costs in the exercise of this jurisdiction (at 531F per Kirby P at 538B-C per Mahoney J and at 538C per Handley JA). Despite this unpromising result, Kepco sought to draw support from so much of Deeks that did not treat the fact that the forfeiture application was made by way of a notice of motion in the criminal proceeding as determinative of whether the application itself was a criminal proceeding (at 537F per Kirby P). This limited point can be accepted but it does not advance Kepco's argument any great distance.
Otherwise, it should be noted that, in Deeks, Kirby P identified a principle of general application namely (at 534C): "… the strong pre-supposition of the law of this country, based upon long history, that the power to award costs in criminal proceedings must, if it is to exist, be very clearly conferred." As expressed, this statement is not confined to the awarding of costs against the Crown or as between the Crown and the accused.
Kepco also referred to R v Scott (1993) 42 FCR 1 ("Scott") in which the Full Court of the Federal Court set aside a costs order made in the ACT Supreme Court in respect of committal proceedings in the ACT Magistrate's Court. Miles, Hill and Cooper JJ found, inter alia, that s 23(1) of the Supreme Court Act 1933 (ACT) did not confer a power to award costs because the proceedings in that Court, and the committal proceedings, were a "criminal cause or matter or … proceeding on the Crown side of the Court" such that s 23(3) of the Supreme Court Act rendered s 23(1) inapplicable (at 1 per Miles J; at 13 per Hill J and at 29 per Cooper J). In Scott Hill J reviewed the authorities as to whether proceedings can be properly characterised as civil or criminal (at 8 to 11). His Honour concluded that, provided the proceeding or matter can be said to be itself a "step in the criminal proceeding", then the "proceeding or matter will be said to arise as part of the criminal proceeding, cause or matter and so to be a criminal proceeding or matter" (at 8 to 9). Scott was referred to by Kirby P in Deeks (at 534)
Having raised Scott, Kepco sought to distinguish it on three bases, namely by contending that: the statutory context in Scott was different to the present; that an application to set aside a subpoena does not have the same connection to criminal proceedings as the committal proceedings did in Scott; and that in this case the relevant application was made by a non-party to the proceeding whereas in Scott the costs order was made in favour of the accused against the Crown. [2]
None of these contentions are of any assistance to Kepco. The statutory provisions considered in Scott, and the relevant provisions of the CPA are not relevantly different. Both invite intention to what is meant by a "criminal proceeding" or criminal cause or matter. Otherwise both the issue of the subpoena and the application by Kepco to set it aside were self-evidently steps in the criminal proceedings against the accused brought by the Crown. The issue of the subpoena involved the accused seeking evidentiary material for his defence and the application by Kepco sought to resist his obtaining that material. The issue of a subpoena and any resistance to its production are all steps that occur prior to verdict and are ultimately directed to the process of ascertaining the accused's guilt or innocence.
An application to set aside a subpoena issued at the behest of the accused in proceedings on indictment is clearly an interlocutory process in criminal proceedings and is not governed by either the CPA or the UCPR. To hold otherwise would be inconsistent with the outcome in Stanizzo in which the Court of Criminal Appeal held that the District Court had no power to award costs in favour of a complainant who successfully applied to set aside a subpoena issued at the request of the accused. Stanizzo is addressed below but at this point it suffices to note that, if an application to set aside a subpoena issued in criminal proceedings is nevertheless a "civil proceeding" for the purposes of s 3(1) of the CPA, then it would follow that the District Court in Stanizzo could have ordered costs in respect of the complainant's application and the result of the appeal in Stanizzo was wrong. I am bound by Stanizzo but, to the extent it matters and with respect, I consider that it was clearly right.

Third Basis: Inherent Power of the Court

Kepco also contended that this Court had an inherent power to award costs in its favour in respect of the application to set the subpoena. Kepco accepted the effect of the authorities, including Stanizzo, Deeks and Moseley, is that a court of limited jurisdiction, such as the District Court, had no implied power to make an award for costs in these circumstances. However, Kepco contended that this Court's inherent power "to control its own processes, must properly be taken to include an inherent power to award costs to any person" in its position. [3]
Kepco's contention that there was an inherent power in this Court to protect its own processes which can extend to making a costs order in criminal proceedings in respect of a subpoena derives support from the Court of Criminal Appeal's judgment in Markisic and Anor v Vizza [2002] NSWCCA 53 ("Markisic") and the judgment of Miles CJ in R v Barbaro (1992) 106 FLR 387 ("Barbaro").
In Markisic, the applicants had commenced proceedings in the Common Law Division which purported to invoke this Court's summary jurisdiction to deal with offences, both under Commonwealth law and under State law. At first instance the proceedings were dismissed on the basis that the Court had no jurisdiction to hear them. The Court of Criminal Appeal dismissed an appeal from that decision on the basis that the appeal was incompetent (at [16] per Stein JA with whom Barr and Dowd JJ agreed). Although s 17 of the Criminal Appeal Act provided that the Court of Criminal Appeal had no power to award costs on the "hearing or determination of an appeal, or any proceedings preliminary or incidental thereto under this Act", the Court of Criminal Appeal held that it had no application because "the proceedings purport to be brought under the Act, they in fact were not so brought" (at [31]). The Court of Criminal Appeal found that it had power to award costs of that appeal reasoning as follows (at [32] per Stein JA): "The Court of Criminal Appeal has implied power to control abuse of its processes. This purported appeal from McClellan J is an abuse of process. It is an incident to such a power to control abuses of its processes that the court has implied (or inherent) power to order the applicants to pay the respondents' costs. See Darcey v Pre-Term Foundation Clinic (1983) 2 NSWLR 497 at 503; R v Barbaro (1992) 106 FLR 387 at 389; and Director General, Department of Community Services v Houdek [1999] NSWSC 1031. The dichotomy between implied and inherent powers matters not in this context."
Subsequent cases have confined the conclusion in Markisic, namely that the Court of Criminal Appeal could make an order for costs, to the precise circumstances of that case. In Re Application by John Fairfax Publication Pty Ltd re MSK, MAK, MMK and MRK [2006] NSWCCA 386 Spigelman CJ (with whom Basten JA and Hislop J agreed) held that a successful jurisdictional objection to an appeal was not enough to justify a finding of an "abuse of process for the purpose of making a special order for costs" (at [36]). In R v JS (No 2) [2007] NSWCCA 309; 179 A Crim R 10 ("JS") at [17] Spigelman CJ held that s 17 of the Criminal Appeal Act applied to any statutory scheme that provided for any form of appeal to the Court, and confined Markisic to proceedings which could not be "called an appeal at all" (at [17] per Spigelman CJ with whom Mason P, McClellan CJ at CL, Hidden and Howie JJ agreed). In Sasterawan v Morris [2010] NSWCCA 91 at [46], Basten JA observed that JS "casts significant doubt on the scope, if not the legitimacy, of the principle" in Markisic that the appeal was not governed by s 17 of the Criminal Appeal Act (at [46]).
However, leaving aside so much of Markisic as concerns s 17 of the Criminal Appeal Act, any assistance that Kepco might obtain from the statement from Markisic set out in [47] is undermined by Stanizzo. As noted in Stanizzo, the Court of Criminal Appeal held that the District Court has no implied power to award costs in favour of a third party who successfully applied to set aside a subpoena issued to them on behalf of the accused.
Kepco sought to distinguish Stanizzo on the basis that, unlike the District Court, this Court has an inherent power to control its processes which extends to "include an inherent power to award costs" to persons and entities in the position of Kepco. [4] The difficulty with that contention is that in Stanizzo (at [16]) the Court of Criminal Appeal endorsed the general principle stated by Kirby P in Deeks at 534 extracted above (at [40]) to the effect that the power to award costs in criminal cases must be "clearly conferred". The principle applies equally to this Court as to the District Court although it may be that, in some contexts, s 23 of the Supreme Court Act is a sufficient basis to make an award of costs in criminal proceedings that are not Third Schedule proceedings (ASIC v Sigalla (No 6) [2012] NSWSC 83 at [32] and Bimson, Roads and Maritime Services v Damorange Pty Ltd (No 2) [2014] NSWSC 827). However, s 23 is not engaged when the Court is hearing proceedings on indictment and the combination of s 17 of the Supreme Court Act and Part 75 of the Supreme Court Rules reveals a legislative choice to apply some but not all of the provisions of the UCPR and CPA including its costs provisions. In those circumstances it follows from Stanizzo that the inherent powers of the Court do not extend to making an order requiring an accused person facing trial on indictment to pay the costs of a subpoena issued to a third party which is set aside.
For the sake of completeness, I note that the above extract from Markisic cites three cases namely Darcey v Pre-Term Foundation Clinic (1983) 2 NSWLR 497 ("Darcey"), Barbaro and Director General, Department of Community Services v Houdek [1999] NSWSC 1031 ("Houdek"). Houdek concerned the existence of an implied power in the Children's Court to make costs orders in proceedings under the Children (Care and Protection) Act 1987, which are not criminal. In Darcey, Hunt J held that a magistrate hearing committal proceeding had power to order a party issuing a summons to pay costs when the subpoena was set aside (at 504A). This conclusion was inconsistent with Stanizzo. In Stanizzo (at [17]-[18]) R A Hulme J, with whom Macfarlan and Latham JJ agreed, held that Darcey was "overtaken" by Deeks and Mosley.
Lastly in Barbaro, Miles CJ ordered an accused facing trial on an indictment filed in the Supreme Court of the Australian Capital Territory to pay the costs of a successful application to set aside a subpoena found to be vexatious or oppressive that was issued on his behalf to the Commissioner of the Australian Federal Police. His Honour stated that the "power of the Court to control abuse of its own processes is part of its inherent jurisdiction and the power to award costs is ancillary to the power to control abuse of process" (at 389). His Honour reached that conclusion notwithstanding that, like this case, the relevant rules of court made specific provision for a non-party to receive their costs and expenses of complying with a subpoena but made no express provision for the payment of costs in respect of an application to set aside a subpoena (at 389 and 391).
Barbaro addressed the same circumstances as this case. However, I decline to follow it. Barbaro is inconsistent with Stanizzo. In holding that the Court had power to award costs, Miles CJ followed Darcey (Barbaro at 389) whereas, as noted, Stanizzo confirmed that Darcey was "overtaken" by Deeks and Mosley. Otherwise the reasoning is Barbaro is inconsistent with the principle extracted from Deeks and endorsed in Stanizzo to the effect "that power to award costs in criminal proceedings must, if it is to exist, be very clearly conferred". Barbaro predates Deeks and the only relevant submission made to Miles CJ on this topic was that there existed a "general principle that in a criminal proceeding, the Crown neither pays nor receives costs" (at 389) which was not engaged as His Honour found that the Commissioner for Federal Police was not the "Crown" (id).

Conclusion on Prayer 1

In proceedings on indictment in this Court, the Court does not have power to award costs against an accused person in favour of the recipient of a subpoena who successfully applies to set it aside. I reject prayer 1 of the summons.

Prayer 2 - Costs of Compliance

In relation to prayer 2, the only issue that arose was what amount should be fixed to be paid in respect of Kepco's reasonable loss or expense in complying with the subpoena. A consideration of what is reasonable must take into account that, at the time of issuing the subpoena, the accused knew or ought to have known that the documents sought from Kepco concern a highly sensitive and valuable commercial project; that it was likely that Kepco would seek expert legal advice concerning its position and would take a careful approach to reviewing the material sought by the subpoena.
One issue between the parties concerned whether it was reasonable for Kepco to incur costs and expenses in complying with the subpoena while simultaneously pursuing an application to set the subpoena aside. Counsel for the accused, Mr Lange, submitted that Kepco is not entitled to any amount referable to costs incurred in complying with the subpoena after 8 February 2018 being the date that it filed the notice of motion seeking to set the subpoena aside. He submitted that costs incurred after that point were either referable to the application to set aside the subpoena or, if they were referable to compliance with the subpoena, they were not "reasonable" costs or expenses of doing so. Mr Howard SC contended that Kepco was entitled to recover costs incurred in both complying with the subpoena and applying to set it aside up until 9 April 2018 when the accused's solicitors notified Kepco's solicitor that their client consented to the subpoena being set aside.
I have addressed the principles concerning the recovery of reasonable loss and expense in complying with a subpoena above. As noted, in some circumstances, it is appropriate for a recipient of a subpoena to respond by pursuing "two fronts" that is by both collating material to answer the subpoena and pursuing an application to set the subpoena set aside, in whole or in part (see [34]). In this case I am satisfied that it was reasonable for Kepco to address the subpoena on "two fronts" even after it filed the notice of motion on 8 February 2018. The notice of motion was filed in circumstances of urgency as the subpoena was returnable the next day. Minter Ellison had already advised the accused's solicitors that it intended to both compile documents in answer to the subpoena and consider its position in relation to setting the subpoena aside.
From 8 February 2018 the accused pursued the production of documents in a desultory fashion. Despite a number of opportunities to do so, there was no response to the reasonable requests made on behalf of Kepco to specify the forensic purpose of the documents being sought. As a result, by no later than the end of 12 March 2018 Kepco was fixed upon a course of seeking to have the subpoena set aside and understood (correctly) that the accused was not pressing for production of the documents in the short term. Kepco knew that the trial was not due to commence until 2019. Given that Kepco was represented by experienced solicitors and counsel, by the end of 12 March 2018 Kepco either knew or should have known that, even if its concerns about the width of the subpoena were resolved against it, it would receive appropriate time after that resolution to complete any process of compiling documents and producing them to the Court. Accordingly, to the extent that any costs and expenses were incurred after 12 March 2018 in compiling and collating documents in answer to the subpoena I am not satisfied they were reasonable such that they are recoverable under UCPR 33.11(1).
Having regard to those findings I address the amounts claimed by Kepco for its cost and expense in complying with the subpoena. The amounts claimed fall into four categories.
First, Kepco seeks $19,392.50 (exclusive of GST) in Minter Ellison's fees. Two invoices were tendered, one dated 1 March 2018 and the other dated 29 March 2018. The total amount invoiced on 1 March 2018 was $55,463.37 and the total amount invoiced on 29 March 2018 was $28,245.25. However, it was accepted that much of the work did not concern the response to Mr Obeid's subpoena and the entries for that work were redacted from the invoices that were tendered. The fees sought to be recovered were comprised of a few charges for a partner charging $800 per hour, but mostly concerned work done by a senior associate charging $600 per hour and a lawyer charging $375 per hour.
Having perused the unredacted portions of Minter Ellison's accounts I am satisfied that the entries up to and including 12 March 2018 represent costs of complying with the subpoena in accordance with the principles set out in [33]. However, having regard to the above findings, I am not satisfied that any of the entries after that date referable to compliance with the subpoena were reasonable. The entries for the period prior to and including 12 March 2018 total $18,350.00. The charge out rates are too high to answer the description "reasonable" for the purpose of imposing a liability on the accused who is a stranger to the contractual relationship between Minter Ellison and Kepco. To account for this, I will allow 70% of the revised amount being $12,845.00 exclusive of GST
Second, Kepco seeks reimbursement of the sum of $2,337.50 being the cost of briefing junior counsel. The invoice issued by junior counsel on 13 April 2018 was tendered. It reveals that junior counsel charged for various attendances between mid-February 2018 and 16 March 2018 at a rate of $500 per hour. The approach adopted to Minter Ellison's fees applies equally to this account. The amount charged for the period up to and including 12 March 2018 is $1250 excluding GST. Seventy per cent of that amount is $875 exclusive of GST
Third, Kepco seeks reimbursement of the sum of $12,550 (exclusive of GST) being the amount invoiced to Kepco by 'WorleyParsons", a firm of consultants it retained to manage the Project. The affidavit annexing their invoice simply states that their costs were incurred "in reviewing and collating material sought by the subpoena". The invoice bears the date 11 April 2018 and specifies a "date range" of "01-Feb-18 to 06-Apr-18" which I infer was the period over which the services were provided. The only description of the services provided was "Total Labour Cost 62.5 Hours for Collating Document for OBEID subpoena". It appears that the services were charged at $200 per hour.
There is no reason why the statement in the invoice that the labour costs were incurred in collating documents for the subpoena during the period 1 February 2018 to 6 April 2018 should not be accepted. However, in the absence of any breakdown of the work done, I can only allow for the recovery of costs on the basis that the time involved was spread evenly throughout that period. The period from 1 February 2018 to 12 March 2018 was 40 days of the 65 day period of the invoice. It follows that the proportion of the total cost referable to that period, rounding to the nearest dollar, is $7,723.00 (= 40÷65 x $12550.00). No evidence was tendered concerning the identity or position of the persons who undertook the collation of documents so as to justify the rate of $200 per hour. The most that could be said in defence of that rate is that it is inherently unlikely that Kepco would incur such costs for the sake of it on the off chance they might be able to recover them from the accused. I will allow these fees at the rate of $150 per hour as an approximation to the cost of a paralegal. Thus, rounding to the nearest dollar, the amount allowed for this claim is $5,792.00 (= $7723 x 150÷200) exclusive of GST.
Fourth, Kepco seeks recovery of $5517.00 for its internal costs for "reviewing and collating material sought by the subpoena". As this is an internal cost no GST can be levied on this amount. Unlike the WorleyParsons invoice, these costs are broken down in a spreadsheet which specifies the number of hours spent by certain employees of Kepco in February 2018 in reviewing documents that may have been caught by the subpoena. All of the entries are clearly referable to complying with the subpoena. The spreadsheet reveals that the claimed amount is comprised of charges based on the hourly rates for the Chief Operating Officer, the General Manager and a Manager of $146.70, $71.46 and $45.55 respectively. The basis upon which those rates were calculated was not specified but they appear reasonable given the positions held. I will allow the entirety of these amounts.
The recovery of GST will be allowed on the first three items but not the fourth. The sum of the amounts allowed is $26,980.20 including GST. This amount will be rounded to $26,980.00.
Mr Lange submitted that this amount should be somehow discounted because of his client's success in resisting prayer 1 of the motion. A loss or expense does not cease to be reasonable because the person who incurred it later loses an unrelated legal argument. Otherwise, to allow some form of set-off would be inconsistent with the reasoning underlying the point that Mr Lange succeeded on.
During the hearing of the motion I suggested to the parties that, bearing in mind that the accused is funding his own defence to serious criminal charges, it would be appropriate to stay the enforcement of the amount ordered to be paid until after his trial but allow interest to accrue in the meantime to protect Kepco's position. This means that the debt cannot be enforced against the accused until the end of his trial but he can choose to avoid interest running by paying early. Both Counsel accepted this approach.
I will apply by analogy the current rate of (simple) interest specified for the purpose of s 101 of the CPA, 3 36.7 UCPR, being 7.5% per annum. The Minter Ellison accounts required payment within 30 days. Presumably Counsel's account was payable within the same time. WorsleyParsons' account was stamped "approved" on 11 April 2018 but it is not clear whether it has been paid. Presumably the internal costs were incurred at the next pay period after early February 2018. Allowing for these matters interest will run from 1 May 2018.

Prayer 3

Kepco failed to establish that the Court had power to order costs of the notice of motion to set aside the subpoena. It follows that the Court has no power to award costs of the notice of motion filed 13 April 2018.

Orders

Accordingly, the Court orders that: 1. The accused pay KEPCO Bylong Australia Pty Ltd the sum of $26,980.00 together with interest accruing daily on that amount at a rate of 7.5% per annum from 1 May 2018; 2. The enforcement of order 1 be stayed until 28 days after the return of the jury's verdict, the entry of any plea of guilty or the cessation of the prosecution of the accused whichever comes first; 3. In these proceedings, no subpoena may be issued to KEPCO Bylong Australia Pty Ltd on the application of the accused without the leave of a judge of this Court; 4. The notice of motion filed 13 April 2018 be otherwise dismissed.

Endnotes

Kepco outline of submissions 1/6/2018 at [6]; "Kepco submissions".
Kepco submissions at [11].
Kepco submissions at [20].
Kepco submissions at [20]. 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: 11 February 2020

Confiscation of Proceeds of Crimes Act 1989(Cth)

Geo IV c 96) Supreme Court Act 1933(ACT)

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