PARTIES:	LEXCRAY PTY LTD

		v

		NORTHERN TERRITORY OF AUSTRALIA

TITLE OF COURT:	SUPREME COURT OF THE 
		NORTHERN TERRITORY

JURISDICTION:	SUPREME COURT OF THE NORTHERN TERRITORY

FILE NO:	33 of 1993 (9303729)

DELIVERED:	22 October 1998

HEARING DATES:	1 and 2 September, 1998

JUDGMENT OF:	Kearney J

REPRESENTATION:

Counsel:

	Plaintiff:	M. Maurice QC, with him P. Durack
	Defendant:	T. Riley QC, with him S. Southwood

Solicitors:

	Plaintiff:	Cridlands
	Defendant:	Solicitor for the Northern Territory

Judgment category classification:	
Judgment ID Number:	kea98024
Number of pages:	14

kea98024

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

No. 33 of 1993 (9303729)

		BETWEEN:

		LEXCRAY PTY LTD
			Plaintiff

		AND:

		NORTHERN TERRITORY OF AUSTRALIA
			Defendant

CORAM:	KEARNEY J

RULING ON APPLICATION FOR COSTS IN RELATION 
 TO DOCUMENTS SUBPOENAED ON
31 AUGUST AND 1 SEPTEMBER 1998

(Delivered 22 October 1998)

	I rule today on whether the Commissioner of Police should recover loss and expense (including legal costs) he has incurred in complying with the plaintiff’s subpoenas issued on 31 August (doc 178) and 1 September 1998 (doc 183).

Events of 31 August 1998
	On 31 August 1998, it was ordered that the Commissioner recover from the plaintiff under r42.08, the “expense or loss” he had incurred in complying with the plaintiff’s subpoena dated 10 August 1998 (doc 141) for production of documents; the amount was to be fixed by taxation, if not agreed.  The Commissioner had earlier unsuccessfully sought to have that subpoena set aside; no order as to the costs of that application was sought by the successful plaintiff, or made.  The subpoena in question [doc 141] sought the production of certain documents relating to an enquiry by the Police into the administration of the brucellosis and tuberculosis eradication campaign (‘the BTEC’) in the Northern Territory in the 4- month period 1 December 1983 to 30 March 1984, insofar as they bore on Dr Calley and Dr Ainsworth’s statements in that period.  

	Ms McMaster, the Police legal policy Officer, and legal adviser to the Commissioner, gave evidence on 31 August 1998 as to the availability and accessibility of the Police records of that enquiry.  Mr Clift of counsel for the Commissioner did not seek to adduce any evidence from Ms McMaster, who had sworn an affidavit of 20 August 1998 (doc 165).  In the course of her evidence Ms McMaster said that all the materials relating to the Police BTEC enquiry were “currently in my office”; she had been through all these files “with a fine tooth comb … looking for the documents within the terms of the subpoena [of 10 August 1998]”; she could locate no record of communications between Dr Calley and Police “within those dates in the subpoena [of 10 August 1998]”, that is, between 1 December 1983 and 30 March 1984; she had, however, located statements by Dr Calley and Dr Ainsworth made (she believed) “in April and May of 1984”; and she had located “about five” files relating to Nutwood Downs, though they contained “nothing relevant in those time periods [in the subpoena of 10 August 1998, that is, 1 December 1983 – 30 March 1984]”.

	At the conclusion of Ms McMaster’s evidence Mr Maurice QC of senior counsel for the plaintiff stated that the plaintiff would issue a further subpoena to obtain the statements of Dr Calley and Dr Ainsworth made in April or May 1984, and also the five ‘Nutwood Downs files’, to which Ms McMaster had referred.  Mr Clift of counsel for the Commissioner then sought the order for ‘expense or loss’ mentioned on p2; Mr Maurice did not oppose the making of that order, which was then made in the terms sought.

	Later on 31 August the plaintiff caused a subpoena [doc 178] to issue to the Commissioner, seeking statements by Dr Calley and Dr Ainsworth made between 1 April and 30 June 1984, and files relating to Nutwood Downs in the Police enquiry into BTEC, from 1 January 1982 to 30 June 1984.  

Events of 1 September 1998
	On 1 September 1998 Mr Clift appeared for the Commissioner when the subpoena of 31 August was called on; he produced in compliance therewith “four running sheets”.   These comprised an unsworn statement of Dr Ainsworth dated 8 May 1984, his sworn statement of 20 May 1984, and two unsworn statements of Dr Calley both dated 13 June 1984.   

	Mr Maurice observed that no files relating to Nutwood Downs had been produced; Mr Clift said that there were no Nutwood Downs files which answered the description in the subpoena of 31 August, that is for the periods from “1 January 1982 to 30 June 1984”.  Mr Maurice responded that the plaintiff would issue a fresh subpoena to secure the Nutwood Downs files to which Ms McMaster had referred on 31 August (p3).  

	Later on that day, 1 September, the plaintiff caused a subpoena (doc 183) to issue, with a close description of the five “Nutwood Downs files” which it sought.

	The submissions on costs (subpoena of 31 August)
	Mr Clift then sought an order for “costs or loss or expense in the same terms as yesterday” (see p3), in relation to the subpoena of 31 August.  Mr Maurice objected to such an order being made, on the following 3 grounds:
	(1)	the mere production of the statements of Dr Calley and
Dr Ainsworth in compliance with the subpoena did not require the appearance in Court of a solicitor, since no objection to their production was taken;
	
	(2)	the plaintiff “out of some sort of deference” to Mr Clift and the
Commissioner, had not applied for costs following the Commissioner’s unsuccessful application to set aside the subpoena of 10 August 1998, and some kind of “set-off” should be made as to costs in that regard, in relation to the present application; and 
	(3)	the only question that had required legal argument, namely the 
Commissioner’s unsuccessful application to set aside the subpoena of 10 August 1998, had been resolved, and no penalty had been applied against the Commissioner.

	Mr Clift responded with 4 submissions:
	(1)	the decision of the plaintiff not to seek costs against the 
Commissioner following the latter’s unsuccessful application to set aside the subpoena of 10 August 1998, was a matter for the plaintiff.  It should not impact on the discretion to award costs, in connection with later subpoenas;

(2)	the Commissioner was entitled to obtain advice and have proper 
legal representation in relation to the subpoena of 31 August.  The matter was complex, as illustrated by the earlier application to set aside the subpoena of 10 August, the professional attendance at Court for that purpose, and the cross-examination of Ms McMaster which had then occurred;

(3)	the late service of the subpoena of 31 August (doc 178)on that day – 
requiring production of documents on 1 September – necessitated a professional legal appearance for the Commissioner, as did the fact that the Commissioner may have easily believed that “there would be argument of this nature which would require answer”; and 

(4)	generally, the Commissioner was entitled to be properly legally 
represented.

	On 2 September Mr Clift also relied on ground (1) below, in support of this application.  I said that I would rule on the application for costs, in due course.  

Events on 2 September 1998
	On 2 September 1998 Mr Maurice called on the subpoena dated 1 September 1998 (doc 183), which required the production of:

“The files referred to by Georgia McMaster in sworn evidence before 
His Honour Justice Kearney on 31 August 1998 as the “Nutwood Downs files” and in respect of which she said: “there’s about five of them”.

	Mr Clift appeared for the Commissioner in answer to this subpoena; he produced five identified files.  

	The submissions on costs (subpoena of 1 September)
	Mr Clift then sought “expenses in connection with the subpoena”, including those for his professional attendance at Court. He made the following 3 submissions, in support.

	(1)	It had been necessary for him to attend at Court with the documents, because the subpoena was served on 1 September, and r42.06(1) required that if the documents were to be produced to the Registrar instead of the Court, they had to be produced to the Registrar “not later than 2 days before the first day on which production is required by the subpoena to be made”, which was of course impossible in the circumstances.  He submitted that this had also been the case with the subpoena of 31 August (doc 178).

	(2)	The plaintiff’s solicitor’s actions had necessitated his involvement, in that they had requested him to obtain instructions to accept service of the subpoenas, on behalf of the Commissioner.  He had sought and obtained those instructions.    

	(3)	The issues arising from the subpoena (doc 183) involved “matters of some weight and some argument” and “the Commissioner was entitled to be represented in those circumstances”.  

	Mr Maurice submitted as follows.  
	(1)	He restated the thrust of his submissions of 1 September (see pp4-5).

	(2)	The five files now produced pursuant to the subpoena of 1 September (doc 183), should “have been produced earlier”, in light of Ms McMaster’s testimony (p3) that there were “about five” Nutwood Downs files.  He characterized Mr Clift’s construing the wording of the subpoena of 31 August (doc 178) so as to exclude the Nutwood Downs files, and the fact that he had not brought those files to Court on 1 September together with the statements of Dr Calley and Dr Ainsworth, as constituting “obstructionism” and “a way of racking up costs”.  

	Mr Clift, in reply, rejected Mr Maurice’s submissions, asserting that a person subpoenaed could “do no more than answer the terms of it”.  I said that I would also rule on this application for costs in due course.

The ambit of “expense or loss” in r42.08
	Although Rules of Court have always provided for payment of conduct money to enable a non-party subpoenaed to come to Court to answer a subpoena – see r42.05 –  they did not formerly provide for payment to recompense that person for the expenses he might have to incur in searching out, collating and copying the documents subpoenaed; see Bank of New South Wales v Withers (1981) 52 FLR 207 at 225-226.  That deficiency is now provided for in Rules such as r42.08, viz:.

“Where a [non-party] reasonably incurs expense or loss in complying with a subpoena for production exceeding by not less than $100.00 the conduct money given under rule 42.05, the Court may order that the party who filed the subpoena pay to that person an amount in respect of the expense or loss.”

In the present case, the Commissioner is clearly a non-party to whom r42.08 applies.

	Whether particular expenses are expenses incurred “in complying with a subpoena” involves questions of fact, as does the question whether those expenses were “reasonably” incurred.  Legal costs which a non-party “reasonably incurs” in relation to subpoenas received, fall within the concept of recoverable “expense or loss” in r42.08; see Charlick Trading Pty Ltd v Australian National Railways Commission (1997) 149 ALR 647 at 649 per Mansfield J:

“In my view, [a number of decisions of the Federal Court] establish that the scope of [O27 r4A] is sufficient to encompass, if the expense is otherwise reasonable in the circumstances, the expense incurred in seeking advice as to the validity of the subpoena, including whether to comply with it at all or in part; correspondence or attendances on a party issuing the subpoena, regarding its terms, and including with a view to narrowing or clearly identifying the scope of documents to be produced; advice as to whether documents are confidential or properly subject to claims for privilege; correspondence and attendance and negotiations with the party issuing the subpoena, as to the terms upon which access to the documents should be permitted by the court, including the negotiation of and formulation of any undertakings as to confidentiality; attendance in court when the subpoena is called on or when it is stood-over, including attendance to assert and make out any claim that the documents subpoenaed should be protected from unrestricted access due to their confidential character and to seek orders restricting access to the documents or documents produced; and steps to ensure that any confidentiality undertakings proposed to be entered into have, in fact, been properly given: Hadid v Lenfest Communications Inc. (1996) 65 FCR 350; 144 ALR 73.  That list may not be exhaustive.  And, of course, whether any order should be made is a matter to be determined in the particular circumstances of the case …” (emphasis added)

It is appropriate that any legal costs allowed be assessed on a solicitor and client basis, as per r63.57(1), though taxed on the standard basis under r63.26 and not on the basis in r63.59(2); see Fuelexpress Ltd v L M Ericsson Pty Ltd (1987) 75 ALR 284, a case where legal costs incurred by a non-party were allowed, some of the documents subpoenaed being confidential and others raising questions of legal professional privilege. 

	In Triotas Pty Ltd v Rohn (unreported, Supreme Court of New South Wales, 20 May 1993) Young J struck a cautionary note as to the incurring of legal costs, observing in relation to the corresponding NSW Rule Pt37 r9 that not all the cost of legal advice sought by a non-party after receiving a subpoena, falls within the concept of a “loss or expense in complying with a subpoena”.  For example, where the non-party enquires of his solicitor as to what his rights are, and is advised that the subpoena must be complied with, the cost of that advice is not within Pt37 r9.  Again, where documents subpoenaed involve confidential information which the non-party wishes to protect, legal advice on that aspect is “not [legal advice] in connection with complying with a subpoena” but rather “in respect of the private rights which are threatened by the issue of the subpoena”.  In any event, where it is contended that it was reasonable in all the circumstances to have obtained legal advice for the purpose of complying with the subpoena, that was “a matter which must be established by evidence”.  His Honour said:

“It is not to be thought that Pt37 r9 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 that is inconvenient.

It seems to me that it is only in the [Bank of New South Wales v Withers (supra)] type case, where a substantial amount of time 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.”

I respectfully agree.

	In Mancorp Pty Ltd v Baulderstone Hornibrook (1993) 169 LSJS 165, non-parties sought legal advice as to their obligation to comply with the terms of certain subpoenas; this resulted in their identifying documents for which they (mistakenly) believed they might be able to claim legal professional privilege on behalf of the plaintiff.  Debelle J observed at 166 that the corresponding South Australian Rule 81.09 was intended “to compensate a [non-party] for any outgoings reasonably incurred in complying with a subpoena”, and in accordance with that intention “any legal costs properly incurred will be awarded on a solicitor and client basis …”.  However, his Honour did not consider that “in all the circumstances of this case it was reasonable” for the applicants to have sought to identify documents which might have been privileged in the hands of the plaintiff; in so concluding, his Honour bore in mind that the subpoenas had been served “at the eleventh hour”.  He observed at 169:

“The purpose of Rule 81.09 is to compensate for outgoings incurred.  It is not intended to provide compensation for loss of profit.  If a person has to employ staff to search for, identify and collate documents in answer to a subpoena, that person is entitled to recover a proper portion of the salary or wages paid to those employees, which is perhaps most accurately determined by reference to the hourly rate of wages or salary of those employees.  The use of the word ‘loss’ in the expression ‘such loss or expense as is reasonably incurred or lost’ in Rule 81.09 does not I think alter this conclusion.  Even if the word ‘or’ is being used conjunctively and not disjunctively, it is not the intention of the rule to provide compensation over and above outgoings incurred by the person served with the subpoena.”

I respectfully agree.  His Honour held that it was reasonable to claim for time lost in attending the court to produce the documents.

	While noting that “it is clear that the question whether the cost of legal advice can be recovered, and the amount of such costs, will depend on the circumstances of each case”, his Honour said (at 168):
“Where a subpoena duces tecum is served, it is, generally speaking, reasonable for the person served to obtain advice as to what is required in order lawfully to answer the subpoena.  In certain circumstances, that advice will extend to the question whether any of the documents sought by the subpoena are the subject of any claim by the person served for legal professional privilege.  Generally speaking, the cost of obtaining that advice would be a cost reasonably incurred.  But where, as here, a person served with a subpoena has been actively involved in the preparation of the case of one of the parties in the action, it will not, generally speaking, be reasonable for that person to incur the cost of obtaining advice as to which documents ought to be made the subject of a claim for legal professional privilege by that party”.

Conclusions
	The documents ultimately produced in compliance with the subpoenas of 31 August and 1 September were all in the office of Ms McMaster, as at 31 August.  They had not been produced in compliance with the subpoena of 10 August (doc 141) because they did not fall within the time frame referred to in that subpoena.  Once Ms McMaster gave her evidence on 31 August, and Mr Maurice stated that he would subpoena the statements and the five files to which she then referred (p3), there could be no doubt in the Commissioner’s mind as to precisely what the plaintiff was about to subpoena.  

	The four statements were produced on 1 September in response to the subpoena on 31 August (doc 178), but the five files were not.  In the circumstances, I consider that those files should have been brought to Court with the statements, as a matter of prudence and commonsense. There was no need for the Commissioner to have instructed a legal practitioner, Mr Clift, to produce the four statements to the Court, in response to the subpoena of 31 August; in the normal course they could and should have been produced (together with the five files) by one of the Commissioner’s staff – for example, Ms McMaster.  There is no suggestion – let alone any evidence – that there was any need to seek any advice of the nature referred to by Mansfield J in Charlick Trading Pty Ltd v Australian National Railways Commission (supra)  at 649 (see p9), in relation to the statements or the files.  The burden of the cost of engaging a legal practitioner to carry out the mundane task of producing the statements to the Court, cannot be thrown on to the plaintiff.  I uphold Mr Maurice’s submission (1) at p4; I uphold Mr Clift’s submission (1) at p5 and reject his submissions (2) and (3) at pp5-6 in the circumstances of this case.  I consider that Mr Clift’s submission (4) at p6 is correct but in the present circumstances the cost of the legal representation which the Commissioner chose to secure, must be borne by him because it was an expense which was not reasonable in the particular circumstances of this case.

	The over-technical approach taken by the Commissioner to the plaintiff’s subpoena of 31 August, necessitated the issue of the subpoena of 1 September (doc 183), which resulted in the production of the five Nutwood Downs files on 2 September.  As noted earlier, those files should have been brought to Court on 1 September, together with the four statements.   As to Mr Clift’s submission (2) at p7, the fact that a solicitor obtains instructions to accept service of a subpoena on behalf of his client, does not mean that his professional attendance at Court is warranted, merely to produce the documents subpoenaed; of course, he is entitled to his fees for obtaining instructions at the plaintiff's request.  The files could have been produced to the Court by an officer of the Commissioner.  I reject Mr Clift’s submissions (1) and (3) at pp6-7.

	I note that there is no evidence that the “expense or loss” incurred by the Commissioner in complying with the subpoenas of 31 August and 1 September exceeded “by not less than $100 the conduct money given under r42.05”.  Such evidence should have been provided.  I assume that conduct money was provided under r42.05 in relation to both subpoenas of 31 August and 1 September; if it was not provided, it should have been.  

	In the circumstances, the Commissioner’s application for the legal costs, loss and expenses in complying with the subpoenas of 31 August and 1 September, is refused.  

	Order accordingly.

_____________________