Campbell v Willian & Anor

HIS HONOUR: These reasons relate to the costs of a notice of motion to set aside a subpoena to produce documents, brought by a solicitor, Neil Patrick Campbell (the Applicant), who is not a party in the substantive proceedings in which it was filed. The costs sought by him are “costs of, and incidental to, this notice of motion on the indemnity, or standard, basis” and are sought from the Respondents named in the notice of motion, who are the Defendants in the substantive proceedings, and the persons who requested the issue of, and then served, the subpoena upon him.

It is important to note that the dispute does not relate to the amount of reasonable loss or expense incurred in complying with the subpoena, by the Applicant, upon whom the subpoena was served. The Court, at no time, was asked to fix the amount, or direct that it be fixed, in accordance with the court’s usual procedure in relation to costs: Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) r 33.11.

At the hearing for costs, it was not disputed that, following some agreed reduction in the scope of the documents sought to be produced, the Applicant had complied with the subpoena. The expense of such compliance by the Applicant had also been agreed at $8,612.17, with the Defendants to pay those costs.

It will be convenient, hereafter, to refer to the parties in the substantive proceedings by the role which she, or they, played in the proceedings.

Prior to the hearing of the Applicant’s notice of motion, the suggestion, made by the Court, to counsel involved, that it might be prudent to delay any costs argument until after the hearing of the substantive proceedings, during which the Applicant is likely to be cross-examined, and when the significance of the documents produced would be established, counsel for the Applicant singularly rejected it, upon the basis that the solicitor did not wish the determination of his application for costs to be delayed until after the completion of the substantive hearing.

In the circumstances, I accepted that, it was appropriate that the Court deal with the costs of the Applicant’s notice of motion as soon as it could: Ashwood v Ashwood [2023] NSWSC 208 at [85] (Parker J).

There is no evidence that the costs of the notice of motion that are sought by the Applicant have been quantified, or even estimated. At the hearing of the notice of motion, counsel for the Applicant, after being given the opportunity to obtain instructions (by telephone), was unable to provide even an uneducated estimate of the quantum of the Applicant’s costs that was being sought (Tcpt, 4 May 2023, p 37(34-39)):

Thus, if the Applicant were successful in the application, it would not be possible for the Court to make an order for a specified gross sum instead of assessed costs. It follows that further costs may be incurred in an assessment of costs, requiring further expenditure with respect to what appears to be a relatively small costs claim.

On the application, the Applicant sought to rely upon his affidavit sworn 27 February 2023, comprising 47 paragraphs, together with an exhibit comprising 106 pages; his affidavit sworn 24 April 2023, comprising 6 paragraphs; and an affidavit sworn 28 April 2023 by the Applicant’s solicitor, Mr J S Dwyer, comprising 5 paragraphs, together with an exhibit comprising 3 pages. In addition, counsel tendered 2 emails, each of 1 page (Ex. NMA1).

The Defendants did not read any affidavits although, prior to the hearing, it had been indicated that an affidavit sworn 1 March 2023 of the Defendants’ solicitor, Ms T Murphy, in opposition to the Plaintiff’s notice of motion filed 14 December 2022, to which reference will be made, that challenged the subpoenas referred to therein, and an affidavit of the Applicant, sworn 6 March 2023, in response to Ms Murphy’s affidavit of 1 March 2023 would be read.

It was not entirely clear, from the Applicant’s first affidavit, whether the Plaintiff’s notice of motion (which had been filed before the Applicant’s notice of motion) and affidavit had been served upon, or a copy provided to, the Applicant, although it was tolerably plain that he was aware of it having been filed, and of its contents. However, at the hearing, it was not disputed that the Applicant had been provided with a copy of an affidavit by the Plaintiff’s solicitor, prior to filing his own motion. Counsel accepted that the Applicant, in fact, had received a copy of both the notice of motion and Ms Dakin’s affidavit: Tcpt, 4 May 2023, p 13(23-35). For this reason, it was not necessary for the Defendants to read any affidavits: Tcpt, 4 May 2023, p 13(39-41)).

The hearing of the Applicant’s notice of motion was of about 2.5 hours duration. No deponent was cross-examined. Most of the time was spent upon the oral submissions of counsel for the Applicant.

The Applicant is a sole practitioner at D. A. Harris & Associates. His office is in Helensvale, a suburb of the City of Gold Coast, in Queensland. He did not attend the hearing of the notice of motion.

Neither party identified any document, or pointed to any evidence, that demonstrated any attempt to resolve the dispute about costs (other than, on one occasion requesting that the matter be adjourned so that the matter could be resolved). That they did not file more fulsome evidence on the topic, including identifying any admissible offers, is a relevant matter, considering the extent of the legal work that had been done, and the costs that were incurred before the resolution of the subpoena issue, and the extent of the legal work to be done, and the costs that were incurred, after, the directions hearing held on 6 March 2023.

Bearing in mind the grim persistence with which the costs application was pursued, and defended, by the Applicant and the Defendants, one cannot help but infer that the costs incurred before 6 March 2023, are likely to exceed the costs “of, and incidental to, this notice of motion” incurred after that date. (I shall return to this topic shortly.)

To further understand the claim being made, and the apparent disproportionate amount of Court time that was required to be devoted to the application, a brief outline of the factual basis of the substantive proceedings and of the notices of motion to which reference has been made, is required. It is only necessary to do so in a superficial way.

Lorna Una Clare Willian (the deceased) died on 9 October 2019. She was survived by three children, namely Rosalyn Miller (the Plaintiff); Warrick Willian (the first Defendant); and Debbie Willian (the second Defendant).

The Defendants filed 5 general caveats in the Probate Registry prior to the commencement of the substantive proceedings.

In the substantive proceedings, the Plaintiff propounds, in the alternative, a Will dated 13 March 2014, a Will dated 18 July 2013, a Will dated 25 January 2013 and a codicil of 25 June 2013, each of the deceased. The Defendants assert that the deceased did not have testamentary capacity from 2013 onwards; that she did not know and approve any of the testamentary instruments made in, and after, 2013; and that each of those testamentary instruments was vitiated by the equitable fraud of the Plaintiff and/or of her husband and fraudulent calumny: see, for example, Sharpe v Dyson & Anor [2022] EWHC 2462.

The Defendants propound a Will made by the deceased on 7 July 2011, or in the alternative, a Will dated 7 May 2009, or in the further alternative, a Will dated 26 October 1999. (There may have been a Will made in 2007, but this Will has not been referred to.)

Following an exchange with the Court on 6 March 2023, it became clear that the Plaintiff does not dispute the validity of either of these Wills, although it is asserted that each was revoked by a later Will made by the deceased: Tcpt, 6 March 2023, p 2(48)-3(7).

Following the filing of the caveats, the substantive proceedings were listed in the Succession List, first, on 25 March 2022, when orders were made for the matter to proceed by pleadings. The Plaintiff filed the Statement of Claim on 8 April 2022. It was listed in the Succession List on 14 April 2022 and has been listed, principally for directions, on various occasions, since then.

The Applicant had been retained by the deceased from about 1999, and he took instructions for, and drafted, a number of the testamentary instruments to which reference has been made. He had also acted for her in other matters, including, relevantly, advising her in relation to the administration of her son’s estate in 2013, the sale of her home in late 2013 or early 2014, the revocation of a Power of Attorney in December 2013, and in guardianship proceedings in QCAT in late 2013.

In the substantive proceedings, a detailed affidavit, sworn on 7 April 2022 comprising 9 pages, by the Applicant, was filed and served in the Plaintiff’s case. An exhibit to that affidavit (Ex. NPC-1) comprises 93 pages. There was filed, and served, a further affidavit sworn on 22 July 2022, by the Applicant, comprising 10 pages. An exhibit to that affidavit (Ex. NPC-2) comprises 73 pages.

The affidavits sworn by the Applicant were not made pursuant to the usual direction of the Court requiring an affidavit, or affidavits, from a solicitor, deposing, to the best of his, or her, knowledge, information, and belief, the circumstances in which the testamentary instrument (or instruments) of the deceased was (or were) prepared and executed. The affidavits were said to have been made “at the request of the Plaintiff/Cross Defendant”.

There can be little doubt that the Applicant is likely to be an important witness in the substantive proceedings, particularly as he appears to have been involved with the deceased, and, therefore, knew her professionally, over a reasonably long period of time.

As the substantive proceedings were ready to be heard, the evidence having been completed, the proceedings were referred to the Registrar in Equity on 9 May 2023, to obtain a hearing, with an estimated duration of 5 days. JusticeLink reveals that it has been listed, for hearing, commencing on 20 November 2023.

On 8 December 2022, the Defendants served upon the Applicant, by email, a subpoena, filed on 7 December 2022, relevantly, to produce the following:

The Applicant stated that no conduct money was served, or tendered, with the subpoena to produce documents. In relation to this matter, the Defendant appears to have been unaware of Hall v Donlon [2011] NSWSC 1088, at [4], in which Brereton J had noted that:

The Applicant also noted that “[T]he notice contemplated by section 31 of the Service and Execution of Process Act 1992 (Cth) was not served with the subpoena”. This was relevant to whether service of the subpoena was effective.

However, that the Applicant had actual knowledge of the subpoena and of its requirements is obvious. Indeed, on 12 December 2022, he responded to the Defendant’s solicitors, in writing, stating that he intended to comply with the subpoena that had been served. He observed that “… the scope and extent of the documents the subject of the Subpoena to Produce is extremely extensive covering a very wide timeline”. He did not, then, state that he intended to challenge the scope of the subpoena but added that it would be expensive for him to comply, requiring about 3.5 days of work to collate the documents, at a cost of $9,850.40. In the letter, the Applicant also informed the Defendants’ solicitors that he had provided a copy of his correspondence to the Plaintiff’s solicitors.

There was no prompt response by the legal representatives of the Defendants to the Applicant’s correspondence of 12 December 2022.

The subpoena addressed to the Applicant was returnable before the Subpoenas Registrar on 17 January 2023.

Presumably, in accordance with UCPR r 33.5(2), the Defendants served a copy of the subpoena to produce on the Plaintiff as the only other active party, as soon as was practicable after the subpoena had been served on the Applicant.

On 14 December 2022, the Plaintiff filed a notice of motion seeking to set aside three subpoenas, one of which was the subpoena addressed to the Applicant. In support of that notice of motion, the Plaintiff filed, and served, a lengthy affidavit, sworn on 13 December 2022, of Ms S M Dakin, solicitor, going to reasons why the three identified subpoenas, issued by the Defendants, including the subpoena addressed to the Applicant, should be set aside.

On 13 January 2023, the Applicant’s solicitor wrote in the following terms:

On the return date of the subpoena addressed to the Applicant, neither the Applicant, nor the Defendants, appeared. (There is no evidence about this, but counsel each confirmed that this was a fact not in dispute. It was not known whether the Plaintiff appeared, but it seems unlikely.) No access order was made, and the matter was listed for return of subpoenas on 14 February 2023.

Subsequently, the Defendants served another subpoena, in the same terms, with the relevant notice attached, upon the Applicant, by email on 6 February 2023. No complaint appears to have been made about the service of this subpoena by email.

The Court’s record of proceedings reveals that the Plaintiff’s notice of motion to set aside the Defendants’ subpoenas was returnable in the Succession List on 6 February 2023. On that date, only a legal representative of each of the Plaintiff, and of the Defendants, appeared. I shall return to the explanation provided for the non-appearance by, or on behalf of, the Applicant on that date, later in these reasons.

The Court noted that the Applicant had not, by then, complied with the subpoena and had not filed a notice of motion to set it aside. As is obvious from the correspondence, the subpoena had come to his attention by no later than the last date for service. As a solicitor, he would have been aware of the requirements imposed on him to comply with the subpoena; and that he did have documents that would answer the subpoena.

So as to avoid delay, on 6 February 2023, the Court directed the Defendants to file and serve any evidence in opposition to the Plaintiff’s notice of motion filed 14 December 2022, by 4:00 p.m. on 20 February 2023, and stood the proceedings over, for further directions on Monday, 6 March 2023. There was also discussion of the need for the Applicant to file and serve his own notice of motion to set aside the subpoena if he did not wish to comply with it.

The Applicant filed a notice of motion on 14 February 2023, seeking an order that the subpoena addressed to him be set aside. He did not file an affidavit in support of the notice of motion at that time.

Having compared the terms of the Plaintiff’s notice of motion with the Applicant’s notice of motion, they essentially seek the same relief. Consequently, the Defendants became respondents to both notices of motion.

On 28 February 2023, the Applicant served an affidavit sworn by him on 27 February 2023 and, subsequently, filed in Court Exhibit NPC-3 (which had not been included with the affidavit). In the affidavit, the Applicant referred to the nature of the documents sought, and the difficulties he would experience in complying with the subpoena, including the need to engage a computer consultant to access computer files not on his current server, the need to locate all the paper and hard copy files that had not been kept as electronic files, the review, or checking, of practice records to ascertain whether there were archived records, and the need to inspect records held in two off-site storage facilities to search for archived files or documents. He noted that he would also be required to personally undertake a review of potentially relevant documents to assess whether they were responsive to the subpoena, as well as whether they were subject to legal professional privilege or another form of privilege.

The Applicant’s notice of motion was returnable on 6 March 2023. Counsel (Mr L Judd) appeared on his behalf, as did a legal representative of each of the Plaintiff and of the Defendants.

The transcript of the proceedings on that day reveals that there was discussion between the Bench and the legal representatives, to ascertain whether all of the documents referred to were required in answer to the subpoena addressed to the Applicant, in circumstances where the Defendants did not assert that the deceased lacked testamentary capacity prior to 2013.

By way of example, the Court asked whether documents relating to the 1999 Will, in circumstances where the parties did not dispute the validity of the 2011 Will, and counsel for the Defendants said that the 1999 Will was relevant to illuminate “the testator’s pattern of making Wills and the instructions”: Tcpt, 6 March 2023, p 3(1-4).

After some discussion, counsel for the Defendants indicated, it would seem, for the first time, that the scope of the subpoena could be narrowed. Accordingly, the Court, relevantly, noted that the Defendants would inform the Applicant of the documents which were pressed in relation to the subpoena, by 4:00 p.m. on Friday, 10 March 2023; directed the Applicant to inform the Defendants of the cost of compliance and the time required to enable production of those documents, by 4:00 p.m. on 17 March 2023. The costs of all parties of the directions hearing were reserved.

Surprisingly, on 6 March 2023, counsel who then appeared for the Applicant, stated that he had thought the Applicant’s notice of motion would be heard on that day. How he came to hold that thought was not explained. All counsel agreed that the estimated duration for the hearing of the two notices of motion was one-half, to one, day: Tcpt, 6 March 2023, p 7(4-14).

Any belief held by counsel for the Applicant, or, by the Applicant himself, that the notices of motion would be heard on 6 March 2023 seems to have been ill-considered. The Applicant’s affidavit of 27 February 2023 could only have been served 4 working days before the Applicant’s notice of motion was returnable. Furthermore, it should have been obvious that the two notices of motion, if contested, could not be dealt with in a busy List and would require a separate hearing.

On 10 March 2023, the Defendants’ legal representatives wrote to the Applicant’s legal representatives outlining the proposal to confine the date range of documents for production to 1 January 2011 to 13 March 2014. The solicitors reiterated that the Defendants would pay the reasonable expense of compliance with the subpoena.

In response, the Applicant’s solicitors indicated that the estimated costs of compliance would be $10,000 (being slightly more than the costs of compliance in respect of the original subpoena).

When the matter was next before the Court, on 27 March 2023, the Defendants, by counsel, indicated, again, that they were willing to pay the reasonable expense of compliance. The matter was stood down in the list to allow the legal representatives to ascertain the quantum of those costs, as well as the costs of the notice of motion.

The Applicant’s notice of motion was not dismissed because his counsel maintained that it was not appropriate to do so, as the Applicant wished to maintain his claim for the costs of the notice of motion: Tcpt, 27 March 2023, p 8(1-25); Tcpt, 1 May 2023, p 3(18-33), p 7(11-50). Counsel also indicated there would be a costs application.

To advance the preparation of the substantive proceedings, the Court suggested that, if a fixed amount could not be agreed upon, an order for the amount sought of $10,000 to be paid into Court could be made, and the Applicant’s costs of compliance would then be considered after the documents had been produced and evidence of the Applicant’s expenses had been filed.

With regards to the costs of the notice of motion, the Court stated that if they were not agreed, they would have to be assessed. The Court also suggested that the costs of the notice of motion be reserved so that the parties could agree on a gross sum costs order. There is no evidence that this was done or even attempted to be done.

The matter was referred to Chambers in the hope that orders by consent could be made dealing with both notices of motion and the costs thereof.

By email sent from the Defendants’ solicitor on 4 April 2023, a request was made that the Applicant’s notice of motion be stood over “to allow the other notice of motion in the proceedings, commenced by Mr Campbell, to be resolved”. (This is the occasion to which earlier reference was made and is as far as the evidence goes.)

Subsequently, on 5 April 2023, the Court, in Chambers, ordered that the Plaintiff’s notice of motion be dismissed with the costs of each party of the notice of motion being costs in the cause. (The matter was dealt with in Chambers with some of the orders being made consensually.)

I pause here to note that by 5 April 2023, the Applicant had filed and served the notice of motion and one affidavit in support and had appeared, by counsel, on two directions hearings, being held on 6 March 2023 and 27 March, 2023. Without any direction from the Court, and, it seems, prematurely, the Applicant’s then counsel had prepared written submissions prior to 6 March 2023, which had been served with a copy provided to the Court.

Although there was no evidence of the Applicant’s costs, calculated on the ordinary basis, as at 5 April 2023, experience dictates that the Applicant’s costs and disbursements of the notice of motion, up to that time, would have been unlikely to be more than a few thousand dollars.

Faced with an impasse in relation to the Applicant’s notice of motion, the Court directed that any further evidence in relation to the costs thereof be filed and served by 4:00 p.m. on 24 April 2023, and ordered that the proceedings, including the Applicant’s notice of motion, be stood over to 1 May 2023.

On 1 May 2023, the parties were given a further opportunity to agree upon orders. The Court pointed out that the costs of further argument about the costs of the notice of motion would be greater than the costs involved in the notice of motion. The Court even raised with counsel for the Applicant, the possibility that the costs of a hearing to argue costs could be ordered to be paid on the indemnity basis, if the Applicant was unsuccessful in seeking the costs order that was being sought. In this regard, neither party sought, nor gave, any quarter.

When it appeared that the Court’s hope the legal representatives would consider proportionality was a forlorn one, as the Applicant and the Defendants were unable to reach any agreement, the application for costs of the notice of motion was listed, for hearing, on 4 May 2023: Tcpt, 1 May 2023, p 1(39-50).

Even then, neither the Applicant, nor the Defendants, provided any evidence concerning steps taken, at any time, by him, or them, respectively, to resolve the issue of the costs of the Applicant’s notice of motion. Neither filed any estimate of the costs, the subject of dispute and, as will next be read, each maintained his, and their, most favourable position, respectively.

At the hearing of the costs application, counsel submitted that there should be an order that the Applicant’s costs, calculated on the indemnity basis or, alternatively, on the ordinary basis, be paid by the Defendants personally. It was said, that, as a third party to the proceedings, he should have all his reasonable outlays reimbursed.

Counsel repeated the four matters that were advanced in written submissions that were said to demonstrate unreasonableness in the Defendants’ conduct in relation to the subpoena and the notice of motion. These matters were:

In oral submissions, counsel argued that it had been necessary for the Applicant to file the notice of motion dated 14 February 2023, or else he would have been in breach, as he had not otherwise complied with the subpoena. He submitted that the Applicant had not been joined as an interested party to the Plaintiff’s notice of motion and did not have standing to attend the hearing on 6 February 2023. He pointed to correspondence from the Defendants that stated that the Court had indicated that the Applicant could be arrested for failure to comply with the subpoena if he did not file a motion (Affidavit, Neil Patrick Campbell, 27 February 2023 at Exhibit NPC-3, p 59).

He further submitted that it was only following the return of the Applicant’s motion on 6 March 2023 that the Defendants had agreed to narrow the scope of the subpoenas: Tcpt, 4 May 2023, p 19(44-47), p 20(16-22).

Counsel for the Defendants, in his submissions, provided a broad history of the Applicant’s notice of motion to which I have referred. He reiterated that the Defendants had not disputed the Applicant’s entitlement to his reasonable costs of compliance with the subpoena to produce but had only questioned the quantum of those costs given the lower estimate that had been provided on 12 December 2022.

He invited the Court to consider three relevant factors in its exercise of discretion with respect to costs under s 98(1) of the Civil Procedure Act 2005 (NSW): first, that the Applicant’s notice of motion duplicated the relief sought by the Plaintiff in her notice of motion; second, that the Applicant sought for the whole of the subpoena to be set aside in the submissions of 6 March 2023; and third, that the Applicant had since produced documents in compliance with the subpoena on a narrowed basis as was agreed between the parties, noting that both the Applicant and the Defendants had a measure of success. He argued that the Applicant’s success was “more in form than in substance” in terms of the actual costs of compliance.

There was a brief oral submission that there was some forensic importance to the documents that had been sought from the period of 1999 to 2011, during which there was no dispute over the deceased’s capacity, as it could go to the weight of the Applicant’s evidence as a solicitor who had completed work for the deceased since 1999: Tcpt, 4 May 2023, p 29(50)-30(7).

I have already referred to the submission that the Applicant should have sought an order under UCPR r 33.11 that his costs of compliance be paid, instead of filing a motion, which, unnecessarily, duplicated the relief sought by the Plaintiff in her earlier motion.

His submission concluded with:

Because a subpoena to produce is an order, in writing, requiring the recipient to produce a document, or thing, to the Court (UCPR r 33.1), subject to formalities as to service having been complied with, the Applicant was required to comply with the subpoena by production to the Court of a document or thing specified in the subpoena (UCPR r 33.6). The failure to comply with a subpoena, without lawful excuse, would be a contempt of court, and the addressee may be dealt with accordingly: (UCPR r 33.12).

Rule 33.4 of the UCPR provides that 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, provided that notice is given to the issuing party.

Unsurprisingly, the term "sufficient interest" is not defined in the UCPR. However, what constitutes “sufficient interest” will be context specific, differing from case to case. Whilst it might be impossible to define the term, it seems clear that the recipient of a subpoena, who is not a party to the proceedings in which the subpoena was issued, and whose documents are being sought, and who is directly affected by having to comply with it, has standing to seek to have it set aside.

I am satisfied that the Applicant had standing to file and serve the notice of motion, even though the Plaintiff had filed a notice of motion in similar terms. As stated, as a solicitor, it was a prudent course for the Applicant to follow, although, equally prudently, he could have sought an order that compliance with the subpoena be extended until after the hearing of the Plaintiff’s notice of motion.

However, I do not accept the submission made on the Applicant’s behalf that he did not have standing to appear at the directions hearing on 6 February 2023. Had he done so, the Court might have simply directed him to file an affidavit in support of the Plaintiff’s notice of motion, or alternatively sought the agreement of the parties that the date for compliance with the Defendants’ subpoena be extended to a date after the hearing of the Plaintiff’s notice of motion. More probably than not, the type of discussion, between Bench and Bar, that had occurred in Court on 6 March 2023 would have occurred.

In my view, it was not the filing of the Applicant’s notice of motion that prompted what occurred after 6 March 2023, but the discussion held with the legal representatives present.

Nor do I accept that the Applicant had complete success on the notice of motion. It is translucently clear that the reduction in the scope of the subpoena addressed to the Applicant came about as a compromise between the parties in the substantive proceedings, which compromise followed the events on 6 March 2023, and discussion with the Court. The compromise demonstrates that at least some of the documents the subject of the subpoena should be produced.

Also, I do not accept the submission made by counsel for the Defendants that the Applicant should have sought an order that the costs of compliance be paid before compliance had occurred. In Hall v Donlon, at [5], Brereton J wrote:

Also see, M-H Engineering Solutions Pty Ltd t/as LMF Earthmoving v Michael John Rolfe & Ors [2023] NSWSC 398, where Harrison AsJ referred to the authorities at [28]-[33].

The principles applicable on interlocutory costs applications are well-known. Costs, even of a disputed notice of motion, are in the discretion of the Court: Civil Procedure Act 2005 (NSW) s 98. The discretion must be exercised judicially and by reference to the overriding statutory purpose mandated by s 56 of the Act: Kyriacou v Raphis Securities Pty Ltd (No 2) [2022] NSWSC 339 at [27].

The Court has full power to determine by whom, to whom, and to what extent, costs are to be paid. Furthermore, the Court may order that costs to be awarded may be calculated on the ordinary basis or on the indemnity basis.

The general rule is that if the Court makes any order as to costs, the Court is to order that costs follow the event unless it appears to the Court that some other order should be made as to the whole, or any part, of the costs: UCPR r 42.1.

The purpose of a costs order is to compensate, or indemnify, the person in whose favour it is made, not to punish the person against whom it is made: Ohn v Walton (1995) 36 NSWLR 77 at 79 (Gleeson CJ).

There is no specific rule in the Civil Procedure Act, or the UCPR, dealing with costs in circumstances where the parties resolve their differences without a hearing on the merits. In those circumstances, the court’s discretion must also be exercised judicially, that is, according to relevant considerations, and taking account of the contextual features and facts of the litigation. The discretion must not be exercised arbitrarily or capriciously.

There are, however, a number of authorities setting out the applicable principles in respect of the making of orders for costs where there has been no hearing on the merits, including, Re the Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622, particularly at 624-625; [1997] HCA 6; Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201-202; [1993] FCA 585; One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270; Fire Containment Pty Ltd v Robins (No 2) [2011] NSWSC 547; Ajkay v Hickey & Co Pty Limited [2011] NSWSC 822; and Red Bull Australia Pty Ltd v Michael Peter Stacey and Christian Walter Graebner [2011] NSWSC 1350. Such cases provide guidance on circumstances that may constitute a basis for the exercise of discretion, but the overriding consideration will always be whether there is some circumstance that justifies a costs order, so as to do justice between the parties.

In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin, at 624-625, McHugh J said:

In Australian Securities Commission v Aust-Home Investments Ltd, at 530, Hill J set out five propositions:

In One.Tel Ltd v Deputy Commissioner of Taxation, Burchett J, referred to both Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin and Australian Securities Commission v Aust-Home Investments Ltd, writing, at [6]:

This passage was cited, with approval, by the Full Federal Court in Chapman v Luminis Pty Ltd [2003] FCAFC 162, at [7] and by Davies AJA (with whom Mason P and Meagher JA agreed) in Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302 at [5]. Davies AJA prefaced his reference to the relevant passage stating:

In Boscaini Investments Pty Ltd v Corporation of the City of Kensington and Norwood (1999) SASC 327, Debelle J wrote, at [22], of the third of Hill J's propositions in Australian Securities Commission v Aust-Home Investments Ltd:

The court is required to make such order as it thinks just in the particular circumstances of the case. In Howards Storage World Pty Ltd v Haviv Holdings Pty Ltd (2010) 182 FCR 84; [2010] FCAFC 5, Gray J, at [17], observed that:

The general rule is that costs are payable on the ordinary basis. A court should only depart from the general rule and award indemnity costs where the conduct of the party against whom the order is sought is plainly unreasonable: Sydney City Council v Geftlick [2006] NSWCA 280 at [90] per Tobias JA, Mason P and Hodgson JA agreeing. Indemnity costs orders should be reserved for the most unreasonable action by an unsuccessful plaintiff: see Leichhardt Municipal Council v Green [2004] NSWCA 341 per Santow JA at [57].

More recently in Cappello v HomeBuilding Pty Ltd [2023] NSWCA 109, Mitchelmore JA, with whom Meagher JA and Simpson AJA agreed, wrote at [47] – [48]:

Having considered all the evidence, and the submissions, and in the exercise of the Court’s discretion, I find that the Applicant filed the notice of motion, and the subsequent affidavit of 27 February 2023, with good reason. There was no suggestion, by the Defendants, that he need not comply with the subpoena until after the determination of the Plaintiff’s notice of motion.

However, I am not satisfied that the Defendants engaged in conduct that warrants an order for indemnity costs in relation to requiring the filing and service of the notice of motion and affidavit in support. Therefore, the Applicant should receive, from the Defendants, his costs, calculated on the ordinary basis, of the notice of motion, the first affidavit in support, and the appearance, for directions, on 6 March 2023.

The Applicant should also receive the costs of the consideration of the correspondence between the legal representatives between 6 March 2023 and 5 April 2023.

The Defendants should bear the Applicant’s costs referred to as it should not have required discussion with the Court to come to the view that, perhaps, the scope of the subpoena might be narrowed, as it ultimately was, although it is to be noted that the Defendants had agreed to pay the Applicant’s costs of compliance with the subpoena as originally drafted.

I am not satisfied, however, that the Applicant should receive the fees charged by counsel for the written submissions, which were prepared, and then served on 6 March 2023, without any direction from the Court to do so, and in circumstances where it was highly unlikely that the two notices of motion would be heard on that day.

As occurred on 6 March 2023, following discussions between Bench and Bar, directions were made with a view to the Defendants considering, and advising the Plaintiff and the Applicant, how the scope of the documents could be narrowed. The directions were complied with and resulted in the Defendants agreeing to narrow the scope of the documents required to be produced, the Plaintiff’s notice of motion being dismissed on 5 April 2023, with the costs of each of the parties being costs in the cause, and the Applicant producing the documents that were sought.

However, the Applicant’s notice of motion needed to be adjourned to 1 May 2023. It could properly have been dismissed on 5 April 2023, leaving outstanding any issue of the costs of the notice of motion to be resolved.

In this regard, it is to be remembered that the Applicant’s notice of motion sought the whole of the subpoena to be set aside. In the events that happened, it was unlikely that the relief sought would, in its entirety, have been granted.

That result also means that the Defendants were not entirely successful in obtaining all of the documents that, initially, had been sought. In other words, by compromise, each of the parties and the Applicant was partially successful. Contrary to what was argued by counsel for the Applicant, neither was wholly successful.

Also critical to the determination of how other costs should be borne, is the approach of both the Applicant, and the Defendants, after the narrowing of the scope of the documents to be produced. In my view, that approach was quite unreasonable. On the available evidence, neither appears to have made any effort to resolve the issue of what should have been a relatively modest amount of the Applicant’s costs that had been incurred. Instead, both engaged, relentlessly, in incurring further costs and disbursements, without any apparent consideration of the quantum of those costs and disbursements, when compared with the Applicant’s costs up to, and including, 27 March 2023.

Bearing in mind the likely costs that would be incurred by the Applicant in relation to the costs of the notice of motion prior to 6 March 2023, every effort should have been made, by both, to resolve the costs issue before additional, more significant, costs were incurred. The Court raised this matter squarely on 27 March 2023, noting that it would be “sensible” for the parties to reach agreement on costs: Tcpt, 27 March 2023, p 2(20-21). The Court did so, again, on 1 May 2023: Tcpt, 1 May 2023, p 1(35-43).

Furthermore, it is to be remembered that the Applicant’s expense of compliance with the subpoena had been accepted as being payable by the Defendants, and those costs are substantial.

I have not been persuaded that either party should receive costs from the other after 6 March 2023, other than the costs of the consideration of the correspondence sent between 6 March 2023 and 5 April 2023. Each party had sufficient information, following the directions hearing on 6 March 2023, to enable an assessment of the costs that had been incurred to that date, and to estimate the costs that would be incurred in the event that the costs of the notice of motion were not agreed. The Court made every effort to encourage both parties to consider these matters.

In relation to the application for the costs of the notice of motion, the Applicant, and the Defendants, should also have considered his, and their, prospects of success, in circumstances where there had been no determination of the notice of motion and what had occurred involved compromise. Had each party, done so, he, and they, should have realised that the additional costs to be incurred, with further evidence being filed and served, counsel being briefed to appear at the hearing, and a hearing of 2 to 3 hours duration, would far exceed the costs that had been incurred already.

Section 60 of the Civil Procedure Act provides that in any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute. The Court endeavoured, more than once, to direct the parties’ attention to all these matters. The failure by them to do so demonstrates an alarming lack of insight.

The lack of any evidence of having attempted, but failing, to agree on the amount of costs to be paid in relation to the notice of motion speaks volumes in circumstances where the Court indicated the good sense in trying to do so before a hearing. I hasten to mention the consideration of the efficient use of available judicial, and administrative, resources. Costs should not have been unnecessarily incurred, and the Court’s time should not have been taken up, without there having been any apparently genuine attempt to resolve the costs issue.

Finally, I should add that there can be little doubt that the Applicant was, and the Defendants were, respectively, seeking to advance, and then maintain, his, and their, own interests, respectively, in seeking, and opposing, the costs application. He, and they, individually, should bear the costs of that indulgence. Even at the hearing of the Applicant’s notice of motion, each sought to advance his, and their, best position, respectively.

Accordingly, the Court: