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Supreme Court 5 July 2018

Regina v Obeid

[2018] NSWSC 1024

Fraud & dishonesty
CRIMINAL PROCEEDINGS SUBPOENA ISSUED BY ACCUSED TO THIRD PARTY WIDELY DRAFTED SUBPOENA SET ASIDE BY CONSENT UCPR 34.11

Citation: Regina v Obeid [2018] NSWSC 1024
Court: Supreme Court of New South Wales
Date: 5 July 2018
Judge: Beech-Jones J

Background

An accused facing trial on indictment for conspiracy to misconduct in public office caused a subpoena to be issued to a third-party company (a mining project proponent) seeking documents in 13 widely drafted categories, covering periods of up to 18 years. The third party retained solicitors, challenged the subpoena as oppressive, and repeatedly requested the accused's solicitors explain the forensic purpose of the documents sought. No satisfactory explanation was ever provided.

The third party filed a notice of motion to set the subpoena aside and simultaneously began collating documents in response to it. The subpoena was ultimately set aside by consent in April 2018 after the accused's solicitors indicated their client would withdraw it.

The third party then sought two categories of costs: the costs of successfully applying to set aside the subpoena, and reimbursement of its reasonable loss and expense incurred in complying with the subpoena during the period it remained on foot.

Legal Issues

  • Whether the Supreme Court has power, in proceedings on indictment, to order an accused person to pay the costs of a third party who successfully applies to set aside a subpoena issued on the accused's behalf.
  • Whether the phrase "other relief" in UCPR r 33.4 confers an independent power to award costs in this context.
  • Whether an application to set aside a subpoena in criminal proceedings constitutes a "civil proceeding" under the Civil Procedure Act 2005, thereby engaging s 98 of that Act.
  • Whether the Supreme Court's inherent powers extend to making a costs order of this kind in proceedings on indictment.
  • What amount should be fixed as reimbursement for the third party's reasonable loss and expense in complying with the subpoena, including the cut-off date for recoverable costs.

Decision

Issue 1: Whether "other relief" in UCPR r 33.4 includes costs

The court held that the phrase "other relief" in UCPR r 33.4(1) does not constitute an independent source of power to award costs. Read in context, the phrase refers to relief that limits or regulates the effect of a subpoena, such as orders staggering production times or restricting the scope of particular categories. Costs are addressed elsewhere in the Civil Procedure Act and the UCPR, and the rule cannot be treated as conferring a freestanding costs jurisdiction (at [37]).

Issue 2: Whether the application to set aside was a "civil proceeding"

The court held that an application to set aside a subpoena issued by an accused in proceedings on indictment is plainly an interlocutory step in criminal proceedings. It is not governed by the Civil Procedure Act or the UCPR (at [44]). Both the issue of the subpoena and the third party's resistance to it were directed to the process of determining the accused's guilt or innocence. To characterise the application as a "civil proceeding" would have produced a result inconsistent with the Court of Criminal Appeal's binding decision in Stanizzo v Complainant [2013] NSWCCA 295 (at [44]).

Issue 3: Whether inherent powers support a costs order

The court held that the inherent powers of the Supreme Court do not extend to ordering an accused facing trial on indictment to pay costs of this kind (at [50]). The principle endorsed in both Deeks and Stanizzo is that a power to award costs in criminal proceedings must be clearly and expressly conferred. The combination of s 17 of the Supreme Court Act 1970 and Part 75 of the Supreme Court Rules reveals a deliberate legislative choice to apply some, but not all, of the UCPR's provisions to proceedings on indictment, with costs provisions deliberately excluded (at [50]). The court declined to follow the ACT decision in R v Barbaro, finding it inconsistent with Stanizzo and predating the authoritative statement of principle in Deeks (at [53]).

Issue 4: Quantum of compliance costs

The court accepted that it was reasonable for the third party to pursue compliance and the setting-aside application simultaneously, at least up to a point (at [57]). However, by the end of 12 March 2018, the third party knew or should have known it would receive adequate time to complete document production after any resolution of its challenges to the subpoena's scope. Costs of collating documents after that date were not recoverable (at [58]). The court allowed 70 per cent of the legal fees charged up to 12 March 2018, discounting them to account for charge-out rates that were too high to impose as a liability on the accused as a stranger to the costs agreement (at [61]). The WorleyParsons consulting costs were calculated on a pro-rata basis to 12 March 2018 and at a reduced rate of $150 per hour in the absence of evidence justifying the $200 rate (at [64]). Internal staff costs were allowed in full, with the hourly rates for the Chief Operating Officer, General Manager and Manager accepted as reasonable (at [65]). The total amount allowed was $26,980.00 inclusive of GST. Enforcement of the payment order was stayed until 28 days after the conclusion of the trial, with interest running at 7.5 per cent per annum from 1 May 2018 to protect the third party's position (at [68]-[69]).

Issue 5: Alleged improper purpose

The court was not satisfied to the requisite standard that the accused procured the subpoena for the improper purpose of assisting a related company's commercial negotiations with the third party (at [20]). Nevertheless, as a precautionary measure, the court ordered that no further subpoena to the third party may be issued on the accused's application without leave of a judge (at [20]).

Orders Made

  • The accused pay KEPCO Bylong Australia Pty Ltd $26,980.00 together with interest accruing daily at 7.5 per cent per annum from 1 May 2018.
  • Enforcement of that order 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, whichever comes first.
  • No subpoena may be issued to KEPCO Bylong Australia Pty Ltd on the application of the accused in these proceedings without the leave of a judge of the court.
  • The notice of motion filed 13 April 2018 otherwise dismissed.

Key Takeaways

  • In proceedings on indictment before the Supreme Court of New South Wales, there is no power to order an accused to pay the costs of a third party who successfully applies to set aside a subpoena issued on the accused's behalf. The power to award costs in criminal proceedings must be clearly and expressly conferred by statute or applicable rules (at [54]).

  • An application to set aside a subpoena issued in proceedings on indictment is an interlocutory step in criminal proceedings, not a "civil proceeding" under the Civil Procedure Act 2005. Section 98 of that Act, which confers a general costs discretion, is not engaged (at [44]).

  • Part 75 rule 3 of the Supreme Court Rules reveals a deliberate legislative choice: it incorporates the UCPR provisions allowing reimbursement of reasonable costs of complying with a subpoena, but does not incorporate the costs provisions of the CPA or UCPR Part 42 that would support a costs order on a setting-aside application (at [32]).

  • Where a recipient of a subpoena in criminal proceedings pursues compliance and a setting-aside application concurrently, only compliance costs incurred up to the point at which the recipient knew (or should have known) it would receive sufficient time to complete production are recoverable as reasonable loss or expense under UCPR r 33.11 (at [57]-[58]).

  • Charge-out rates agreed between a subpoenaed party and its solicitors are subject to a reasonableness assessment before being imposed on an accused as a stranger to that costs agreement. The court here applied a 70 per cent reduction to external legal fees to reflect that the contracted rates were too high to meet the "reasonable" standard required by r 33.11 (at [61]).

Legislation and Cases Referenced

Legislation
- Children (Care and Protection) Act 1987
- Civil Procedure Act 2005, ss 3(1), 4(1), 98
- Confiscation of Proceeds of Crimes Act 1989 (Cth)
- Criminal Appeal Act 1912, s 17
- Evidence Act 1995, s 140
- Mining Act 1992
- New South Wales Act 1823 (Imp) (4 Geo IV c 96)
- Supreme Court Act 1933 (ACT), s 23
- Supreme Court Act 1970, ss 17, 22, 23
- Supreme Court Rules, Pt 75
- Uniform Civil Procedure Rules 2005, rr 33.11(2), 34, Pt 33, 42

Cases
- A Pty Ltd v Z [2007] NSWSC 999
- ASIC v Sigalla (No 6) [2012] NSWSC 83
- Bimson, Roads and Maritime Services v Damorange Pty Ltd (No 2) [2014] NSWSC 827
- Commissioner of Corrective Services v Liristis [2018] NSWCA 143
- Darcey v Pre-Term Foundation Clinic (1983) 2 NSWLR 497
- Deposit and Investment Co Ltd (receivers appointed) v Peat Marwick Mitchell & Co (1996) 39 NSWLR 267
- Dietrich v The Queen (1992) 177 CLR 292; [1992] HCA 57
- Director of Public Prosecutions v Deeks (1994) 34 NSWLR 523
- Director General Department of Community Services v Houdek [1999] NSWSC 1031
- Frontier Assets Pty Ltd v Fishburn [2011] NSWSC 334
- J Aron Corporation v Newmont Yandal Operations [2004] NSWSC 996
- Keramianakis v Regional Publishers Pty Ltd (2009) 237 CLR 268; [2009] HCA 18
- Markisic and Anor v Vizza [2002] NSWCCA 53
- R v Barbaro (1992) 106 FLR 387
- R v JS (No 2) [2007] NSWCCA 309; 179 A Crim R 10
- R v Mosley (1992) 28 NSWLR 735
- R v Scott (1993) 42 FCR 1
- Re Application by John Fairfax Publication Pty Ltd re MSK, MAK, MMK and MRK [2006] 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