The consequences of serving a subpoena: compliance costs must be paid

Parties to litigation often fire off subpoenas to third parties seeking the production of documents. These subpoenas may seek voluminous documents. The subpoenaed party may often feel that they do not have appropriate redress available in ensuring that their costs of compliance are covered.

 

Typically, a cheque for a nominal sum of money for compliance costs is included with the subpoena. We have previously written about how a subpoenaed party cannot refuse compliance for receipt of insufficient amount of money; subpoenas are court orders after all. However, this does not mean that a subpoenaed party is left without redress if they incur significant costs in complying with a subpoena.

An often-forgotten reality is that the complying party is entitled to seek their "reasonable loss or expense incurred" in compliance with the subpoena. In the case of Allstar Capital Pty Limited v FIP Holdings Victoria Pty Limited [2019] NSWSC 693, the Supreme Court of NSW considered this issue.

The subpoena in question

Allstar and FIP Holdings Victoria Pty Ltd had entered into a loan agreement. McCabe Curwood acted for Allstar in relation to this transaction. A dispute arose, and proceedings were commenced before the Supreme Court of NSW. FIP Holdings served subpoenas seeking documents forming part of the McCabe Curwood's file. A sum of $25 in conduct money was provided by FIP Holdings.

What followed was extensive correspondence between solicitors regarding defects in the subpoena, its scope, and other procedural issues. After compliance with the subpoena, McCabe Curwood sought their costs of compliance with the subpoena. After an extensive period of time of non-responsiveness from FIP Holdings, a motion was filed to seek the recovery of costs.

It is well established that a subpoena recipient can also recover their costs associated for filing a motion to recover their costs of compliance with the subpoena. Rather than seek to go through the time and expense of a costs assessment, the applicants sought a fixed sum costs order for the costs of compliance with the subpoena and for prosecuting the motion.

Resolving the motion

The respondent elected to not obtain legal representation. In the ordinary course, a corporation must conduct proceedings through a solicitor or, in some limited circumstances, through a director.

In unusual circumstances, the respondent sought to appear through a "friend" of the director. Davies J ultimately granted leave for this friend to appear, but noted in his judgment his reluctance to do so. However, his Honour was convinced to exercise his discretion to ensure that the matter was not further delayed.

His Honour outlined the authorities on the recovery of costs for a subpoena, and considered the relevant facts of the present case. His Honours findings can be summarised as follows:


  • The relevant rules exist to allow the subpoenaed party to be compensated for the actual expense and loss reasonably incurred in compliance. Unlike the costs of litigation, it is not to be distinguished by reference to party/party and solicitor/client costs.
  • The costs that are recoverable include the time incurred in dealing with the subpoena, legal advice obtained in relation to confidentiality and privilege, and costs of photocopying.
  • The conduct of the party issuing the subpoena is relevant and they may be responsible for increasing the costs of compliance, including where subpoenas are defective, where there is a failure to engage in correspondence, where adjournments to return dates are not reasonably accepted, and where the scope of the subpoena is too broad.
  • It is generally unsatisfactory to require a subpoenaed party to go through a costs assessment process and, depending on the costs incurred, it may well be appropriate to order a fixed sum costs order.

Takeaway points

Prior to issuing a subpoena, litigants should carefully consider the necessity of the scope of the subpoena relative to the nature of the documents that they wish to obtain.

Litigants should also remember that they have an obligation to pay the third party's costs of compliance, which includes an obligation to attempt to reach agreement as to those costs. As in this case, where agreement on reasonable costs of compliance with a subpoena cannot be reached, the complying party may seek to recover those costs through the courts.

If you are served with a subpoena, it may be necessary for you to seek legal advice, both as to your obligations and your ability to recover costs. McCabe Curwood is experienced in advising its clients on their rights and obligations in relation to document production.

Contributors

Luke Dominish Lawyer
Ethan Aitchison Law Graduate