15 May 2014

It's not your fight, but you've still got to swing some punches: dealing with third party subpoenas

by Luke Buchanan, Simone Rees, Nadia Latti

You can recover the cost of complying with a third party subpoena, but it's smart to minimise the cost upfront by checking its scope and reasonableness.

A party to proceedings uses the court's powers of compulsion to subpoena documents from you, even though you're not a party to the litigation. Most businesses automatically comply, unaware that they do have the right to examine and, if necessary, challenge the subpoena. For their part, litigants know that they can't go on fishing expeditions with the other side who will object, but sometimes assume they can be a bit looser with third parties, who aren't in court to argue the toss.

This can be a costly mistake for all concerned. Third parties responding to subpoenas not only can be entitled to their costs from the issuing party, but do have some options for minimising those costs in the first place. This however requires a bit more thinking upfront, when the subpoena is first received.

If you receive a subpoena relating to proceedings to which you are not a party, there are three key questions you should ask at the outset to minimise your costs of complying with it:

  • Are the documents sought under the subpoena relevant to the issues in dispute?
  • Is the subpoena the appropriate method for the issuing party to obtain the documents?
  • What costs can you recover in complying with the subpoena and should you seek some form of assurance that those costs will be paid by the issuing party?

Question 1: Are the documents sought under the subpoena relevant to the issues in dispute?

There can sometimes be a misapprehension that the recipient of a subpoena always has to produce everything that is subpoenaed and that there is no basis on which to challenge the scope of the subpoena. However, it is important to bear in mind that the issuing party can only legitimately ask for documents which are relevant to the issues in dispute in the proceedings. The issuing party cannot use a subpoena as a mere fishing expedition.

The issues in dispute ought to be identifiable by reference to the pleadings. If a subpoena requires extensive (and therefore costly) production it might be useful to examine the pleadings to determine whether the documents or categories of documents requested are in fact relevant to issues in dispute.

Whether a subpoena has legitimate forensic purpose turns on whether the documents would materially assist the issuing party in relation to the proceedings. The test has been formulated in the criminal context as whether it is "on the cards" that the documents would materially assist the issuing party (Alister v The Queen (1984) 154 CLR 404 per Justice Gibbs; applied by Justice Rares in the civil context in Wingecarribee Shire Council v Lehman Brothers Australia Ltd (No 4) [2010] FCA 1128).

If a subpoena is in terms which are too broad, it is liable to be set aside. In Lane v Registrar of the Supreme Court of NSW (1981) 148 CLR 245 at 259, the High Court held that a subpoena to produce documents must "specify with reasonably particularity the documents which are required to be produced". In many situations, it is worthwhile corresponding with the issuing party's solicitors to seek to narrow the scope of a subpoena to comply with the requirements imposed by law. If agreement is not forthcoming, it may be necessary to bring an application to have the subpoena set aside or narrowed by the court.

This is particularly so if locating and retrieving documents for review is likely to be expensive and inconvenient. Often documents are located in offsite storage, or even another state. This may result in significant costs at an initial stage in order to locate the potentially relevant documents, before the documents are even reviewed for relevance. By reducing the scope of the subpoena so that it covers only documents which can legitimately be called for, the contingent costs and outlay of time associated with retrieving and reviewing documents may be reduced.

It is in the interests of the issuing party not to put the recipient of a subpoena to considerable expense in producing documents which are ultimately irrelevant to the issues in dispute (but which are otherwise caught by a poorly drafted subpoena) if it's likely it will be asked to indemnify the recipient for the costs of production.

2. Is the subpoena the appropriate method for the issuing party to obtain the documents?

If you are satisfied that the scope of the subpoena is appropriate, the next question to ask is whether the issuing party should be obtaining the documents from you, or parties in the proceedings. Would they likely also have the same documents? This may be the case when the documents sought include correspondence or agreements between you and one of the parties.

Of course, this depends on the particular facts of the matter, but if it is evident that the same documents are (or ought to be) held by a party to the proceedings, you should consider whether the subpoena is being used as a substitute for discovery and therefore is an abuse of process.

This consideration has particular relevance in NSW after the introduction of Practice Note SC Eq 11, which requires evidence to be served before any order for disclosure is granted. The NSW Supreme Court has taken a broad approach when applying the Practice Note and has not looked favourably on attempts to circumvent it using processes analogous to disclosure, including subpoenas.

3. What costs can you recover in complying with the subpoena?

In NSW, the relevant rule is Rule 33.11(1) of the UCPR, which says: "The Court may order the issuing party to pay the amount of any reasonable loss or expense incurred in complying with the subpoena."

It is well established in the authorities that a third party and stranger to the litigation should not have to bear the costs of producing documents for the purpose of the proceedings. That means if you incur costs in complying with a subpoena, you should be compensated for your actual costs, provided the costs are not unreasonable, either in amount or being unreasonably incurred. This, of course, depends on the circumstances of the matter, as the court retains a discretion in relation to costs.

You are likely to be entitled to recover your costs for:

  • your time spent on locating documents;
  • legal advice on the scope of the subpoena and other issues such as confidentiality or legal professional privilege of the documents sought under the subpoena (on a solicitor/client basis, potentially including obtaining counsel's advice);
  • negotiations with the issuing party aimed at narrowing or clearly identifying documents to be produced and negotiating and formulating undertakings as to confidentiality;
  • legal costs for attending court to respond to the subpoena; and
  • preparing, negotiating and having taxed a bill of costs for such costs,

in each case, to the extent that those costs are reasonably and properly incurred.

However, legal costs for preparing and running an application to set aside a subpoena are unlikely to be recoverable as costs of compliance (although they may be recoverable as costs of a successful application). This is because of the distinction drawn between work that is in compliance with the subpoena and work which is in opposition to it.


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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.