Introduction

Receiving a subpoena to produce documents can be an unfamiliar and potentially disruptive experience for any business owner. While compliance is generally mandatory, navigating the process and understanding your rights is crucial.

Many businesses are unaware that they may be entitled to claim reasonable costs incurred while fulfilling the requirements of a subpoena to produce. This guide explains your obligations when issued with such a subpoena and outlines how you can recover associated expenses under the Uniform Civil Procedure Rules (UCPR).

Understanding Your Business Obligations & Rights with a Subpoena to Produce

What a Subpoena to Produce Means for Your Business

Receiving a subpoena to produce documents can be an unfamiliar experience for business owners. As a formal legal notice, it requires your business to:

• gather specific documents relevant to a court case or legal matter, and
• provide those documents within the specified time frame.

Generally, you must comply with these requirements.

Your Right to Claim Reasonable Costs

While complying with a subpoena is necessary, many business owners are unaware of their rights regarding associated expenses. The Uniform Civil Procedure Rules (UCPR) allow businesses to claim the reasonable costs incurred during the process of producing the requested documents. This differs from subpoenas that require someone to attend court to give evidence.

Conduct Money & Reasonable Costs for a Subpoena to Produce

Why Conduct Money Usually Does Not Apply to Your Subpoena to Produce

A common question regarding subpoenas is whether you can refuse compliance if the conduct money seems insufficient. However, the requirement to provide conduct money generally applies only to subpoenas that compel attendance to give evidence, not those solely for producing documents.

This principle is established in legal precedent, including:

• Re Bauhaus Pyrmont Pty Ltd (in liq) [2006] NSWSC 253
• Hall v Donlon [2011] NSWSC 1088

These decisions confirm that under rule 33.6(1) of the UCPR, the obligation to tender conduct money is limited to subpoenas requiring a person to attend court to testify. Therefore, for a subpoena that only requires your business to produce documents, the issuing party is typically not obligated to provide conduct money upfront.

The Court’s Power to Award Reasonable Costs Under UCPR 33.11

While conduct money may not apply to a subpoena for production, the court has the authority to ensure you are compensated for the effort involved. Under rule 33.11(1) of the UCPR, the court may order the party who issued the subpoena to pay the reasonable loss or expense you incurred in complying with it.

This means that, even without upfront conduct money, your business can seek reimbursement for:

• the costs associated with gathering the requested documents
• the expenses involved in providing those documents

Importantly, any amount awarded by the court under rule 33.11(3) is distinct from—and additional to—any conduct money or witness expenses that might apply in other circumstances.

How Reasonable Costs for Subpoena Compliance Are Determined

The Court’s Focus on Reasonableness Not Taxation

When determining the costs and expenses associated with complying with a subpoena, the court’s primary role is to assess whether the claimed costs were reasonably incurred. This process is distinct from a formal taxation or assessment of costs.

In other words, the emphasis remains squarely on the reasonableness of the expenses tied directly to the compliance effort itself.

Key Factors from the NewSat Case for Business Owners

The Federal Court’s decision In the matter of NewSat Limited (receivers and managers appointed) (in liquidation) provides guidance on how courts assess reasonable costs for subpoena compliance. Key considerations highlighted in this case include:

• Compensation for Search Time: Although no specific statute mandates compensation for time spent searching for documents for an order to produce, the court acknowledged it is appropriate to make an allowance for this effort.
• Relevance of Subpoena Cost Principles: The established legal principles regarding costs and expenses for complying with a subpoena are relevant when considering claims related to orders for production.
• Engaging External Lawyers: It can be considered reasonable for a business receiving a subpoena to hire an external law firm for tasks like reviewing documents, especially when dealing with significant time pressures or large volumes of material. This includes reviewing for relevance.
• Internal Capacity Not Scrutinised: The court generally does not investigate the internal work capacity of the third party ordered to produce documents when assessing the reasonableness of engaging external help.
• Manual Document Review: Undertaking a manual review of each document to determine its relevance, check for legal privilege, and assess confidentiality can be deemed a reasonable step in the compliance process.

Types of Costs Your Business Can Claim for a Subpoena

Claiming Internal Costs

When your business complies with a subpoena to produce documents, you may incur various internal costs. These expenses are directly related to the time and resources your business spends gathering and organising the required information. You can include the following in your claim for reasonable costs:

• Staff hours devoted to locating and collecting documents
• Costs of data management and document-handling resources

Claiming External Legal Costs for Document Review

It is often necessary to engage external lawyers to assist with the subpoena response, particularly when dealing with large volumes of documents or tight deadlines. The fees charged by these lawyers cover tasks such as:

• Reviewing documents to ensure relevance
• Checking for legal privilege
• Assessing confidentiality

Consequently, these external legal costs associated with document review for the subpoena can typically be claimed.

Claiming External Legal Costs for Advice

Beyond just reviewing documents, you might need specific legal advice regarding your obligations and rights concerning the subpoena. The costs associated with obtaining this external legal counsel—to navigate the complexities of the subpoena compliance process—are also potentially claimable as part of your reasonable expenses.

The Process for Claiming Your Subpoena Costs

Applying to the Court for a Costs Order

Your business may apply under rule 33.11(1) of the Uniform Civil Procedure Rules 2005 for a court order requiring the party that issued the subpoena to pay the reasonable loss or expense incurred in complying with it.

If the court makes such an order, it will then:

• determine the specific amount payable, or
• direct how that amount should be calculated according to its usual procedures for costs.

This provides a formal pathway to recover the costs associated with the subpoena.

Negotiating Costs Outside Court

Alternatively, you can resolve subpoena costs through commercial negotiation with the issuing party. During these discussions, consider factors such as:

• internal time spent, and
• any external legal fees incurred for document review or advice.

By addressing these elements collaboratively, both parties may reach an agreement without resorting to formal court proceedings.

Seeking Legal Assistance for Your Subpoena Response & Costs Claim

Because responding to a subpoena and claiming related costs can be complex, seeking legal advice is crucial. Lawyers can:

• review documents,
• advise on your rights and obligations, and
• negotiate or formally claim the reasonable costs your business has incurred.

With professional guidance, you can navigate the process confidently and effectively.

Conclusion

Receiving a subpoena to produce documents requires compliance, but your business has the right under rule 33.11 of the UCPR to claim reasonable costs incurred, including internal expenses and external legal fees, even though conduct money typically does not apply. Understanding how these costs are assessed based on reasonableness and the factors outlined in cases like NewSat is crucial for recovering expenses associated with the subpoena.

Navigating the complexities of subpoena compliance and cost recovery can be challenging, so contact PBL Law Group today for trusted expertise. Our commercial and business lawyers in NSW can provide specialised advice tailored to your situation, assisting with document review and negotiating or claiming your reasonable costs to ensure a smooth process.

Frequently Asked Questions