Australia: Third party notices: what costs can be claimed by receiving parties?

Last Updated: 7 March 2016
Article by Matt Edwards

Key Points:

The reasonable costs and expenses of producing a document must be borne by the party seeking production, subject to the court's cost assessment.

Even if your organization is not involved in litigation itself as a party, you might still find you are embroiled in someone else's fight if they decide you have documents that are relevant to their court battle.

If you are in that situation, you may incur considerable cost and spend substantial time in locating and producing documents that are only of value to a party to the proceedings. Happily, there is a way to recover those costs.

Although we'll be basing our discussion on the Queensland Uniform Civil Procedure Rules 1999 (Qld) (UCPR), similar rules exist across Australia.

The sorts of documents a non-party might be compelled to produce

Under the UCPR, a person may be required to produce a document that is directly relevant to an allegation in issue in the pleadings, in the possession or control of that person, and which may be required at the trial of a matter. Generally, however, a party to a proceeding cannot compel another person to produce a document that may be obtained in another reasonably simple and inexpensive way.

A non-party may be required to produce documents:

  • to a party at the interlocutory stage of proceedings under the notice of non-party disclosure rules; or
  • to the court through a subpoena for production.

Whether it's a notice of non-party disclosure or a subpoena, you will be obliged by law to produce the material in question. This is done in circumstances where there is no view to any gain for yourself, and generally without a vested interest in the proceedings or the outcome of the litigation.

The general principles for awarding costs for complying with notices of non-party disclosure

The reasonable costs and expenses of producing a document must be borne by the party seeking production, subject to the court's cost assessment. The non-party is to produce a costs statement of those expenses within one month after producing the relevant document.

The purpose for this has been described as being "to provide reasonable monetary compensation for [the burden of complying with a notice of non-party disclosure]... and to provide a mechanism for resolving any dispute about what is reasonable in the circumstances" (NJH Pty Ltd v Billabong International Ltd [2010] QSC 239).

In assessing reasonable costs and expenses, the court may look to similar provisions on the payment of costs for complying with a subpoena to inform an appropriate cost order (Taylor v Dixon Advisory Ltd (2010) 5 ACTLR 136).

The general principles for awarding costs for complying with Subpoenas

Under rule 417 of the UCPR, the court may make an order for the applicant to pay for the reasonable loss or expense incurred in complying with a subpoena.

When a non-party has been issued with a subpoena to produce a document and the court is satisfied that substantial loss or expense has been, or would be, incurred in complying with a subpoena the court may order the party on whose behalf the subpoena was issued to pay all or part of the losses and expenses, including legal costs, incurred by the non-party in responding properly to the subpoena.

Furthermore, a court may excuse a non-party from complying with a subpoena unless conduct money is provided to the recipient, which would be sufficient to meet the reasonable expenses of complying with the subpoena.

What costs are recoverable?

The costs of complying with the notice will necessarily include the searching for, collating, copying if necessary (for example, to enable business to continue while the documents are produced and inspected), and producing the documents.

In Taylor v Dixon Advisory Ltd (2010) 5 ACTLR 136 Justice Refshauge considered what more might be held as reasonable expenses in complying with a non-party disclosure notice, specifically whether a party may claim the legal costs incurred in complying with that notice. The following were found to be costs of compliance so long as they were reasonably incurred costs:

  • If the matter is complex and more so than the ordinary case, the costs of advice about its validity and the extent of compliance required.
  • Correspondence or attendances with the issuing party about its terms and whether they can be narrowed or production of the documents completed in a particular way.
  • Advice about whether documents are confidential or subject to legal professional privilege.
  • Documents sought, including the formulation of undertakings as to confidentiality.
  • Attendances when the documents are produced, though this will be ordinarily by post.
  • Any necessary attendances at court to ensure those arrangements are effected.
  • Attendances to ensure undertakings have properly been given and compliance is secured.
  • Preparing, negotiating and having taxed a bill of costs for such costs and attending on such taxation.

Are the costs of objecting to third party notices recoverable?

It should be noted by persons issued with a notice of non-party disclosure, or a subpoena for production, that the costs considered to be reasonably incurred in complying with a disclosure order will be limited to the costs of compliance with the notice and not the costs of objecting to it or applications to set it aside. The courts in these instances will usually make no order for costs and each party will be responsible for the expense of hearing the objection (Smith v O'Leary [2001] QDC 197).

Will indemnity or standard costs be ordered?

In claiming the costs of producing a document under a notice of non-party disclosure a party will ordinarily receive an order from the court for costs on an indemnity basis. Such an order allows the non-party to recover the actual costs involved in producing the documents requested. This reflects the compensatory nature of the costs provisions in both r 249 and r 417 of the UCPR.

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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 bulletin. Persons listed may not be admitted in all states and territories.

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