What Should a Professional (Accountant, Financial Advisor, General Counsel or Company Secretary) do When Served With a Subpoena?

There are two types of subpoenas:

• A Subpoena to Produce documents- this this a request to produce specified documents, by a certain date, to the registry of the Court in which the proceedings have been instituted. These documents should only be produced to the specified court registry, and not to any of the parties; and
• A Subpoena to Attend- this requires you to attend court at a particular date and time. The purpose of this will be for you to attend a court hearing as a witness, and be asked questions in the witness box (known as examination-in-chief, followed by cross-examination).

A subpoena constitutes an order of the Court- a failure to comply with its terms may constitute contempt.

Subpoenas are distinct from Notices to Produce, as subpoenas are used to request documents from non-parties to proceedings. Notices to Produce are reserved for named parties (i.e. plaintiffs or defendants).

That distinction aside, the principles for assessment of the content remain the same. Subpoenas to Produce are the most common document we advise professional advisers on.

The most important thing to note is that a subpoena is technically an order of the Court. A failure to comply by the specified date will constitute contempt of Court. While it is usual for dates for compliance to be extended (often multiple times, by consent), a repeated failure to comply with a subpoena has the potential to result in a hearing and subsequent punishment for contempt.

As a result, the Golden Rule is- take a subpoena seriously, and seek legal advice as soon as you can.

Keeping in mind the Golden Rule, once you receive the subpoena, you should consider the following questions, as these will be the first questions your lawyer asks you:

• Has it been issued to you, or your entity, or your employer? Is the name of the entity correct? Is this an entity in which you work, or you have control over?
• Who are the parties to the proceeding? Is one of them your client? Are you aware of these proceedings and what are they about?
• What is the specified date for production? If it is approaching rapidly, immediate steps need to be taken to buy more time to allow you to consider the subpoena, and either apply to set it aside or produce documents.

After you have reviewed the front cover of the subpoena to consider the questions above, the next step is to locate the schedule. This is the section which specifies the types of documents that are to be produced.

There are strict rules (contained in both Rule 33 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and case law) which govern the way documents can be both sought and described.

If the subpoena does not comply with these strict rules, you are able to apply to the Court to have it set aside. It is important to note that compliance with the subpoena is required until such an application is made. These rules are summarised below.

First, the subpoena must seek documents that are relevant to the proceedings. This is known as having a “legitimate forensic purpose”. Hence, the first question to ask is, does the subpoena seek documents that are relevant to the facts in issue between the parties? If this test is not met, the subpoena constitutes an abuse of process and is liable to be set aside.

We often advise general counsel and company secretaries after their employer has been served with a subpoena. By way of example, a general counsel of a large motor group that sells cars, and offers a service workshop, has received a subpoena. A customer has commenced proceedings against the manufacturer of their car, on the basis that they say their vehicle is faulty, and that this fault is common to that particular make and model. The subpoena seeks “service records for all vehicles serviced between 2022 and 2026”. To the extent that the subpoena seeks service records that do not relate to the specific make and model of the vehicle in question, the subpoena does not have a legitimate forensic purpose. The subpoena in this example may be liable to be set aside, unless its scope is narrowed significantly (by way of negotiation).

A subpoena must state, with specificity, the documents sought. To the extent that a subpoena seeks broad categories of documents, it will constitute a substitute for discovery (often referred to as a “fishing expedition”). In some instances, the breadth and scope of the documents sought may be so extreme, that production would be oppressive.

A subpoena cannot be used to broadly try and capture documents that may have a bearing on the case. The documents sought in the schedule must be described in reasonable particularity. This means that, at the very least, the types of documents should be limited by their variety (letters, emails, file notes, balance sheets, receipts etc), date range and topic.

We commonly advise accountants and financial advisors after they have been served with a subpoena relating to one of their clients. A subpoena that seeks “All documents you hold relating to Mr Smith” would be both a fishing expedition and potentially oppressive (as well as an abuse of process). However, if it were framed as “Notices of Assessment received from the ATO for Mr Smith between 2022 and 2026”, this is reasonably particularised and meets the requirements of the rules.

Assuming the subpoena has been sufficiently particularised, the next step is to assess the cost of production. Non-parties are entitled to seek conduct money for compliance. It is recommended that this be negotiated while production is taking place (as disagreements about conduct money do not circumvent the requirement to produce). If the amount of conduct money has not been agreed, this can be sought by way of application after documents have been produced.

It is important to note that the documents may be produced in physical form to the appropriate Court registry (by USB is also sufficient), or in some instances, uploaded via a Court portal. These documents should be produced to the Court only, and not to any party. It is essential that you do not discuss the types of documents you will be producing with your client, nor should you show them these documents at any stage.

In some instances, the documents sought may be covered by legal professional privilege. While this is a topic that can be addressed separately, documents that may be privileged should be placed in a separate folder or envelope, marked with “PRIVILEGED”, and produced along with the others. An indication to each party that you have produced documents, and that some may be privileged, may be appropriate, but this communication should only be made on the advice of your lawyer.

If you are a professional advisor (whether in-house or an external advisor) it is critical that you act quickly and seek legal advice if served with a subpoena. Generally speaking, issues such as scope, clarity as to relevance and conduct money can all be resolved quickly and cost effectively via negotiation, without the need for any court application.

This article is not legal advice.  It is intended to provide commentary and general information only.  Access to this article does not entitle you to rely on it as legal advice.  You should obtain formal legal advice specific to your own situation.  Please contact us if you require advice on matters covered by this article.