Receiver’s subpoena compliance costs rankle

A judge’s comments have sounded yet another warning to lawyers about over egging the pudding, in this case in terms of advising on subpoena compliance.

In the matter of Lainson Holdings Pty Limited [2019] NSWSC 1446 NSW Supreme court judge Kelly Rees was determining an application Lainson Holdings‘ receivers and managers had made for a gross sum costs order.

“His Honour noted that compliance with a subpoena is not a profit-making exercise for a professional firm, and therefore discounted the estimated costs of the receiver’s solicitors, Corrs Chambers Westgarth..”

The receivers – HLB Mann Judd’s Todd Gammel and Barry Taylor – wanted $16,000 to cover the costs of complying with a subpoena Lainson had issued to them in respect of an “Outcomes Document” the receivers had sent to Lainson.

The Outcomes Document contained information relating to the sale by the receivers in April this year of a property development in Cronulla that Lainson had attempted to develop.

Lainson had run into problems after a dispute emerged between it and builder Duffy Kennedy Pty Ltd.

Within the outcomes document’s was detail about how the receivers intended to apply the sale proceeds to the costs of the receivership and to discharging interest obligations owed to the project’s financiers.

As was described by Justice Rees: “On 10 May 2019, Lainson issued a subpoena to the receivers seeking a wide range of documents in respect of the sale, interest payable to the financiers and various documents to support entries in the “Outcomes Document”.

Gammel and Taylor sought to have the subpoena set aside or, failing that, to have $16,000 security for their costs of complying with it.

When it the matter first came before Justice Ashley Black he was critical of how the subpoena had been drafted, suggesting its scope contributed to the receivers’ hefty estimate. But that wasn’t all that attracted the judges’ attentions.

Referring to the observations of her colleague, Justice Rees said: “His Honour noted that compliance with a subpoena is not a profit-making exercise for a professional firm, and therefore discounted the estimated costs of the receiver’s solicitors, Corrs Chambers Westgarth, but not the disbursements likely to be incurred. Security of $12,100 was ordered.”

Among the criticisms of the legal advisor’s fees was reference to a Corrs partner billing 1.2 hours for considering an email, discussing the subpoena return date and recommended approach and settling a reporting email to the clients”.

That actually doesn’t seem excessive. Whaddya gonna’ do? Support INO’s continued chronicling of the insolvency sector.