Harrold v Exactech Australia Pty Ltd

Harrold v Exactech Australia Pty Ltd [2025] FCA 1058 is a Federal Court decision about the cost of compelling a non-party to produce documents. The Court ordered the applicant in the main proceeding to pay the Australian Orthopaedic Association $112,262.84 under rule 24.22 of the Federal Court Rules 2011 (Cth) for its reasonable loss and expense in complying with a subpoena.

The decision matters because the Court took a practical and relatively broad view of what counts as compensable loss or expense. It accepted that compliance can involve specialist staff, internal governance processes, legal review and operating costs, especially where the requested material is sensitive and must be checked before release.

The judgment is also a reminder that the Court expects parties to deal with subpoena cost disputes proportionately. Justice Jackman drew attention to the issuing party's own evidence about the large amount spent contesting the claim and linked that issue to the overarching purpose provisions in the Federal Court of Australia Act 1976 (Cth).

The underlying proceeding was a class action in the Federal Court brought by Mr Simon Harrold against Exactech Australia Pty Ltd and Exactech Incorporated. The judgment on costs does not explain the merits of that broader dispute in any detail. What it does explain is how a non-party, the Australian Orthopaedic Association, became involved because it was served with a subpoena to produce documents.

The subpoena was issued on 20 November 2024. It sought documents that recorded or evidenced the number of revision surgeries performed in connection with 22 listed joint devices. The original return date was 4 December 2024. Before carrying out the work, the Association's solicitors warned that compliance would be expensive. They said the fees to locate the information, with assistance from the South Australian Health and Medical Research Institute, would be in the vicinity of $80,000 for ten reports at approximately $8,000 each. They also provided a breakdown and invited the issuing party to reduce the scope.

The Court specifically noted that this early estimate was given in line with paragraph 9.4 of the Federal Court's Subpoenas and Notices to Produce Practice Note. That practice note encourages an addressee to raise significant expected compliance costs at an early stage, including where third-party contractors may need to be engaged.

There were then exchanges between the solicitors from 3 to 10 December 2024 about scope and timing. The applicant attempted to organise a meeting with the Association, but those attempts did not succeed. On 10 December 2024, seven days before the then return date, the applicant proposed revising the period to 1 January 2024 to date. Despite that, the applicant ultimately required production of the original scope of documents, with a revised return date of 23 December 2024. The reason given was that the documents were very important for a mediation in the class action.

After the Association complied, its solicitors wrote on 20 February 2025 seeking payment of $88,000 including GST, consistent with the earlier estimate. The applicant first offered only $2,000, then later offered $30,000 including GST. The Association rejected those offers and applied to the Court for an order fixing the amount of its reasonable loss and expense on a lump sum basis.

The central question was how rule 24.22 of the Federal Court Rules should be applied to a non-party's claim for reimbursement. Rule 24.22(1) says the Court may order the issuing party to pay the amount of any reasonable loss or expense incurred in complying with the subpoena. The parties agreed that the amount should be fixed on a lump sum basis under rule 24.22(2).

That broad question broke into several practical issues. First, what legal principle should guide the assessment of reasonable loss or expense? Second, was the Association entitled to rely on its standard per-report charge as a measure of expense? Third, were the hours spent by statisticians, clinical directors and other personnel reasonable? Fourth, should the amount be reduced because the applicant said part of the reports, called Table 2, was not actually required by the subpoena? Finally, were the Association's legal costs of compliance and of bringing the application itself recoverable?

Justice Jackman answered those questions by drawing on earlier authority. His Honour said a narrow view should not be taken where a third party to litigation is compelled to assist. A subpoena is an intrusion into the time, affairs and freedom of a third party with no interest in the litigation, justified only by the administration of justice. That public policy, the Court said, supports proper compensation so that a third party is not discouraged from complying.

The judgment then referred to Australian Competition and Consumer Commission v Boral Limited, where Finkelstein J had approved reasoning from Deposit and Investment Co Limited (Receivers Appointed) v Peat Marwick Mitchell and Co. Those authorities recognise that recoverable expense is not confined to bare wages or copying costs. It can include the real cost of taking professionals and employees away from productive work, together with add-on costs such as superannuation, workers compensation, leave liabilities, office space and support resources. The Court also referred to Foyster and J Aron, which treated loss as including reasonable reimbursement for time that would otherwise have been spent on productive activities.

On legal costs, the Court referred to Fuelxpress and Titan Enterprises. Those cases support the proposition that a stranger to the litigation should generally be fully compensated for legal costs actually incurred in complying with a subpoena, including advice about the lawfulness of production and whether any privilege claim is open.

Justice Jackman ordered Mr Harrold to pay the Australian Orthopaedic Association $112,262.84. The Court accepted the Association's claim for the capped report-production amount of $88,000 including GST, together with legal costs incurred in compliance and in bringing the application.

A key part of the reasoning was the Court's acceptance of the Association's standard charge of $8,460 per report as the most appropriate measure of expense or loss. The evidence showed that this amount had been determined by the Association's board, was charged to third parties requiring this information, was designed to recover operating costs, and did not include a profit margin. The Court treated that as a reasonable basis for quantifying expense.

This was significant because the Association had actually produced 24 reports. At its standard rate, that would have equated to $203,040. Even so, it only sought $80,000 plus GST in line with its original estimate. The Court described that as a kindness and said the applicant should have gratefully accepted it. His Honour said it was unnecessary to decide whether a higher amount could have been recovered, although he expressed some misgivings that the Association may have shortchanged itself.

The Court rejected the applicant's attempt to reduce the claim on the basis that Table 2 in the reports was not required by the subpoena. There was no evidence showing what proportion of the claimed cost was attributable to Table 2. The applicant suggested at least 50%, but the Court said there was no evidence supporting that figure. The expert evidence only went so far as to say Table 2 involved some additional work over and above Table 1. In any event, the Court considered any such figure likely immaterial given the substantial discount already built into the Association's claim.

The Court also accepted that the time spent was reasonable. The evidence established that the Association had to conduct quality assurance and review the data in a way that complied with the Commonwealth Qualified Privilege Scheme under the Health Insurance Act 1973 (Cth) and Health Insurance Regulations 2018 (Cth). Substantial time and resources were needed to ensure that no individual patient, hospital or institution was identifiable and that the data was accurate. The Court accepted the Association's evidence that compliance required preparation of 24 draft reports by three statisticians, review for federal qualified privilege by the Association as data custodian, further review by four more statisticians, seven clinical directors and the senior data manager, and about 100 hours in total.

The applicant relied on expert reports from Professor Mengerson to challenge the reasonableness of the time claimed. The Court gave those reports limited weight because they were based on unsupported assumptions about the complexity of the computation required, the volume and location of the data reviewed, and the tasks required by different roles. The Court held that the Association had adduced sufficient evidence of reasonableness, and if the applicant's expert contended otherwise, that contention needed to be made good by opinion evidence based on proven facts.

Finally, the Court allowed legal costs. The amount awarded included two invoices for legal work up to 19 December 2024 and 30 June 2025, plus further legal costs already invoiced and an estimate up to the hearing. The Court accepted that the Association was entitled to the costs of the interlocutory application itself.

Several practical features of the evidence appear to have mattered a great deal. First, the Association gave an early written estimate before undertaking the work. That made it harder for the issuing party to say later that the cost came as a surprise. It also aligned with the Court's practice note, which the judge expressly mentioned.

Second, the Association had a documented pricing structure. Its board-approved charge per report was not presented as an arbitrary figure. The evidence was that it reflected operating costs and did not include profit. That gave the Court a concrete and commercially intelligible basis for assessing expense.

Third, the Association explained the actual workflow required to comply. It did not simply assert that the task was difficult. It identified the roles involved, the number of reports prepared, the review steps undertaken, the legal framework that had to be observed, and the approximate total hours spent. That level of detail helped the Court accept that the work was reasonable.

Fourth, the legal and regulatory setting mattered. The Association was not just producing ordinary business records. It had to ensure compliance with the Commonwealth Qualified Privilege Scheme and avoid identifying patients, hospitals or institutions. That justified a more substantial review process than might be required for less sensitive material.

Fifth, the issuing party's conduct after receiving the estimate mattered. The applicant was invited to narrow the subpoena but ultimately insisted on the original scope because the documents were said to be very important for mediation. That made it more difficult to resist the resulting cost claim.

If your business is issuing a subpoena, this case is a warning not to treat third-party production as free. The broader and more technical the request, the more likely it is that the recipient will need to involve specialist staff, external contractors, legal advisers or governance personnel. If the material is sensitive, regulated or held in a structured database rather than a simple file, the cost of lawful compliance can be substantial.

That does not mean you should never issue a subpoena. It does mean you should think carefully about scope, timing and purpose. Ask whether the request can be narrowed by date range, product list, report type or other parameters. If the recipient gives an early estimate, take it seriously. If the documents are sought urgently for mediation or settlement purposes, that urgency does not remove the likelihood that you may have to pay the real cost of obtaining them.

If your business receives a subpoena, the decision is useful because it confirms that the Court may compensate a non-party for the real burden of compliance. But success will usually depend on evidence. Keep records of who did the work, how long it took, what systems were used, what legal or confidentiality checks were required, and how any standard charge is calculated. If you have a release-of-information policy, data protocol or board-approved pricing schedule, preserve it. Those documents can help show that the amount claimed is grounded in actual business cost.

The case also contains a broader procedural warning. The Court was critical of the applicant's own costs of contesting the matter, which were said to be disproportionate. Justice Jackman referred to sections 37M and 37N of the Federal Court of Australia Act 1976 (Cth), which require disputes to be resolved justly, quickly, inexpensively and efficiently, including at a cost proportionate to the importance and complexity of the issues. In other words, even if there is room to argue about a compliance bill, the fight over it should remain proportionate.

A common misconception is that a subpoena only creates a modest copying or administration bill. This case shows that assumption can be wrong. Where compliance requires report generation, specialist review, legal checking or careful handling of sensitive data, the Court may accept a much broader measure of reasonable loss or expense.

Another practical question is whether a non-party needs perfect timesheets to recover costs. The judgment does not say that only one form of proof will do. What mattered here was that the Association had evidence of its board-approved pricing, the workflow required, the number of people involved, the legal framework it had to comply with, and the approximate total hours spent. The Court accepted that evidence as sufficient.

Businesses also often ask whether they can challenge a claim by saying the recipient did more work than the subpoena strictly required. The answer is yes in principle, but this case shows that the challenge needs evidence. The issuing party argued that part of the reports was outside scope, but the Court was not prepared to make a substantial reduction without evidence showing what part of the claimed cost was actually attributable to that extra work.

Finally, businesses should note that legal costs can be part of the recoverable amount. The Court relied on authority that a stranger to the litigation should generally be fully compensated for legal costs actually incurred in complying with a subpoena, including advice about the lawfulness of production and possible privilege issues. That can materially increase the total amount payable.

This page is based on the Federal Court's reasons in Harrold v Exactech Australia Pty Ltd [2025] FCA 1058, delivered by Jackman J on 29 August 2025. The reasons are detailed on the subpoena costs issue and support a practical explanation of how rule 24.22 was applied.

The judgment does not set out the full commercial and factual background of the underlying class action. For that reason, this page focuses on the subpoena, the costs dispute, the authorities applied by the Court, and the practical implications for businesses dealing with subpoenas in Federal Court proceedings.