A & A and Ors
[2005] FamCA 561
•9 June 2005
[2005] FamCA 561
FAMILY LAW ACT 1975
FAMILY COURT OF AUSTRALIA
AT MELBOURNE MLF1044 of 2005
IN THE MATTER OF:
A (Husband)
and
A (Wife)
and
A (Secondnamed
Respondent)
and
The A Group of Companies & A (Applicants)
JUDGMENT DELIVERED BY
THE HONOURABLE JUSTICE GUEST
Date of Hearing: 27 May 2005
Date of Judgment: 9 June 2005
Appearances:
No appearance by or on behalf of the husband
Mr Strum of counsel, instructed by Taussig Cherrie & Associates, Solicitors, DX 38236 Flagstaff, on behalf of the wife
Mr Kirkham QC, with Mr Dickson of counsel, instructed by Messrs Herbert Geer & Rundle, Solicitors, DX 428 Melbourne, on behalf of the secondnamed Respondent and the Applicants
INTRODUCTION
These proceedings are constituted by a Form 2 Application in a Case filed by V (“the husband’s father”) and The A Group of Companies (particularised in Schedule “A” to the said application) (“the Applicants”) to Review, pursuant to Rule 18.08 of the Family Law Rules (2004) paragraph 5 of the orders made by Registrar Marrone on 12 May 2005. In addition, the Applicants seek an order that a subpoena issued by the wife and filed on 27 April 2005 directed to The Managing Partner of an accounting firm (“the Group Accountants”) be struck out.
Part E of that subpoena sought production of the documents in the possession, custody or control of the Group Accountants and referred to in Schedule 1, which is in the following terms:
“Schedule 1
For the period as and from 1 January 2002 all:
·correspondence
·working papers
·accounts for work done by you
·files
·journals
·ledgers
·cash books
·computer printouts and reports
·taxation returns
·notes to accounts
·depreciation schedules
·annual returns
·trading profit and loss accounts
·balance sheets
·member's statements
·trust deeds
·variation to trust deeds
·company constitutions
·beneficiary loan account ledgers
·business activity statements
·instalment activity statements
·company registers
·secretarial files
·minutes
·deeds
·loan agreements
·deeds of agreement
·records of telephone conversations
in relation to each of the following:-
A. 1. S2. A & M Pty Ltd
3. AM Holdings Pty Ltd
4. AC Pty Ltd
5. ACS Pty Ltd
6. AEH Pty Ltd
7. A Holdings Pty Ltd
8. ASI Pty Ltd
9. ASC Pty Ltd
10. ASC (SA) Pty Ltd
11. AS Pty Ltd
12. A Pty Ltd
13. ISS Pty Ltd
14. MI Pty Ltd
15.Any other corporation (other than a public company), partnership, joint venture business or other commercial activity in relation to which S has a beneficial interest or entitlement.
16.Any trust:-
(i)of which S is or was the appointor, trustee or guarantor including but not limited to the SA Family Trust established by deed of settlement dated 4 March 2002;
(ii)of which S, any child of S and/or a spouse of S is or was an eligible beneficiary as to capital or income;
(iii)of which a corporation is or was an eligible beneficiary as to capital or income and S, and/or child and/or spouse of S is or was a shareholder or director;
(iv)over which S has or had any direct or indirect power or control;
(v)in respect of which S has or had the power (whether directly or indirectly) to remove or appoint a trustee;
(vi)in respect of which S has or had the power (whether subject to the concurrence of another person or not) to amend the terms thereof;
(vii)in respect of which S has or had the power to disapprove a proposed amendment of the terms thereof or the appointment or removal of a trustee;
(viii)over which a corporation has or had the powers mentioned in any of the sub-paragraphs above, if S and/or any child and/or a spouse of S is or was the director or shareholder of the corporation;
B.Member statements for all superannuation funds of which S is a member and, if self managed, the trust deed and financial statements for such fund for the last three financial years.”
I was informed by Mr Kirkham, one of Her Majesty’s Counsel, who, together with Mr Dickson of Counsel appeared on behalf of the Applicants, that on 5 May 2005 a Notice of Objection was filed in relation to the subpoena served on the Group Accountants on the grounds that it was too wide and oppressive, and that the documents sought were not relevant to the interim issues before the Court. Furthermore, it was the position of the Applicants that the subpoena, ”insofar as it catches documents” which were relevant, was both premature and inappropriate in form. It was also submitted that the subpoena was wholly misconceived.
Paragraph 5 of the Orders made by Registrar Marrone is as follows:
“5.Subject to paragraph 6 hereof and other than those documents to which a claim for legal professional privilege may be claimed, the parties are granted leave to inspect and copy, no earlier than 3.00 pm this day, documents produced by [the Group Accountants].”
It was further ordered that in the event an Application for Review was filed by 2.45 pm that day, paragraph 5 be stayed pursuant to Rule 18.09 of the Rules pending determination of the Review. In the result, an Application was filed and the relevant stay order made.
BACKGROUND
The husband, who is 33 years of age, was married to the wife, who is 30 years of age, on 11 March 2002. There are two children of their union, namely I and C. The parties separated on 18 February 2005 following a relatively short union of 23 months.
The husband commenced proceedings in the Family Court of Australia on 8 March 2005, limited to child welfare issues. The wife filed a Form 1A and Form 2A Response on 12 April 2005. In addition to child welfare issues, the wife sought interim orders for urgent spousal maintenance, a payment by the husband to her of $50,000.00 for litigation funding (a “Barro” Order), child support and detailed orders for discovery.
MATERIAL RELIED UPON
At the hearing before me, Mr Kirkham and Mr Strum, who appeared for the wife, each provided for my assistance a helpful written Outline of Submissions which engrossed various references to affidavits filed by the husband and the wife. For the purpose of my decision, it was sensibly agreed that I need only consider those specific references and otherwise any additional reference to affidavits made in the course of oral argument.
In paragraphs 19 to 21 (inclusive) in his written Outline of Submissions, Mr Strum referred to various documents allegedly relating to the husband which had apparently, and quite outside the knowledge of the Applicants, been obtained under subpoena from the Insurance Company, the Assurance Society and the Bank. Objection was taken by Mr Kirkham when Mr Strum sought to address these issues and to tender two documents sourced from the Insurance Company and referred to in paragraph 19(a) and (b) of his written Outline. He did not seek to tender any of the other documents referred to in his Submission.
Albeit there was some general discussion overall concerning the admissibility of such documents as a business record (see s.69 Evidence Act 1995 (Cth)), Mr Kirkham conceded, and properly so in my view, that these two specific documents from the subpoenaed files of the Insurance Company were admissible as a business record, being an exception to the hearsay rule. He submitted however that they should not, in the exercise of my discretion, be received into evidence. He submitted that the documents were not properly before the Court as material on the record for the purpose of this Application and were quite outside the knowledge of the Applicants. He pointed out that in her affidavit filed on 16 May 2005, the wife had annexed a number of documents relating to the financial affairs of the husband and herself, but had not chosen, as a matter of fairness, to file any supplementary affidavit annexing those two particular documents as material that would be sought to be relied upon at the hearing. Put simply, no notice was given. In response to that, Mr Strum conceded that it was “an oversight” on the part of those instructing him.
Mr Kirkham otherwise relied upon s.135 of the Evidence Act (Cth) vesting in the Court a general discretion to exclude such evidence if its probative value was substantially outweighed by the danger that the evidence might be unfairly prejudicial to his client, misleading, or confusing. On the issue of prejudice Mr Strum submitted that I must also take into account any prejudice that may enure to the wife.
In my view, and in the exercise of a general discretion vested in me, the receipt of those two documents would be unfairly prejudicial to the Applicant, who were never put on notice by the wife’s solicitors of their intention to rely upon them. The Applicants have had no time in which to investigate, assess and make an informed decision concerning their accuracy or meaning sought to be imputed by Mr Strum. There is, in my view, a high risk of procedural disadvantage to them. In any event, I was not persuaded by any measure as to the probative value of these documents, nor the manner or extent to which they could rationally affect my assessment, to the requisite standard, of the issues for my determination. Furthermore, the arguments proffered by Mr Strum revealed questions of interpretation when comparing specific paragraphs of the two documents, giving rise to what I regard as ambiguity inviting speculation as to meaning.
In the circumstances, I reject Mr Strum’s application to tender and rely upon those two documents, and I otherwise disregard those other documents referred to in his written Outline of Submissions.
THE SUBMISSIONS
In his submissions, Mr Kirkham properly pointed out, relying upon Rule 15.31 of the Rules, that the Applicants were persons having a “sufficient interest” in the subpoena served upon the Group Accountants. Accordingly, under Notice dated 5 May 2005, the Applicants objected to the production of the documents as sought for the reasons earlier addressed by me.
As a foundation, Mr Kirkham emphasised in terms of width of the subpoena, that it sought the production of 28 categories of documents from all thirteen companies within the A Group (regardless of ownership or control) and from:
“15.Any other corporation (other than a public company), partnership, joint venture, business or other commercial activity in relation to which [S] has a beneficial interest or entitlement.”
In addition, documents of the class and type set out were also sought in relation to “Any Trust” that fell within the rubric of the eight classes there described ending with, yet again, a broad catch-all clause. The breadth of the subpoena, in the discrete circumstances before me was, as I indicated to Mr Strum in the course of argument, of some concern.
Mr Kirkham emphasised the interlocutory issues presently before the Court, namely the parenting issues, spousal maintenance and child support, litigation funding and specific orders for production of documents by the husband. He submitted that, insofar as the subpoena sought to duplicate to some extent the orders sought in paragraph 16 of the wife’s Form 2A Response filed on 12 April 2005 for the specific provision of documents by the husband, it was premature, relying upon the clear proposition that a subpoena duces tecum is not an alternative to discovery. It was Mr Kirkham’s submission that the wife caused the subpoena to be issued before pressing her right to obtain from the husband documents relevant to the issues, noting that the Application filed by her sought orders for documents “appreciably more confined or limited” than the documents sought under the subpoena. Furthermore, in her affidavit material the wife acknowledged the husband’s “lack of interest” in most of the entities referred to in the Schedule to the subpoena.
Mr Kirkham referred in particular to paragraphs 32 and 33 of the wife’s affidavit filed with her instituting documents on 12 April 2005 wherein she accurately recorded the fact that the husband was a director of thirteen named companies within the A Group (and repeated in the Schedule to the subpoena) acknowledging that he held shares in only three of the entities. The wife deposed (inter alia):
“… the husband is employed on a full-time basis by one of the many companies controlled by his parents, which are involved in steel production …” (paragraph 32) (my emphasis)
Mr Kirkham submitted that none of the entities in which the husband held shares were “active entities”, but were corporate trustees of superannuation funds. In a letter from the Group Accountants dated 25 May 2005 (annexed to the husband’s affidavit in the proceedings and filed on 26 May 2005) it was made quite clear that ASI Pty Ltd and AS Pty Ltd were bare trustees of superannuation funds and only held assets in their capacity as trustees of specified trusts. They did not hold assets in their own right. Further, that the husband held 500 out of 30,000 shares (1.67% of the issued capital) in MI Pty Ltd, maximising his interest upon distribution, if at all and if it were possible, at $6,774.00. It was otherwise confirmed by the Group Accountants that the other ten companies, of which the husband is a director, were controlled by his parents. As Mr Kirkham pointed out, that fact alone had been acknowledged by the wife and that the husband did not hold any beneficial interest in any of those companies.
Mr Kirkham submitted that nowhere did the wife assert as a fact in issue that the entities, set out in the Schedule to the subpoena, were the alter ego of the husband, or that he had effective control of them. He said that the “high point of her evidence as to the link between the companies and the husband (over and above his entitlements as an employee)” was deposed to by the wife as follows:
“… additionally he had cash income available to him from sale of steel ‘scraps’ and of (sic) our family expenses were paid for by A Companies. He also had regular distributions of income from the A Trust.” (paragraph 34)
Mr Kirkham otherwise pointed to paragraph 44 of the wife’s affidavit filed 16 May 2005 wherein she deposed that:
“… the husband is the Managing Director of ASC [Pty Ltd]and has a degree of control in relation to the company’s operations.”
He described that statement, with some accuracy I might add, as a “generic and unsupported assertion”. He said that nowhere had the wife asserted that the husband held a proprietary interest and that she had otherwise failed to provide or file evidence in support of her assertion.
Mr Kirkham conceded, and properly so in my view, that had the subpoena confined itself to seeking documents relating to:
· firstly, expenses of the wife and the wife and/or children met by the companies;
· secondly, documents evidencing distributions made to any of them from any of the A Trusts;
· thirdly, documents relating to any loan accounts (debit or credit) held by the husband in any of the entities; and
· fourthly, salaries or any other form of remuneration paid to the husband by any of the said companies,
then the subpoena would have been “proper, and adequately confined” to the issues before the Court.
It was his submission that it was totally unwarranted to extend the comments allegedly attributed by the wife to the husband (as set out in paragraph 44 (supra)) so as to entitle her to look at all the documents referred to in the Schedule 1 to the subpoena relating to the financial performance of ASC Pty Ltd. In my view, there was merit to that submission. The husband had set out the benefits he received from that company in paragraph 6 of his Affidavit filed on 16 May 2005 and further, details of those benefits were set out in Appendix 1 to the letter from the Group Accountants dated 25 May 2005 annexed to his Affidavit filed on 26 May 2005. Mr Kirkham also submitted that, to the extent that paragraph 15 of the wife’s Affidavit filed on 16 May 2005 raised confusion as to which company was the employer of the husband (whether AC Pty Ltd, or ASC Pty Ltd) that issue had been explained in the letter from CC Pty Ltd (an accounting firm) dated 22 May 2005 and exhibited to the husband’s Affidavit filed on 26 May 2005.
Mr Kirkham submitted that the limit of documents sought pursuant to the subpoena should be relevant only to questions of income and/or benefits available and/or paid to the husband (which went to the maintenance issues) and as to any capital entitlement or proprietary interest he has or may have, such as to satisfy a litigation funding order. They were the interim issues before the Court.
Mr Kirkham further submitted that in order to obtain information from non-parties under Part 13.4 of the Rules, the requesting party was only entitled to obtain a specified document, or class of documents “relevant to an issue” in the proceedings. He referred to and relied upon Rule 13.33(1) of the Rules and further submitted, that the wife, in serving the relevant subpoena was attempting to avoid the requirement of “demonstrating relevancy”, relying upon what was said by the Full Court in Hatton v. Attorney-General of the Commonwealth of Australia & Commonwealth Bank of Australia & Commonwealth Development Bank of Australia (2000) FLC 93-038, esp. at par. 41 – 42.
Mr Kirkham emphasised the clear fact that a subpoena must have a legitimate purpose and that the only “legitimate forensic purpose” of the subpoena, given the state of evidence, could be to establish what, if any, benefits or family expenses had historically been paid by the A Companies and otherwise to establish what distributions had been made to the husband from the unspecified A Trusts.
Mr Kirkham pointed out that the documents sought in the subpoena served on the Group Accountants went far further than those needed for the “legitimate forensic purpose” before the Court. It was his submission that in circumstances where there was no assertion by the wife of de facto control, or indeed, de facto ownership by the husband of any of the entities, there could be no basis for her to seek the breadth of class of documents required under the subpoena. One has only to peruse the 28 items set out in Schedule 1 to understand the strength of that submission. He further submitted that to permit the wife to inspect the spread of documents referred to in the Schedule to the subpoena unduly trespassed on “the privacy and confidential records of parties” with no relationship to the proceedings save that they were companies owned and controlled by the husband’s parents and where the wife made no assertion that the husband had any proprietary interest in the A Group of companies, save for the entities in which he had a shareholding and to which I have earlier referred. It was his submission, that overall the subpoena was an abuse of process and, in addition, sought documents containing “sensitive and commercially confidential information” in relation to entities belonging to “strangers” to the proceedings.
Overall, Mr Kirkham submitted that the subpoena, as drafted, amounted to a fishing exercise and, in effect, sought non-party discovery rather than the production of specific documents of relevance to issues before the Court. He submitted that the wealth of the husband’s family, the financial performance and dealings of the companies in which the husband had no interest were not relevant to the interim issues before the Court.
The submissions of Mr Strum were less than convincing. However, with that said, he correctly pointed out that the subpoena was issued in support of the wife’s Form 2A Response filed on 12 April 2005, namely spousal maintenance, litigation funding and departure from administrative assessment of child support. That necessarily defined the limits of both purpose and relevance before me. It is to be recalled that the parties separated on 18 February 2005 with the proceedings being instituted on 8 March 2005.
Central to Mr Strum’s submissions were the provisions of Rule 13.04(1) dealing with disclosure by a party to the proceedings of his/her financial position. It is correct to say that in an 11 page letter dated 8 March 2005 to the husband’s solicitors (following earlier correspondence between them) the wife’s solicitors sought documents from the husband couched with slavish devotion to that Rule. The husband’s solicitor responded in a letter on 15 March 2005 noting, for example, that the husband was overseas on business (a fact disputed by the wife) until 22 March 2005 and that they “… did not have much financial information at this stage” (my emphasis).
Mr Strum, properly in my view, submitted that in order to determine the relevance of the documents sought pursuant to the subpoena regard must be had to the affidavit material commencing with the first affidavit of the wife filed on 12 April 2005, and it naturally follows, any affidavits by the husband in answer thereto. Mr Kirkham addressed the relevant concessions made by the wife in her affidavits and it is clear that she had details of all corporate entities involved in the A Group together with ownership and control.
The written submissions of Mr Strum then detailed over some nine pages various extracts from affidavits, all of which I have carefully considered in coming to my determination. Much of the wife’s material dealt with what may be described overall as the lifestyle enjoyed by the parties over their short union asserting the wealth (in general terms) of the husband’s family and financial matters that went to issues such as spousal maintenance and child support. The wife deposed, inter alia, that she was provided with “little information” by the husband, or his family, as to their financial affairs and that without ”appropriate discovery of such documents”, she was unable to properly prepare her case for “interim financial support”.
I do not agree with that assertion, given, firstly, the information now known to the wife concerning the husband’s income (both from the husband and her own investigations), financial benefits and assets (certainly sufficient to support a lump sum of the magnitude sought and to be characterised, for example, by the trial Judge at any hearing on the contested applications) and, secondly, the preparedness of the Applicants to provide the breadth of information delineated by Mr Kirkham in his submissions.
Mr Strum’s submissions contain a number of criticisms of the husband and an assertion, in oral argument, that he had failed to make full and frank disclosure of his financial affairs. For example, that he disclosed on 26 May 2005 “for the first time” that he was a beneficiary of six discretionary trusts in addition to the A & M Family Trust. Ultimately that may warrant discussion and criticism at trial, and it may be that the husband can provide a rational explanation, if required to do so, but that is purely speculative as matters currently stand and enlightenment, for the purpose of the interim financial relief sought by the wife, may be obtained from the formula described by Mr Kirkham in a properly drawn subpoena.
Mr Strum addressed the issue of inconsistencies or omissions arising from the husband’s Form 13 Financial Statement filed on 11 May 2005 and referred to, for example, the husband’s assertion that “some minor expenses were paid for by [A] companies”, there being no reference in the financial statement to any such expenses. This too, as Mr Kirkham argued, would be resolved through a subpoena “correctly framed”, to use his apt description.
Mr Strum laid considerable emphasis upon the terms of a letter penned by the husband to the wife annexed to her Affidavit filed 16 May 2005 (annexure “LA-1”) which included the words:
“… We are not middle of the road young couple with kids in Caulfield in a high-paying salary job or running a small business. I run a large business and there is a price to pay for this lifestyle you have. If you don’t want the lifestyle or the price of long hours – you are in the wrong place. So have a good think about it, if you want to stay with me then you have to support me and the hours and the stress and not resent me for it.”
This resentment then manifests itself into you constantly trying to get me to come home early and are against me putting in the hours I need to run our business.
So you understand we are not running a milk bar or a chain of shops – this is one of the hardest businesses to run because it requires constant monitoring, battling with other people’s egos, supervising, daily/hourly changes in strategy and dealing with a 1000 issues (sic) at all different levels including enormous risk and not to add it is in one of the toughest industries anywhere.”
Mr Strum gained, in my view, unwarranted comfort from those words, interpreting for example, that the husband’s reference to “our business” meant the husband and his family, namely the wife. It is correct that the husband can be said to “run a large business”, for he is the Managing Director of ASC Pty Ltd. That is the company, as Mr Kirkham pointed out, that pays the husband’s salary, and only that company. As Mr Kirkham said, it is clear that he “has a degree of control” in that he administers its commercial activities as the Managing Director on a day to day basis. Insofar as the conclusions sought to be drawn by Mr Strum from that letter are concerned, which I am informed was written by the husband shortly prior to the separation, it may at best be a matter for evidence but, for interlocutory purposes, there is little persuasive influence in the light of what the Group Accountants have to say on the issue of control, the actual shareholding of the companies within the A Group and the wife’s stated concessions under oath.
Mr Strum dealt carefully with the issue of width and oppression. He submitted that given the financial matters in issue raised “both in the affidavits filed to date and by the documents produced upon subpoenas and released to date” it could not be said the subpoena was too wide or oppressive. I have already dealt earlier in this judgment with the objections taken by Mr Kirkham to Mr Strum’s endeavoured reliance upon documents produced under subpoena thus far.
Documents that are relevant to the proceedings cannot be said to be oppressive. In particular, Mr Strum placed reliance upon what was said by the Full Court in Hatton v. Attorney-General of the Commonwealth of Australia & Ors (supra) at p.87,605. However, it is plain to me, given the interim issues before the Court, that many of the class of documents sought in the subpoena are “not sufficiently relevant” in that they are not “likely to add in the end, in some way or other, to the relevant evidence of the case”, discrete to the interim issues before the Court.
Mr Strum submitted what he described as a “fall back” position, namely that I should, in the exercise of my discretion, allow production of certain of the documents sought in the subpoena without striking down the subpoena as a whole. In relation to the corporate entities, he submitted that I permit production of ledgers, taxation returns, notes to accounts, depreciation schedules, annual returns, trading profit and loss accounts and balance sheets. In relation to the various Trusts, he submitted that I should also permit production of Trust Deeds, variation to Trust Deeds, company constitutions, beneficiary loan account ledgers (of the husband), minutes and loan agreements. He submitted this was a permissible exercise of discretion. On the other hand, Mr Kirkham made it clear in his oral submissions that the subpoena was either properly drawn and thereby appropriate, alternatively, it was so widely drawn that it was oppressive and fishing and, in the circumstances, should be struck down.
In his written submissions, Mr Strum argued that it was not open to the A Group to object that the subpoena was oppressive to them in circumstances where the Group Accountants (being the recipient of the subpoena) had not objected on that basis, and had “ostensibly complied” with the subpoena by producing documents to the Court. He pointed out that the recipient of the subpoena, the Group Accountants, had not objected to the subpoena or complained that they were required to form a conclusion as to whether documents fell within the subpoena, referring to Hatton v. Attorney-General of Commonwealth of Australia & Ors (supra) at p. 87,604, citing Epstein v. Epstein (1993) FLC 92-384 at p. 79,969–970. To the contrary, he pointed out they produced eight boxes of documents. He submitted, that the only decision that had to be made was whether or not any particular document came within a category of documents described in the Schedule to the subpoena. See Lea v. Lea (1990) FLC 92-174 at 78,174.
Mr Strum said there was no requirement for the Group Accountants (as the recipient of the subpoena) to form a judgment or conclusion as to whether a particular document was or was not required to be produced. Further, that given the specificity with which the documents sought were described in Schedule 1 to the subpoena, a document either did or did not fall within the scope therein required. That was simply a question of fact upon which no judgment or conclusion was required to be formed by the recipient.
CONCLUSION
For the purpose of my determination, I limit my judgment to the arguments relied upon by Mr Kirkham in paragraphs 2 and 3 of his Written Submissions before me and not the bases particularised in the Notice of Objection dated 5 May 2005 filed on behalf of the Applicants.
Firstly, I am satisfied that the Applicants are persons having a sufficient interest in the subpoena for production and that their objection to production of the documents set out in Schedule 1 to the subpoena is properly before the Court.
In my view, it is proper to consider, for the purpose of my determination, the stage thus far reached in the proceedings. The parties separated on 25 February 2005 (in quite unhappy circumstances as evidenced from the affidavits and annexures) and the husband instituted proceedings relating to child welfare matters on 8 March 2005. The wife’s Response was filed on 12 April 2005 in which she claimed the interim relief (paragraphs 10, 12, 11 and 14) that is central to the proceedings yet to be determined. That prescribes the issues before the Court.
Discovery as between the parties has not yet taken place nor been pursued, in my view, as it should between the parties. By paragraph 16 of the wife’s Form 2A Response, she sought an order that the husband do provide discovery of specified documentation, drawing upon the provisions of Rule 13.04 of the Rules under Part 13.1 – DISCLOSURE BETWEEN PARTIES. As Mr Kirkham properly submitted, the orders sought by the wife in paragraph 16 are substantially more confined than the documents sought under the subpoena and acknowledge the husband’s lack of interest in almost all entities referred to in the subpoena. The fact of his lack of interest and control was, as I have discussed earlier in this judgment, clearly acknowledged by her in her affidavit material upon which I am to rely in coming to my determination.
In my view, it was inappropriate for the wife to issue the subject subpoena in its present form before exhausting her rights of discovery against the husband and having regard to the whole range of documents sought, may be seen as an abuse of process. A subpoena is not a substitute to discovery. See Relationships Australia v Pasternak & Children’s Representative (1996) FLC 92-699 esp. at p. 83,375-376 citing McAuliffe v McAuliffe (1973) 4 ACTR 9 at 11-12 per Blackburn J.
Without wishing to detract from the overall arguments advanced by Mr Kirkham, his principal complaint was directed to the issue of relevance and which, in my view, was an argument of considerable merit. It is clear law that the question of relevance or apparent relevance is an arguable ground or basis for setting aside a subpoena and that a party seeking to uphold the issue of a subpoena seeking documents must demonstrate that those documents have an apparent relevance to the issue or issues before the court and in respect of which the subpoena was filed. See Hatton v Attorney-General of Commonwealth of Australia & Ors. (supra) at p 87,607, citing Santos Ltd v Pipelines Authority of South Australia (1996) 66 SASR 38 esp. at 52 per Debelle J (relying upon Trade Practices Commission v Arnotts Ltd (No. 2) (1989) 88 ALR 90). That is, it is a separate and sufficient ground in itself for setting aside a subpoena and not just a “species of oppression or abuse of process” (as was sought to be argued in Hatton, (supra) at par 31).
As was made perfectly clear in Hatton v Attorney-General of Commonwealth of Australia & Ors (supra) case at par 59, given that there are no pleadings as such at present in the Family Court, the only way in which the apparent relevance of the documents sought under the subpoena particular to the proceedings before the court could be established, was by reference to the affidavit material filed for the purpose of those proceedings. I have earlier in this judgment set out the limits of the approach mutually agreed upon by counsel to this issue and the evidentiary parameters within which my determination is sought. The material sought to be relied upon by Mr Strum falls far short, in my view, of establishing a sufficient basis to support the subpoena sought to be struck down by the Applicants.
It seems to me, given the whole range or raft of documents variously sought under the 28 dot point provisions of Schedule 1 of the subpoena in relation to each of the 13 companies there named (ignoring paragraph A15 of Schedule 1 for the moment) and “any trust” described in paragraph A16(i) to (viii) to the Schedule, the draughtsperson was stylistically adopting an extremely liberal approach apparent to me in the hope that the subpoena may produce documents relevant to the issues before the court. This is not, in my view, the correct approach as the relevance of the documents called for under a subpoena must be apparent from the affidavit material filed in the particular proceedings for determination. I have made it clear that it is for the wife in these interim proceedings to demonstrate to the requisite standard of persuasion that the documents sought are relevant to the actual proceedings. As the Full Court said in White & Tulloch v White (1995) FLC 92-640,
“It appears to us oppressive to (the recipient of the subpoena) to have to disclose detailed financial records in circumstances where that may prove ultimately to be of no more than marginal relevance. It is likely to widen the scope of these proceedings far beyond what is legitimate or useful and is not in accordance with a proper practice in these matters”. (p 82,464) (my emphasis).
Any pious expectation or hope of landing a document that may be of relevance to the actual proceedings before the Court is nothing short of fishing.
In my view, the terms of the subpoena in the main fail to meet the test of relevance. The width of the various class of documents called for do not satisfy the test of apparent relevance. Indeed, much of the material called for does not appear, on the face of it, to bear relevance to the interim issues raised in the affidavit material. There is what I regard as a call for the production of a whole raft of documents regardless of their significance. There was no persuasive argument addressed to me by Mr Strum in relation to the particular documents sought, but otherwise to argue a “fall back” position, which, though limited to 13 classes (of the 28 classes of documents set out in Schedule 1) did not persuade me by any measure of their relevance to any of the particular 13 companies (again, leaving aside Schedule 1 paragraph A(15)) or trust entities (referred to in Schedule 1 paragraph B). It seems to me that many of the hurdles faced by him in argument were generated by the fact that the process involving proper inquiry, production and inspection of relevant documents from the husband had not been undertaken by the wife’s practitioners.
I am satisfied that the width of the documents sought by the wife under subpoena goes far beyond that necessary to enable her to “properly prepare” her case for “interim financial support”, to cite Mr Strum’s words. The relevant issues before the Court are spousal maintenance, departure from Administrative Assessment of Child Support and litigation funding. Details of the husband’s position in the A Group, including directorships, shareholding and control are known to her. She has conceded that the companies are controlled by his parents and which fact has been made independently clear to her advisors by the Group Accountants. She has not asserted that the husband has de facto control or that any of the 13 corporate entities is or are the alter ego of the husband in the sense explained in Ascot Investments Pty Ltd v Harper & Harper (1981) FLC 91-000 per Gibbs J (as he then was) (with whom Stephen, Aickin and Wilson JJ agreed) at page 76,061. The submissions addressed by Mr Kirkham are both sensible and compelling in the particular circumstance of the interim issues to be argued before the Court and the stage which it has reached in the litigation trail. I accept that a subpoena that can confine itself to seeking documents of the kind argued by Mr Kirkham and referred to in paragraph 22 of my judgment is appropriate and that, in the circumstances before me, the subpoena as drawn is both wide and oppressive in seeking the production of documents that do not satisfy the test of apparent relevance.
Given my findings on these issues, it is not necessary for me to address the remaining arguments advanced by Mr Kirkham. In the circumstances, I propose to set aside the subpoena, noting that the Applicants have, through Mr Kirkham agreed to produce various of the documents to which I have referred. I do not propose to dissemble the subpoena and in effect re-write its terms. I am not persuaded that even those documents sought to be produced under the “fall-back” position addressed by Mr Strum, for reasons earlier advanced, satisfy the relevance test, the onus of which rests with the wife.
Although undated and headed “Without Prejudice”, (but agreed to be a document of offer made on 16 May 2005) it was resolved by Mr Strum to waive privilege and admit the document into argument which I marked Exhibit “A”. That arose by reason of certain submissions made by Mr Strum and Mr Kirkham which are not necessary for me to record in this judgment. That document, to a large extent, mirrors the proposal advanced by Mr Kirkham detailing those documents that his clients were prepared to produce. Given the contents of Exhibit “A”, I am surprised that some form of common accord was not achieved.
In his Written Submissions, Mr Strum referred to a number of specific paragraphs deposed to by both the wife and the husband in their respective affidavits addressing the interim issues yet to be argued before the Court. The husband’s detailed affidavit addressed matters of a financial nature and relevant to those proceedings. Insofar as documentation is required arising from what he has deposed to and referred to by the wife, it may be met by the rational and balanced proposal advanced by Mr Kirkham, and not the wild thrust for documents advanced in Schedule 1 to the subpoena.
The issue of control and ownership of the companies was conceded. There is, in my view, no merit in Mr Strum’s argument asserting a “degree of control”, which is a term that is both vague and inconclusive. As Mr Kirkham said, it was a “generic and unsupported assertion”. The marriage was of short duration and the husband’s parents, on the face of the material before the Court appear to be people of some means. The material disclosed that the husband has a substantial income and has had (certainly in more happier times), and subject to his parents’ control, the ability to drawn on a loan account. He deposed to those expenses he is prepared to meet on an interim basis and otherwise the wife and the children will continue to reside in the valuable former matrimonial home. That does not warrant or underpin a claim for production of documents of the width, variety and magnitude sought in Schedule 1 to the subpoena from the spread of corporate entities and trusts. I do not propose to go through each and every one of the 28 class of documents sought from those commercial entities from the period commencing 1 January 2002, for a plain reading of the same alone gives force to my proposition and determination.
In the circumstances, the orders I propose to make, subject to any further argument on costs, are as follows:
1.That paragraph 5 of the orders made on 12 May 2005 be discharged.
2.That the subpoena directed to the Managing Partner, the Group Accountant, and filed on 27 April 2005 be set aside.
3.That the Form 2 Application filed on 12 May 2005 be otherwise dismissed.
4.That pursuant to rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of Counsel.
I certify that the preceding 58 numbered
paragraphs are a true copy of the
reasons for judgment herein of
the Honourable Justice Guest.
Associate to Guest J
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