Anderson and Anderson and Ors
[2014] FamCA 491
•10 July 2014
FAMILY COURT OF AUSTRALIA
| ANDERSON & ANDERSON AND ORS | [2014] FamCA 491 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Subpoenae – objections on the ground of relevance – relevance established – importance of discovery being undertaken before the issuing of subpoena. |
| Family Law Act 1975 (Cth) |
| Cahill & Cahill (No 2) [2013] FamCA 546 |
| APPLICANT: | Ms Anderson |
| RESPONDENT: | Mr Anderson |
| FIRST OBJECTOR: | Law Firm K |
| SECOND OBJECTOR: | Mr Rankin |
| FILE NUMBER: | MLC | 11091 | of | 2013 |
| DATE DELIVERED: | 10 July 2014 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 1, 2 July 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Strum |
| SOLICITOR FOR THE APPLICANT: | Taussig Cherrie Fildes |
| COUNSEL FOR THE RESPONDENT: | Mr Williams |
| SOLICITOR FOR THE RESPONDENT: | Coote Family Lawyers |
| COUNSEL FOR THE FIRST OBJECTOR: | Ms Bennett |
| SOLICITOR FOR THE FIRST OBJECTOR: | Law Firm K |
| COUNSEL FOR THE SECOND OBJECTOR: | Ms Morton |
| SOLICITOR FOR THE SECOND OBJECTOR: | Sladen Legal |
Orders
That the amended objection by Mr Rankin filed 30 June 2014 is dismissed.
That Mr Rankin forthwith comply with the provisions of Categories 1 to 6 of the schedule to the subpoena addressed to him filed 19 June 2014.
That the objection by Law Firm K is dismissed.
That all documents provided by Law Firm K pursuant to the subpoena filed 17 June 2014 are released for inspection and copying subject only to any further application in relation to any confidentiality agreement.
That there be liberty to apply.
That there be liberty to apply specifically in relation to issues of costs arising out of these orders.
That all extant interim applications are otherwise adjourned for hearing by the Honourable Justice Macmillan on a date to be fixed to be notified by the Court.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Anderson & Anderson and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 11091 of 2013
| Ms Anderson |
Applicant
And
| Mr Anderson |
Respondent
And
| Law Firm K |
First Objector
And
| Mr Rankin |
Second Objector
REASONS FOR JUDGMENT
Ms Anderson (“the wife”) and Mr Anderson (“the husband”) are involved in financial proceedings in this Court. The wife began the proceedings by application filed on 18 December 2013. Relevantly, she sought imprecise orders relating to spousal maintenance and child support. The husband filed a response on 4 February 2014. Again relevantly, he sought that the former “matrimonial home” be sold and after the discharge of encumbrances and costs, the net proceeds be divided as to “60% to the wife and 40% to the husband” and otherwise, any further adjustment of the “property rights of the parties” pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”).
The husband filed an amended response on 9 May 2014 seeking parenting orders but did not seek to alter the financial orders he was seeking.
The wife filed a “reply” to the husband’s position on 27 May 2014 in which she sought the dismissal of the husband’s claim for financial relief.
Thus, in simple terms, the wife seeks that she retain the home. Affidavit material filed by the parties shows that the wife is the registered proprietor of the home on the title. The property is encumbered by mortgage and, as I understand the evidence, the husband is a guarantor.
This Court is not a court of pleadings but the filed applications set the parameters of the dispute as far as the parties are concerned. Those parameters are relevant to the dispute I am required to determine which relates to two objections lodged in relation to different subpoenae. The first subpoena was directed to the executive partner of a law firm where the husband is employed. That subpoenae was issued by a registrar at the request of the solicitors for the wife. The second subpoena was directed to the wife’s father. It was issued by a registrar at the request of the solicitors for the husband.
The first subpoena dealt with here is that directed to the executive partner of the law firm.
The law firm was represented by counsel and sought to have the subpoena set aside on its written grounds that:
(a)The documents requested are irrelevant; and
(b)The terms of the subpoena are too broad.
The law firm is not a party to the substantive proceedings. Its connection lies in the fact that the husband is employed there.
Ms Bennett of counsel for the firm began by indicating that documents to which no objection had been taken had been provided. Objection was taken to categories 2, 4, 5 and 7. A further category concerned a superannuation fund but it seemed common ground that the firm was not the trustee. That issue was not pressed.
It will suffice if I describe the disputed documents as:
(a)trust deeds, taxation returns, financial statements and minutes of trustee meetings for three trusts;
(b)Taxation returns and financial statements for the firm; and
(c)Income projections and budgetary estimates for the firm.
The years relating to the disputed documents are not the issue.
The main ground argued by Ms Bennett was that of relevance. Relevance is a difficult ground for an “arms-length” objector because as an outsider to the parties and the proceedings, normally one would not expect that the subpoenaed person would have any understanding of the litigation such as to be able to say what documents have any relevance. Ms Bennett argued the matter carefully and cogently. Reliance was placed on the affidavit of the Manager of the Office of General Counsel of the firm.
The affidavit said that the firm had requested whether the documents that had been provided were sufficient for the wife for the purposes of the hearing but “no meaningful” explanation was received as to why the disputed categories were pursued. It was said that the documents were highly commercially sensitive relating to the whole of the firm rather than just the husband.
In counsel’s submission, she repeated the claim of the absence of relevance. Submissions then followed about the importance of the privacy of the non-party and the test to be applied to determine relevance. Counsel referred to Seven Network Ltd v News Ltd (no 11) [2006] FCA 174, Trade Practices Commission v Arnotts Ltd (No 2)(1989) 88 ALR 90, Woley & Humboldt (No 3) [2009] FamCA 546 and Cahill & Cahill (No 2) [2013] FamCA 546. There is nothing in those authorities that is controversial insofar as they affect the immediate proceeding.
As Ms Bennett submitted, the wife had to show some apparent relevance in the documents to the proceedings before the Court before any order for release and inspection could be made. The parameters of the dispute have crystallised to some degree by the nature of the orders each of the husband and the wife has sought. Generally, it is said that relevance must be shown on the material set out in the affidavit material relied upon by the parties but is it confined to that only?
In Hatton, VF & Attorney-General of the Commonwealth of Australia [2000] FamCA 892; (2000) FLC 93-038 the Full Court noted that given that there were no pleadings in the Family Court of Australia, the only way in which “apparent relevance” of the subpoenaed material to the main property settlement proceedings could be established was by reference to the affidavit material filed in those proceedings.
In Portal Software International Pty Ltd v Bodsworth, [2005] NSWSC 1115, Brereton J noted of the documents pursued by the subpoena:
It is sufficient that they could "possibly throw light" on the issues in the substantive proceedings, or that it appears to be "on the cards" that they will do so. What are the issues in the proceedings will appear from the pleadings (where there are pleadings), the affidavits, and the legal principles which govern the claims for relief in the substantive proceedings. (emphasis mine)
In Hudson Timber and Hardware Ltd v Chaudhary Group Pty Ltd [2002] FCA 832the Full Court of the Federal Court examined the issue of apparent relevance and said that the relevant principles governing the obtaining of documents on subpoena which have “apparent relevance” were that inter alia:
(1)The relevance of documents was not limited to documents directly admissible in themselves in proof of an issue raised in pleadings; and
(2)If a class of document which has material forensic relevance could be shown to exist, then a subpoena would not normally be set aside.
In Hatton (supra) at para 59, the Full Court was referring to the fact that the affidavit material was the only material that was available to the trial judge in that case. I consider the principle to be a guide. The strict nature of the disclosure obligations as set out in chapter 13 of the rules of the Court also provide guidance but so too does contemplation of the provisions of Part VIII of the Act which have to be established if a matrimonial cause is prosecuted. Whilst it was asserted by the objector that the perception was that this was a case based upon income, the substantive proceedings are significantly different. The interlocutory proceedings are but a prelude to, and clearly assist in, the substantive proceedings. I consider that the Court is entitled to determine the relevance issue on the affidavit material, the financial statements and the applications of the parties knowing of the legal issues to establish them.
Whatever documents the wife seeks, she must show that there is a legitimate forensic purpose; she cannot, for example, use the process of the Court for “fishing” or abusive purposes.
Ms Bennett submitted that even allowing for these being family proceedings where the test may not be as high as in other civil proceedings, it had to be remembered that the firm was a stranger to the proceedings so that, relevantly in this case, a very large number of other individuals would have their private financial lives exposed. The Court has to walk a fine line here between the protection of the individual and the pursuit of justice for the parties before it. The invasion of privacy is probable even with confidentiality clauses and the redacting of information because of the very nature of a partnership relationship. Whilst confidentiality obligations apply to litigants, they may give little comfort to the non-parties whose private information is exposed. Thus, the Court must take the issue of privacy seriously even if the standard of proof of relevance in a family matter is modestly low.
In this case, Ms Bennett submitted that the “matters in issue” were the financial position of the husband and his likely future income and those details had already been provided by the firm. Counsel observed that even those matters should have been inter partes’ obligations and dealt with in discovery. It is indeed to that issue that I turn because it enables the Court to focus on apparent relevance.
In Hatton (supra), the Full Court of this Court supported the approach taken by Moffitt P in National Employers’ Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372. That is, a subpoena can be set aside where it has been used for the purpose of discovery.
Having regard to the very wide and strict obligations well-known in chapter 13 of the Court’s rules, along with the Court’s “pre-action procedures”, questions must be asked whether discovery has been undertaken and even then, whether the documents pursued have apparent relevance to the issues in dispute. It ought be obvious that if disclosure is not made properly by a party, then a subpoena to a non-party is reasonably justified even if it is an invasion of privacy. Curiously, one might expect that the husband might be more conscious of the concerns of the others in the law firm knowing that rule.
Mr Strum of Counsel for the wife agreed that the test was not controversial and referred to my judgment in Martin & Martin (unreported 9 April 2014) where I had said that the focus of the Court should be on whether it was “on the cards” that the documents would materially assist. It is important to observe here that at least in relation to the first of the objectors (unlike the second), it was not suggested that the subpoenae were issued for an ulterior purpose. Mr Strum submitted that the Court should accept that the subpoena path had been followed because the husband had taken a stance not to provide the documents that the wife had sought. There was some suggestion by Ms Bennett that the husband may not have been able to obtain the disputed documents anyway but I do not consider that was a serious objection. It had not been suggested by the husband.
Counsel for the husband was Ms Williams. She observed that there was nothing she could say about the firm’s subpoena objection save that the husband wanted the Court to understand that he had not been recalcitrant in respect of his obligations in discovery as was asserted by counsel for the wife.
The starting point must be that of the orders made on 26 March 2014. On that occasion, I ordered that each party provide to the other a list of documents each required for inspection purposes and if the documents were not so produced, then, subject to the solicitors certifying that the documents being pursued were relevant to the “forthcoming financial issues”, the subpoenae could be issued. That is how the subpoenae were so issued.
There was correspondence between the practitioners for the husband and wife respectively, the precise details of which do not matter save that the husband’s solicitors said that the documents they were providing were “sufficient” to enable the wife to “understand” the husband’s income and that further requested documents would not “disclose any information” about the husband’s future income earning potential. The firm’s partnership was described by the solicitors for the husband as “vast” and the documents requested related to the entire firm. The letter went on to say that the firm would require confidentiality agreements to be signed. The reference to confidentiality was to correspondence that was not in dispute. In other words, the wife was not able to have the disputed documents anyway. Other correspondence tendered into evidence indicated a slightly different income position of the husband from that disclosed by the husband in his financial statement but I accept the submission of his counsel that nothing turns on that because of its amount and the approach the husband had taken to working out his entitlements within the firm.
The inference that is open to me on the basis of the husband’s letter and supported by the position adopted by the firm is that the husband’s financial position had been disclosed in his documents and nothing more would assist the wife. I have some difficulty with that proposition because it has the “trust me” attitude about it. There may be some justification for that attitude because, as had been made clear to the solicitors for the wife, the firm has no partnership deed and none of the partners has any goodwill or capital value in the firm. As was submitted by Mr Strum, what that overlooks is that the husband has an income stream of some substance and it may have been the wife’s desire to value it. Whether the trust deed or the trustee minutes might have affected that stream or its value was not something that the wife could assess without having access to the documents.
Ms Bennett submitted that the wife was not at liberty to “cross-check” the husband’s declared financial position in that way but I do not accept that is what she was doing.
Chapter 13 of the rules and particularly rules 13.19 to 13.22 apply to the parties. To avoid the involvement of non-parties, the focus in those rules is on the obligation of the party to provide documents. There is an obligation to provide all of the necessary trust documents but again with the rider that they are relevant to the issues in dispute.
Although the order I made in March was directed to the financial issues in dispute relating to these proceedings, it was probably infelicitously worded because the major issues are those set out in the earlier part of these reasons. That is, the husband wants a share of the house (which is resisted by the wife) and thus, all of the financial circumstances of the parties become relevant as to whether or not it is just and equitable to make any orders at all.
Is it therefore appropriate to value the husband’s income stream? I consider it is and to the extent that a valuer wants to see the genesis of the stream, the trust deeds and minutes of meetings along with projections could be seen to be relevant. Ms Bennett submitted there was no such evidence or indeed any suggestion of a valuation at this stage that might give rise to such an inference. I reject that on the basis that every source document that might enable the stream to be assessed as well as valued should be made available. All of the authorities of this Court have required the parties’ financial positions to be comprehensively known before any (and if so what) alteration of their legal and equitable interests can be made.
To the extent that it is considered by the firm that the wife is fishing, I observe that “fishing” occurs where, somewhat like “cross-checking”, a party issues the subpoena not to obtain evidence to support a case but to decide whether there is a case at all. In circumstances where the wife knows of, and the husband discloses, an income stream that seems to be largely governed by trust structures, I consider that it may be on the cards that the information could lead to a confirmation that the income is or is not, as the husband declares in his financial statement. However, it is conceivable that those same structures may also point to income splitting devices, tax minimisation potentials and the like, all of which are relevant to the matters that the Court has to consider in s 79(4)(e) of the Act. The Court is obliged to consider financial resources.
Whilst many of these matters were not specifically canvassed by the parties, it is hardly controversial bearing in mind all of the long-standing authorities of this Court about how matters are determined.
I do not find therefore that this was fishing, an abuse of process nor that it had no apparent relevance. The objection must be dismissed.
The principle relating to the determination of the objection to the second subpoena is similar to those set out above. This subpoena was issued by the Court at the request of the husband’s solicitor based on the grounds that I earlier mentioned.
This subpoena was said to have been justified by virtue of a letter written by the husband’s solicitors to the wife’s solicitors on 26 May 2014. I certainly drew the inference that the wife was indicating that documents that were under the control of her father were accessible by her. In a letter dated 26 May 2014, the solicitors for the husband referred to the fact that a number of requests had been made in the previous month for documents and there had been no compliance. These documents included various trust deeds, financial statements, tax documents as well as evidence of the wife’s parent’s contributions to the household expenses of the wife by reference to her financial statement filed. It can be seen that the subpoena mirrors the documents required of a litigant under the rules. Obviously, some of those documents may not have been easily accessible but as I understand the complaint of the husband, the wife was unresponsive.
The solicitor for the wife’s father who was the objector, began by submitting that this subpoena was issued for the purpose of harassment. That is a very strong allegation from a practitioner who purported to act for a person who was not a party to the proceedings and as it subsequently transpired, was not privy to correspondence between the other practitioners. The assertion of harassment arose from the timing of the issue of the subpoena. It was said that it was issued as a result of the wife’s practitioner issuing a subpoena to the husband’s firm. How that could be asserted by a non-party without evidence (and here there was none) escapes me. As I understand the solicitor’s submission, one of the grounds of setting aside a subpoena is that it was issued for an improper purpose. If indeed that was the basis of the assertion, in my view it was not only improper but irresponsible having regard to the fact that there was clear correspondence between the solicitors for the husband and the solicitors for the wife about the very documents. That can be seen from the correspondence to which I have earlier referred. Thus, I reject that submission.
The father’s objection document refers to the specific categories of document but in essence, leaving aside the assertion that the subpoena was bad on its face because it was incorrectly addressed, the argument was that:
(a)The subpoena was oppressive because it required the wife’s father to look for and examine every trust deed in which the wife might be an appointor, trustee or beneficiary;
(b)The period was too broad;
(c)The documents referred to were not relevant to any issue in the proceedings;
(d)The subpoena was fishing;
(e)The subpoena required the recipient to engage in “judgments of law as to whether or not the (wife) fulfilled the legal definition of appointor, trustee or beneficiary”.
In relation to those matters, the foundation for the argument in this case was modestly simple. There is little doubt on the evidence filed at the Court that the wife is providing benefits to her parents who have at times, if not at present, been living with her and she in turn, has been receiving benefits from them most particularly, in relation to large payments of her legal fees. In a rather ironic twist, the wife’s father attached to his affidavit a lengthy list of payments that he had made. Bearing in mind the objection based on oppression, and having to search through records which seems to have been exactly what the father had done, that complaint will no doubt be the subject of some scrutiny in the future. Needless to say, the father had no difficulty ascertaining those payments.
It was suggested by the solicitor for the wife’s father that he was a property developer and had many trusts and she seemed to assert that “everyone” knew that as each development began, a new trust was settled. I am not sure that I would necessarily draw that inference but in the next submission, it was put that the wife’s father was an elderly man suffering from Parkinson’s Disease. It was difficult therefore to gauge just how complicated an exercise he was being asked to fulfil if he was an astute property developer.
Importantly, counsel for the husband pointed to the fact that there is a significant dispute between the husband and wife about the wife’s financial position. She pointed to the wife’s financial statement showing she had an income of $37,000 but expenditure of $164,000 at a time when she had no credit card or overdraft facility. No explanation was said to have been given other than that the wife’s parents were supporting her. Where were those funds coming from? How was it that the wife was able to get capital distributions from a trust or indeed, was it coming directly from the father?
It was submitted on behalf of the husband that he had no idea of the source of these funds. I accept that the husband is entitled to know because as earlier mentioned, the property is in the wife’s name yet the husband is a guarantor of the mortgage. The mortgage was said to be $2.5 million and how someone on an income of $37,000 a year would be able to service it remains a mystery. Indeed, it is part of the dispute in the case at the moment that the husband is seeking a sale and apparently the wife is resisting that.
The solicitor for the wife’s father indicated that as the husband is employed in the legal field, he would well know about the trust structure but there is no evidence to support that conclusion.
Counsel for the husband submitted that in any event, if the wife was a regular recipient of funds from either her father directly or a variety of trusts, it may be that even though distributions have not been made, there may be a financial resource there.
As I earlier indicated in the first subpoena, the Court is entitled to look outside of the affidavit material and look to the nature of the applications for orders by the parties as well as consider the legal aspects required to be proved. As I observed in discussion, there was a certain irony about the wife resisting the sale of the home with a mortgage that she is not able to personally service whilst her father was refusing to provide any information as to how she was being financially assisted. No doubt that is a matter for another hearing.
I turn back then to the objection. The objection was supported by an affidavit by the wife’s father. That did not take the matter much further. I do not understand how many trusts there are and the statement that there are many does not help me. I do not understand why it is so oppressive to say that the father should advise and provide documents in relation to one of his children. Whilst the period of 14 years sounds like an extraordinary time, I do not understand how complicated an issue that would be bearing in mind that I understand with a variety of trusts, there will be a number of professionals involved such as an accountant. I have no idea but the evidence does not help me determine the fact that the period is oppressively too broad. That is particularly so where some material has been provided.
The third objection related to the fact that there was no relevance in the documents. The solicitor for the wife’s father relied upon a decision of Macdowell v Williams a decision of Kent J reported at [2012] FamCA 479. That was a case involving two issues. The first related to a subpoena pursuing a number of trust documents and the second related to wills. Kent J set aside the subpoena but it is clear that his Honour did so on the basis that it was the husband’s case that the wife’s parents intended for the wife to take control of one of the entities “in the near future”. His Honour rejected that as a basis to allow the production of documents in circumstances where there was no other apparent connection. His Honour said that he was not prepared to allow the subpoena to stand “without further evidence”. His Honour observed that the way the money had been distributed by the trust was not controlled by the wife “nor affects her financial position”. His Honour went on to say that the way in which distributions were made by the trust was set out in the trust deed “which the husband accepts has already been provided by the wife’s parents”.
In this case, the wife’s father indicates a reluctance to say much at all and the evidence of the husband indicates that there is a significant amount of support being provided to the wife by some person or entity.
The test that I have earlier set out only requires the husband to show that it is on the cards that the information is relevant to the proceedings. The proceedings are of interlocutory nature relating to the sale of the home and in my view, as the solicitor for the wife’s father was unable to assist at all in relation to the concerns of the husband as to how his wife was funding her lifestyle, I am satisfied that the husband has established that there is some relevance in the documents sought.
The fourth ground of the objection was that the subpoena was “fishing”. I have already addressed that issue in the first subpoena and I reject that here as a ground for the objection. There is no doubt in my mind that the husband knows exactly what he is looking for and it is conceivable that the documents he is pursuing will shed some light on that issue.
The fifth ground of the objection related to a requirement that the wife’s father make a judgment as to law. That was a curious objection bearing in mind that he was represented by a lawyer. It is well known that people who are required to make certain determinations and indeed obtain advice about subpoenae are entitled to get legal advice and seek that as part of the costs of compliance. In my view, that objection was spurious.
I find on the evidence and the submissions that there is no basis to set aside the subpoena. That said however, if indeed the wife’s father does not have any control over the documents that are specifically pleaded, no doubt he will say so.
Category 8 in the subpoena sought the taxation returns of the wife’s father and mother. Nothing I heard indicates that there was any justification for that request. If the sort of money being paid to date towards the wife exceeds $150,000 and was described by the wife’s father’s solicitor as a small amount of money in the scheme of things, there is little doubt that there is a lot more. As such, the taxation returns are unlikely to make much difference. That means that category must be set aside.
The subpoena also sought documents relating to loans and gifts made by the wife towards her parents. That was somewhat infelicitously worded because what the husband was looking for was some sort of documentation in relation to the benefit that the parents were receiving from living with the wife. It seems that that is a bit spurious as well because unless there is a documented agreement, it will no doubt be a gratuitous sort of arrangement without quantification. In my view it is such a limited issue that that part of the subpoena ought not stand.
I do not accept that the subpoena is bad on its face such as justifies setting it aside. I do however intend to expunge Categories 7 and 8 but I see no reason in this case why items 1 to 6 insofar as they have not been provided, should not be immediately lodged with the Court and made available for inspection and if necessary copying.
I shall make orders accordingly including giving the parties liberty to apply in respect of issues associated with confidentiality agreements if they are unresolved as between the parties but also in relation to applications for costs.
As I earlier indicated, it is not appropriate that I deal with the issue as between the husband and the wife concerning the sale of the home and I shall make arrangements for another judge to determine that issue.
I certify that the preceding Fifty Nine (59) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 10 July 2014.
Associate:
Date: 10 July 2014
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