Anton and Malitsa

[2009] FamCA 70

FAMILY COURT OF AUSTRALIA

ANTON & MALITSA [2009] FamCA 70

FAMILY LAW – SUBPOENA - Objection by practitioner to production of client financial records – Review of the decision of the Registrar

Family Law Act 1975 (Cth)

Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd (1952) 72 WN (NSW) 250
Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98
Commissioner of Railways v Small (1938) 38 SR (NSW) 564

Hatton v Attorney General (Cth) & Ors (2000) 26 Fam LR 570
National Employers’ Mutual General Association Limited v Waind & Hill [1978] 1 NSWLR 372

APPLICANT: Mr Anton

RESPONDENT: Ms Malitsa

FILE NUMBER: DGF 928 of 2005

DATE DELIVERED: 10 February 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: 6 February 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR HOULT

SOLICITOR FOR THE APPLICANT: TAUSSIG CHERRIE & ASSOCAITES

COUNSEL FOR THE RESPONDENT: MR LENNON

SOLICITOR FOR THE RESPONDENT: LENNON MAZZEO

Orders

(1)That the firm Lennon Mazzeo produce to the Registrar the documents lettered (a), (b), (c), (d) and (e) set out in the subpoena filed on 4 December 2008 by 4.00pm on 20 February 2009 and that they be thereafter released pursuant to these orders for inspection and copying by the solicitors for the husband.

(2)That paragraph 3 and 4 of the orders of Registrar Sikiotis made on 18 December 2008 be set aside.

(3)That any dispute between the parties as to the costs of these proceedings and the costs and expenses of the production of the said documents be determined as part of the forthcoming trial between the parties.

(4)That with respect to Orders 7, 8 and 9 of the orders made on 3 November 2008, the date “11 March 2009” be inserted in lieu of “13 February 2009”.

(5)That in respect of Order 10 of the orders made on 3 November 2008, the date “25 March 2009” be inserted in lieu of “27 February 2009”.

(6)Should either party request the production of further documents by way of discovery:

(a)       such request be made in writing by no later than 20 February 2009;

(b)compliance with or an explanation in writing as to non-compliance, take place no later than 27 February 2009; and

(c)“compliance” means providing the other party with a photocopy of the requested documents.

IT IS NOTED that publication of this judgment under the pseudonym Anton & Malitsa is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: DGF 928  of 2005

MR ANTON

Applicant

And

MS MALITSA

Respondent

REASONS FOR JUDGMENT

1.On 4 December 2008, the solicitors for the husband filed and the Court issued, a subpoena to the managing partner of the firm of solicitors for the wife to produce documents.  The demand read:

In relation to [MS MALITSA] (formerly [ANTON]) (“[the wife]”) born […] May 1953 the following books, documents and things:-

(a)      Trust account ledger records;

(b)      Client debtor ledger records;

(c)      Inward cheque register;

(d)Transit register records (in accordance with Regulation 3.3.27 of the Legal Profession Regulations 2005);

(e)Costs agreement(s) signed by [the wife];

(f)Bill(s) in taxable form;

(g)Letters provided to [the wife] before each court event in accordance with Rule 19.04 of the Family Law Rules 2004;

(h)Tax invoice(s) rendered including but not limited to the tax invoice rendered on 10 November 2008;

(i)Records of monies received from [the wife] on account of disbursements including but not limited to [the wife’s] half share of the fees payable to Mr Michael Wood of counsel for the Mediation conducted on 28 October 2008 and [the wife’s] half share of the fees paid to [N] Valuers for the valuations reports prepared in July 2007; and

(j)Any other trust or accounting records in relation to all monies received from or on behalf of [the wife] and disclosing the source of such funds.

2.On 18 December 2008, Registrar Sikiotis set aside the subpoena and ordered the husband to pay the wife’s costs of $500.

3.On 22 December 2008, the husband filed an application seeking to review the Registrar’s orders.

4.The husband’s application was returnable before me on 6 February 2009 on the basis that the case was still listed for final hearing before me in March.

5.The wife filed no material in relation to the review application. 

6.The husband was present and appeared by his counsel. 

7.The solicitor for the wife attended and although he announced he was appearing for the wife, in reality, he was appearing on his firm’s behalf to defend the Registrar’s orders.  Having said that, the parties were able to also negotiate some discovery orders as between husband and wife that really had nothing to do with the subpoena issue.

8.In relation to the agreed orders, I will make those by consent.

9.One order which was not agreed to was that the wife produce tax returns and various probate documents within 14 days. Mr Lennon the solicitor for the wife indicated that he did not have instructions in relation to that but that in any event, those sort of documents were captured by proposed consent Order 4 and that in the event the solicitors for the husband gave notice requiring those for production, subject to them being in the possession of the wife, they would be produced.  This was a rather vague but legitimate argument and having regard to the absence of the wife and the fact that the parties were really there in relation to the subpoena issue, I propose not to make that order. 

10.In the affidavit filed by the husband’s solicitor, Ms Cherrie said that on 18 December 2008, Lennon Mazzeo Lawyers the solicitors for the wife, made an oral objection to the Registrar to a subpoena to produce documents issued to them and returnable on that day.  The affidavit sets out no more than that and I am not sure what it was that gave rise to the ruling of the Registrar.  It matters little in this case because I am determining it de novo. 

11.The fundamental issue in this case relates to whether or not the legal practitioners for the wife ought to be ordered to comply with the subpoena.

12.Mr Hoult for the husband argued that the husband wanted to see the solicitor’s records because of:

(a)questions about add-backs to the pool of assets which were going to be important in the case and that gave rise to what legal fees were being paid; and

(b)what source of funds was being used to pay for legal costs and expenses which in turn may be related to the use of the parties’ funds.

13.Unfortunately, Mr Lennon had a commitment and was concerned that I understood the issue fully as he had to leave.  I was also in the middle of a part-heard defended trial.  I think I understood the nature of his argument.  Mr Lennon said that this subpoena was identical to one that the husband’s solicitor had issued in October 2008 and which he said was then dealt with by me.  I pointed out that my recollection was that Mr Lennon then had told me that there were no such documents as outlined in the subpoena and hence I had concluded that there was nothing to produce or respond to.

14.Mr Lennon said that the only difference this time was that as result of my order in November 2008, there were debtor records as the wife had been told of her legal costs subsequent to my order.

15.In so far as the orders I made on 25 November 2008 are seen by the wife as the same as what is now being sought, I disagree.

16.What seems to be the inference from the husband’s current subpoena is that he does not accept the assertion by letter from the wife’s solicitor nor what I was told in November.  More importantly, it seems that the solicitor’s records will only confirm or refute for him the two issues I have set out above.  There is no res judicata issue here because apart from this being an interim matter, discovery is an ongoing process. 

17.Mr Lennon says that if I am against him on the first issue relating to the fact that I had already determined the subpoena, then I needed to contemplate that the subpoena was:

(a)too wide;

(b)oppressive; and

(c)fishing.

18.Mr Lennon said that he had no idea about the management systems and financial records of his firm and he was not computer literate.  That seems to me to be beside the point.  The formal records presumably are required to be kept for legal practices as well as for taxation purposes.  How those records are prepared, kept and produced is not a matter that I should be concerned about unless and until some argument arises about the costs of having someone collate them.  That should not arise if there are no records - or records and nothing in them.  Mr Lennon said that there would be substantial costs for his involvement but that is a matter too that should be dealt with in other proceedings.  If he knows little about the record-keeping, presumably someone in the firm does.  I do not see the need for Mr Lennon’s personal involvement. 

19.Accordingly, the resolution of this matter must be determined on the usual principles relating to the objections to subpoena.

20.Chapter 15 of the Family Law Rules 2004 deals with this issue.

21.The relevant part of Rule 15.29 says:

A named person may comply with a subpoena for production by:

(a)attending, on the court date, at the place specified in the subpoena and providing the documents to the court; or

(b)no later than 2 days before the court date:

(i)producing the documents to the Registry Manager together with a copy of the subpoena; or

(ii)producing photocopies of the documents attached to an affidavit verifying the accuracy of the documents, instead of producing the original documents.

From what I can gather, because of the objection of the wife’s practitioner on the grounds of an abuse of process, no documents were produced.

22.The relevant part of Rule 15.31 says:

This rule applies if the named person ……

(a)objects to the production of a document identified in the subpoena…

The person must, as soon as practicable after being served with the subpoena and at least 10 days before the court date, give written notice of the objection, or other order sought, in accordance with Part F of the Subpoena, to:

(a)the Registry Manager;

(b)the named person, if applicable;

(c)the other parties;

The rules do not provide the grounds upon which a subpoena can be set aside. In this case, there is no formal notice of objection on the file.  It would seem that the practitioners attended on the return day and simply argued the issue.

23.The Full Court of the Family Court in Hatton v Attorney General (Cth) & Ors (2000) 26 Fam LR 570 generally approved of the description of the three stages involved in the subpoena process outlined by Moffit P in National Employers’ Mutual General Association Limited v Waind & Hill [1978] 1 NSWLR 372 at 381:

The first is obeying the subpoena, by the witness bringing the documents to the court and handing them to the judge.  This step involves the determination of any objections of the witness to the subpoena, or to the production of the documents to the court pursuant to the subpoena.  The second step is the decision of the judge concerning the preliminary use of the documents, which includes whether or not permission should be given to a party or parties to inspect the documents.  The third step is the admission into evidence of the document in whole or in part; or the use of it in the process of evidence being put before the court by cross-examination or otherwise.  It is the third step which alone provides material upon which ultimate decision in the case rests.  In these three steps the stranger and the parties have different rights, and the function of the judge differs. (my emphasis)

24.In this case, the first step was not fulfilled because the recipient raised the objection. Whilst that may be seen as a pragmatic approach, there is little point in the rule if it is not fulfilled. The objection process puts the issuing party on notice of an argument to be raised as well as giving the court an opportunity to properly understand what is to be argued.

25.Even in circumstances where, as here, the recipient of the subpoena wished to argue that the issue had already been previously determined, the rule still requires compliance. Having said that, the issuing party in those circumstances may very well face a significant costs order for having not pursued the issue more fully in the first place but I again stress that discovery is an on-going process.

26.Clearly in circumstances where there are no documents to be produced, the recipient of a subpoena ought not be expected to attend court and say so.  However, to do so without notice to the issuing party would certainly put the subpoena recipient at risk of not being granted costs or indeed possibly being ordered to pay costs.

27.Similarly, in circumstances where there is an objection based upon an argument about an abuse of process or that the subpoena is oppressive, too wide or fishing, it would be pointless to expect a recipient who desired to claim that to have to produce the documents first. Again however, for the efficient running of the court and the saving of costs for litigants, the objection process should be followed or at the very least, the issuing party must be put on written notice about the argument upon which the court can then rule. In addition, the parties can all come properly prepared. I do not know what happened here because the affidavit material of the practitioner for the husband does not set out the details but then again, nor is there any material from the practitioner who received the subpoena.

28.Before me, albeit in a very truncated hearing, no issue was taken by either party about what the rules say nor about the fact that no formal objection notice had been filed.  It should be followed in future.

29.In my view, the rules are meant to assist the court and the parties in respect of the management of cases but I see no reason to depart from the approach taken by Moffit P as set out above; that is what the rules provide.

30.I turn then to the substance of the dispute as best I can on the submissions.

31.The recipient says that the subpoena is an abuse of process because I determined the issue previously and ordered the practitioner to provide the wife and the court with the required costs letter. That is not what this is about. As I earlier mentioned, I understood the earlier issue related to the very existence of documents. There is therefore no substance in that point.

32.The next issue relates to the width of the subpoena. It is clear that a subpoena must specify with reasonable particularity the documents which are required to be produced.  A subpoena ought not to be issued simply requiring the recipient to search for and produce all such documents as he may have in his possession or power relating to a particular matter.  That subpoena must be clear, precise and enable the recipient to go direct to the documents.

33.As have often been said, a stranger to the cause ought not to be required to go to the trouble and perhaps expense in ransacking his records and endeavouring to form a judgment as to whether any of his papers throw light on the dispute which is to be litigated upon, issues of which he is presumably ignorant[1]. 

[1] Commissioner of Railways v Small (1938) 38 SR (NSW) 564

34.In this case, I am somewhat perplexed because the recipient of the subpoena is an experienced practitioner who says that he knows nothing about the computer system.  However, he should certainly be aware of what records he is required to keep. If, as seems to be the case when the first subpoena was before me, there are no records of substance, I fail to see why it would be difficult to immediately find what is sought in the subpoena. In those circumstances, I do not uphold the objection on the grounds of width.

35.The next issue is whether or not the subpoena is oppressive on the basis that it is an abuse of process.

36.In very simple terms, items (f), (h) and (i) of the subpoena seem to me on the limited submissions I received, to be caught by items (a) to (d). I am not sure why the husband should be entitled to see an itemised account rather than the lump sum sought or paid. To do otherwise might enable the husband to see what type of attendances were being undertaken by the wife and that would be bordering on a breach of legal professional privilege. I agree with the recipient that there is an element of doubling up there.

37.The next issue is whether it is oppressive to require production of the wife’s costs agreement. This was argued by Mr Hoult for the husband on the ground of relevance. As I have already pointed out, the issue relates to what monies (if any) were being used by the wife and from what source. That leads to the question of relevance.

38.The Full Court of the Family Court in Hatton generally approved the checklist of bases set out by Powell J in Botany Bay Instrumentation & Control Pty Ltd v Stewart[2] upon which a subpoena might be set aside. It is a long list. The Full Court, commenting upon the list added that apparent relevance should be included in addition as a ground for setting a subpoena aside, if it was not already impliedly included within the ground of oppression.[3]

[2] [1984] 3 NSWLR 98 at 100

[3] Hatton v Attorney General (Cth) & Ors (2000) 26 FamLR 570 per Finn, Kay and Dessau J at Paragraph 27.

39.What is the relevance of any of the legal practice’s records or the costs agreement? The husband through his counsel said that they go to the question of what money the wife was using and its source. It is said that the issue will be one relating to add backs to the property pool. In my view therefore, the applicant has shown some apparent relevance.

40.Is this exercise simply “fishing”?

41.“Fishing” occurs where a person pursues a stranger to the litigation to discover evidence.[4]  That question can be answered in this case on the basis of whether or not there is some legitimate forensic purpose involved.  In financial cases, it is often argued that parties have spent joint funds on legal fees or that persons other than themselves have placed funds at the disposal of lawyers which can give rise to an argument about resources. Normally, one lawyer’s word would be accepted by another and nothing further would come of the issue. In this case, I understand that that is not the case and hence the pursuit by the solicitors for the husband.

[4] Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd (1952) 72 WN (NSW) 250.

42.On the basis of apparent relevance and accepting that there is a legitimate forensic purpose, it is open to me to say that this is not fishing.

43.For those reasons, I do not find there to be any basis for the objection.

44.It follows that I must also set aside the orders of the Registrar which were reviewed.

45.I direct that the recipient of the subpoena produce to the Registrar only the documents set out in items (a), (b), (c), (d) and (e) by 4 pm on 20 February 2009 and that they be thereafter released pursuant to my orders for inspection and copying.

46.Any dispute between the parties as to the costs of these proceedings and costs and expenses of the production of the said documents shall be determined by me as part of the forthcoming trial.

I certify that the preceding Forty Six (46) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  10 February 2009