BARAKAT & BARAKAT

[2015] FamCA 979

FAMILY COURT OF AUSTRALIA

BARAKAT & BARAKAT [2015] FamCA 979

FAMILY LAW – PRACTICE AND PROCEDURE – Review of Registrar’s decision declining to grant leave to the applicant wife to issue two subpoenas – Where the final hearing is part-heard and set to recommence in a week – Where it is alleged that the husband has failed to disclose an interest in a trust established by his mother, which has subsequently acquired property – Where the Court finds there to be a legitimate question as to whether there has been full and frank disclosure by the husband – Application allowed – Leave to issue subpoenas granted, subject to amended schedules.

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth) r 13.04

Hatton & Attorney General of the Commonwealth of Australia and Ors (2000) FLC 93-038
Macks v Tuck & Ors & QBE Insurance (Australia) Ltd (No. 4) (2007) SASC 255
X Pty Ltd and Ors & Merhi [2015] FamCA 622

APPLICANT: Ms Barakat

RESPONDENT: Mr Barakat

FILE NUMBER: SYC 3117 of 2012

DATE DELIVERED: 4 November 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: McClelland J

HEARING DATE: 4 November 2015

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Ms Coorey of Cambridge Law

SOLICITOR FOR THE RESPONDENT: Mr Magee of Armstrong Legal

THE COURT ORDERS THAT:

(As Amended Pursuant to the Slip Rule on 5 November 2015)

1. The applicant wife has leave to issue a subpoena to National Australia Bank (NAB) in the following form:

   Copies of bank statements, loan application forms, valuations, authority to operate account, correspondence, file notes, for the following:

   a)   F Trust ABN …;

   b)   G Pty Ltd ACN …;

   c) Ms H (aka Ms I H) in respect to the purchase of the property at J Street, Suburb K;

   in respect to the period from 1 January 2014 to date.

2. The applicant wife has leave to issue a subpoena to L Solicitors in the following form:

   File notes, correspondence (sent and received), settlement sheets for purchase and/or sale in your possession relating to:

   a)   the purchase of the property located at J Street, Suburb K;

   b)   the purchase of shares or other equities or transferral or investment of funds by:

   i)   Mr Barakat;

   ii) G Pty Ltd ACN …;

   iii) F Trust ABN ….

   c)work performed on behalf of Ms H (aka Ms I A) in respect to:

   i)   the purchase of J Street, Suburb K;
   ii)  the establishment of F Trust ABN …;
   iii) the appointment of G Pty Ltd ACN … as trustee of the F Trust.

1. The subpoenas referred to in Orders 1 and 2 must be filed and served by close of business tomorrow Thursday 5 November 2015.

2. The subpoenas issued pursuant to these Orders are to be made returnable for 11.30am next Wednesday 11 November 2015.

3. The applicant wife shall comply with the provisions of the Family Law Rules in respect to service of subpoenas including provision of appropriate conduct money.

4. For the purpose of these Orders, the Court abridges the time specified in rule 15.28 in respect to service to a period of four (4) clear days.

5. The parties are to file and serve an updated Financial Statement by close of business Wednesday 11 November 2015.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Barakat & Barakat 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 SYDNEY

FILE NUMBER: SYC 3117 of 2012

Ms Barakat

Applicant

And

Mr Barakat

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. This matter concerns an Application for Review filed by the wife against a decision of Registrar Mordaunt made on 27 October 2015 to refuse leave to the wife to issue subpoenas to the National Australia Bank and L Solicitors. The background of the matter is that it involves an application for final property orders which is part-heard before me.  Evidence has been presented over a period of four days commencing on 30 August 2015 until 3 September 2015.  The matter was adjourned part-heard until Friday 13 November 2015.  The applicant wife has closed her case, and the respondent husband has given his evidence-in-chief and is in the process of cross-examination. 

2. In an affidavit filed by the wife’s solicitor, Ms Coorey of Cambridge Law, on 3 November 2015, it is alleged that the husband has failed to disclose, in his updated financial statement sworn on 27 August 2015, that he had any interest in the property known as J Street, Suburb K or any interest in a company known as G Pty Ltd.  After an exchange of correspondence between the parties’ solicitors, by letter dated 22 October 2015 (Annexure “I” to the affidavit of Ms Coorey sworn on 2 November 2015), the solicitor for the husband provided the following information, which I note by way of summary form as being: 

   a)On 12 November 2014 a company was established in the name of G Pty Ltd, with the husband being the sole shareholder and director.

   b)On 5 December 2014, a discretionary trust known as the F Trust (“the Trust”) was established by the husband’s mother, Ms H.

   c)Ms H is a principal appointer and has appointed G Pty Ltd as trustee. 

   d)The husband is named as a beneficiary of the Trust, although the Court has been informed by the solicitor for the husband that the definition of “beneficiaries” is framed in extremely broad terms, and it would enable distributions to be made from the Trust to the Barakat family at large, including the wife.

   e)No distributions have been made from the Trust, and Ms H has the power to replace the trustee at any time and at her discretion.

   f)On 19 December 2014, G Pty Ltd as trustee for the Trust entered into a contract for the purchase of land at J Street, Suburb K; the purchase price of the property was $1.8 million.

   g)Ms H paid the deposit, legal costs and stamp duty from a reverse mortgage secured over her home.

   h)The purchase of the property was settled on 31 July 2015 with the balance of funds being provided by a loan from the National Australia Bank. 

   i)The reverse mortgage of Ms H and the loan from the National Australia Bank are both liabilities of the Trust.

   j)The loan from the bank is serviced from the rent collected from the tenants who live in the property. 

3. Additional information, essentially in the form of argument relating to the extent of the husband’s interests, was also included in the letter dated 22 October 2015 from the husband’s solicitors. 

4. While it will be the subject of more detailed argument, there is a legitimate question as to whether the information set out in the letter dated 22 October should have been disclosed by the husband to the wife prior to the trial in this matter, pursuant to rule 13.04 of the Family Law Rules 2004 (Cth) (“the Rules”). In the circumstances, the solicitor for the wife has applied for leave to issue three subpoenas. The Registrar granted leave to the wife to issue a subpoena to M Lawyers. Leave was not granted in respect to the subpoenas to the National Australia Bank and L Solicitors.

5. The schedules for those requested subpoenas are as follows.  For the National Australia Bank:

   Copies of all records held including but not limited to bank statements, loan application forms, valuations, authority to operate account, correspondence, file notes, for the following: 

   the F Trust ABN …;,

   G Pty Ltd CAN …;

   Ms H aka Ms I H;

   for the period 1 January 2014 to date. 

6. The proposed schedule to L Solicitors was:

   Any documents, including files, file notes, diary entries, copy letters or emails sent (including all attachments), copy letters received (including all attachments), settlement sheets for purchase and or sale, tax invoices, copy receipts, copy costs disclosure documents, retainer agreements, or any other documents in your possession relating to the purchase of real estate, shares and other equities (inside or outside of Australia) or any transfer or investment of funds by:

   (a)Mr Barakat;

   (b)Ms H aka Ms I H;

   (c)Any corporate entity in respect of which any of the above persons is either a director or shareholder; and

   (d)Any trust, discretionary or otherwise, in respect of which any of the above persons are either a trustee or a beneficiary or in respect of which a corporate entity related to any of the above persons is either a trustee or a beneficiary.

7. In terms of the relevant law in this matter, I recently had cause, in X Pty Ltd and Ors & Merhi [2015] FamCA 622 at paragraphs 24 to 39, to summarise relevant authorities that are of assistance in resolving a matter such as this. I will not repeat those authorities save insofar as, most relevantly, those authorities are to the effect that a subpoena is at risk of being set aside, or indeed, leave not being granted for the subpoena to be issued, if it is determined that it is merely fishing or the subpoena is otherwise oppressive. That is, a subpoena must specify with reasonable particularity the documents which are required to be produced.[1]   

   [1] Hatton & Attorney General of the Commonwealth of Australia and Ors (2000) FLC 93-038 at 87,603.

8. The second relevant principle is that a subpoena that is tantamount to discovery is likely to be set aside as an abuse of process.  An extension of that principle is that it is impermissible for a subpoena to be issued to rectify inadequate discovery by a party to proceedings.[2] 

   [2] Macks v Tuck & Ors & QBE Insurance (Australia) Ltd (No. 4) (2007) SASC 255 at [49].

9. Ms Coorey argues that the subpoenas are necessary because there may be matters that have still not been disclosed by the husband and, further, that it is necessary for her to ascertain, on behalf of her client, the consequences of that information that has now been disclosed.

10. Mr Magee expressed concern that there have already been a great number of subpoenas, in the order of 65 in total, that have been issued in these proceedings, and that his client would be very reluctant to see a course of action being adopted by this Court or the wife that would result in the matter not proceeding to finality next Friday 13 November, or as soon as it reasonably can be concluded thereafter. 

11. Having regard to these matters, but most specifically the issue as to whether there has been a full disclosure as required by rule 13.04 of the Rules which, as I have indicated, will be a matter to be determined at the hearing, I make the orders as set out at the commencement of these reasons for judgment. Those orders grant leave for the solicitors for the wife to issue the subpoenas applied for but with the schedules amended as per the Orders.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 4 November 2015.

Associate:

Date:  10.11.2015