Belcher and Belcher & Anor
[2019] FamCA 553
•16 August 2019
FAMILY COURT OF AUSTRALIA
| BELCHER & BELCHER AND ANOR | [2019] FamCA 553 |
| FAMILY LAW – SUBPOENA – husband issuing subpoena to his ex-father-in-law – objections to subpoena on the grounds of breadth, relevance, fishing and others – recipient volunteering production of limited number of documents. FAMILY LAW – RULE 15.23 – consideration of applicable authorities. FAMILY LAW – COSTS – husband seeking his costs for being successful in obtaining documents. FAMILY LAW – COSTS – father-in-law seeking reimbursement of expenses incurred in complying with the subpoena. FAMILY LAW – RECUSAL – governing principles – recusal ordered. |
| Family Law Act 1975 (Cth) s 117 Family Law Rules 2004 rr 15.16, 15.23, 26B.18 Federal Court Rules 2011 r 24.22 |
| Ann Street Mezzanine Pty Ltd (in liq) v Beck (2013) 215 FCR 150 Bank of New South Wales v Withers (1981) 35 ALR 21 Chamberlain v Stoneham (1889) 24 QBD 113 Collins v Godefroy (1831) 109 ER 1040 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 Fuelxpress Ltd v L M Ericsson Pty Ltd (1987) 75 ALR 284 Goodwin v West (1639) 79 ER 1066 Green & Knowles [2010] FamCAFC 248 Hallet v Mears (1810) 104 ER 271 Hillier & Wootton [2013] FamCAFC 11 Kelleher v Anderson [2008] FamCA 113 Knight v FP Special Assets Ltd (1992) 174 CLR 178 Lucas Industries Ltd v Hewitt (1978) 45 FLR 174 Markoska v Markoska(Costs) (2011) 46 Fam LR 598 Masters & Cheyne [2016] FamCAFC 255 Moriarty v Moriarty (2009) 41 Fam LR 336 Pell v Daubeny (1850) 5 Exch 955 Pfenning & Snow [2014] FamCA 736 Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 Re JRL; Ex parte CJL (1986) 161 CLR 342 Re Working Men’s Mutual Society (1882) 21 Ch D 831 SCVG & KLD (No 2) [2016] FamCAFC 99 Strahan v Strahan (Disqualification) (2009) 42 Fam LR 252 The Ibis [1921] P 255 Willis v Peckham (1820) 129 ER 821 Zanda & Zanda (2014) 293 FLR 1 |
| APPLICANT: | Mr Belcher |
| RESPONDENT: | Mr Belcher |
| INTERESTED PARTY: | Mr Gardener |
| FILE NUMBER: | MLC | 1705 | of | 2019 |
| DATE DELIVERED: | 16 August 2019 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Wilson J |
| HEARING DATE: | 12 August 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr D Sweeney |
| SOLICITOR FOR THE APPLICANT: | Lander & Rogers |
| COUNSEL FOR THE RESPONDENT: | Mr TDOJ North of Senior Counsel |
| SOLICITOR FOR THE RESPONDENT: | Taussig Cherrie Fildes |
| COUNSEL FOR THE INTERESTED PARTY: | Ms E Swart |
| SOLICITOR FOR THE INTERESTED PARTY: | Kennedy Partners |
I Order by consent
UPON BEING INFORMED by counsel –
(a)the said Mr Gardener has this day provided to the husband in compliance with the subpoena the following –
(i)the Trust Deed of the Mr Belcher Family Trust Deed
(“BFT”);
(ii)tax returns for the year 30 June 2015 to 30 June 2018 for the Mr Gardener Family Trust Fund;
(iii)dividend statements for AA Pty Ltd for 1 July 2015 and 1 July 2016; and
(b)Mr Gardener warrants to the husband, and the husband accepts the warrant that there are no minutes of the BFT relating to distributions nor any financial accounts for that Trust for the year 30 June 2015 to date.
(c)these orders are made without prejudice to any application for final relief either party may make with respect to the ownership of C Town.
(d)the single expert witness engaged to value the parties’ interest in the N Pty Ltd Group, prepare their valuation –
(i)on the husband’s contention “as if sold”; and
(ii)on the wife’s contention, “as value to owner”.
(e)the parties intend to apply their interim part property settlement payments pursuant to order 15 to meet the costs of valuations pursuant to order 13 and mediation pursuant to order 17.
(f)subject to the husband requiring the interest of the wife, if any, in the Gardener family entities to be valued, the parties intend to engage Mr U of V Company as single expert witness.
(g)the parties propose to attend mediation on 4 December 2019.
(h)the parties intend that the children and adult children be at liberty to attend at C Town at any time.
(i)the husband maintains he has no beneficial interest in W Pty Ltd, as described in his affidavit filed 17 May 2019 at paragraphs 56 to 61.
The subpoena directed to Mr Gardener personally and in his capacity as a director and of a shareholder of CC Pty Ltd and AA Pty Ltd are struck out.
Documents delivered up to the court pursuant to subpoena to Mr Gardener be otherwise returned to him.
For the purposes of these orders, the following capitalised words have the meaning ascribed and set out in this order –
(a)“Adult Children” means Ms SS Belcher born … 1998 and Mr KK Belcher born … 2000;
(b)“Children” means Z born … 2002 and Y born … 2005;
(c)“N Pty Ltd Group” means –
(i)BB Pty Ltd (ACN …);
(ii)MM Pty Ltd (ACN …);
(iii)NN Pty Ltd (ACN …);
(iv)PP Pty Ltd (ACN …);
(v)Belcher Investment Unit Trust;
(vi)Belcher Unit Trust;
(vii)QQ Pty Ltd (ACN …)
(viii)EE Pty Ltd (ACN …);
(ix)N Pty Ltd (ACN …);
(x)FF Pty Ltd (ACN…); and
(xi)P Pty Ltd (ACN…);
(d)“Mr Belcher” means –
(i)Belcher Family Trust;
(ii)Belcher Family Trust No 3.
(iii)GG Pty Ltd (ACN …);
(iv)W Pty Ltd (ACN …);
(v)JJ Pty Ltd (ACN …);
(vi)JJ Family Trust;
(vii)G Pty Ltd (ACN …);
(viii)HH Belcher Family Trust; and
(ix)Mr Belcher Family Trust;
(e)“C Town” means the real property situate at B Street, C Town in the State of Victoria;
(f)“School term” means the school term dates prescribed by LL School;
(g)“Summer holidays” means from 1 December until 31 January;
(h)“Term 1 school holidays” means the term 1 holiday dates prescribed by LL School;
(i)“Term 2 school holidays” means the term 2 holiday dates prescribed by LL School; and
(j)“Term 3 school holidays” means the term 3 holiday dates prescribed by LL School.
C Town
C Town be used by each party as follows –
(a) the husband from 12 August until 10am on 1 October 2019;
(b) the wife from 12 noon on 1 October until 10am on 15 October 2019;
(c) the husband from 12 noon on 15 October until 10am on 29 October 2019;
(d) the wife from 12 noon on 29 October until 10am on 12 November 2019;
(e)the husband from 12 noon on 12 November until 10am on 20 November 2019;
(f)the wife from 12 noon on 20 November until 10am on 24 January 2020;
(g)the husband from 12 noon on 24 January 2020 until 10am on 4 February 2020;
(h)the wife from 12 noon on 4 February 2020 until 10am on 18 February 2020;
(i)the husband from 12 noon on 18 February 2020 until 10am on 3 March 2020;
(j) the wife from 12 noon on 3 March until 10am on 17 March 2020;
(k) the husband from 12 noon on 17 March until 10am on 5 April 2020;
(l) the wife from 12 noon on 5 April until 10am on 23 April 2020;
(m) the husband from 12 noon on 23 April until 10am on 7 May 2020;
(n) the wife from 12 noon on 7 May until 10am on 21 May 2020;
(o) the husband from 12 noon on 21 May until 10am on 4 June 2020;
(p) the wife from 12 noon on 4 June 2020 until 10am on 18 June 2020;
(q) the husband from 12 noon on 18 June until 10am on 1 July 2020;
(r) the wife from 12 noon on 1 July until 10am on 14 July 2020;
(s) the husband from 12 noon on 14 July until 10am on 28 July 2020;
(t) the wife from 12 noon on 28 July until 10am on 11 August 2020;
(u) the husband from 12 noon on 11 August until 10am on 25 August 2020;
(v) the wife from 12 noon on 25 August until 10am on 8 September 2020;
(w)the husband from 12 noon on 8 September until 10am on 18 September 2020;
(x) thereafter –
(i)save as provided in order 5(x)(v) C Town be used during the school term on an alternate fortnightly rotation, with the wife to have the first two weeks in term 1 and term 3 and the husband to have the first two weeks in term 2 and term 4;
(ii)C Town be used by the wife during the term 1 school holidays;
(iii)C Town be used by the husband during the term 2 school holidays;
(iv)in the term 3 school holidays, C Town be used by the parties as agreed in writing and failing agreement –
A.in even numbered years, the wife use C Town in the first half of the holidays and the husband use C Town in the second half of the holidays; and
B.in odd numbered years, the husband use C Town in the first half of the holidays and the wife use C Town in the second half of the holidays;
(v)in the summer holidays, C Town be used by the parties as agreed in writing and failing agreement –
A.in even numbered years, the husband use C Town from 12 noon on 1 December until 10am on 10 December and the wife use C Town from 12 noon on 10 December until 10am on 31 January; and
B.in odd numbered years, the wife use C Town from 12 noon on 1 December until 10am on 24 January and the husband use C Town from 12 noon on 24 January until 10am on 31 January; and
(y) as otherwise agreed between the parties in writing.
Each party vacate C Town in a clean and tidy state, with linen and towels removed.
In the event a party fails to vacate C Town on any date required by these orders, that party no longer be authorised to use C Town.
Save as otherwise agreed between the parties in writing or as provided in these orders, neither party attend at C Town during a period the other party has use of C Town pursuant to these orders.
Upon either party resolving that he or she will not use C Town during an allocated time or part thereof, he or she shall forthwith give written notice to the other that C Town is available for use by the other and where practicable notice shall be given 10 days prior to the commencement of the allocated time, and the other party shall in such circumstance be permitted to use the property during that period.
Payments
Until further order, the husband will pay or cause to be paid –
(a)all rates, taxes, insurance and utilities for the properties at F Street, Suburb E and C Town;
(b)hedging, pruning and professional window cleaning at C Town, in November each year;
(c)the registration, motor vehicle insurance, servicing and e-tag for the Vehicle 1 registration …;
(d)the registration, motor vehicle insurance, servicing, petrol and e-tag for the Vehicle 2 registration …;
(e)health insurance for the wife, children and adult children at the current level of cover;
(f)the gap and non-rebatable payments for the adult children and children’s health costs, including medical, dental and all specialist costs;
(g)internet and telephone for the wife, adult children and children;
(h)the children’s educational costs, including tuition fees, school uniforms, required books, stationery and compulsory computer equipment and such other computer equipment as may otherwise be agreed in writing, excursions, camps, agreed sports tours, school events and tutoring;
(i)the adult children’s college and other compulsory education fees and required books;
(j)the sum of five thousand ($5 000) per annum to each of the adult children, in monthly instalments;
(k)the costs of the adult children and children’s annual ski passes at X Town;
(l)the costs and fees of the children’s agreed extra-curricular activities including the winter ski programs and ski instructors courses; and
(m)the sum of six thousand dollars ($6 000) per month to the wife, payable to the wife’s nominated bank account on the first day of each calendar month.
In the event the wife makes payment of an expense pursuant to order 10 in the first instance, the husband pay such sum as is necessary to reimburse the wife within 14 days of the wife providing the husband with an invoice and payment receipt for the expense.
The amounts paid by the husband for the children pursuant to order 10 be credited against any liability of the husband under any relevant administrative assessment of child support for the children as to 100%.
Valuations
Within 35 days the parties do all acts and things and sign all documents necessary to instruct single expert witnesses to value the interests of the parties in any real estate, personal property, business, company, trust or entity in which they and/or either of them has an interest including the N Pty Ltd Group and the Mr Belcher.
Each party provide all documents in their possession, custody or control as requested by a single expert witness, appointed pursuant to order 13, from time to time, within seven days of request and authorise the single expert witness to obtain any information as may be required by him/her from any other person.
The husband pay or cause to be paid to each of the parties the sum of $50 000, to be characterised as interim part property settlement.
In the event the costs of valuations pursuant to order 13 exceed $100 000, the husband be responsible in the first instance for all costs over $100 000, and the amount expended by him be included as a notional asset of the husband pursuant to the principles of Chorn v Hopkins and upon receipt by the wife of her entitlements pursuant to final orders under s 79 of the Act, she reimburse the husband 50% of the monies so expended.
Mediation
By no later than 6 December 2019, the parties attend a private mediation with Mr Peter Young QC, or such other mediator as the parties agree, with such costs to be paid equally from the parties’ part property settlements provided herein.
Applications
All interim applications are dismissed.
All extant applications for final orders are to be placed in the list of cases awaiting allocation to a judicial docket.
Orders
The husband’s costs of the subpoena are reserved.
By 4pm on 15 September 2019, pursuant to r 15.23, Mr Gardener is to be paid $5 873.78.
This proceeding and any further proceeding interlocutory application in it is to be heard by any Justice of the Family Court of Australia other than me.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Belcher & Belcher has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER:
| Mr Belcher |
Applicant
And
| Mr Belcher |
Respondent
And
| Mr Gardener |
Interested Party
REASONS FOR JUDGMENT
Introduction
Pursuant to orders made on 7 June 2019 this proceeding returned before me on 12 August 2019 mainly for the resolution of ongoing interlocutory disputes.
On 12 August 2019 Mr D Sweeney and Mr T D O J North SC negotiated and produced a minute of consent orders. Those orders addressed the use to be made of the parties’ C Town property from 12 August 2019 until 18 September 2020. The consent orders also addressed the ongoing payments of various liabilities associated with the parties’ Suburb E real estate, the C Town property, motor vehicles, insurance, skiing, children’s education and other expenses. The consent orders made provision for this case to be mediated not later than 6 December 2019. The precise details of the consent orders as made appear earlier in these reasons.
A debate emerged about a subpoena issued on behalf of the husband to Mr Gardener on 28 May 2019.
The subpoena
Soon after this case was called on for hearing on 12 August 2019 I asked Mr Sweeney what he understood the debate to involve in relation to the subpoena. He said that his client, the husband, had recently became aware that the wife was or may have been a beneficiary under one or more trusts settled by her father, the recipient of the subpoena.
The subpoena was issued on 28 May 2019. In paragraph 2 of the subpoena, the husband sought an extensive array of documentation from the addressee of the subpoena in relation to various entities. It is as well to reproduce that paragraph, in terms, as follows –
Copies of:
(a)the following documents in relation to The Mr Belcher Family Trust Fund:
(i) trust deeds and any amending deed thereto;
(ii)financial statements and tax returns for the financial years ended 30 June 2015, 2016, 2017 and 2018 (if available) including notes to accounts and depreciation schedules;
(iii)loan account ledgers including any loan accounts in the name of Mr Belcher, whether in credit or debit, and including any from which Mr Belcher has received distributions of any kind (including taxable or actual) for the period 1 July 2015 to date;
(iv)unpaid beneficiary entitlement ledgers;
(v)Business Activity Statements for all periods since 1 January 2017;
(vi)details of current trust assets and liabilities;
(vii)details of any family trust election; and
(viii)any other documents relating to Mr Belcher, born in 1966 (Mr Belcher), including documents evidencing payments received by Mr Belcher or paid for her benefit, for the period of 1 July 2014 to date.
(b)The following documents in relation to any other trust of which Mr Belcher is a beneficiary (whether a specified beneficiary or within the class of general beneficiaries) and of which you are a trustee in your personal capacity, or of which the trustee is a company of which you are a director:
(i) trust deeds and any amending deed thereto;
(ii)financial statements and tax returns for the financial years ended 30 June 2015, 2016, 2017 and 2018 (if available) including notes to accounts and depreciation schedules;
(iii)loan account ledgers including any loan accounts in the name of Mr Belcher, whether in credit or debit, and including any from which Mr Belcher has received distributions of any kind (including taxable or actual) for the period 1 July 2015 to date;
(iv)unpaid beneficiary entitlement ledgers;
(v)Business Activity Statements for all periods since 1 January 2017;
(vi)details of current trust assets and liabilities;
(vii)details of any family trust election; and
(viii)any other documents relating to Mr Belcher including documents evidencing payments received by Mr Belcher or paid for her benefit.
(c)The following documents in relation to AA Pty Ltd:
(i) The Constitution and/ or any Articles of Association;
(ii)Complete financial statements, including but not limited to profit and loss statements, balance sheets, depreciation schedules and notes hereto for the period 1 July 2015 to date;
(iii)The annual financial returns (including taxation returns) of AA Pty Ltd for the period 1 July 2015 to date;
(iv)Loan account ledgers beneficiary entitlement ledgers and/ or statements relating to Mr Belcher;
(v)All minutes of directors’ meetings and resolutions of directors’ meetings; and
(vi)Statements as to all financial institution accounts conducted by AA Pty Ltd or on its behalf in respect of which its income and expense transactions are recorded and which reflect its capital reserves from time to time, for the period 1 July 2015 to date.
(d)The following documents in relation to DD Pty Ltd:
(i) The Constitution and/ or any Articles of Association;
(ii)Complete financial statements, including but not limited to profit and loss statements, balance sheets, depreciation schedules and notes hereto for the period 1 July 2015 to date;
(iii)The annual financial returns (including taxation returns) of DD Pty Ltd for the period 1 July 2015 to date;
(iv)Loan account ledgers and beneficiary entitlement ledgers and/ or statements relating to Mr Belcher;
(v)All minutes of directors’ meetings and resolutions of directors’ meetings; and
(vi)Statements as to all financial institution accounts conducted by DD Pty Ltd or on its behalf in respect of which its income and expense transactions are recorded and which reflect its capital reserves from time to time, for the period 1 July 2015 to date.
Mr Gardener objected to the production of those documents by notice of objection filed 27 June 2019. He specifically addressed each paragraph of the subpoena. It is utile to record his general objection. It was as follows –
1.1The subpoena seeks production of documents which have no apparent relevance to the issues in dispute in these proceedings;
1.2The subpoena seeks documents, impermissibly, as a substitute for discovery;
1.3The subpoena seeks documents, impermissibly, as part of a fishing expedition; and
1.4The classes of documents sought by the subpoena are improperly wide and oppressive.
To paragraph 2(a) of the subpoena, he made eight responses. They were as follows –
(i)I will forthwith produce a copy of the deed of settlement for the Mr Belcher Family Trust Fund to this Honourable Court. To my knowledge, there are no amending deeds. To my knowledge the wife has not at any time received a distribution from this trust. To the best of my knowledge, recollection, information and belief, in the financial year ending 30 June 2018, my company, AA Pty Ltd, declared a dividend of $200,000 to each of its shareholders, including this trust, but that the dividend allocated to each shareholder other than the Mr Gardener Family Trust Fund, was distributed by that shareholder back to the Mr Gardener Family Trust Fund;
(ii)I am currently attempting to locate the documents requested under this sub-heading, if any. If my objection is unsuccessful, in order to comply with the subpoena, I will need to engage my accountants and advisors to locate and collate the subpoenaed documents. That will necessarily incur costs and fees. I seek that the issuing party undertake to reimburse me for all reasonable fees and expenses incurred or will be incurred in connection with the subpoena within seven days of service on the issuing party of an invoice for such fees and expenses from my accountants;
(iii)To the best of my knowledge, there are no documents under this sub-category;
(iv)To the best of my knowledge, there are no documents under this sub-category;
(v)To the best of my knowledge, there are no documents under this sub-category;
(vi)I refer to and repeat the matters referred to under subparagraph (ii) above;
(vii)To the best of my knowledge, there are no documents under this sub-category; and
(viii)To the best of my knowledge, there are no documents under this sub-category.
To paragraph 2(b) of the subpoena he made six responses. They were as follows –
4.1The wife is one of a class of general beneficiary of several trusts under my sole effective control. Each of the trusts were settled in the nineteen seventies as part of my personal financial arrangements;
4.2To the best of my knowledge, recollection, information and belief, the wife has not received distributions from any trust under my control;
4.3To the best of my knowledge, there are no loan accounts referrable to the husband or the wife in any trust;
4.4 The trusts hold minimal assets;
4.5The trusts have no discernible or apparent relevance to any issue in dispute between the husband and the wife in these proceedings; and
4.6I am likewise attempting to locate the documents under this sub-heading. I refer to and repeat my objection expressed under subparagraph 3 (ii) above of this Notice of Objection in relation to the costs of producing the requested class of documents. I seek that the issuing party undertake to reimburse me for all reasonable fees and expenses incurred or to be incurred in connection with the subpoena in the same manner as in subparagraph 3(ii);.
To both paragraphs 2(c) and 2(d) of the subpoena. Mr Gardener made five responses. They were as follows –
5.1The companies referred to are corporate entities under my sole control utilised to hold wealth for my wife and myself and to act as corporate trustees for the various family trusts under my sole effective control;
5.2Neither the husband nor the wife in these proceedings are or have been a shareholder or officeholder of the stated corporate entities;
5.3There are no loan accounts in these entities referrable to the husband or the wife in these proceedings;
5.4My personal financial affairs have no discernible or apparent relevance to any issue in dispute between the husband and the wife in these proceedings; and
5.5The documents requested are held by my accountants at RR Company. If this objection is unsuccessful, in order to comply with the subpoena, I will need to engage my accountants and advisors to locate and collate such documents. That will necessarily incur costs and fees for me. I have made enquiries with my accountant at RR Company who estimate such costs and fees to be between $10,000 and $15,000. I seek that the issuing party undertake to reimburse me for all reasonable fees and expenses incurred or will be incurred in connection with this aspect of the subpoena in the same manner as that set out in subparagraph 3(ii) of this Notice of Objection.
In support of his notice of objection, Mr Gardener swore an affidavit on 7 August 2019. Relevantly paraphrased, in that affidavit Mr Gardener swore as follows –
a)he is the father of the respondent wife in this proceeding;
b)he is 89 years of age;
c)the applicant is his former son-in-law;
d)he was applying for reimbursement of his expenses under r 15.23(3) of the Family Law Rules;
e)DD Pty Ltd is owned by Mr Gardener and his wife, those two are its directors and it was incorporated in March 1977;
f)DD Pty Ltd is the trustee of various family trusts including the Mr Gardener Trust of which the beneficiaries are Mr Gardener, his wife, his children and other issue;
g)in 1977 the Mr Belcher Trust was settled as were trusts named after Mr Gardener’s wife and other children;
h)the person after whom a trust was named is a specified beneficiary of the trust and in all cases the appointor is Mr Gardener and the trustee is DD Pty Ltd.
i)AA Pty Ltd was incorporated in 1984 the directors of which are Mr Gardener, his wife and his son;
j)all trusts other than the Mr Gardener Trust have been dormant and have held no assets or modest assets;
k)for some years Mr Gardener paid his daughter Ms Belcher and his other children in his complete discretion.
Mr Gardener swore in the same affidavit that he instructed his solicitors Kennedy Partners to respond to the requests for documentation in the subpoena, which Mr Gardener’s solicitors did by letter dated 3 June 2019. In that letter, Kennedy Partners stated –
a)neither the applicant or respondent were shareholders in or directors of any of the companies referred to in the subpoena;
b)Mr Belcher (the wife and respondent in this litigation) had not received any distribution from a trust controlled by Mr Gardener;
c)the applicant was invited to withdraw the subpoena for being irrelevant;
d)that if the husband persisted in his search for documentation, he was required to file affidavit material demonstrating the relevance of the documents sought in the subpoena;
e)if the husband refused to withdraw the subpoena he was to provide correspondence which related to a request for discovery of the documents sought in the subpoena and answers thereto;
f)that Mr Gardener sought an undertaking to the effect that the husband would reimburse Mr Gardener for the expenses Mr Gardener incurred with respect to the subpoena.
Mr Gardener swore that the husband’s solicitors did not respond to that letter. He said Kennedy Partners wrote again to the husband’s solicitors on 6 June 2019 in answer to which someone from the husband’s solicitors telephoned Mr Gardener’s solicitors (the details of which conversation were not given). Various other correspondence was exchanged during the month of June 2019. Nothing after 27 June was exchanged.
Mr Gardener swore in that same affidavit that certain documents relating to the Mr Belcher Trust had been produced to the court whereas others had not. Those produced included the trust deed itself yet he said no financial documents had been located in relation to that trust.
Mr Gardener swore that there were no financial documents or taxation returns or other financial information for the trusts, with the exception of the Mr Gardener Trust. Mr Gardener swore that he arranged for the trust deed of the Mr Gardener Trust and tax returns for it to be produced to the court. Mr Gardener swore that he arranged for copies of financial statements and tax returns for AA Pty Ltd to be produced to the court together with various minutes of meetings and annual returns. He said no separate documents existed for Mr Gardener Trust.
During the mention before me on 12 August 2019, after counsel had conferred, Mr Sweeney informed me that he and Ms Swart had narrowed the issues in dispute between them in relation to the subpoena so that only documents relating to paragraph 2(a) were pressed, namely the documentation in relation to the Mr Belcher Family Trust Fund.
Against that factual backdrop, certain conclusions about documentation production may be stated. In no special order they include the following –
a)despite the ambit objection contained in paragraphs 1.1 to 1.4 of the notice of objection about relevance, breadth of the subpoena, it being a substitute for discovery, it being a fishing expedition and it being oppressive, certain documents were in fact produced in response to the subpoena;
b)the Mr Belcher Family Trust Fund deed was produced prior to the date of Mr Gardener’s 7 August 2019 affidavit, it seemed, as in paragraph 16 of that affidavit Mr Gardener said that the deed had “been produced”;
c)the trust deed and certain taxation returns in respect of the [Mr Gardener] Trust Deed were produced to the court, and it seemed, prior to 7 August 2019; and
d)various financial statements and taxation returns for AA Pty Ltd plus minutes of meetings of that company and annual returns had been produced to the court.
A dispute emerged about who should pay the costs associated with the production of documents in response to the subpoena.
On behalf of the husband, he sought orders for his costs to be paid by Mr Gardener. On his behalf, he contended that –
a)he was successful in obtaining some of the documents sought by the subpoena to which Mr Gardener had previously objected about their production; and
b)in default of agreement, the husband said his costs of and incidental to the subpoena should be paid as taxed.
Conversely, Mr Gardener sought his costs. He said he had been put to trouble and inconvenience by complying with the subpoena and, despite being invited to do so, the husband did not withdraw the subpoena but rather only narrowed it in the course of the opening by his counsel. Mr Gardener sought –
a)the reimbursement of costs of compliance in the sum of $913;
b)his own solicitor’s and counsel’s costs totalling $6 918.71
aggregating, in all, the sum of $7 831.71.
The question for me was whether to make the orders sought by either Mr Gardener or the husband.
Mr Gardener’s position
Mr Gardener called in aid what he said was an entitlement to reimbursement for his expenses under r 15.23(3) of the Family Law Rules. That rule enables a person named in a subpoena to apply to be reimbursed “if the named person incurs a substantial loss or expense” that is greater than the amount of the conduct money or witness fee payable under the rule. In order to ascertain the precise quantum payable by way of conduct money or witness fees, r 26B.18(1) made relevant item 101 of the table in part 1 of schedule 4 to the Rules. Item 101 stipulated that the minimum amount for conduct money was $25. Rule 26B.18(2) stipulated that a named person served with a subpoena to give evidence is entitled to be paid a witness fee by the issuing party in accordance with part 2 of schedule 4 to the Rules. Item 201 stipulated that all witnesses were entitled to be paid $75 per day. Where a substantial loss or expense is incurred by a person named in a subpoena r 26B.18(3) permits that person to apply to the court to be reimbursed “if the named person incurs a substantial loss or expense that is greater than the amount of conduct money or witness fee payable” under r 26B.18.
On the evidence before me, Mr Gardener as the person named in the subpoena and involved in the process of searching for and collating documents incurred expenses significantly greater than $75 per day. He said that his expenses were $7 831.71 when various items were taken into account. Ms Swart deconstructed the total of $7 831.71 into the following component parts –
a)her solicitors’ costs of preparing for 15 hours at a scale rate of $251 per hour to derive $3 722.50;
b)junior counsel’s appearance fee of $1 979.86;
c)junior counsel’s reading fee of $411.85;
d)her solicitors’ fees at court for three hours at $251.50 per hour to derive $754.50; and
e)the sum of $913.
Ms Swart cast her application for costs, as she described it, partly as a claim for reimbursement to the extent of the sum of $913 as well as a claim under s 117 of the Family Law Act for $6 918.71. It is necessary to dissect Mr Gardener’s claims in that regard. But before doing so, it is relevant to make certain preliminary observations about a witness’s entitlement to recover costs of complying with a subpoena.
At common law, a witness was not entitled to be paid his expenses for searching for, collating and copying documents in the absence of a statutory provision that allowed for such payment. Very early expositions of the proposition were given in Goodwin v West[1] and Hallet v Mears.[2] The rationale was explained by Parke B in Pell v Daubeny[3] to be that “a witness is to sacrifice his time, but he is not to be put to expenses”. Conflicting approaches were illustrated in subsequent authorities. The cases were extensive in number and no divining guidance was illuminated. Points of differentiation emerged between situations where a medical or legal practitioner was under subpoena in which case compensation was allowable for loss of time. Cases in that category included Willis v Peckham[4] and Collins v Godefroy.[5] To the class of professional witnesses entitled to compensation for lost time was added auctioneer in Re Working Men’s Mutual Society,[6] Chamberlain v Stoneham[7] (a solicitor) and The Ibis[8] (a seafaring witness). Many of the above authorities were surveyed by Sheppard J of the Federal Court of Australia in Bank of New South Wales v Withers.[9]
[1] (1639) 79 ER 1066
[2] (1810) 104 ER 271
[3] (1850) 5 Exch 955
[4] (1820) 129 ER 821
[5] (1831) 109 ER 1040
[6] (1882) 21 Ch D 831
[7] (1889) 24 QBD 113
[8] [1921] P 255
[9] (1981) 35 ALR 21
The Family Law Rules do in fact make express provision for meeting the expenses of a person upon whom a subpoena is served. The provisions of the Family Law Rules are different in detail than loosely equivalent provisions in the Federal Court Rules, the latter making provision for the taxing officer to award costs to a non-party for the loss and expense incurred by the non-party in complying with a subpoena. A consideration of the impact of r 24.22 of the Federal Court Rules was provided by Kenny J in Ann Street Mezzanine Pty Ltd (in liq) v Beck[10] as well as in the earlier decision in Lucas Industries Ltd v Hewitt.[11] The jurisprudence on point in the Federal Court is not entirely on all fours with that of this court under r 15.23 of the Family Law Rules.
[10] (2013) 215 FCR 150
[11] (1978) 45 FLR 174
Two reasonably recent decisions of single judges of this court bear upon the determination of the question before me. In the first, Markoska v Markoska (Costs),[12] a question arose about whether a firm of solicitors upon which a subpoena had been served, was entitled to costs either under s 117(e) of the Family Law Act or under r 15.23(3) of the Family Law Rules. The firm of solicitors had previously acted for the husband. The wife issued the subpoena against the husband’s former solicitors. In the course of the court’s reasons, certain useful observations emerged, including –
a)it was held in Kelleher v Anderson[13] that the subpoena recipient’s reasonable losses or expenses are recoverable and for the purposes of pt 15.23 a claim for the costs of legal advice and representation in relation to the documents which have been subpoenaed including costs incurred in seeking advice as to the validity of a subpoena or whether a claim to privilege or confidentiality was maintainable; and
b)it was held in Moriarty v Moriarty[14] that the concept of substantial loss of expense within the contemplation of r 15.23 must be expense that is large causing loss, it must be unusual in the sense of requiring normal activity to be stopped or it must cause an unfair inconvenience having regard to the fact that the recipient has nothing to do with the litigation.
[12] (2011) 46 Fam LR 598
[13] [2008] FamCA 113
[14] (2009) 41 Fam LR 336
At this juncture it should also be observed that in Moriarty v Moriarty Cronin J held that the Family Law Rules are not intended to put the individual presenting the documents in a situation where he or she loses income or capital, yet the expense to which the individual is put must be “substantial”.
Returning to Markoska v Markoska it was held that r 15.23 should be read as a whole and the sub-rule governs the amounts that might be paid by an “issuing party” to a “named person” as “conduct money” or a “witness fee” as the case may be. The court held that the sub-rule gave power to the court to enlarge the amounts of conduct money or witness fees payable to a named person by an issuing party in compliance with the subpoena. The precise holding at [75] is useful –
In my view the sub-rule gives power to the Court to enlarge the amounts of conduct money or witness fee payable to a named person by an issuing party in compliance with a subpoena, where the claimed loss or expense can be regarded as “substantial”; where the conduct money or witness fee as the case may be is otherwise payable pursuant to sub-rules (1) or (2); and where any amount claimed is, in any event, determined by the Court to be reasonable in all the circumstances of the individual case.
In Markoska v Markoska the court made observations about a point embedded in the submissions made on behalf of Mr Gardener concerning the power to make a costs order in circumstances where an order under r 15.23(3) is sought in relation to a subpoena. In Markoska the court held that r 15.23(3) addresses payment in respect of substantial loss or expense whereas s 117 addresses costs, although by reason of the learning in cases such as Kelleher v Anderson, Markoska v Markoska and Fuelxpress Ltd v L M Ericsson Pty Ltd[15] the notion of “substantial loss or expense” might include legal costs and expenses. Further, it must be recognised that a payment made under r 15.23(3) might be passed on pursuant to a costs order in the substantive proceeding. But, as to whether a person who responds to a subpoena can seek “costs”, the question is answered by a combination of the words of s 117, and by the decisions of the High Court in Knight v FP Special Assets Ltd[16] and in Re JJT ; Ex parte Victoria Legal Aid.[17] The interrelationship between all of s 117 and the two High Court decisions cited immediately above was explained in Markoska v Markoska in the following terms –
[15] (1987) 75 ALR 284
[16] (1992) 174 CLR 178
[17] (1998) 195 CLR 184
The Court does not have the power to make an order pursuant to r 15.23(3) in favour of the “named party” against any person other than the “issuing party” for a subpoena (as each expression is defined in r 15.16(1));
The Court has the power, exercisable in only limited circumstances, to make an order for costs pursuant to s 117(2) against a third party;
There is no reason in principle why, in similarly confined circumstances, the Court does not have the power to make a costs order in favour of a third party;
The power in each case derives from there being “proceedings” between the parties to the costs application within the meaning of s 117;
By reference to the definition of “proceedings”, those proceedings can be an incidental proceeding in connection with a proceeding;
The claim by the firm against the wife pursuant to r 15.23(3) can be seen as such an incidental proceeding;
There are not, nor could be, proceedings of that type between the firm and the husband;
There are no other proceedings between the firm and the husband that can be described as proceedings incidental to proceedings in the course of, or in connection with, a proceeding;
The Court has no power pursuant to s 117(2) (or otherwise) to order costs in favour of the firm as against the husband.
The second decision concerning r 15.23 and its interrelationship with s 117 is that of Hogan J in Pfenning & Snow.[18] The authorities canvassed above were restated and applied resulting in limited costs of compliance being awarded and costs of the objection being awarded.
[18] [2014] FamCA 736
what is to be made of this?
Drawing together the threads of the legal position in relation to Mr Gardener’s claim, it seemed to me that several propositions may be stated. They are –
a)as the recipient of the subpoena served upon him by his former son-in-law, Mr Gardener responded appropriately by taking advice about the subpoena and whether it was in a form that obliged him to respond or whether to object on one basis or another;
b)Mr Gardener incurred legal expenses in instructing his solicitors and accountants and he was, quite properly, advised of his legal position;
c)precisely how the trusts and companies beyond the trust mentioned in paragraph 2(a) of the subpoena were at all relevant or were otherwise properly the subject of a subpoena was tangential at best and irrelevant at worst;
d)Mr Gardener was entitled to maintain the objections he advanced in paragraph 1 of his notice of objection;
e)very early in the subpoena process Mr Gardener recognised that the Mr Belcher Trust was relevant and he produced the trust deed;
f)despite that, the husband pressed for the whole array of documents canvassed in the subpoena;
g)quite properly, Mr Gardener swore an affidavit about the state of documentation on 7 August 2019 in which he deposed to most entities identified in the subpoena having no documentation or relevant documentation;
h)despite the contents of that affidavit the husband pressed his application for the production of all documents when this case was called on for hearing on 12 August 2019; and
i)once the position of Mr Gardener was announced on 12 August, namely, that he objected to the production of documents sought beyond those already produced, counsel for the husband announced that his client only sought documents in relation to the Mr Belcher Family Trust.
The case was briefly stood down. All parties discussed their respective positions. On returning to court, a minute was produced and urged by Mr Sweeney. It had two relevant paragraphs as follows –
1.The subpoena directed to Mr Gardener personally and in his capacity as a director and of a shareholder of CC Pty Ltd and AA Pty Ltd be struck out.
2.Documents delivered up to the court pursuant to subpoena to Mr Gardener be otherwise returned to him.
IT IS NOTED that the said Mr Gardener has this day provided to the husband in compliance with the subpoena the following –
a)The Trust Deed of the Mr Belcher Family Trust Deed (‘BFT’);
b)Tax returns for the years 30/6/15 – 30/6/18 for the Mr Gardener Family Trust Fund;
c)Dividend Statements for AA Pty Ltd for 1.7.15 and 1.7.16.
IT IS FURTHER NOTED that Mr Gardener warrants to the husband, and the husband accepts the warrant that there are no minutes of the BFT relating to distributions nor any financial accounts for that Trust for the year 30/6/15 to date.
On the question of whether the husband was entitled to costs or whether Mr Gardener was entitled to reimbursement under r 15.23 Mr North SC said he did not wish to be heard on point. Both Mr Sweeney and Ms Swart submitted that the upshot of those orders rendered it necessary for me to only be concerned with the financial consequences of those orders having regard to the fact that the orders brought in after counsels’ discussions effectively disposed of the fight about production of most of the documents arising sought in the subpoena.
The husband sought his costs. It is necessary to say something about his application.
The husband’s position of costs
On behalf of the husband, in written submissions his solicitors wrote that the trust deed of the Mr Belcher Family Trust Fund was only disclosed on the hearing on 12 August 2019. Also produced that day, apparently at or immediately prior to the hearing before me were –
a)dividend statements for AA Pty Ltd; and
b)tax returns for the Mr Gardener Family Trust Fund for 2015-2018.
On behalf of the husband a factual issue arose about the precise point in time when Mr Gardener produced the Mr Belcher Family Trust Fund trust deed. The husband said the deed was produced for the first time on 12 August 2019 soon after Mr Sweeney opened before me. That seemed to contradict the statement in Mr Gardener’s notice of objection in which notice he stated that Mr Gardener had (past tense) earlier provided the trust deed as indeed he made a similar statement in his affidavit. If the deed had in fact been provided prior to the hearing on 12 August 2019 it seemed peculiar that no record of that emerged in the correspondence between the solicitors. It was equally unexplained why Mr Sweeney opened before me on the basis that he or his client had not been provided with any documentation in response to the subpoena if in fact the husband had been provided with a copy of the trust deed prior to 12 August 2019.
The point is significant because the husband claimed his costs of and incidental to the subpoena, in an amount to be agreed or as taxed. The husband said he successfully obtained at least some documents in response to the subpoena.
Self evidently, this was an interlocutory application and the material before me was limited to the documentation and the verbal submissions. I was not able to assess the veracity of the assertion that any documents produced in response to the subpoena emerged for the first time on 12 August 2019 (being the complexion the husband put on events) or whether Mr Gardener was correct in the assertions in his documentation (the notice of objection and his affidavit especially) that he produced certain limited documentation in relation to the Mr Belcher Family Trust prior to 12 August 2019. If Mr Gardener had not done as he swore in his affidavit (7 August 2019) by providing the trust deed of the Mr Belcher Trust Fund, then the consequences for him were serious as they included the consequences of making a false affidavit. It is impossible for me to say at this stage of the litigation where assertions are untested by cross-examination where the truth lies. While I accept without reservation Mr Sweeney’s statement that he had not seen any documents in response to the subpoena until 12 August 2019, his statement is in stark contrast to the sworn evidence of Mr Gardener to the effect that certain documents were produced prior to 7 August 2019. There may be explanations for the differing versions, not the least of which is the likely antipathy between Mr Gardener whose ex-son-in-law served a subpoena on Mr Gardener asking for documentation about Mr Gardener’s daughter. But that is speculation.
At present I am unable to state that on the balance of probabilities the version given by the husband of events about the production of documents is to be preferred over the version given by Mr Gardener. On that basis I am unable to make a costs order in favour of the husband in the manner he sought. I propose to reserve his costs.
Next, it became necessary to examine the claim made under r 15.23(3) by Mr Gardener for reimbursement of his expenses. Several things must be said of his claim, modest as it was. First, no supporting documents were adduced in evidence to verify the amount claimed. That was especially relevant in relation to the component of his claim in relation to legal fees. No details were given of the dates on which his solicitors performed work, information that would have been useful to connect the date on which Mr Gardener consulted his solicitors and for what purpose because the date on which he provided the relevant trust deed to the husband was a fact in issue. The records from Mr Gardener’s solicitors would also have revealed the activity in which the solicitors were engaged for which they rendered a fee and on what date. That was relevant to a consideration of the concept of “substantial” under the rule. Chronologically, by the date Mr Gardener had prepared his objection to the subpoena, he had decided (presumably on advice) to maintain a broad objection on the grounds stated in paragraph 1 of the notice of objection to the subpoena. Yet in the notice of objection he also stated that certain documents had been produced, relevantly here, the trust deed of the Mr Belcher Family Trust. Then followed correspondence from solicitors about documentation. In none of that correspondence adduced on this application was there evidence of Mr Gardener physically providing the deed nor was there an acknowledgement by the husband’s solicitors of a receipt of the deed. The evidence on that issue was silent. The solicitors’ costs history would have detailed the activities leading to the preparation of Mr Gardener’s affidavit of 7 August 2019 in which he stated, using the past tense, that various documents had been provided to the husband.
It is readily apparent that Mr Gardener retained legal representation early, probably shortly after receipt of the subpoena. The subpoena was broad. It sought documents having no apparent connection with the property settlement proceeding between the husband and wife. Mr Gardener was entitled to maintain his objection to relevance and to the oppressive nature of the subpoena. Insofar as he was put to substantial expense to maintain that objection or those objections, he should be reimbursed. However, I am unable to see how he should be fully reimbursed for the whole sum he claims, especially the component of his claim relating to documentation that he volunteered to produce for the Mr Belcher Family Trust and which he swore that he had produced prior to 7 August 2019. Had that documentation in fact been produced as he said, no call could properly have been made for documents about the Mr Belcher Family Trust on 12 August 2019.
The amount of reimbursement under r 15.23 is discretionary. In the exercise of my discretion, I am not persuaded that the whole of the sum claimed is properly to be reimbursed. Any amount referrable to seeking and obtaining legal advice about the validity, breadth and enforceability of the subpoena in its entirety is to be reimbursed. Any amount referrable to items 2(b), (c) and (d) is to be reimbursed as the entities in those paragraphs were irrelevant, in my view. The fact that Mr Gardener may have volunteered documents in answer to the subpoena does not render the claim for the documents relevant. That left the documentation in relation to paragraph 2(a). To my mind, the information about the provision of documentation in relation to the Mr Belcher Family Trust was opaque, to say the least. In the same way as I was not satisfied that the husband should have his costs in respect of the production of that documentation, I was not satisfied that Mr Gardener should be reimbursed specifically for expenses including costs associated with the production of that category of documentation having regard to the fact that from his notice of objection to the subpoena, Mr Gardener said he had produced the relevant documentation.
In those circumstances, in the exercise of my discretion I allow reimbursement for 75% of the sum sought by Mr Gardener, there being four categories of documentation only one of which the husband ultimately pressed. Mr Gardener should not be reimbursed for expenses associated with the production of documentation of the Mr Belcher Trust. Mr Gardener claimed reimbursement of the sum of $7 831.71. Seventy-five percent of that is $5 873.78. The husband should pay Mr Gardener that amount by 15 September 2019.
Recusal
I have been involved in this case on three separate occasions. The first was the husband’s application on 3 April 2019 for an order for sole use and occupancy of the C Town property. The second was a discovery dispute on 7 June 2019 arising out of the adjourned hearing of the application for an order for sole use and occupation. This was the third application. On the hearing of the first application, I disclosed to the parties that the husband was a member of the same city gentleman’s club as was I. I asked on that first occasion whether the parties objected to my hearing of the case. No one objected. Since then I have ascertained that the parties’ children attended the same secondary school as did I, that I owned a beach house very near the beach house in issue in this case, I live very near the former matrimonial house in this case and that my social circle most likely cross pollinates with that of the parties in this case. On 12 August 2019 Mr Sweeney, with utmost discretion, courtesy and politeness, brought to my attention that I had raised the issue of club membership in the first hearing. He submitted that by reason of that membership I may find it awkward and uncomfortable to mix in that club with or near the husband. Mr Sweeney did not apply by motion (whether in writing or ore tenus) for an order that I recuse myself. However, he invited me to consider whether that set of circumstances caused embarrassment to me such that I should disqualify myself.
Mr North SC submitted he had no position on the matter. Ms Swart was silent on the matter, possibly because her involvement in this case was comparatively short.
Even though the husband did not formally apply, it was open to me of my own motion to consider whether, by reason of apprehended bias, I should recuse myself. The test is well known from the High Court decisions in Ebner v Official Trustee in Bankruptcy,[19]Re JRL; Ex parte CJL,[20] Johnson v Johnson[21] and Isbester v Knox City Council.[22] In the specific context of the family law jurisdiction, the authorities also include Strahan v Strahan (Disqualification),[23] Green & Knowles,[24] Hillier & Wootton,[25] Zanda & Zanda,[26] SCVG & KLD (No 2)[27] and Masters & Cheyne.[28] In essence, the question is whether a fair-minded observer might take the view that by reason of the husband’s and my membership of the same club I might not bring an impartial mind to bear in the determination of this proceeding. The test focuses on the likely view of the fair minded observer. No evidence was adduced to ascertain that view nor could there be as the court must put itself in the position of that person and ask whether that person would take the view that the judge might not bring an impartial mind to bear because of the common club membership. Proof positive is not necessary.
[19] (2000) 205 CLR 337
[20] (1986) 161 CLR 342
[21] (2000) 201 CLR 488
[22] (2015) 255 CLR 135
[23] (2009) 42 Fam LR 252
[24] [2010] FamCAFC 248
[25] [2013] FamCAFC 11
[26] (2014) 293 FLR 1
[27] [2016] FamCAFC 99
[28] [2016] FamCAFC 255
It seemed to me that by application of the test espoused in Ebner and the cases mentioned above at paragraph 46 a fair-minded observer might take the view that by reason of the husband’s and my membership of that particular club I might not bring an impartial mind to bear in the determination of this case. Naturally, I will bring in fact an impartial mind to bear to this and every other case I hear. However, that is not the test.
It must be recognised that the wife did not argue to the contrary. In those circumstances, I recuse myself and direct that this case is referred to the registrar for ongoing case management.
Conclusions
From the foregoing it will be apparent that the consent orders appearing at the commencement of these reasons should be made, which orders I pronounced on 12 August. In addition, orders should be made in relation to documents produced in response to the subpoena. So far as the husband’s costs of the subpoena are concerned, in my view they should be reserved to abide the eventual outcome of this case in the event that a costs order is made. As to Mr Gardener’s claim to reimbursement under r 15.23, in my view he should receive 75% of the amount stated in his written submissions, that 75% amount being $5 873.78 to be paid by 15 September 2019. Otherwise this proceeding is referred to the registrar for further case management by reason of the fact that, on the court’s own motion, I must recuse myself.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 16 August 2019.
Associate:
Date: 16 August 2019
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