Betro & Grima (No 2)
[2022] FedCFamC1F 897
Federal Circuit and Family Court of Australia
(DIVISION 1)
Betro & Grima (No 2) [2022] FedCFamC1F 897
File number(s): SYC 1826 of 2021 Judgment of: SCHONELL J Date of judgment: 16 November 2022 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Subpoena objections – Where the husband, the husband’s brother and other non-parties objected to subpoenas filed by the wife – Where some of the categories of documents subpoenaed are likely to add to the relevant evidence in the case – Orders made for the production of some documents. Cases cited: Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98
Lexcray Pty Ltd v Northern Territory of Australia [1988] NTSC 126
Lucas Industries Ltd v Hewitt and Ors (1978) 18 ALR 555
R v Saleam (1989) 16 NSWLR 14
Rochfort v Trade Practices Commission (1982) 153 CLR 134; [1982] HCA A66
Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145
Division: Division 1 First Instance Number of paragraphs: 45 Date of hearing: 16 November 2022 Place: Sydney Counsel for the Applicant: Ms Tabbernor Solicitor for the Applicant: Lionheart Lawyers Counsel for the Respondent: Mr Gould Solicitor for the Respondent: Long Saad Woodbridge Lawyers Counsel for the Other: Mr Jackson Solicitor for the Other: Dimocks Family Lawyers ORDERS
SYC 1826 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS GRIMA
Applicant
AND: MR BETRO
Respondent
MR T
Other
order made by:
SCHONELL J
DATE OF ORDER:
16 NOVEMBER 2022
THE COURT ORDERS THAT:
1.The time for compliance for production of documents in relation to the subpoena addressed to Mr T and P Pty Ltd trading as Q Services is extended to 4.00 pm 17 November 2022.
2.Leave to inspect is granted to all parties to:
(a)Documents falling within the category of documents identified in paragraph 4 in the subpoena directed to Westpac Banking Corporation;
(b)Documents falling within the category of documents identified in paragraphs 2 and 3 in the subpoena directed to R Pty Ltd;
(c)Documents falling within the category of documents identified in paragraphs 2(a) to 2(d), 6 and 7 in the subpoena directed to Mr T;
(d)Documents falling within the category of documents identified in paragraphs 2(c) and 2(d) in the subpoena directed to S Real Estate;
(e)Documents falling within the category of documents identified in paragraphs 2(a) to 2(d) in the subpoena directed to P Pty Ltd trading as Q Services subject to a right of first inspection by the brother’s solicitor in relation to documents falling within the category of paragraph 2(d).
3.The balance of the subpoenas be set aside.
4.All parties’ costs in relation to this hearing be reserved.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Betro & Grima has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
SCHONELL J:
This is an interlocutory hearing in relation to objections filed by the husband, his brother and other non-parties in relation to subpoenas addressed to:
(1)R Pty Ltd;
(2)P Pty Ltd trading as Q Services (“P Pty Ltd”);
(3)Westpac Banking Corporation;
(4)Mr T, the husband’s brother; and
(5)S Real Estate (“S Real Estate”).
Documents have been produced by R Pty Ltd, Westpac Banking Corporation and S Real Estate.
This application is part of wider litigation between the husband and wife that was commenced by the husband in March 2021. Since that date there have been numerous orders made by the Court, including orders made by Harper and Henderson JJ and by a Senior Judicial Registrar. The matter was originally listed for determination on 11 November but was adjourned to today as a consequence of the health of the husband’s counsel. There is listed before me next week further financial applications.
The wife relied upon the following documents:
(1)Affidavit of wife filed 10 November 2022;
(2)A tender bundle which became Exhibit 1; and
(3)Case outline.
The husband relied upon the following documents:
(1)Affidavit of husband filed 8 November 2022;
(2)Notices of Objection to five subpoenas; and
(3)Case outline.
The husband’s brother relied upon an affidavit, Case Outline as well as Notices of Objection to each of the subpoenas.
The applicable law
The jurisprudence in relation to subpoenas is well settled.
A subpoena is akin to a court order. Justice Mason, as he then was, in Rochfort v Trade Practices Commission (1982) 153 CLR 134 at 143 held:
The subpoena, which has the effect of a court order, requires the person to whom it is addressed to produce the documents which it describes. It assumes that he has the ability or capacity to produce them. At times this idea has been expressed by saying that the person served is bound to produce any document which is in his possession, custody or control. But these statements should not be allowed to obscure the true effect of the subpoena it binds a person who can produce the documents to do so.
The Court’s power to issue a subpoena is part of its obligation to ensure the proper administration of justice.
In Lucas Industries Ltd v Hewitt and Ors (1978) 18 ALR 555 at 570, Smithers J held:
The purpose of the process of subpoena is to facilitate the proper administration of justice between parties. For that purpose it is the policy of the law that strangers who have documents may be put to certain trouble in searching for and gathering together relevant documents and bringing them to court. It is according to the same principle that persons who have knowledge of facts are put to the inconvenience of being brought to court and required to give evidence.
In Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 (“Secretary of the Department of Planning, Industry and Environment v Blacktown City Council”), Brereton JA observed:
84. In modern litigation, the subpoena for production is crucial to the ability of a party to investigate the facts and assemble evidence to prove a case. That is particularly so in civil litigation, where a plaintiff does not have the extra-curial investigative powers that are available to police and prosecutors in the criminal context.
It is beyond doubt that the issuing party bears the onus of establishing to the satisfaction of the Court the legitimate forensic purpose relied upon in seeking production of documents (R v Saleam (1989) 16 NSWLR 14 at 18).
The test has been expressed in terms of apparent relevance.
In Secretary of the Department of Planning, Industry and Environment v Blacktown City Council, Bell P observed:
68.… The word “apparent” admits of the possibility that the documents sought by way of subpoena may not ultimately turn out to be relevant. Their apparent relevance, however, should be able to be ascertained by an examination of the description or identification of the document or documents sought in the schedule to the subpoena in light of the issues in the case, as they present themselves on the pleadings, in particulars and/or in affidavits or witness statements if they have been filed or served at the time of the issue of the subpoena.
69. If the documents are apparently relevant and, provided that the terms of the subpoena are not unduly vague or the ambit of the subpoena is not such that it would be oppressive to comply with it, the subpoena should not be set aside. …
…
71. The converse of this, namely the absence of any apparent relevance (in the broad sense of that term) of the documents sought to be subpoenaed to the issues in the case, may warrant a conclusion of a lack of legitimate forensic purpose and be a sufficient ground to set aside a subpoena or a part of a subpoena: see Portal Software at [22]. That is because, if the documents subpoenaed do not meet the relatively low threshold of apparent relevance, it may readily be inferred that the documents are being sought for some purpose foreign to the litigation. That may not have been the issuing party’s motivation, but the lack of apparent relevance test is a convenient means of delimiting that which is legitimate.
His Honour went onto observe:
80. My review of the authorities in relation to the setting aside of subpoenas and/or the refusal to permit access to documents produced leads me to the conclusion that, although a party will generally be able to demonstrate that it had a legitimate forensic purpose in issuing a subpoena where, to quote Simpson J (as her Honour then was, and with whom Spigelman CJ and Studdert J agreed) in Saleam at [11], it can:
“(i) identify a legitimate forensic purpose for which access is sought; and
(ii) establish that it is ‘on the cards’ that the documents will materially assist his case”,
at least in civil matters, an inability to demonstrate that it is “on the cards” that the documents sought will materially assist the subpoenaing party’s case will not automatically require either that the subpoena be set aside or that access to the documents produced be refused. It will generally be sufficient and prima facie evidence of a legitimate forensic purpose if the documents sought to be produced on subpoena have an apparent relevance to the issues in the case and or bear upon the cross examination of witnesses expected to be called in the proceedings.
While Brereton JA observed:
89. I agree with Bell P, for the reasons given by his Honour, that an issuing party is not required to show that it is “likely” (or “on the cards”) that the documents sought will materially assist its case, as distinct from that it is “likely” (or “on the cards”) that they will add, in some way or another, to the relevant evidence in the case, and that the essential question is whether the documents called for are apparently relevant, or capable of providing a legitimate basis for cross-examination, in which case there is a legitimate forensic purpose for the issue of the subpoena. In my view, at least in civil proceedings and in the absence of any question of public interest immunity, no more is required to support the issue of a subpoena for production than that there is a reasonable basis for supposing that the material called for will likely add, in the end, in some way or another, to the relevant evidence in the case. This reflects the notions that the documents relate to, throw light on, or are sufficiently relevant to the dispute; that they “appear relevant in the sense that they relate to the subject matter of the proceedings”; or that they could possibly throw light on the issues in the case. Moreover, documents will add “in some way” to the relevant evidence in the case if they are capable of assisting in cross-examination, or go to credit, and notwithstanding that they are inadmissible according to the rules of evidence.
(Footnotes omitted)
The Court’s power to set aside a subpoena is but part of its power to regulate its own processes and to intervene where necessary to prevent an abuse of process. A subpoena will constitute an abuse of process if it is not issued for a legitimate forensic purpose. That is, it has not been issued bona fide to obtain ‘apparently relevant’ evidence.
In Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98 at 100–101, Powell J set out a number of examples in which a court would exercise its jurisdiction to set aside a subpoena. Those examples included:
·Where the subpoena had not been issued bona fide for the purposes of obtaining relevant evidence.
·Where the subpoena had been used for the purpose of obtaining discovery or further discovery against a party or a non-party.
·Where to require a party to comply with the subpoena to produce documents would be oppressive.
·Where the subpoena had been issued for purposes which is impermissible such as fishing.
Justice Powell went on to observe at 100–101:
…
the authorities do not make clear whether such classes of case to which I have referred above are to be regarded as the only cases in which the court will intervene, or, whether such cases are to be regarded as merely particular examples of a broad class of case in which the court will intervene to exercise its jurisdiction to set aside a subpoena, or, indeed, whether the jurisdiction to set aside a subpoena is but one part of a wider jurisdiction of the court. It seems to me, however, that when, as one does, one finds assertions that the court's jurisdiction to set aside a subpoena is but part of the inherent jurisdiction of the court (see, for example, R v Lewes Justices; Ex parte Secretary of State for the Home Department (at 240 per Lord Parker CJ, at 244 per Bridge J, as he then was)) coupled with assertions that a subpoena will be set aside if it be issued for an impermissible, or illegitimate, purpose, or if to require compliance with it would be oppressive (see, for example, Commissioner for Railways v Small (at 573-575 per Jordan CJ) it is difficult to avoid the conclusion that, in reality, the court's jurisdiction to set aside a subpoena is but one aspect of the court's jurisdiction to act to prevent an abuse of process, and that the particular classes of case which I have recorded above are to be regarded as no more than examples of situations which the courts, in the past, have held, and, in the future, would hold, to be cases of an abuse of process.
In relation to subpoenas directed to non-parties, Kearney J in Lexcray Pty Ltd v Northern Territory of Australia [1998] NTSC 126 observed at 6:
The Court is concerned to see that its process is not “simply used to torture [non-parties] and not for the purpose of justice”; In r Mundell; Fenton v Cumberlege (1883) 52 LJ Ch. N.S. 756 at 758. A balance must be struck between the right of a plaintiff to obtain documents in the hands of a non-party, in the interests of the proper administration of justice, and the private rights of that non-party. A non-party is always entitled to apply to set aside a subpoena, for “oppression”.
Some background is necessary to determine the issue of apparent relevance and the questions of objection generally.
submissions of the wife
The wife in her Case Outline in support of the current application says the following:
3. A central issue in the property proceedings is the financial dealings of the husband, referable to his control and conduct of property development entities, primarily [B Pty Ltd], [C Pty Ltd]. It is not in dispute that the wife’s property in [Suburb N] is used as security for [B Pty Ltd] and [C Pty Ltd], with the amounts owed exceeding $10,000,000 – far in excess of the value of the former matrimonial home.
4. Related to this central issue, are the circumstances in which the husband exerted pressure on the wife to agree to these loans (in the context of the husband’s […] addictions, and mental health difficulties), and the husband’s lack of transparency and disclosure as to his financial dealings and circumstances, and those of the entities in which he controls.
5. Simply put, the Wife has been forced to seek and enforce a series of disclosure orders in respect of the husband’s financial dealings, at her great expense, including the use of subpoenas and orders pursuant to s 121 of the Act.
6. As set out in the wife’s affidavit filed 10 November 2022, the subpoena documents or the limited documents provided by the husband simply demonstrate a further murkiness in the husband’s financial affairs, including now, the use of the husband’s brother to either dissipate or remove assets outside of the matrimonial pool.
7. These concerns as a result of the Husband’s conduct in these proceedings which can be summarised as follows:
(a) The circumstances surrounding the registration of [X1 Pty Ltd];
(b) The Deed of Settlement entered into between [B Pty Ltd] and [Mr T] on around 17 May 2022 (the Deed);
(c) The husband’s payment of $500,000 to [U Company], recently discovered through documents disclosed by the Husband’s lawyers on 31 October 2021;
(d) The Husband’s continued lack of financial disclosure, particularly with respect to the following:
i. the accounts opened on behalf of [B Pty Ltd];
ii. funds received by [B Pty Ltd] in 2022, exceeding the sum of $1,560,000;
iii. A safety deposit box rented in the name of [B Pty Ltd] (on behalf of the parties) during their relationship;
iv. the aforementioned business debts of the Husband secured against the family home; and v. [B Pty Ltd]’s joint venture with [V Pty Ltd].
Many of these contentions are in issue. It is not possible in this application to make any findings of fact on the many disputed assertions.
The husband’s brother is not yet a party to the proceedings. In light of the above, that state of affairs is unlikely to continue for much longer.
The five subpoenas address in the main the purchase by X1 Pty Ltd (“X1 Pty Ltd”) of a property at W Street, Suburb N (“the W Street property”). X1 Pty Ltd is a company of which the husband’s brother is the sole director and shareholder.
On 28 June 2022, the company purchased the W Street property. In the wife’s Case Outline, she asserts the following which does not appear to be controversial:
27. From searches obtained from the NSW Land & Registry Services, the following observations can be made with respect to the purchase of the [W Street] Property:
(a) the property was purchased for the consideration of $3,050,000;
(b) [X1 Pty Ltd] entered into a loan arrangement with [R Pty Ltd], for [R Pty Ltd] to register a mortgage over the [W Street] Property to secure an advanced loan of $2,000,000 as part of the purchase price of the property (the Mortgagee);
(c) [Mr T], in his personal capacity, entered into a Deed of Guarantee with the Mortgagee; and
(d) [X1 Pty Ltd] entered into a facility agreement with the Mortgagee.
An issue is the source of the balance of the purchase price. There is no evidence before the Court as to where the balance of the funds were sourced from. The husband’s brother despite filing an affidavit has elected to lead no evidence as to the source of funds notwithstanding he was on notice it was an issue in the proceedings. The wife says that the husband told her last year, at a time when he needed money and she suggested he speak to his brother, that “he has nothing” (at paragraph 121).
The wife makes a number of submissions. In her Case Outline, she says:
14. …
(a) The subpoenas are relevant to the parties and Court having a precise understanding of the husband’s dealings with marital assets and whether or not he has attempted to dissipate marital assets to the detriment of the wife;
(b) The subpoenas are germane to the issue relating to the repayment of the two loans securing the former matrimonial home, being an immediate issue in the interim hearing on 22 November 2022;
(c) The subpoenas are relevant to determining what beneficial interest exists in the [W Street] property, and/or appropriate relief that should be granted by the Court in respect of the acquisition of this property and/or the [X1] and [X2] Trusts (noting that the [X2] Trust has only been discovered by reference to the [X1] Trust Deed, annexed to the Husband’s affidavit filed 8 November 2022).
The wife says that the name of the company is no coincidence. X is the name of their daughter, it is a name used by companies incorporated by the husband, and the husband recently built apartments called X Suburb N. In particular, the wife says the following:
23. The subpoenas concern [X1 Pty Ltd], and broader intermingling between the husband and the brother. The Husband asserts that he does not have an interest in this company. The Court should, however, form the view that the circumstances surrounding the incorporation of the company have the hallmarks of a company operated for the benefit of another party, in this case, the Husband or potentially the parties’ child.
24. From the searches conducted with ASIC, one can make the following observations:
(a) At the time of its registration, 7 months post-separation, [X1 Pty Ltd] listed [L Street, Suburb N], being the family home where the Wife and the parties’ child resides, as its principal place of business. The Husband has not resided at the family home since separation and at no point during the relationship and post-separation did [Mr T] reside or have an interest in the family home.
(b) As of 20 July 2022, the principal place of business was changed to [Y Street, Suburb N] ([Y Street]). [Mr T] currently resides at [Z Street, Suburb AA]. At the time of this change, the Husband resided at [Y Street]
25. [Mr T] has never lived at either the [L Street] property or at [Y Street].
The wife also points to various transactions by the husband in the past, including one where it is asserted that he misappropriated funds. She says there is a history of a failure to disclose by the husband, the removal of items of value from a vault, and dealing with monies she says in a way which is designed to minimise the pool of assets for distribution between herself and the husband. There is also evidence she asserts of the payment by the husband’s company of an invoice in relation to the W Street property and the involvement of one of his companies in the W Street development that go beyond what he has asserted to be his involvement.
One particular transaction she refers to is a deed entered into between the husband’s company B Pty Ltd and the husband’s brother. The wife in her affidavit in relation to this deed says the following:
76.On 30 June 2022, [Mr Betro]’s lawyers disclosed a Deed of Settlement purpoedly made between [B Pty Ltd] and [Mr Betro]’s brother, [Mr T]. The Deed contemplats a payment to [Mr T] from the business, in the sum of $1,300,000, alleging that they are monies owed for his employment. Annexed and marked “H” is a copy of this email and the attached Deed.
77. To the best of my knowledge, during my time as the sole Director and Shareholder of [B Pty Ltd] in the period between […] 2014 to […] 2021, [Mr T] was not an employee of [B Pty Ltd]. I was not aware of any agreement to pay [Mr T] any funds. I deny that there was any agreement between [B Pty Ltd] and [Mr T] to pay bonuses owing to [Mr T], and that [B Pty Ltd] owed any money to [Mr T].
78. Prior to the Deed, I was not aware of any legal dispute with [Mr T], and I am not aware of any proceedings on foot. By consent on 2 September 2022, [Mr Betro] agreed that he be restrained from paying any funds to [Mr T] pending further order from the Court. To date, I have not received an explanation about this Deed nor the dispute it refers to.
The husband in his affidavit says the following on pages 3–4:
1. My brother and I are twins. We have a close and loving relationship and will often assist each other like families do. Since about 2008, he has been one of the lead workers in my business. I [work in property], and he is a highly skilled [tradesperson]. I often employee him in my business. Between the years 2015 to 2020, when [Ms Grima] was actively involved in the business of my company group, she is aware that my brother worked for me. He was paid a base wage of about $1,800 week gross on the various sites, but in addition, we agreed to pay him $100,000 per annum per project in lieu of equity participation. He worked about 16 to 17 hours per day, 6 days a week, which was well-beyond the other employees. [Ms Grima] attended site meetings at the site projects, and physically signed the wages cheques for me, and met him each Friday (sometimes more). She participated in discussions with my brother at which we agreed to pay the figure of $100,000 per project. Indeed, I recall on many discussions with [Ms Grima], particularly during 2016 and 2017 where she said words to the effect of "he is working so hard, he is worth more than what we have agreed to pay him".
2. Over a course of a few years, I invited my brother to have his wages paid as a lump sum upon the completion of a successful project and that project became the [Suburb M] development. In addition to those discussions, [Ms Grima] was present when I had periodic discussions with my brother to the following effect “getting the [Suburb M] site to DA phase is proving very difficult. It is coming on to 6 years, we've got lots of creditors and this is our big project.” Do you agree to take out your lump sum from his one, this our big project. He said “yeah, I know what’s happening, we will get it eventually, and I'll take it out as a lump sum at the end or in units in [Suburb M]”. That discussion was renewed almost annually between my brother, [Ms Grima] and I. I recall a conversation between my brother and [Ms Grima] in about 2020, as our relationship was deteriorating, where he said to her “you and [Mr Betro] aren’t going well, but don't forget I want my money from [Suburb M]. I worked very hard for that.”
3. Over the course of 2021, as my family Court proceedings became property based, and increasingly acrimonious, my brother became more concerned about him receiving his property entitlements. My brother and I caused a Deed to be prepared to identify the sum properly payable for his works. I disclosed this Deed to [Ms Grima] in the proceedings. After disclosure, I was requested by [Ms Grima] and consented to, an Order that he not be paid those monies for the time being. That Order (being Order 16) made 2 September 2022 remains in place. I acknowledge my brother's entitlement from our marital pool to the sum for the works he has performed.
4. In the course of 2022, now that my brother is no longer working for [B Pty Ltd], and because I am waiting upon the registration of the DA application for the [Suburb M] development before my business becomes active and could offer him new work, he has decided to do his own projects. Because we are brothers and have been in the industry together for many years, I assist him by giving advice of a few hours here and there in relation to his new business activities but I am not a participant in any financial sense at the [W Street] property. I understand my brother purchased the [W Street] property for approximately $3,000,000, some of which was financed from lenders. I understand at the site he is building two houses, one for him and one for his daughter, [Ms BB], who is 19 years of age.
One of the issues in the proceedings is whether there are monies owing by the husband’s company to the brother. There are no shades of grey between what the husband says and what the wife says. Someone is not being truthful in relation to what they say and this clearly will be a focus of the final proceedings as between the parties.
Submissions of the husband and his brother
The husband and his brother object to the subpoenas. They variously contend that the subpoenas lack forensic purpose, constitute fishing, lack apparent relevance, and/or are an abuse of process.
As to the purchase by X1 Pty Ltd, the husband’s Case Outline contends as follows:
2. The Husband's brother is not a party to these proceedings. The Wife has no substantive evidence before the Court to suggest or establish that the Husband's brother should be joined to these proceedings, nor is a relevant party to these proceedings. The extent of the Wife's evidence in relation to the Husband's brother appears at paragraphs 104 to 106 of her Affidavit filed 7 October 2022.
3. Neither the Husband nor the Wife are directors or secretaries of [X1 Pty Ltd]. The Husband's brother is the sole director, secretary and shareholder of this company. The Husband's brother acquired [X1 Pty Ltd] and the associated Unit Trust from the Husband in or around October 2021 as a dormant, unregistered shell. This was a shelf company which was never utilised by the Husband or the Wife, nor was it ever registered with ASIC. The Husband's brother paid for the registration of the company with ASIC. The Husband's brother has been the only director, secretary and shareholder of this company.
4. [X1 Pty LTtd] is the corporate trustee of the [X1] Unit Trust. Neither the Wife nor the Husband have an interest in the [X1] Unit Trust, nor are they directors or secretaries of the controlling entity, [X1 Pty Ltd]. All 100 units of the [X1] Unit Trust are held by [X1 Pty Ltd]. Neither the Wife nor the Husband have a beneficial interest in the Unit Trust.
The husband gives an explanation in his affidavit about the circumstances surrounding the establishment of [X1 Pty Ltd]. He says the following at pages 4–5:
1. About 2 to 4 years ago, I established a number of shelf companies to manage my financial affairs. When I established the companies, [Ms Grima] was the sole director. One of those companies were [X1 Pty Ltd]. I also established a Unit Trust. [X1 Pty Ltd] was the corporate trustee of the[X1] Unit Trust. This company and the Unit Trust remained dormant. I never traded under this company name. I did not cause for this company to be registered with ASIC. I never held any assets in [X1 Pty Ltd] or the [X1] Unit Trust.
2. In or around September/ October 2021, my brother approached me to establish a company to undertake a commercial development. He has limited business expertise and relies on me to advise him about business structures. His expertise is in building and construction. Because I had (and still have) a number of dormant companies, which had already been purchased, rather than him go to the costs of setting up a company, I offered my brother one of my dormant companies to save costs. My brother chose [X1 Pty Ltd] to register as his own company. We use the same accountants, [CC Accounting], to assist with our financial affairs. This made the transfer of the company from me to him easy and straightforward. My brother paid the costs of registration and incorporated the company in his sole name, which I understand from conversations with him was around $1,000.
3. Following the filing of [Ms Grima]’s subpoenas, I asked my brother to send me a copy of the Company Constitution and Unit Trust Deed for the purposes of these proceedings. On 1 November 2022, I received the requested documents from [CC Accounting]. I understand from the documents received that:
(a) On 14 October 2021, my brother registered [X1 Pty Ltd] with ASIC (neither [Ms Grima] nor I had registered this company prior to this date). My brother executed and signed the Company Constitution. He remains the sole director, shareholder and secretary of this company. Annexed and marked with the letter "C" is a copy of the ASIC search for [X1 Pty Ltd], Company Constitution and Certificate of Registration.
(b) On 14 October 2022, my brother set up the [X1] Unit Trust. [X1 Pty Ltd] is the corporate trustee of the [X1] Unit Trust. My brother executed the Trust Deed as director of [X1 Pty Ltd]. [X1 Pty Ltd] holds all the units in the Unit Trust. Annexed and marked with the letter "D" is the trust deed for the [X1] Unit Trust.
4. I do not have an interest in [X1 Pty Ltd] or the [X1] Unit Trust. My brother is the sole director, secretary and shareholder of this company. I do not hold any shares in this company. I have never held any assets in the [X1] Unit Trust. I do not hold any units in the Unit Trust. Both these entities are controlled and operated by my brother. I have not given any security or personal guarantees, or signed any document with any bank or financier, or my brother, referrable to his development at the [W Street] property.
He also says he has never banked with Westpac Banking Corporation, has never borrowed money from R Pty Ltd, and that in relation to P Pty Ltd, they are solicitors who have acted for him in the past but he did not retain them for the purchase of the W Street property. As to S Real Estate, he says:
11. I have had a long association with various real estate agents in the [Suburb N] area purchasing and selling properties for many years. I was approached by [S Real Estate] as to whether I wished to purchase the [W Street] property. I invited them to contact my brother as I had no funds for a purchase any property at present. They did so, and their transaction proceeded.
The husband’s brother’s submissions and Case Outline largely followed the same theme as that of the husband. His counsel submitted that the brother’s personal financial records had no apparent relevance to the issues before the Court. He otherwise made a claim as to privilege to some of the documents held by his solicitor.
P Pty Ltd and S Real Estate filed their own Notices of Objection. The source of knowledge for the contentions they advance are not apparent. Rhetorically, one might ask how they would know what the relevant issues in the proceedings are. Perhaps understandably in the light of such unsupported assertions, they did not appear to argue the contentions they advanced.
Conclusion
There are clearly issues in the proceedings as to the degree of financial intersection between the interests of the husband and that of the brother. The evidence reveals that there is an issue as to the use of companies previously purchased by the husband and given to his brother, the payment of expenses by the husband’s company for the W Street property, the involvement of one of his companies in the W street development, and assertions that the parties home was used as the registered address for a company that ostensibly had on the husband’s case no connection to their assets.
There are issues about the application of large sums of money by the husband which the wife contends are unexplained. There is also the issue as to whether the husband’s company is indebted to the brother for $1.3 million. Some of the documents sought to be subpoenaed include loan applications made by the brother. Representations by the brother to financiers as to his financial position including whether he had an asset represented by a loan of $1.3 million would fall within the category of documents having apparent relevance to an issue in the proceedings.
The authorities make it plain that the threshold of establishing apparent relevance is “relatively low”. As Bell P states “the word ‘apparent’ admits of the possibility that the documents sought by way of subpoena may not ultimately turn out to be relevant” (at [68]), but that is not a basis for setting aside a subpoena. I am satisfied that some but not all of the categories of documents subpoenaed are “likely” to add “in some way or another” to the relevant evidence in the case.
Documents demonstrating the source of funds to complete the purchase of the W Street property, the extent of the husband’s companies involvement in the W Street development and what the brother said to financiers as to his financial position fall within the rubric of apparent relevance in these proceedings. Consequently, I am satisfied that the subpoena were in the main issued for a legitimate forensic purpose and were not ‘fishing’ nor an abuse of process.
Accordingly, I propose to direct production where necessary, and will grant leave to inspect the following:
(1)Documents falling within the category of documents identified in paragraph 4 in the subpoena directed to Westpac Banking Corporation;
(2)Documents falling within the category of documents identified in paragraphs 2 and 3 in the subpoena directed to R Pty Ltd;
(3)Documents falling within the category of documents identified in paragraphs 2(a) to 2(d), 6 and 7 in the subpoena directed to Mr T;
(4)Documents falling within the category of documents identified in paragraphs 2(c) and 2(d) in the subpoena directed to S Real Estate;
(5)Documents falling within the category of documents identified in paragraphs 2(a) to 2(d) in the subpoena directed to P Pty Ltd subject to a right of first inspection by the brother’s solicitor in relation to documents falling within the category of paragraphs 2(d).
Accordingly I will make orders in these terms.
I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Ex Tempore Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 16 November 2022
4
0