Bruce F McLaren Holdings Pty Ltd & Ors v McLaren and McLaren

[2000] FamCA 675

FAMILY LAW ACT 1975

IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA
AT MELBOURNE

Appeal No. SA67L and SA66 of 1999
File No. ML3521 of 1997

IN THE MATTER OF:

BRUCE F McLAREN HOLDINGS PTY LTD
JALNA DAIRY FOODS PTY LTD
ARTCAM ENTERPRISES PTY LTD

Applicants/Appellants

- and -

LOUISE DAWN McLAREN

Respondent/Wife

- and -

STUART FARQUHARSON McLAREN

Husband

REASONS FOR JUDGMENT

BEFORE:                  Ellis, Holden and Chisholm JJ
HEARD:                   8th day of March 2000
JUDGMENT:            31st day of May 2000

APPEARANCES: Mr O’Callaghan QC with Mr Strum of counsel (instructed by Deacons Graham & James, Lawyers, Level 24, 385 Bourke Street, Melbourne, Victoria 3000) appeared on behalf of the applicants/appellants
Mr Spicer of counsel (instructed by Rogers & Gaylard, Lawyers, Level 13, 31 Queen Street, Melbourne, Victoria 3000) appeared on behalf of the respondent wife

There was no appearance by or on behalf of the husband

APPEALS - Leave to Appeal - Order for production of documents - Interlocutory order.
PRACTICE AND PROCEDURE - Production - Non party - Order 20 Rule 7.

This was an appeal and application for leave to appeal against orders of Frederico J requiring the companies Bruce F McLaren Holdings Pty Ltd, Jalna Dairy Foods Pty Ltd and Artcam Enterprises Pty Ltd as trustee for the BF McLaren Family Trust to produce their 1994 to 1998 tax returns, profit and loss statements and financial statements, for inspection by the wife in property settlement proceedings between the husband and wife.

The wife contended that after separation the husband continued to work in the family business known as the Jalna Dairy Foods Group of Companies (“Jalna Group”) and that the husband had an interest in the Jalna Group. The entities from which the wife sought production were part of the Jalna Group. The wife asserted that her accountant, who sought to value the husband’s interest in the entities in the Jalna Group, could not prepare a final report due to incomplete information. The wife claimed that requests to the husband and the companies for the necessary documentation were refused and until the documents were provided, the accountant could not value the husband’s interests.

His Honour proceeded upon the following essential facts:

The husband is the sole beneficiary of the Stuart McLaren Trust No. 2.
The trustees of the Stuart McLaren Trust No. 2 are B F McLaren, L E McLaren and F Carew.
The Stuart McLaren Trust No. 2 owns half of the “B” class shares and one redeemable preference share in Bruce F McLaren Holdings Pty Ltd.
Bruce F McLaren Holdings Pty Ltd owns 77.7% of the shares in Artcam Enterprises Pty Ltd which is the trustee for the BF McLaren Family Trust.
The BF McLaren Family Trust owns 99.9% of the shares in Jalna Dairy Foods Pty Ltd.
The “B” class shares are, in effect, the only shares attached to the equity of the company and therefore the husband effectively owns half of the only shares that relate to the equity of the entities.

His Honour considered the pre-requisites from J and J (1988) FLC 91-940 in relation to discovery from non-parties. He noted that the entitlement to the “B” class shares could in certain circumstances be a considerable benefit to the husband.

Held (per curiam) dismissing the application for leave to appeal and the appeal:
The Court considered the applicants’ grounds of appeal in a general way when determining the application for leave to appeal.
Interlocutory or final order?

The relevant law as to the distinction between final and interlocutory orders for appellate purposes was summarised in Malouf v Malouf and Ors (1999) 167 ALR 383 at 386. Malouf (supra) and the authorities cited therein related to orders dismissing applications. The question for determination in this case was whether an order directing third parties to produce documents, as opposed to an order simply dismissing an application, is an interlocutory order. The first instance decisions of Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 3)(1996) 64 FCR 55 and Levis v McDonald (1997) 75 FCR 36 appear to support the proposition that an order directing a third party to produce documents is a final order as it finally disposes of the only issue between the applicant and the third party. These decisions concerned whether certain proceedings were interlocutory proceedings for the purpose of s 75 of the Evidence Act 1995 (Cth) which permits the giving of hearsay evidence in interlocutory proceedings.
In Brouwer v Titan Corporation and Ors (1997) 149 ALR 50, the relevant order required a third party to produce documents. The Full Court of the Federal Court held that the order was interlocutory. In Malouf (supra) the Full Court of the Federal Court referred to Brouwer (supra) with approval and considered Allstate Life Insurance Co (supra) and Levis (supra). The Full Court of the Federal Court held that the latter cases were distinguishable because they relate to a relaxation of the hearsay rule which is a narrower category of cases than the authorities concerning the availability of appeal as of right. The order of Frederico J was thus interlocutory and therefore leave to appeal was required.

Leave to Appeal

For an application for leave to appeal to be successful, the Court must be satisfied that there has been an error of principle, and/or a substantial injustice to one of the parties (Rutherford v Rutherford (1991) FLC 92-255) or that the application raises a matter of general importance (Aaron v Knowles (1995) FLC 92-627).
Error of principle

A number of the grounds of appeal asserted that there was insufficient evidence before his Honour to satisfy the J and J (supra) pre-requisites that the documents sought related to a matter in question and were documents the respondent could be required to produce at trial. There was sufficient evidence before his Honour and the applicants’ counsel conceded that the husband could benefit upon a winding-up of the company or a sale of its assets. The applicants asserted that the husband’s interest in the “B” class shares was a mere expectancy. The Court held that the shares were property. As the sole beneficiary of the trust, the husband had the right to call for the trust property to be vested in him; Saunders v Vautier (1841) 4 Beav 115 cited with approval in Brown and Brown; Eley and Henty (Interveners) (1991) FLC 92-265 at 78,780. The documents were relevant in valuing the “B” class shares upon a winding-up of the company or a sale of its assets.

Substantial Injustice

The applicants contended that the production of private and confidential records was an unreasonable intrusion into their business affairs. Further, if the documents were found to be irrelevant, their privacy would have been lost and they could not be adequately compensated for this loss. The applicants asserted that this amounted to a substantial injustice. There was no evidence before his Honour that the documents were commercially sensitive. Whilst his Honour took into account the right of third parties to maintain their privacy, this was only one of a number of relevant factors. The applicants’ privacy was protected by s 121 of the Family Law Act 1975 and they could have sought an order pursuant to O 20 r 8 of the Family Law Rules. If the orders were final orders, the Court would have dismissed the appeal. This was a further reason why there was no substantial injustice in dismissing the leave application.

General Importance

The application for leave to appeal concerned the practice and procedure governing the production of documents by non-parties. The relevant Rules, or similar provisions, have existed in various jurisdictions for a considerable period of time and no issue of general importance was raised.

Application for leave to appeal and appeal dismissed.
Applicants to pay the respondent’s costs, to be taxed in default of agreement.
Reportable.

INTRODUCTION

This is an application for leave to appeal and an appeal against orders made by Frederico J on 19 August 1999. His Honour ordered that each of the companies, Bruce F McLaren Holdings Pty Ltd, Jalna Dairy Foods Pty Ltd and Artcam Enterprises Pty Ltd as Trustee for the BF McLaren Family Trust, produce for inspection their 1994, 1995, 1996, 1997 and 1998 tax returns and financial statements (being detailed balance sheets, profit and loss statements and notes to the accounts). None of the companies was a party to the principal property proceedings between the husband and the wife.
The Notice of Appeal and application seeking leave to appeal were filed on 20 September 1999. On 22 February 2000, the application for leave to appeal was stood over by the Full Court to be heard with the appeal. The applicants filed an amended Notice of Appeal on 28 February 2000.
The applicants assert that the orders made by his Honour on 19 August 1999, are final orders and therefore they can appeal as of right. The application seeking leave to appeal was filed to cover the eventuality that this Court determines that the orders are interlocutory in nature and leave is required. This is a matter to which we shall return later in these reasons.
BACKGROUND
The wife contended that following separation the husband continued to work in the family business known as the Jalna Dairy Foods Group of Companies (“Jalna Group”) and derived a substantial income and other benefits from this employment. The wife also contended that the husband had an interest in the “Jalna Group”. The entities from which the wife sought production were part of the Jalna Group.
The wife asserted that she had instructed her accountant, Mr Lamb of Ernst and Young, to value the husband’s interests in the companies and trust structures within the Jalna Group. She asserted that he was only able to prepare an interim report based on incomplete information as the husband did not provide all of the necessary information. The wife asserted that various requests were made to the husband and the companies for the documentation to be provided but these requests were refused. She claimed that until the documents and information were provided, Mr Lamb could not value the husband’s interests in the various entities and the benefits received from them. The wife, therefore, filed an application to obtain access to this documentation from the entities and this is the application that came before Frederico J on 19 August 1999.
THE ORDERS - FINAL OR INTERLOCUTORY?
Section 94(1) of the Family Law Act 1975 provides:
94 (1) Subject to sections 94AAA and 94AA an appeal lies to a Full Court of the Family Court from -
(a)a decree of the Family Court, constituted otherwise than as a Full Court, exercising original or appellate jurisdiction -
(i) under this Act; or
(ii) under any other law;
.......
Section 94AA(1) provides:
94AA(1) An appeal does not lie to a Full Court of the Family Court from a prescribed decree of a court other than the Federal Magistrates Court, except by leave of a Full Court of that Court.
By virtue of s 94AA(4), a prescribed decree means a decree of the kind mentioned in s 94(1) that is, an interlocutory decree, but does not include a decree in relation to a child welfare matter. Therefore, if the orders made by Frederico J on 19 August 1999 were interlocutory, leave to appeal is required. If they are final, an appeal lies as of right.
In the written submissions, the applicant appeared to be adopting the position that the orders made by his Honour were not final orders. However, during the course of his oral submissions counsel for the applicant asserted that the orders were in fact final orders. He did not then develop any argument in support of this contention nor did he provide any authorities to assist us in resolving this issue, although there are many.
It has been said that “[t]he question whether judgment is final or interlocutory for the purpose of the rules relating to appeals is one productive of much difficulty”: Carr v Finance Corp of Australia (No 1) (1981) 147 CLR 246 at 248; 34 ALR 449 at 450, per Gibbs CJ.
There is considerable High Court authority as to the distinction between final and interlocutory orders for appellate purposes. The relevant law was conveniently summarised by the Full Court of the Federal Court (Beaumont, Lee and Dowsett JJ) in Malouf v Maloufand Ors (1999) 167 ALR 383 at 386 as follows:
“An appropriate starting point is the decision of the High Court in Hall v Nominal Defendant (1966) 117 CLR 423. That case concerned an application to extend time within which to sue the nominal defendant established pursuant to Tasmanian legislation. A judge at first instance granted the application, but that decision was reversed on appeal by the Full Court. From that decision, the prospective plaintiff purported to appeal as of right to the High Court, asking, alternatively, for leave or special leave to appeal. In determining the status of the purported appeal it was necessary to determine whether or not the order of the Full Court was interlocutory for the purposes of s 35(1) of the Judiciary Act 1903 (Cth) as it then was, which provision was similar in effect to s 24(1A) of the Federal Court Act. The majority (Taylor, Windeyer and Owen JJ) considered that it was. At 439-40 Taylor J said (Owen J concurring):
However, at an earlier stage Lord Alverstone CJ, when called upon to say whether a particular order was interlocutory or final said: “It seems to me that the real test for determining this question ought to be this: Does the judgment or order, as made, finally dispose of the rights of the parties? If it does, then I think it ought to be treated as a final order; but if it does not, it is then, in my opinion, an interlocutory order” ... Much the same test has been proposed on other occasions and, if I may say so with respect, it provides a broad test which is unexceptionable. So an order made in the course of an action or suit which does not conclude the rights of the parties inter se, although it may, of course, conclude the fate of the particular application in which it is made, is interlocutory only. On this basis an order staying proceedings against one of the several defendants on the ground that they are scandalous, vexatious and an abuse of process of the court has been treated as interlocutory . . . The same view was taken of an order striking out a plaintiff’s statement of claim on the ground that it disclosed no reasonable cause of action . . . and of an order dismissing an action as frivolous and vexatious . . . In Manley Estates Ltd v Benedek . . . there were successive applications to extend time under a provision similar to that in question here, while Atwood v Chichester . . . shows that an order dismissing an application to set aside a default judgment did not constitute a bar to a subsequent application of the same character. It is not, however, of the essence of an interlocutory order that it is one made in the course of a pending action or suit and the last-mentioned case may be regarded as illustrating this proposition. Further, in Smith v Cowell . . . the objection taken was that the order sought in that case was not “interlocutory” and the objection was supported by the contention “that an order is interlocutory only if made at some time between writ and final judgment”. The contention was expressly rejected by the Court of Appeal, which was unanimously of the opinion that the expression “interlocutory order” was wide enough to include orders made after the conclusion of proceedings in the action. Brett LJ . . . said: “. . . But it is said that interlocutory must mean something between action begun and final judgment. I cannot agree. In my opinion, ‘interlocutory order’ there means an order other than a final judgment or decree in an action.” . . . The order in the present case was made in proceedings preliminary to the bringing of an action and, although it deprived the applicants of the benefit of the order of the learned judge at first instance, it did not operate to prevent him from making a further application for an extension of time. No doubt its practical effect was that any further application would have been fruitless unless supported by additional relevant facts but the order made by the Full Court did not of its own force conclude his right to bring an action.
In my opinion, the order in question was not final in the sense in which that term is used in relation to judgments and was interlocutory only so that the appeal was, to say the least, incompetent without leave.
Windeyer J said (at 444-5):
But I find it hard to relate the test of finality or otherwise in the determination of a dispute between parties to an application [of this kind], because in such a case there is no existing dispute between parties and no existing action, and unless the prescribed times be complied with or extended there is no cause of action it seems to me. There are no defined parties to the application . . . The court is required to hear “such of the persons affected or likely to be affected by the application as it thinks fit”. If the times prescribed have expired at the date of the application the question is, should the applicant who is out of time for fulfilling a condition for obtaining a judgment against the nominal defendant be put in the position that he has a cause of action. The question is, in effect, whether he should be permitted to bring an action. A refusal of his application means that he cannot do so. I am prepared to assume that in practical effect, if not in strict law, a refusal would preclude him from making another application for an extension of time. But does this mean that such a refusal would be a final order? On the whole I think not. The question is a troublesome one; and I have found no analogy on which to base my decision. The position when there is an existing dispute between defined parties does not, I think, provide an analogy. There, as I have said, the cases show that the determining factor is the effect of the order in establishing finally or otherwise the rights of the disputant parties - does it put an end to an existing dispute or existing action? But in a case such as this the character of the proceedings in which the order is made seems to me of more significance than is the result for the applicant. I am unable to accept the view that if an extension of time as sought were granted such an order would be a final order. It seems to me it would be interlocutory; and I think that the position is the same if the extension be refused or if a lesser time were allowed than was sought.
The High Court again considered the matter in Licul v Corney (1976) 180 CLR 213; 8 ALR 437. The court was concerned with an application to extend time for the service of summonses. A judge of the Victorian County Court made certain orders which, on appeal to the Full Court, were set aside. The plaintiff appealed to the High Court. The defendant objected to the competency of the appeal. At CLR 219-20; ALR 441 Barwick CJ said:
The first question arising from the objection to the competency of the appeal to this court is whether the order of the Supreme Court was a final order within the meaning and operation of s 35(1)(a) of the Judiciary Act 1903 (Cth) (as amended). To be final for this purpose, the order, in my opinion, must of its own force put an end to the action or proceeding between the parties. It is not enough, in my opinion, that by reason of circumstances unconnected with and uncontrolled by the order itself, it may be or become impossible or impracticable to proceed with this action.
Gibbs J said (at CLR 225; ALR 446):
The distinction between final and interlocutory judgments is not always easy to draw and there has been disagreement as to the test by which the question whether a judgment is final or interlocutory is to be determined. One view . . . is that the test depends on the nature of the application made to the court. The other view which, since Hall v Nominal Defendant . . ., should, I think, be regarded as established in Australia, depends on the nature of the order made; the test is: Does the judgment or order, as made, finally dispose of the rights of the parties?
In Carr v Finance Corp of Australia Ltd (1981) 147 CLR 246; 34 ALR 449 the High Court considered an appeal from a decision of the New South Wales Court of Appeal determining an appeal from an order declining to set aside a judgment by default. At CLR 248; ALR 450 Gibbs CJ said:
The question whether a judgment is final or interlocutory for the purpose of the rules relating to appeals is one productive of much difficulty. The test now applied in this court for determining whether a judgment is final or not is whether the judgment or order appealed from, as made, finally determines the rights of the parties: Licul v Corney . . . An order refusing to set aside a default judgment does not as a matter of law finally dispose of the rights of the parties, for it is open to the disappointed defendant to apply again to have the judgment set aside: Hall v Nominal Defendant . . . In practice, in some cases a second application of that kind might be successful, for example, when the first application had been dismissed on a technicality. In other cases, however, the second application would be doomed to failure because the issues of substance which it raised would have been decided adversely to the defendant in the first application. The applicants here submit that their right to make a further application is purely theoretical, since any such application must necessarily fail, and urge that in these circumstances the judgment should be regarded as a final one.
In my opinion the test in Licul v Corney requires the court to have regard to the legal rather than the practical effect of the judgment. If this were not so, the question whether a judgment is final or interlocutory would be even more uncertain than it is at present. In some cases it would be necessary for the court, for the purpose of determining the practical effect of an order refusing to set aside a default judgment, to embark on a detailed inquiry as to the facts of the matter and the course of the proceedings already taken - an inquiry quite inappropriate when the only issue is whether a right of appeal exists. As will be seen, it would be necessary to make an inquiry of that kind in the present case if the practical test were to be adopted. The rigour of the rule that the legal effect of the judgment is decisive may of course be mitigated by the exercise of the court’s power to grant special leave to appeal.
Mason J said (at CLR 256-7; ALR 456-7) with regard to the discretion to set aside a judgment:
... I can see no justification for arbitrarily imposing upon that discretion a rigid rule that the refusal of an application is a complete bar. The court should preserve the generality of its discretion so as to protect its capacity to see that justice is done in a wide variety of cases.
The question remains whether the refusal of an application amounts to a final order, when the practical effect of that order is to preclude the defendant from making another application to set aside the judgment, although in strict law the defendant is free to bring his application, knowing that it will inevitably fail . . .
The choice for the court is whether it should continue to adopt the traditional classification of orders of this kind as interlocutory because there is the right to make another application and because the order does not deal directly with the rights in contest in the action or whether it should now classify such orders as final when their practical effect is to shut out the defendant from contesting the default judgment.
Although the second alternative has some attractions, it has the disadvantage that the character of the order (whether it be final or interlocutory) could not be determined on its face, but could only be ascertained after an examination of the grounds on which the application to set aside was made, the grounds on which it was refused and the formation of a judgment as to the impact of the grounds of refusal on the prospects of bringing a second application. The adoption of this approach would bring yet a further complication to the complexities which already bedevil the existence of appeals as of right to this court.
The prospect that there could be a steady stream of appeals to this court from orders on applications to set aside default judgments, if the character of a final order be conceded to them, is by no means an inviting prospect. Even so, I would not shrink from making that concession if it be correct in law so to do, in order to do justice to the parties. However, for the reasons already given, I do not consider it to be a correct approach. It goes without saying that the unsuccessful party can, in an appropriate case, apply for and obtain special leave to appeal.
Sanofi v Parke Davis Pty Ltd (1982) 149 CLR 147; 39 ALR 405 was an appeal to the High Court from an order of the Full Court of this court, granting leave to an applicant to file and serve a notice of appeal to the Full Court from a decision of the Supreme Court of Victoria in proceedings under the Patents Act 1952 (Cth). The respondent lodged an objection to the competency of the appeal. At CLR 152-3; ALR 406-7 Gibbs CJ, Stephen and Mason JJ said:
By s 33(4) of the Federal Court of Australia Act 1976 (Cth) as amended, an appeal to this court may be brought as of right from a final judgment of a Full Court of the Federal Court . . . However, it is disputed that the judgment of the Full Court of the Federal Court was a final judgment.
A final judgment is one which finally disposes of the rights of the parties: . . . It was not suggested that the order of the Federal Court in the present case finally disposed of the rights of the parties under s 90 of the Patents Act: obviously it did not. What was contended by Mr Lyons on behalf of Sanofi was that the order of the Federal Court finally determined that Parke Davis had a right to appeal to the Federal Court. The order proceeded on the basis that Parke Davis had a right to apply for leave to appeal, and that it was competent to the Federal Court to grant it leave to appeal. However, it was submitted that Parke Davis had no right to seek or obtain leave to appeal, since it had not been a party to the proceedings in the Supreme Court. It was submitted that a power of appealing is a right, and not a matter of mere procedure, and that the order of the Federal Court finally disposed of that right in the present case.
There is, as Mr Handley for Parke Davis submitted, a short and conclusive answer to that contention. The Federal Court did no more than grant leave to file and serve a notice of appeal. It is always open to a court which has granted leave to appeal or special leave to appeal to rescind that grant if it later appears to the court, in the light of further information or argument, that the leave or special leave should not have been granted . . . It is irrelevant whether or not it is likely that the Federal Court would make an order rescinding the grant of leave, since it is the legal force of the judgment in question, and not its practical effect, that has to be considered in determining whether or not the judgment is a final one . . . For those reasons the order of the Federal Court was interlocutory and there was no right of appeal from it to this court.””

The High Court authorities and Malouf (supra) involved orders dismissing applications. In Malouf (supra) the applicant sought pre-trial discovery from the respondents under O15A, r6 of the Federal Court Rules. Order 15A, r6 states that the Court may order that a person provide pre-trial discovery to an applicant if certain criteria are met. A single judge of the Federal Court dismissed the application on the ground that the applicant did not meet the criteria. The applicant sought to appeal to the Full Court against this decision and the question arose whether an appeal lay as of right or whether leave to appeal was required. The Court concluded:
“(b) The relevant principle
For present purposes, we need only consider Hall. That decision has been followed consistently in Australia and appears to be materially indistinguishable from the present case in that it involved an application in advance of the commencement of substantive proceedings. It establishes that for the purposes of determining whether there is an appeal as of right, itself dependent upon whether the decision in question was final or interlocutory, the test is whether or not the order in question precludes a further application. There is nothing in the rule currently under consideration which would preclude an applicant from making more than one application thereunder. No doubt, an application based on the same grounds as a previous application would be unsuccessful but, for the reasons advanced by the High Court, that is not relevant. The order is interlocutory. There is no appeal as of right.”
The question remains, however, whether the making of an order directing third parties to produce documents, as opposed to an order simply dismissing an application, is also an interlocutory order. It might be thought that an order directing third parties to produce documents is a final order because, although of course it does not dispose of the issues in the main proceeding, it finally disposes of the only issues that arise between the applicant for the order and the third party, namely whether the third party should be required to produce the documents.
Some support for this approach might be found in two first instance decisions on the question whether certain proceedings were interlocutory proceedings for the purpose of s 75 of the Evidence Act 1995 (Cth), which permits the giving of hearsay evidence in interlocutory proceedings. [Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 3) (1996) 64 FCR 55; Levis v McDonald (1997) 75 FCR 36. Compare Ex parte Britt [1987] Qd R 221 (McPherson J)]. In those decisions it was held that hearsay evidence could not be admitted because the applications in question were independent of the action and were for final relief. In one of the cases, Lindgren J held that the proceeding was not interlocutory, “since the relief provided for finally determines the rights of the parties in relation to the particular issue tendered for decision, that is to say, the issue whether the person concerned is to be ordered to do things provided for in the rule”. [Levis (supra), at 43.]
This question was considered and determined by the Full Court of the Federal Court in Brouwer v Titan Corporation Ltd and Ors (1997) 149 ALR 50. In that case the relevant order required production of documents, and thus finally disposed of the issue between the respondents, who issued the subpoenas, and the police officer. In Brouwer (supra), civil proceedings were brought in the Federal Court relating to the sale of a business by the respondents. The respondents issued subpoenas requiring Detective Sergeant Brouwer (who was not a party to the proceedings) to produce documents in the possession of the Victorian Police relating to a criminal investigation into the business and the respondents’ activities. Detective Sergeant Brouwer claimed public interest immunity for the documents on the basis that their production would prejudice the ongoing investigation. Northrop J concluded that the claim of public interest immunity failed and ordered the production of the documents to the court.
Detective Sergeant Brouwer appealed to the Full Court against the order of Northrop J and, on the day before the hearing, filed a notice of motion seeking leave to appeal.
The Court examined a number of authorities including R v Gray; ex parte Marsh (1985) 157 CLR 351; 62 ALR 17, a decision of the High Court. In that case, subpoenas were issued at the request of a party to proceedings in the Federal Court, pursuant to O 27, r6 of the Federal Court Rules. The subpoenas were directed to a stranger to the proceedings who sought to set them aside, pursuant to O 27, r9 of the Federal Court Rules. It was held by the High Court that the issue of the subpoenas to the stranger, and the application to set the subpoenas aside, were steps in the Federal Court proceedings. The High Court rejected an argument that the setting aside of the subpoenas constituted an order made in separate proceedings commenced by the issue of the subpoenas themselves: see CLR 362, per Gibbs CJ with whom Mason, Wilson and Deane JJ agreed.
The Full Court in Brouwer (supra) said, at 53:
“It would seem to follow that, if a subpoena is issued to a stranger to existing proceedings, and, as occurred in the present case, an order is made requiring the stranger to produce documents to the court, the order does not ‘finally determine the rights of the parties’ for the purpose of the notion of a ‘final’ order.”
After considering the authorities, the Full Court of the Federal Court in Brouwer (supra) concluded at 54:
“It seems to us that, consistently with the authorities to which we have referred, the word “interlocutory” in the present context has been understood to bear a meaning by reference to the meaning of the word “final”. The final orders to be made in proceedings No VG346 of 1993 will be orders which will finally determine the rights of the parties to those proceedings in relation to the issues presented for decision in them. In contrast, a decision in relation to a subpoena, the issue of which is a procedural step in the existing proceedings provided for by the rules of court governing them, seems to us to be a paradigm case of an interlocutory judgment.
There are sound policy reasons to support classification of the orders made by Northrop J as interlocutory in character. If Mr Nash’s argument were correct, every stranger to proceedings required to produce documents to the court in the course of those proceedings would be entitled to appeal to the Full Court as of right (cf Mason J’s description of a “steady stream of appeals . . . from orders on applications to set aside default judgments” as “by no means an inviting prospect” in Carr, at CLR 256). This would be so, as Mr Nash acknowledged, even if the stranger was effectively in the camp of one of the parties and was represented by the same legal representatives. Similarly, if copies of the same document were in the possession of a party and a non-party, it would be odd that an order against a party to produce it should be interlocutory while the same order against the non-party should be final.
It may well be appropriate for an appellate court to review an order by a trial court for a stranger to the proceedings to produce documents. However, like appeals in relation to other matters arising in the course of proceedings, an appeal from such an order should be subject to the process provided by the leave requirement specified in s 24(1A) of the Federal Court Act.”
The authorities were fully discussed in Malouf (supra), from which we have already quoted. The actual decision in Malouf (supra) is not directly in point. The orders that were the subject of the appeal dismissed the application for pre-trial discovery. Since they did not terminate the applicant’s right to make a later application for pre-trial discovery, they did not finally determine any issue and they were thus interlocutory rather than final orders. However, the Full Court referred to Brouwer (supra) with approval. Their Honours considered the two decisions of Lindgren J, namely Allstate (supra) and Levis (supra), to which we have already referred. Their Honours pointed out that Lindgren J was a member of the Full Court in Brouwer (supra), in which one of the cases, Allstate (supra), was distinguished. The Full Court held that Allstate (supra) and Levis (supra), relating to the admissibility of evidence, are distinguishable from authorities on the present point, relating to the availability of appeal as of right. As the Full Court observed at 390:
“It is not difficult to find good reason for allowing relaxation of the hearsay rule in a narrower category of cases than that in which the right of appeal is truncated by a requirement for leave.”
We are of the opinion that, consistent with High Court and Federal Court authority, the orders made by Frederico J are interlocutory in nature and therefore leave to appeal is required.

LEAVE TO APPEAL - RELEVANT PRINCIPLES

The decision of Frederico J concerned a matter of practice and procedure. As the High Court said in Adam P Brown Male Fashions Pty Ltd v. Philip Morris Inc (1981) 148 CLR 170 at 176:
“The essence of such a matter is described in terms which are sufficient for present purposes in Salmond on Jurisprudence 10th ed. (1947), p. 476:
‘Substantive law is concerned with the ends which the administration of justice seeks; procedural law deals with the means and instruments by which those ends are to be attained. The latter regulates the conduct and relations of courts and litigants in respect of the litigation itself; the former determines their conduct and relations in respect of the matters litigated’.”
It is apparent from the applicant’s submissions in respect of the application for leave that they accept that the orders relate to a matter of practice and procedure. As their submissions state:
“The appeal raises significant issues of the practice and procedure to be undertaken by applicants in bringing applications under Order 20, Rule7 of the Family Law Rules.”
An applicant seeking leave to appeal from interlocutory orders must demonstrate that there has been an error of principle and/or a substantial injustice to one of the parties (Rutherford and Rutherford (1991) FLC 92-255) or that the issue is one of general importance: Aaron v Knowles (1995) FLC 92-627.
Counsel for each of the parties concede in their written submissions that it has not been conclusively decided whether the Rutherford (supra) requirements ought to be applied disjunctively or not. Counsel for the applicants submits that in any event, both criteria have been met, whereas counsel for the respondent argues that neither has been met.
Before further considering this aspect of the matter, it is useful in our view, to refer to the following passage from the judgment of the High Court (Gibbs CJ, Aickin, Wilson and Brennan JJ) in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (supra) at 177:
“Nor is there any serious dispute between the parties that appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure. Counsel for Brown urged that specific cumulative bars operate to guide appellate courts in the discharge of that task. Not only must there be error of principle, but the decision appealed from must work a substantial injustice to one of the parties. The opposing view is that such criteria are to be expressed disjunctively. Cases can be cited in support of both views: for example, on the one hand, Niemann v. Electronic Industries Ltd. [[1978] V.R. 431, at p 440]; on the other hand, De Mestre v. A.D. Hunter Pty. Ltd. [(1952) 77 W.N. (N.S.W.) 143, at p. 146]. For ourselves, we believe it to be unnecessary and indeed unwise to lay down rigid and exhaustive criteria. The circumstances of different cases are infinitely various. We would merely repeat, with approval, the oft-cited statement of Sir Frederick Jordan in In re the Will of F.B. Gilbert (dec.) [(1946) 46 S.R. (N.S.W.) 318, at p. 323]:
‘... I am of the opinion that, ... there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.’
See also, Brambles Holdings Ltd. v. Trade Practices Commission [(1979) 40 F.L.R. 364, at p. 365; 28 A.L.R. 191, at p. 193]; Dougherty v. Chandler [(1946) 46 S.R. (N.S.W.) 370, at p. 374]. It is safe to say that the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration.”

JUDGMENT OF FREDERICO J

The essential facts upon which his Honour proceeded were as follows:
(a) The husband is the sole beneficiary of the Stuart McLaren Trust No. 2.
(b)The trustees of the Stuart McLaren Trust No. 2 are B F McLaren, L E McLaren and F Carew.
(c)The Stuart McLaren Trust No. 2 owns half of the “B” class shares and one redeemable preference share in Bruce F McLaren Holdings Pty Ltd (which owns the buildings used by Jalna Dairy Foods Pty Ltd).
(d)Bruce F McLaren Holdings Pty Ltd also owns 77.7% of the shares in Artcam Enterprises Pty Ltd which is the trustee for the B F McLaren Family Trust.
(e)The B F McLaren Family Trust owns 99.9% of the shares in Jalna Dairy Foods Pty Ltd.
(f)The “B” class shares are, in effect, the only shares attached to the equity of the company and therefore the husband effectively owns half of the only shares that relate to the equity of those related entities.
Counsel for the applicants in both oral and written submissions, drew our attention to a number of findings of fact made by his Honour which counsel asserted were incorrect.
The errors are said to be that the Stuart McLaren Family Trust No. 2 in fact holds one redeemable second preference class share and that S F M Holdings Pty Ltd as Trustee for the Stuart McLaren Family Trust No. 2 holds 38 redeemable second preference class shares. Furthermore, it is asserted that the 40 “B” class shares represent 46.5% and not 50% of the capital of Bruce F McLaren Holdings Pty Ltd.
Even if those assertions are correct, the errors are of little consequence. It is the “B” class shares that are important. Article 2(c) of the Articles of Association provides that:
“The Class ‘B’ shares shall be numbered 101 - 1100 inclusive and shall confer or impose as the case may be on the holders thereof rights, privileges, restrictions and conditions as follows:
(i) No right to vote at any meeting of the Company.
(ii)Subject to the prior rights of the Redeemable First Preference Shareholders and the Redeemable Second Preference Shareholders to participate in the ordinary dividend (if any) declared in proportion to the number of Class ‘B’ Shares issued at the date of declaration of such dividend.
(iii)In the event of the winding-up of the Company to repayment of the capital paid up on such shares but subject to the rights of the holders of Preference shares as hereinafter set forth and pari passu with the holders of the Class “A” Shares.
(iv)In the event of the winding-up of the Company to participate in the surplus assets, if any.”
His Honour referred to J & J (1988) FLC 91-940 and the pre-requisites that an applicant must establish to obtain an order for the production of documents by a non-party.
His Honour then stated:
“Now I am not embarking on the final hearing of this matter, as I have already said. Whether the documents, if produced, are relevant to the issues, is a matter for the Judge conducting the final hearing to determine. My role as I see it is, having regard to the requirements of the Family Law Rules, to place the Court in a position of doing justice between the parties upon the final hearing.”
Frederico J went on to state:
“Although the wife’s accountant has stated that he wished to value dividend streams arising from the Jalna Group, no dividends are in fact payable. However, the entitlement of 40 “B” class shares could in certain circumstances be a considerable benefit to the husband. Notwithstanding that redeemable preference shares have priority and not knowing the circumstances of the company beyond what I have in broad terms stated, it might well be that a sale of the company could produce significant benefits to the husband.”
His Honour concluded:
“I must also have regard to the fact it is intrusive for the Court to make orders that persons who are not parties to proceedings should make such disclosure. On the other hand there is no suggestion that by making such an order I am intruding into the area of commercial in confidence or otherwise causing embarrassment to the other parties.
I have had some opportunity to consider the nexus between this application and the property proceedings between the parties. I have had an opportunity of considering the possible remoteness of the relief now sought to the actual disposition of the property proceedings. However, it appears to me on reflection that the appropriate course is that I should grant in substance the application which is now made. I must put the Judge who has the control and responsibility for the final hearing in a position of being able to do justice between the parties. I must put the parties in a position of knowing what it is that it is in issue. Whilst on the one hand the prospect of a significant financial benefit flowing to the husband from the corporate entities by which he is employed is a factor that must be brought into account, I am not in a position to determine the likelihood or otherwise thereof.”

GROUNDS OF APPEAL

The amended Notice of Appeal filed 28 February 2000, contains 36 grounds of appeal. In our view, it is not necessary for the purposes of this judgment to set out those grounds seriatim. It is preferable that we deal with the grounds, or such of them as have relevance, in a general way when determining the application for leave to appeal.
As we observed earlier in these reasons, for an application for leave to appeal to be successful, we must be satisfied that there has been an error of principle, and/or the applicant has suffered a substantial injustice or that the application raises a matter of general importance.
Error in principle
A number of the grounds of appeal assert that there was insufficient evidence before his Honour to satisfy one of the pre-requisites referred to in J and J (supra), namely that the documents sought relate to a matter in question in the proceedings and which the respondent could be required to produce at the hearing. In his written submissions, counsel for the applicants refers to the lack of a dividend stream and the shareholding of S F M Holdings Pty Ltd. A careful reading of his Honour’s reasons for judgment reveal that neither of these matters had any bearing on the conclusion his Honour reached.
In our view, the only evidence that his Honour needed to satisfy the pre-requisite was that:
(i)The husband was the sole beneficiary of the Stuart McLaren Family Trust No. 2.
(ii)The Stuart McLaren Family Trust No. 2 owned 40 “B” class shares in Bruce F McLaren Holdings Pty Ltd.
(iii)Bruce F McLaren Holdings Pty Ltd owned 77.7% of the shares in Artcam Enterprises Pty Ltd which was the Trustee for the B F McLaren Family Trust.
(iv)The B F McLaren Trust owned 99.9% of the shares in Jalna Dairy Foods Pty Ltd.
(v)The “B” class shareholders would participate in any surplus assets upon a winding up of Bruce F McLaren Holdings Pty Ltd or possibly a distribution of profit if the assets of that company were sold. That evidence is to be found in paragraph 13 of the affidavit of Mr Coombs, sworn 22 January 1999.

Counsel for the applicants, during the course of his oral submissions, conceded that there were at least two possible ways the husband could benefit, namely:
(a) upon a winding up of the company; or
(b) upon the sale of its assets.
In the applicant’s summary of argument in relation to the appeal, the essential issue was identified as being:
“(W)hether it was open to Justice Frederico to do other than accept the evidence brought by the Applicants that tho (sic) most to which the Husband is entitled is a ‘mere expectancy’ within the meaning of White’s case.”
This submission refers to the case of White and Tulloch v White (1995) FLC 92-640. That case dealt with an expectancy of an inheritance. The case stands for the following propositions:
(1)The primary emphasis in property proceedings is upon the property of the parties to those proceedings. An expectancy of an inheritance by one of those parties will not be relevant in many s 79 proceedings but it will depend upon the nature of the claims and the facts of the particular case.
(2)An expectancy is not a financial resource within s 75(2)(b). The only basis for its admissibility is within s 75(2)(o).
(3)Initial relevance in a particular case needs to be established and once established, it becomes a question of weight and degree.
As we understand the submission of counsel for the applicants, it is that the interest in the “B” class shares constitutes a mere expectancy and is not, therefore, either property or a financial resource. It was submitted that this is because they could not have any relevant value and that it was mere speculation to prescribe them a value based on what may or may not occur in the future.
In our view, that submission is misconceived. The 40 “B” class shares are neither an expectancy nor a financial resource. They are property. As the sole beneficiary of the Trust, the husband has the right to call for the Trust property to be vested in him as a consequence of the principle enunciated in Saunders v Vautier (1841) 4 Beav 115 which was cited with approval in Brown and Brown; Eley and Henty (Interveners) (1991) FLC 92-265 at 78,780.
We agree with the submission of counsel for the respondent, that the documents ordered to be produced are relevant to the issue of the value to be attributed to the husband’s rights as the sole beneficiary of the Stuart McLaren Trust No. 2.
The shares are property which may or may not have a speculative value. A determination of that issue will depend upon all of the evidence and is a matter properly left to the trial Judge. The husband has a non-contingent proprietary interest in the shares, the value of which must be taken into account in proceedings pursuant to Part VIII of the Family Law Act 1975.
In our view, the documents are clearly relevant for the purpose of valuing the 40 “B” class shares in the event of a winding up of the company or a sale of its assets. The likelihood of one of those happening is, in our opinion, a matter for consideration by the trial Judge. It has not been demonstrated to our satisfaction that his Honour erred in principle in making the orders against which the applicants/appellants have sought leave to appeal and appealed.
Substantial Injustice
In the applicants’ written submissions in support of the application for leave to appeal, it is contended that the applicants were required to produce for inspection documents which they considered to be private and confidential records. It was submitted that having to produce those documents is an unreasonable intrusion into their business affairs and if it is later found either by the wife on an inspection of the documents, or by the Judge hearing the property proceedings, that the documents are not relevant to the proceedings, the privacy of the documents will nevertheless have been lost.
It was further submitted that a subsequent order for costs in favour of the applicant companies against the wife would not be adequate compensation for the loss of privacy in relation to the documents and that this would amount to a substantial injustice to the applicants if the application for leave to appeal is not granted.
Any order requiring a third party to produce documents is potentially intrusive. Although the documents required to be produced in this case may be said to be private and confidential, there was no evidence before his Honour that they were commercially sensitive.
We accept that the rights of third parties to have their privacy maintained is a consideration to be taken into account when determining whether it is just to require the production of documents. However, that is only one of a number of factors to be taken into account.
His Honour clearly took this matter into account when he said:
“I must also have regard to the fact it is intrusive for the Court to make orders that persons who are not parties to proceedings should make such disclosure. On the other hand there is no suggestion that by making such an order I am intruding into the area of commercial in confidence or otherwise causing embarrassment to the other parties.”
In any event, the confidentiality of the documents ordered to be produced is protected by s 121 of the Family Law Act 1975. If the applicants were not satisfied with the protection afforded to them by that section, it was open to them to seek orders from the Judge to protect their privacy. Order 20, r8 of the Family Law Rules provides that an order for the production of documents may be ordered “subject to such conditions and restrictions as (the court) thinks it proper to impose”. We are not aware of any such application having been made to his Honour.
We are not persuaded that the orders made by his Honour resulted in a substantial injustice to the applicants, nor are we satisfied that if leave to appeal were refused that would, of itself, amount to an injustice. If, contrary to our view, the orders were final rather than interlocutory orders, we would dismiss the appeal. For the reasons already given, we do not consider that the appellant has established any error in the appellate sense in his Honour’s judgment. This is a further reason why, in our view, there is no substantial injustice in dismissing the leave application.
General Importance
In the applicants’ written submissions in support of the application for leave to appeal, it is submitted that the appeal raises significant issues of the practice and procedure to be undertaken by applicants bringing applications under O 20, r7 of the Family Law Rules. The application for leave to appeal relates to a matter of practice and procedure namely, the practice and procedures requiring the production of documents by non-parties. The relevant Rules, or similar provisions, have existed in various jurisdictions for a considerable period of time. We are of the opinion that no issue of general importance has been raised.
We are satisfied that in all the circumstances there was no error in principle, no injustice to the applicants and that there is no issue of general importance. Accordingly, we would dismiss the application for leave to appeal.
COSTS
At the conclusion of the argument, we heard submissions on costs. Counsel for the respondent submitted that if the appeal was unsuccessful the applicants ought to pay the respondent’s costs.
Counsel for the applicants submitted that if the appeal was unsuccessful this Court ought to reserve the costs of the appeal to the trial Judge or, in the alternative, each party ought to pay their own costs. It was not submitted that the applicants do not have the capacity to meet an order for costs.
As the applicants have been wholly unsuccessful in this application, they ought to pay the respondent’s costs.
ORDERS
The orders of the Court will be:
1.That the application for leave to appeal No. SA67L of 1999 be dismissed.
2.That Appeal No. SA66 of 1999 be dismissed.
3.That the applicants/appellants pay the respondent’s costs, to be taxed in default of agreement.

I certify that the preceding 59 paragraphs
are a true copy of the reasons
for judgment delivered by
this Honourable Full Court.

Associate

[2000] FamCA 675

31 May 2000