Galante and Galante and Ors (No 3)

[2019] FamCA 903

FAMILY COURT OF AUSTRALIA

GALANTE & GALANTE AND ORS (NO. 3) [2019] FamCA 903

FAMILY LAW – PRACTICE AND PROCEDURE – Subpoenas – Objections – Where the party issuing the subpoena seeks to tighten the scope of the documents sought – Where the subpoenaed parties object to production – Orders.

National Employers’ Mutual General Association Limited v Waind & Hill 1 [1978] NSWLR 372

APPLICANT: Ms Galante

1st RESPONDENT: Mr Galante

SUBPOENAED PARTIES: Mr B Galante, Mr D Galante and R Pty Ltd Accountants

FILE NUMBER: ADC 3454 of 2017

DATE DELIVERED: 29 November 2019

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 22 November 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Conduit

SOLICITOR FOR THE APPLICANT: Camena Legal

COUNSEL FOR THE 1ST RESPONDENT: Mr Livesey QC with Mr Jordan

SOLICITOR FOR THE 1ST RESPONDENT: Jordan & Fowler Family Lawyers

COUNSEL FOR THE SUBPOENAED PARTIES: Mr Rowley

SOLICITOR FOR THE SUBPOENAED PARTIES: Charlton Rowley-Legal

Orders

1. That within seven (7) days from the date of this order and pursuant to subpoenas (as amended) directed to Mr R of R Pty Ltd Accountants (“R Pty Ltd”), Mr D Galante and Mr B Galante dated 10 October 2019, the subpoenaed parties shall produce the following documents:-

   (a)       All bank statements or other documents that relate to the following:-

   (i)The payment of a sum of money in excess of FIVE HUNDRED THOUSAND DOLLARS ($500,000) whether by way of loan, capital contribution, gift or on the basis of any other arrangement, to the B Galante Family Trust (“BGFT”) for the financial year ended 30 June 2010; and

   (ii)The payment of any sum of money, whether by way of loan, gift or on the basis of any other term or arrangement, by Mr Galante, or for and on behalf of Mr Galante to Mr B Galante between 30 June 2001 and 30 June 2010;

   (iii)The payment of any sum of money, whether by way of loan, gift or on the basis of any other term or arrangement, by Mr Galante, or for and on behalf of Mr Galante to Mr D Galante between 30 June 2001 and 30 June 2010; and

   (iv)The payment of any sum of money, whether by way of loan, gift or on the basis of any other term or arrangement by Mr Galante or for and on behalf of Mr Galante to Mr B and Mr D Galante (jointly) between 30 June 2001 and 30 June 2010;

   (b)That Mr R and Mr B Galante do produce within seven (7) days the following documents:-

   (i)All documents that identify bank accounts held individually or jointly in the names of the B Galante Family Trust, or as trustee for the B Galante Family Trust, Mr Galante, Mr B Galante and/or Mr C Galante in their joint or several capacity as trustees for the B Galante Family Trust for the period 1 July 2016 to the current date.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Galante & Galante has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADC 3454 of 2017

Ms Galante

Applicant

And

Mr Galante

Respondent

And

Mr B Galante and Mr D Galante and R Pty Ltd Accountants
Subpoenaed Parties

REASONS FOR JUDGMENT

Introduction

1. The Amended Initiating Application filed by Ms Galante (“the wife”) on 30 August 2019 and the Amended Response filed by Mr Galante (“the husband”) on 14 October 2019 seeking orders for settlement of property are listed for final hearing in the week commencing 9 December 2019.

2. The wife contends that the husband has not made full and frank disclosure. The wife considers that the B Galante Family Trust (“the BGFT”) should be considered as the alter ego of the husband or in the alternative, that the husband holds an equitable interest in the trust property.

3. The wife acknowledges that the husband’s parents have made significant financial contribution to the BGFT. The Trust Deed identifies the husband’s father as the appointer of the trust.

4. Notwithstanding this observation, the wife is of the view that monies contributed by the husband’s parents may have been provided by the husband.

5. The wife sought to join the husband’s father and the husband’s brother to the proceedings in their capacity as co-trustees of the BGFT. The wife’s stated purpose in seeking joinder was to pursue discovery from them.

6. On 10 October 2019 the wife caused the issue of four separate subpoena seeking production of documents from the following subpoenaed parties:-

   a.Commonwealth Bank of Australia (“CBA”);’

   b.Mr R of R Pty Ltd Accountants (“R Pty Ltd”);

   c.Mr B Galante (“Mr B”); and

   d.Mr D Galante (“Mr D”).

7. The CBA have produced some of the documents set out in the schedule to the subpoena. I am uncertain whether more documents are to be provided or whether the wife is content with the documents that have been produced.

8. Whilst there was an initial objection to the inspection by the wife of documents produced by CBA, upon leave being given to the solicitor for R Pty Ltd, Mr B  and Mr D inspecting the documents on 22 November 2019, the objection was withdrawn.

9. Counsel for the wife relied upon a supplementary outline of argument and a proposed minute of order which seeks orders in the following terms:-

   a.Permission granted to the wife in accordance with FCR 15.32(b) to inspect and copy the documents produced by the Commonwealth Bank of Australia in compliance with the Subpoena for Production dated 10 October 2019; and

   b.Part E of the Subpoenas issued to Mr D Galante, Mr B Galante and Mr R (Subpoenaed Parties) dated 10 October 2019 (together ‘the Subpoenas’) be varied in accordance with “Annexure A” attached hereto; and

   c.The Subpoenaed Parties comply with the Subpoenas (as varied) within 7 days.

10. In relation to the subpoena to Mr R and by reference to the item number as appears in the schedule of documents sought in the subpoena, the wife has further refined the category of documents to the following:-

    5.        All bank statements or other documents which evidence:

    a.the payment of a sum of money in excess of $500,000 whether by way of loan, capital contribution, gift or on the basis of any other arrangement, to the B Galante Family Trust for the financial year ended 30 June 2010.; and

    b.the payment of any sum of money, whether by way of loan, gift or on the basis of any other terms or arrangement, by Mr Galante, or for or on behalf of Mr Galante, to Mr B Galante between 30 June 2001 and 30 June 2010;

    c.the payment of any sum of money, whether by way of loan, gift or on the basis of any other terms or arrangement, by Mr Galante, or for and on behalf of Mr Galante, to Mr D Galante between 30 June 2001 and 30 June 2010;

    d.the payment of any sum of money, whether by way of loan, gift or on the basis of any other terms or arrangement, by Mr Galante, or for or on behalf of Mr Galante, to Mr B Galante and Mr D Galante (jointly) between 30 June 2001 and 30 June 2010.

    …

    15.A List of all bank accounts held whether individually or jointly in the name/s of:-

    (i)the B Galante Family Trust, or as trustee for the B Galante Family Trust; and/or

    (ii)in any combination of: Mr Galante (or alternate Mr Galante), Mr B Galante and/or Mr C Galante (the “Trustees”), as trustee/s for the B Galante Family Trust;

    for a period 1 July 2016 to date identifying the name of the financial institution, account name and/or account number for each such account or any documents which identifying (sic) the name of the financial institution, account name and account number for each such account.

    16.All bank statements or other documents identifying the name of the financial institution, account name and account number for any and all bank accounts held (where known) whether individually or jointly in the name/s of any beneficiary (including specifically Mr B Galante, Mr D Galante and Mr C Galante) into which deposits, transfers and/or payments recorded as beneficiary drawings have been made by the B Galante Family Trust or received by the said beneficiary for the period 1 July 2016 to 30 June 2019.

11. The category of documents now sought in item 5 does not appear in the schedule of documents sought as attached to the subpoena to R Pty Ltd, however, it is likely that following further exchange between the solicitors for the parties, the wife concedes that the documents she seeks should be better defined. The wife argues that the documents have apparent relevance to the issues before the Court and therefore have a legitimate forensic purpose.

12. The wife considers that during the period of cohabitation the parties lived “frugally and without luxuries” and given that she now has knowledge of the husband’s substantial income prior to separation, believes there must have been surplus funds that have not been accounted for. She opines that the financial affairs of the husband and his parents, in particular his father in his capacity as appointor of the BGFT, have been intermingled.

13. The submissions on behalf of R Pty Ltd are to repeat the previous indication given to the wife that documents as sought in item 5 do not exist.

14. The wife seeks an order out of an abundance of caution.

15. Whilst I recognise that the category of documents now sought by the wife represents a substantial variation to item 5 in the schedule of documents attached to the subpoena to R Pty Ltd, nonetheless I propose to allow the amendment.

16. The wife has made it clear that she considers the contributions made by the husband’s parents to the BGFT may have been sourced from the husband. The category of documents now sought from R Pty Ltd are better defined and their production or an advice that they do not exist may have the benefit of concluding that aspect of the wife’s inquiries.

17. A similar consideration does not apply to items 15 and 16.

18. The R Pty Ltd objection is that the documents are not relevant to the relief sought by the wife. They have either been the subject of disclosure and/or have been the subject of explanation as to the transactions involved.

19. R Pty Ltd also contends that the documents are not sought for any legitimate or genuine purpose and therefore amount to an abuse of process.

20. R Pty Ltd contends that the subpoena is oppressive in that it expands the focus of the documents sought to any beneficiary including Mr B Galante, Mr D Galante and Mr C Galante but not limited to them.

21. The period of 1 July 2016 to 30 June 2019 is not of itself onerous, nor do I consider that the provision of documents which would identify the name of the financial institution, account name and account number for each account in respect of the BGFT, Mr Galante, Mr B Galante and/or Mr C Galante in their capacity as trustees for the BGFT for the period of 1 July 2016 to the present date to be unreasonable.

22. In relation to item 16, I am not satisfied that the wife has established apparent relevance in relation to documents identifying bank accounts in respect of any beneficiary (not necessarily limited to Mr B Galante, Mr D or Mr C Galante) in circumstances where the financial statements for the period 1 July 2016 to 30 June 2019 would set out the extent to which a trust distribution has been made to any beneficiary. Those financial statements have been produced.

23. I propose to require compliance with the subpoena by R Pty Ltd in relation to item 15 but limited to documents that may be available as opposed to a list of information sought.

24. Mr R is an accountant and it is reasonable that his costs of compliance should be paid by the wife.

Conclusion

1. In National Employers’ Mutual General Association Limited v Waind & Hill 1 [1978] NSWLR 372 at 381 Moffitt P recognised three distinct steps in the procedure for the production of documents and said:-

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

2. At 382 Moffitt P said:-

   The issue of a subpoena may involve an abuse of the power in other ways and, as stated in Small’s case[1] objection to production to the court may be on other grounds. Thus, it would be an improper use of the subpoena if it were not sought for the purpose of the litigation, but for some spurious purpose, such as to inspect the documents in connection with other proceedings, or for some private purpose, or in collusive proceedings to give them publicity. A witness might argue the documents must be sought for some undefined spurious reason, as they have no conceivable relationship to the proceedings. The court would jealously consider any of such submissions having regard to the invasion of the private rights of the stranger occasioned by the operation of the subpoena.

   [1]Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 574.

3. By reference to the wife’s proposed orders, she now seeks that Mr D Galante produce documents as specified in item 7 of Part E which repeats Item 5 in the R Pty Ltd subpoena.

4. It is likely that Mr D does not hold documents, but for completeness I propose to make the order as sought.

5. Similarly, I will make an order in terms of item 8 of Part E in relation to Mr B Galante which again repeats the obligation to produce documents (if any) as required of R Pty Ltd and Mr D Galante.

6. I do not propose to make an order in terms of item 12 of Part E in relation to Mr B Galante for the same reasons as discussed in respect of the similar category of documents sought from R Pty Ltd. The reference to “any beneficiary” is oppressive and is an investigation not underpinned by any apparent relevance to the issues to be determined between the parties.

7. I propose to make an order requiring Mr B Galante to produce documents in terms similar to R Pty Ltd.

8. I make orders as appear at the commencement of these reason.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 29 November 2019.

Associate:

Date: 29 November 2019