Garnier & Garnier

[2021] FedCFamC1F 186

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Garnier & Garnier [2021] FedCFamC1F 186

File number(s):

SYC 8916 of 2020

Judgment of:

ALDRIDGE J

Date of judgment:

11 November 2021

Catchwords:

FAMILY LAW – PRACTICE AND PROCEDURE – Subpoena objection – Review of a decision which upheld the objection – Subpoena sought the production of a will and all previously executed wills – Relevant to proceedings – Objection dismissed.

Cases cited:

Hatton v Attorney-General of Commonwealth of Australia & Ors (2000) FLC 93-038; [2000] FamCA 892

ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307

National Employers’ Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372

Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145

White and Tulloch v White (1995) FLC 92-640; [1995] FamCA 127

Division:

Division 1 First Instance

Number of paragraphs:

20

Date of hearing:

26 October 2021

Place:

Sydney (via video link)

Counsel for the Applicant:

Mr Richardson SC

Solicitor for the Applicant:

York Law

Solicitor for the First Respondent:

Barkus Doolan Family Lawyers

Counsel for the Second Respondent:

Mr Klineberg

Solicitor for the Second Respondent:

Pearson Emerson Family Lawyers

ORDERS

SYC 8916 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS GARNIER

Applicant

AND:

MR GARNIER

First Respondent

MS C GARNIER

Second Respondent

ORDER MADE BY:	ALDRIDGE J
DATE OF ORDER:	11 NOVEMBER 2021

THE COURT ORDERS THAT:

1.The objection to the production of the document described in paragraph 2 of the subpoena filed on 11 March 2021 addressed to Ms C Garnier is dismissed.

2.The proceedings are listed for directions on Wednesday, 1 December 2021 at 10 am.

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 Garnier & Garnier has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

ALDRIDGE J:

1. This is a review of decision of a registrar made on 19 July 2021, striking out paragraph 2 of a subpoena issued to Ms C Garnier. That part of the subpoena sought the production of Ms C Garnier’s last will and testament and all wills previously executed by her since 1 January 1996.

2. The subpoena was issued in property settlement proceedings between Ms Garnier (“the wife”) and Mr Garnier (“the husband”). According to the wife’s evidence, they commenced a relationship in 1993, married in 2000 and separated in December 2019. They have had four children.

3. Throughout the marriage the husband played professional sport and on his retirement in approximately 2006, he started working for B Pty Ltd (“B Pty Ltd”). That company then had 20 shares which were owned by the husband’s parents, the husband and his sisters. It is not disputed that B Pty Ltd has significant assets, including six freehold properties, most of which were acquired after 2006. It is the wife’s case that the husband has had the effective control of B Pty Ltd since 2006.

4. In 2009, the shareholding of B Pty Ltd was restructured so that the husband’s father, Mr E Garnier, and his mother, Ms C Garnier (the person to whom the subpoena in question was issued) each owned 35 ordinary shares and their three children, the husband and his two sisters, each held 10 ordinary shares.

5. In very short summary, the wife’s case is that there is or was a family arrangement pursuant to which, on the death of his parents, the husband would receive his parent’s shares in B Pty Ltd giving him a controlling shareholding in the company. The wife’s case is disputed by the husband and by Ms C Garnier.

6. In the well-known decision of National Employers’ Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372, Moffitt P said at 384:

   It is true that, in the exercise of the power in relation to the subpoena, the invasion of the rights of a third party have been jealously guarded. It is accepted that the documents should not go beyond the judge against objection of the owner, unless there is valid reason to do so. It is clear that it can only be legitimate to do so, so far as it is necessary in the proper conduct of the litigation. It is difficult to see why to do that which is “requisite for the purpose of justice” should be restricted by some arbitrary limit. Of course, the concept of what is requisite for the purpose of justice, and how the compromise between the requirements of justice between litigants and the rights of a stranger should be met, may change and, indeed, be different now from the concepts of last century, just as concepts as to what is appropriate between parties has changed in favour of fuller disclosure of relevant matters.

   …

   So far as factual matters are concerned, the proper conduct of the litigation can only be that which fairly leads to the introduction of all such evidence as is material to the issues to be tried, and the testing of that evidence by the accepted procedures of the court. The only legitimate purpose of requiring the production, and permitting the inspection, of a stranger’s documents can be to add, in the end, to the relevant evidence in the case.

7. In another equally well-known decision, Hatton v Attorney-General of Commonwealth of Australia & Ors (2000) FLC 93-038 at 87,606, the Full Court said that “the present state of authority is such that lack of apparent relevance will be a sufficient ground in itself to set aside a subpoena”.

8. In Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145, Bell P said that a subpoena would have a legitimate forensic purpose if the documents sought are “‘apparently relevant’ or, to use the words of Nicholas J in ICAP at first instance, it can be seen that the documents sought to be produced by way of subpoena will materially assist on an identified issue or there is a reasonable basis beyond speculation that it is likely the documents subpoenaed will so assist” (at [65]) (Emphasis in original). In the same case, Brereton JA said:

   89.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 a cross-examination, or go to credit, and not withstanding that they are inadmissible according to the rules of evidence.

   (Footnotes omitted)

9. Both parties referred to White and Tulloch v White (1995) FLC 92-640, which deals specifically with the production of a will, but as the Court said there, the relevance of the issue of inheritance is ultimately a question of fact and degree (at 82,464).

10. The wife relies on three documents to suggest that her claim, that there is a family arrangement of the kind alleged, goes beyond mere speculation.

11. In order to purchase a family home for the husband and wife in 2018, some $7 million was borrowed from the D Bank. In order to assist in the borrowing of that sum, a Deed of Acknowledgment and Rectification was signed by the husband and each of his parents. The document contained the following handwritten notation:

    “Mr Garnier owns 10% shareholding of B Pty Limited (the Company). However the age and remote living arrangements of Mr E Garnier and Ms C Garnier, being 70% shareholders of the company, in effect means that Mr Garnier controls the company. This is reaffirmed by the fact that Mr Garnier will receive the 70% shareholding of Mr E Garnier and Ms C Garnier on their passing, solidifying his control of the company. Mr Garner has lately driven the business and the investment strategy of the company since the acquisition of Property F in June 2010. All family expenses and living costs for Mr Garnier are paid out of the company profits. The property at G Street, Suburb H NSW […] will provide a location for formal director and shareholder meetings of the company as well as supplier and associate functions. The rental payment in relation to the 60% ownership of J Trust in G Street Suburb H as supported by the formal lease agreement will be honoured by the company”.

    (Wife’s Case Outline filed on 25 October 2021, p.3)

    Those handwritten comments appear to be initialled by the husband and each of his parents and the document is signed by them immediately under the handwritten notation. There is therefore some basis for asserting that the paternal grandparents affirmed that note.

12. The husband’s father, Mr E Garnier, died in 2020. His will is somewhat complex. Pursuant to the will, the late Mr E Garnier divided his residue of his estate into seven components. Component 1 was all the right, title and interest he held in relation to the business enterprise B Pty Ltd. If Ms C Garnier was to survive him by 30 days, which she has, the executor was directed to set up a discretionary trust fund (“K Trust”), which was to consist, amongst other assets, of 100% of Component 1; that is all of the assets Mr E Garnier held in B Pty Ltd. The beneficiaries of K Trust were expressed to be his wife, Ms C Garnier, their children and spouses, grandchildren and spouses and future generations. The trustee and appointer was Ms C Garnier. K Trust was to vest on the death of Ms C Garnier or on such earlier date as she determined. On that vesting, the assets of K Trust were to be distributed between L Trust, M Trust and N Trust. The effect was that any remaining balance from Component 1 went to L Trust.

13. L Trust was to arise on the vesting of K Trust. L Trust was to consist of 70 shares in Component 1, that being B Pty Ltd. This is either an error because Mr E Garnier held only 35 shares, or refers to both the testator’s shares and those of Ms C Garnier which he, apparently assumed, would be left by her for the benefit of L Trust.

14. The beneficiary of L Trust is the husband, his spouse, children, grandchildren and associated companies as well as the husband’s two sisters and their children. The trustee and appointer of L Trust is to be the husband. Thus, in due course, if, and the “if” is not inconsequential, any assets of B Pty Ltd remained in K Trust, they would come under the control of the husband, giving him 80% of the shares in B Pty Ltd. In other words, he could control the company as he saw fit.

15. That assumes that the shares in B Pty Ltd were not disposed of by Ms C Garnier prior to the vesting date.

16. Finally, the wife relies on a Shareholders Agreement entered into on 12 June 2009. In that agreement, the husband’s two sisters agreed that if they intended to dispose of their shares, they must first offer their shares to the husband at a price agreed between them or as provided for by the Shareholders Agreement. Once the price is agreed, the husband is entitled to pay the purchase price over a period of 10 years (with the instalments to be determined by him).

17. These are obviously not the entirety of the documents that will come before the Court at a final hearing but they are sufficient to show that the husband has been treated in a different manner to the other shareholders of B Pty Ltd and in a way that could see him ending up in control of the company.

18. A disposition of Ms C Garnier’s shares in the company by her will has apparent relevance to the issues raised by the wife in the sense that the word is used in the authorities above and as explained by Bell P and Brereton JA, because of the arrangement asserted by the wife and as recorded in the Deed of Acknowledgment and Rectification. The will of Mr E Garnier and the Shareholders Agreement are, at least, not inconsistent with that arrangement.

19. I accept, of course, that there is no reason to doubt that Ms C Garnier retains testamentary capacity and that she is free to alter her will at any time. That does not mean that wills that have been created in the past, or that currently exist, have no relevance at all to the proceedings because they may shed light in one way or another on the wife’s contentions.

20. The objection to paragraph 2 of the subpoena is therefore dismissed.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Aldridge.

Associate:

Dated:       11 November 2021