Grimmond & Hartin (No 2)
[2022] FedCFamC1F 361
Federal Circuit and Family Court of Australia
(DIVISION 1)
Grimmond & Hartin (No 2) [2022] FedCFamC1F 361
File number(s): DNC 234 of 2021 Judgment of: BERMAN J Date of judgment: 23 May 2022 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Subpoenas – Where the applicant caused subpoenas to be issued – Where the second and third respondents object to the subpoenas – Where it is argued that any apparent legitimate forensic purpose that existed at the time the subpoenas were issued has since been exhausted – Consideration of the relevance of the documents sought to be produced by subpoena – Where the documents are relevant and do not amount to a fishing expedition – Objections dismissed. Legislation: Family Law Act 1975 (Cth) s 78 Cases cited: Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98
Lucas Industries Ltd v Hewitt (1978) 18 ALR 555
National Employers’ Mutual General Association Ltd v Waind & Hill [1978] 1 NSWLR 372
Division: Division 1 First Instance Number of paragraphs: 39 Date of hearing: 28 April 2022 Place: Heard in Melbourne, delivered in Adelaide Counsel for the Applicant: Ms Giacomo Solicitor for the Applicant: Ward Kelly Lawyers Counsel for the First Respondent: Ms Dart Solicitor for the First Respondent: Cozens Johansen Lawyers Counsel for the Second and Third Respondents: Mr Casey Solicitor for the Second and Third Respondents: Withnalls Lawyers ORDERS
DNC 234 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS GRIMMOND
Applicant
AND: MR HARTIN
First Respondent
MR X HARTIN
Second Respondent
B PTY LTD ACN …
Third Respondent
order made by:
BERMAN J
DATE OF ORDER:
23 may 2022
THE COURT ORDERS THAT:
1.The notices of objection filed 24 January 2022 to the production of documents pursuant to subpoena’s to O Corporation and N Bank issued on 13 January 2022 be dismissed.
2.All parties have leave to inspect and copy documents produced by O Corporation and N Bank pursuant to the subpoena’s issued on 13 January 2022.
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 Grimmond & Hartin has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BERMAN J
INTRODUCTION
Ms Grimmond and Mr Hartin are the applicant and the first respondent respectively to property settlement proceedings commenced by Initiating Application filed on 21 May 2021.
The applicant and the first respondent are directors and equal shareholders of a business known as C Pty Ltd (“CPL”).
Mr X Hartin (“the second respondent”) is the adult son of the parties. Prior to their separation on 15 June 2020 and into 2021 he was an employee of CPL.
On 22 May 2020, the first and second respondents incorporated B Pty Ltd (“BPL”). The applicant contends that BPL was set up by the first and second respondents to be in direct competition to CPL.
The applicant’s assertion was denied by the first respondent and he was subsequently removed as a director and shareholder of BPL in February/early March 2021.
The applicant says that the second respondent was either assisted by the first respondent to compete for work by utilising client information and intellectual property of CPL or in the alternative that the second respondent accessed such information directly.
By Further Amended Initiating Application filed 5 April 2022, the applicant seeks the following further additional orders:
1.That pursuant to section 78 of the Family Law Act the right title and interest in [B Pty Ltd] (ACN […]) be declared to be held in equal shares by the Applicant and First Respondent.
2.That within 28 days of the date of these Orders, the parties shall sign all documents and do all acts and things necessary to transfer the Applicant’s interest in [B Pty Ltd] (ACN […]) to the First Respondent.
(As per the original)
The applicant does not wish to retain any interest in CPL. The first respondent initially sought to retain CPL but now does not seek to do so.
The proceedings have been listed for final hearing in the fortnight commencing 22 August 2022.
As part of the applicant’s trial preparation she caused subpoenas to be issued on 13 January 2022 to O Corporation and N Bank seeking a wide range of documents in relation to the following:
·Mr Hartin;
·Mr X Hartin
·C Pty Ltd; and
·B Pty Ltd.
There is no objection by the subpoenaed parties to the production of documents sought but by notices of objection filed 24 January 2022, the second and third respondents object to the production of documents to the Court.
objections to subpoenas
The first respondent does not object and did not wish to be heard. The second and third respondents object to each of the subpoenas for the following reasons:
1. The Subpoena issued is not relevant to an issue in proceedings;
2. The Subpoena amounts to a “fishing” expedition;
3. The Subpoena amounts to an abuse of process;
4. The Subpoena does not possess a legitimate forensic purpose;
5. The material has not been requested by way of discovery.[1]
(As per the original)
[1] Notices of objection filed 24 January 2022, page 2.
The second respondent infers that the subpoena to N Bank is sought to identify any potential financial assistance provided by the first respondent to the second or third respondents.
The second respondent contends that he has provided a comprehensive response to the broad contention of the applicant in his affidavit filed 4 April 2022. Moreover, he has provided a letter that he obtained from N Bank outlining his own personal involvement together with that of BPL with N Bank.
The gravamen of the second and third respondents’ objections are to be found at paragraphs 29 and 34 of counsel’s written submissions, dated 28 April 2022, as follows:
29.It is my submission that any apparent legitimate forensic purpose that may have existed when the subpoena was issued, has since been exhausted due to the evidence contained in the second respondent’s affidavit material, as mentioned above;
…
34.The applicant was provided with a schedule of documents and emails which were produced under subpoena. At paragraph 22 of her affidavit, the applicant states there is significant correspondence between the second respondent and [O Corporation] leading up to his resignation, and continuing after the second respondent commenced at [BPL].
The submission in support of the objection to the subpoena to O Corporation is conveniently summarised at paragraph 36 of counsel’s written submissions.
The objection to the N Bank subpoena material is primarily that the documents are not relevant to the proceedings.
The applicant contends that each subpoena was issued for a legitimate purpose and that the material produced is likely to aid the applicant’s case preparation and is reasonably likely to be relevant.
To the extent that it is necessary to do so, the applicant provides the basis for the issue of subpoenas to O Corporation and N Bank at paragraphs 14 to 36 in her affidavit filed 29 March 2022. The applicant states that O Corporation have been a significant customer of CPL for the 2018 to 2020 financial years. The total quantum of sales is substantial.
CPL were also a member of the O Corporation suppliers’ panel, providing contractual works to remote clients.
On 29 June 2021, O Corporation sought confirmation from the first respondent that CPL would be able to fulfil its contract with O Corporation in the short-term. The applicant contends that an email sent by the first respondent to O Corporation included the following remark:
“I forgot to add, [Ms Grimmond] reads all my emails”[2]
(Emphasis in original)
[2] Affidavit of the applicant filed 29 March 2022, paragraph 16.
It appears that CPL has not received any request from O Corporation for new work and the contention of the applicant is that the first and second respondents may have encouraged O Corporation to transfer their business from CPL to BPL.
The applicant complains that a number of documents which might assist in determining whether her contention is correct have not been included in the schedule of documents as provided by O Corporation, which indicates the documents produced to the Court pursuant to the subpoena. The applicant has considered the schedule and submits that there are documents that should be in existence, namely a contract between BPL and O Corporation which she considers has not been disclosed by the second and third respondents.
The focus of documents sought under subpoena to N Bank are documents as and from 1 January 2020 which might deal with a meeting that occurred on 14 July 2021, arranged by the first respondent with the purpose of introducing the second respondent to CPL’s N Bank’s bank manager.
On 8 February 2022 and 23 March 2022, the applicant was advised by N Bank that documents have been produced to the Court.
legal principles
In Lucas Industries Ltd v Hewitt (1978) 18 ALR 555 at 570, Smithers J considered the use of a subpoena and its abuse as follows:
The purpose of the process of subpoena is to facilitate the proper administration of justice between the 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 order to obtain information from a non-party, the requesting party is only entitled to obtain a specified document or class of documents relevant to an issue in the proceedings.
In National Employers’ Mutual General Association Ltd v Waind & Hill [1978] 1 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.
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 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 relation 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.
(Footnotes omitted)
In Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98 at 100, Powell J set out a number of examples in which a court should exercise its jurisdiction to set aside a subpoena. Those examples included where the purpose of the subpoena was to obtain discovery against a third party, where to produce documents would be oppressive or where the subpoena is for a fishing exercise.
Lack of relevance is also a ground for setting aside a subpoena.
Given the orders sought by the applicant and the matters raised in her affidavit filed 29 March 2022, I consider that the test of relevance has been satisfied. The focus of the proceedings is to determine the extent to which the applicant’s assertion of collusion between the first and second respondents is made out and if so, to what extent the value of CPL may have been diminished.
The further contention is that the conduct of the first respondent supports the declaration sought by the applicant pursuant to s 78 of the Act in that either BPL is effectively the alter ego of the first respondent and to the extent that it has value, should be included in the balance sheet of assets relevant to the proceedings or that there should be an addback on the basis that the actions of the first respondent have caused a significant wasting and diminution of the value of CPL.
The documents by both N Bank and O Corporation have been produced without objection.
The Court is not able to determine whether the documents held by O Corporation and N Bank are also held by the second and/or third respondents and therefore discoverable. At the very least, the applicant’s contention is that in relation to each of the subpoenas, the documents that the applicant understands have been produced are not comprehensive.
I am satisfied that the documents sought pursuant to the subpoenas to O Corporation and N Bank are relevant to an issue in the proceedings and do not amount to a fishing expedition.
I do not consider that the subpoenas amount to an abuse of process given that there is some uncertainty as to whether the documents held by the subpoenaed parties are either not held by the second and third respondents or are not able to be requested by them.
For these reasons, I dismiss the objections by the second and third respondents to the subpoenas and will order that all parties have leave to inspect and copy the documents produced.
I make orders as appear at the commencement of these reasons.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Berman. Associate:
Dated: 23 May 2022
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