HACKETT & YORK

[2020] FamCA 848

FAMILY COURT OF AUSTRALIA

HACKETT & YORK [2020] FamCA 848

FAMILY LAW – PRACTICE AND PROCEDURE – Review of Registrar decision – Subpoena objection – Where the husband seeks that an objection to a subpoena to a third party corporation be dismissed – Where the documents sought are not relevant to the matter as it currently stands in relation to the husband’s substantive application – Where the Court already has an indication of the value of the assets in question – Whether legal professional privilege in respect of the subpoenaed material arises – Review dismissed – Objection upheld.

Commissioner for Railways & Small [1938] 38 SR (NSW) 564
Degraff & Degraff [1991] FLC 92-224
Esso Australia Resources Limited & Federal Commissioner of Taxation [1999] 201 CLR 49

APPLICANT: Mr Hackett

FIRST RESPONDENT: Ms York

SECOND RESPONDENT: Ms Tate

FILE NUMBER: SYC 3560 of 2018

DATE DELIVERED: 3 July 2020

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Henderson J

HEARING DATE: 19 June 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Lloyd SC of Counsel

SOLICITOR FOR THE APPLICANT: B Hayward & Co Lawyers

COUNSEL FOR THE FIRST RESPONDENT: Ms Kennedy of Counsel

SOLICITOR FOR THE FIRST

RESPONDENT

Horton Rhodes Legal

COUNSEL FOR THE SECOND RESPONDENT AND SUBPOENAED PARTY Ms Reid of Counsel

SOLICITOR FOR THE SECOND RESPONDENT AND SUBPOEANAED PARTY Barry Nilsson Lawyers

Orders

1. The husband’s Application for Review filed 21 May 2020 is dismissed.

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 Hackett & York 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 SYDNEY

FILE NUMBER: SYC 3560 of 2018

Mr Hackett

Applicant

And

Ms York

First Respondent

And

Ms Tate

Second Respondent

REASONS FOR JUDGMENT

1. This matter of Hackett & York was a review of a registrar’s decision to dismiss a subpoena addressed to B Pty Ltd which order was made on 8 May 2020. The subpoena was issued to this company by the applicant de facto husband - and I will refer to him as the husband for ease throughout the judgment – as part, he says, of the information he requires to bring an application pursuant to section 106B of the Family Law Act1975 (Cth) to set aside a transaction by his former de facto wife – and I will refer to her as the wife. Such applications are conducted - that is, this review - as a hearing de novo.

2. I have read all the documents that were before the learned registrar. Mr Lloyd of senior counsel represented the de facto husband, and Ms Kennedy the wife, and Ms Reid appeared for B Pty Ltd and the newly joined second respondent, Ms Tate, the de facto wife’s mother.

3. Both Ms Kennedy and Ms Reid’s position was similar to the Registrar’s, namely, that her decision be upheld. The substantive application before the Court is the husband’s application for property settlement which comprises an application pursuant to section 106B to set aside the aforementioned transaction. The wife admitted she had carried out this transaction on 2 August 2017, a date after separation and prior to proceedings commencing in 2018.

4. The transaction was the transfer by her of 200 ordinary shares in C Pty Ltd which company forms part of the H Group of which B Pty Ltd forms a part as well. The shares were transferred to the wife’s mother who has only since 5 June 2020 been a party to these proceedings. 

5. The husband pleads that at the time of the transfer Mr J of K Accountants assessed the value of the shares transferred by the wife at $900,000 in his indicative valuation of 1 November 2017 and that valuation is attached to the husband’s submissions. The husband does not necessarily accept or adopt his value. 

6. The material I read was as follows:

   a)The husband’s submissions dated 29 April 2020;

   b)Further submissions of 5 June 2020;

   c)Pleadings filed by the applicant husband setting out his case in relation to the 106B application;

   d)Wife’s submissions filed 4 May 2020;

   e)Letters from her lawyers to the husband’s lawyers dated 19 June 2020;

   f)The second respondent’s affidavit of 21 April 2020; and

   g)Submissions for B Pty Ltd adopted by the second respondent.

7. As I see it there are two categories of objections broadly speaking. The first category relates to a claim by the second respondent and B Pty Ltd of legal professional privilege. Some 86 documents were subpoenaed and have been brought to the registry. Of those 86 documents legal professional privilege is claimed in respect of 27. The remainder of the objection is that the documents sought are not relevant to the application, that the breadth and width of the subpoena amounts to effectively a fishing expedition by the husband who is seeking to make out his claim, resulting in that the Court in the exercise of its power to control its proceedings should set the subpoena aside as an abuse of process. These principles are well understood and Commissioner for Railways & Small [1938] 38 SR (NSW) 564 is still good law.

8. The documents to which the claim of legal professional privilege is sought is set out in paragraph 7 being copies of correspondence relating to any prospective sale of N Street, Suburb M, New South Wales, also known as folio identifier … . The subpoena seeks the following 8 categories of documents:

   a)Copies of the financial reports for B Pty Ltd for the financial years ending 2015, 2016, 2017 and 2018;

   b)Copies of the final tax returns for B Pty Ltd the financial years ending 2015, 2016, 2017 and 2018;

   c)Copies of the detailed general ledgers for B Pty Ltd the financial year ending 2017 and 2018;

   d)Copies of general journals and associated work papers for B Pty Ltd the financial year ending 2017 and 2018;

   e)Copies of any contracts of sale for property N Street Suburb M New South Wales also known as folio identifier ...;

   f)Copies of the signed contract for sale for when B Pty Ltd purchased N Street Suburb M New South Wales also known as folio identifier ...;

   g)Copies of correspondence relating to any prospective sale of N Street Suburb M New South Wales also known as folio identifier ...;

   h)Copies of any valuation conducted of property N Street Suburb M New South Wales also known as folio identifier ....

9. It is difficult for me to see the relevance of the documents sought in the subpoena to the husband’s application for 106B orders given the husband knows the wife transferred a number of shares and what the wife asserts was the value of those shares was at the time of transfer. Even if the husband disputes the value of shares at the time of transfer and currently their value, to subpoena documents from an entity not party to the proceedings to produce tax returns, ledgers, contracts for sale and purchase, financial reports for the last four years would not assist him, as I see it, to satisfy the Court that the wife’s transaction ought be set aside.

10. The precise value of the assets transferred does not per se bear directly upon a 106B argument, particularly when as here there is an indicative valuation of the assets transferred, even if that be disputed as to value.  The Court does have an indication of the value of the assets transferred and, as I see it, that would be sufficient if required by the Court in running a 106B application. 

11. I accept, ultimately, if the husband is successful in his 106B application, the Court may require it to be provided with a valuation of the shares at that time as well as their value at the time they were transferred in order to effect a just and equitable adjustment of the parties’ property. If that be the case, and in the absence of agreements, those values will be ascertained by a valuation prepared by an expert in this area. 

12. I accept this expert may require additional information to that which has been provided by the wife and is to be provided by the second respondent, and if upon request that information is not forthcoming, subpoena to obtain that information may need to be issued to entities such as B Pty Ltd; however, that is not the stage the matter is at currently. Given that the second respondent has now joined the proceedings, she too must provide disclosure pursuant to the rules. 

13. Once that disclosure is provided, it will be a matter for the husband to ask further particulars or details of documents disclosed, if he chose to do so. If that disclosure proves unsatisfactory, or is not fulsome or forthcoming, this may support an argument by the husband to issue subpoena to entities such as B Pty Ltd. The matter has not reached this stage at this time, either. 

14. I share the concern of the wife, second respondent and B Pty Ltd that the documents sought bear no relevance to the husband’s claim at this time, raises spectre of a fishing expedition and that as the law is that the issue of a subpoena should not be for the purposes of discovery - and support for that proposition is Degraff & Degraff [1991] FLC 92-224 - the subpoena should be set aside.

15. It was argued that the provisions of section 122(3) and 118 of the Evidence Act1995 (Cth) apply to the documents sought under the subpoena. However, as Ms Reid for the second respondent and B Pty Ltd pointed out, these two provisions of the Evidence Act only apply to the adducing of evidence and do not assist the husband’s argument as no evidence is being adduced. For these reasons, I agree with the learned registrar’s decision to set the subpoena aside and that decision is upheld.

16. I will deal separately, however, with the claim of legal professional privilege in respect of the documents sought at paragraph 7 for completeness in this review.  It is, prima facie, clear to me that the documents sought in paragraph 7 are privileged if for no other reason than that the husband asserted that any claim for privilege had been waived by B Pty Ltd.  However, I reject an argument that the documents are not privileged or that the privilege attached has been waived. 

17. Going to the submission of the second respondent and on behalf of B Pty Ltd, the test for the claim of legal professional privilege is one at common law, given that sections 118 and 122(3) of the Evidence Act1995 (Cth) do not apply as the documents are not being adduced into evidence. The common-law test is as set out in Esso Australia Resources Limited & Federal Commissioner of Taxation [1999] 201 CLR 49, namely, whether the communication was made or the document was prepared for the dominant purpose of giving or receiving legal advice or the provision of legal services.

18. The key elements of the test are:

    a)There is a communication;

    b)The communication is confidential;

    c)There is a professional relationship of lawyer and client giving or receiving legal advice a provision of legal services; and

    d)The dominant purpose of the documents.

19. The documents sought in paragraph 7 of the subpoena ask for copies of correspondence relating to a prospective sale of a property forming part of the H Group, the property at N Street.

20. As set out in Ms Tate’s affidavit, discussions, communications and emails between she and others in relation to this sale deal with the potential sale of the property, and the emails are almost exclusively between members of the Tate family and W Lawyers and relate to this purpose, namely, a prospective sale of the property at N Street, Suburb M. 

21. I am satisfied the communication in relation to this prospective sale was between Ms D Tate, Mr G Tate and Ms Tate, who is now the second respondent to the proceedings and a director of B Pty Ltd as well.  In these circumstances, it would go without saying that emails from W Lawyers to her would ordinarily attract legal professional privilege.  Additionally, Mr G Tate is a director and secretary of the company, and Ms D Tate is a director and shareholder of other entities in the H Group and they receive a salary from the group.

22. It cannot be other than that the entities in the group, including B Pty Ltd, have a common interest privilege, namely, the obtaining of legal advice in dealing with the assets of the group which include the property at N Street, Suburb M, and its, perhaps, sale.  As such, confidentiality extends to members of the group and does not require those claiming privilege to be directors of B Pty Ltd only.

23. Such confidentiality would extend to others involved in a prospective sale, namely, financial controllers such as Mr F Tate and Mr L.

24. The emails and communications relating to the prospective sale of a property between these parties, each other and W Lawyers are part of the joint, common and dominant purpose of the legal advice namely the selling of an asset which forms part of an asset within a group, the sale of which may affect other members of the group.

25. Ms Tate sets out in the schedule to her affidavit at exhibit T3 the documents to which B Pty Ltd claims privilege, as does she, and it is clear to me from a reading of that material that the documents came into existence solely for the purpose of obtaining legal advice in relation to the prospective sale of a property. 

26. I reject the submission of Mr Lloyd that because Ms Tate has in the schedule clearly identified the documents to which she claims privilege that this in some way this is a disclosure by her of the substance of the evidence of the documents and therefore privilege has been waived. The schedule merely clearly identifies the documents for which privilege has been claimed. 

27. Having read the schedule, I do not have any idea of the substance of the evidence of the documents, rather a descriptor of what they are and what they may relate to. The description of the documents was necessary and proper to allow the Court to identify the documents for which privilege is claimed and why. In these circumstances I reject the submission that B Pty Ltd has disclosed the substance of the evidence in the documents for which privilege is claimed. 

28. I have no need to inspect the documents to determine this issue, although I have a right or a capacity to do so, as I accept the submission of B Pty Ltd, supported by the second respondent from the affidavit filed by her, that legal professional privilege attaches to these 27 documents, and accordingly they are to be returned to the entity who provided them. As the decision of Registrar Hayward has been upheld and the review dismissed, all documents produced must now be returned as in setting aside the subpoena there is now no right or basis to retain the documents of a corporation that is not a party to the proceedings.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Henderson delivered on 3 July 2020.

Associate: 

Date:  6 October 2020