Inch & Inch - [2007] FamCA 508

FAMILY COURT OF AUSTRALIA

INCH & INCH

[2007] FamCA 508

FAMILY LAW - PRACTICE AND PROCEDURE – Application by husband to strike out two subpoenas addressed to his bankers and accountants, on the basis of relevance and oppression, in that the documents sought were not described with particularity – Application misconceived and dismissed – General discussion on purpose and relevance.

Family Law Act 1975 (as amended)

Clauson v Clauson (1995) FLC 92‑595;
Ferraro v Ferraro (1983) FLC 92‑335;
JEL v DDF (2001) FLC 93‑075;
Hatton v Attorney General of the Commonwealth of Australia and Commonwealth Development Bank of Australia (2000) FLC 93‑038;
A & A and Ors [2005] FamCA 561;
Relationships Australia v Pasternak (1996) FLC 92‑699;
National Employers Mutual General Insurance Association Ltd v Waind (1978) 1 NSWLR 372 at 381-2;
Trade Practice Commission v TNT Management Pty Ltd (No.1) (1981) 55 FLR 197 at 208

APPLICANT:

Mrs Inch

RESPONDENT:

Mr Inch

FILE NUMBER:

MLF

4911

2003

DATE DELIVERED:

14 May 2007

PLACE DELIVERED:

Melbourne

JUDGMENT OF:

Guest J

HEARING DATE:

14 May 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr North SC with Ms Johns

SOLICITOR FOR THE APPLICANT:

Clancy & Triado

COUNSEL FOR THE FIRST, THIRD, FIFTH AND SIXTH NAMED RESPONDENTS:

Mr Dickson

SOLICITOR FOR THE FIRST, THIRD, FIFTH AND SIXTH NAMED RESPONDENTS:

Marshalls & Dent

Orders

That all documents produced pursuant to the Form 14 subpoenae filed on 30 October 2006 and directed to L & Co., Accountants and the Westpac Banking Corporation (of which there are two) be released to and made available for inspection by the wife and her professional advisors AND THAT leave be granted for them to take copies of such documents as may be advised.
That the oral application of the husband made 21 February 2007 be dismissed.
That all costs of the said application be reserved.

(4) That pursuant to rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of Counsel including Senior Counsel.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 4911 of 2003

Mrs Inch

Applicant

And

Mr Inch

Respondent

And

I Pty Ltd
(Secondnamed Respondent)

And

C Pty Ltd
(Third Respondent)

And

Mr M (in his capacity as Guardian/Trustee of the Z Settlement
(Fourth Respondent)

And

Z Pty Ltd
(Fifth Respondent)

And

P Pty Ltd
(Sixth Respondent)

REASONS FOR JUDGMENT

When these proceedings were before me on 21 February 2007, application was made by Mr Dickson of counsel who appeared on behalf of the respondent husband and the third, fifth and sixth named Respondents objecting to the breadth and relevance of two subpoenas filed by the wife on 30 October 2006 directed to the Westpac Banking Corporation and one directed to L and Co., Accountants.
The application was opposed by Mr North, Senior Counsel, who appeared on behalf of the wife, who sought release of the subpoenaed material for inspection. Given the time constraints that day, I ordered that written submissions on behalf of the husband be filed and served on or before 8 March 2007 and that the wife do file and serve written submissions in reply within 14 days thereafter.
In the result, the submissions filed on behalf of the husband only addressed objection to the subpoena served upon L and Co., Accountants. I can thus assume that the initial objection to the release of material produced under subpoena by the Westpac Banking Corporation has now been withdrawn. The subpoena left in issue and addressed to L and Co. requires the production of all "… records, notes and files relating to [the husband] and any related identities including:
(a)      P Pty Ltd,
(b)      C Pty Ltd,
(c)      Z Pty Ltd,
(d)      I Pty Ltd,
(e)      Z Settlement,
(f)       P Unit Trust;
including but not limited to tax affairs, banking records, file notes, records of instructions and any personal financial data", from January 2001 to present.
It is conceded by the husband, which is a significant concession in my view, that he has interests, both direct and indirect in each of the identities set out in the subpoena, noting of course that I Pty Ltd, C Pty Ltd, Z Pty Ltd and P Pty Ltd have been joined in any event as parties to the proceedings between himself and the wife.
An issue relevant to the final determination in the proceedings will be the value of that interest, if any, which is central to the finalisation of the pool of assets available for distribution between the parties, which is a fundamental aspect in the exercise of power pursuant to section 79(4) and section 75(2) of the Family Law Act 1975 (as amended), through the exercise of a four‑step interrelated process. See for example, Clauson v Clauson (1995) FLC 92‑595; Ferraro v Ferraro (1983) FLC 92‑335; and JEL v DDF (2001) FLC 93‑075.
In his submissions, Mr Dickson noted the terms of the subpoena, observing that the documents were "not described with any greater particularity". That, as a mere observation is correct, but alone does not undermine the legal efficacy of the subpoena, as I will make clear in the course of this judgment. Mr Dickson submitted that discovery as between the husband and the wife had taken place and that it was not clear what documents the husband had not produced pursuant to his disclosure obligations in the discharge of that process.
In the course of his submissions, Mr Dickson emphasised the obvious, namely that the wife must demonstrate "apparent relevance" and that the relevance of the "documents sought" must be clear from the affidavit material filed at court. See Hatton v Attorney General of the Commonwealth of Australia and Commonwealth Development Bank of Australia (2000) FLC 93‑038. It was his further submission that, as the documents sought pursuant to the subpoena were not identified by the wife with "any particularity", it was not possible for her to demonstrate the relevance of the breadth of the document sought, referring to my decision in A & A [2005] FamCA 561.
However, as Mr North correctly argued, that submission misread the effect of my decision in A & A (supra) which, and I make it quite clear, should be considered against the discrete factual scenario in which it was determined, none the least of which being that it was an interlocutory argument concerning a subpoena drafted without regard to the relevance of the specific issues then before the court, which was shortly following the institution of proceedings.
It is plain, as Mr Dickson submitted, that a subpoena cannot be used as an alternate to discovery of relevant documents, referring to Relationships Australia v Pasternak (1996) FLC 92‑699. However, as Mr North submitted, and with which I agree, such a proposition is unremarkable, but bore no relationship to the discrete facts before me as the subpoena did not cast a burden upon L and Co to form an assessment of the relevance of the documents sought to be produced.
It is plain that to seek discovery by way of a subpoena is a form of oppression, for it requires the recipient to form a judgment as to the relevance of the documents or class of documents in his possession or control which may or may not answer the description proffered in the subpoena. The proper meaning of the ground of objection was correctly explained by Mr North in relying on National Employers Mutual General Insurance Association Ltd v Waind (1978) 1 NSWLR 372 at 381-2 per Moffitt P, with whom Hutley and Glass JJA agreed, namely:
“Upon the first step the person to whom the subpoena is addressed may seek to, and have, the subpoena set aside on the ground that it was improperly issued and an abuse of the power to compel the production of documents in any one of a number of ways. Such a case is where the subpoena is used for the purpose of discovery. The essential feature of discovery in this connection … is that the person to whom this subpoena is addressed will have to make a judgment as to which of his documents relate to issues between the parties. It is oppressive to place upon a stranger the obligation to form judgments as to what is relevant to the issue joined in the proceeding, to which he is not a party. Hence it is an abuse of the use of the subpoena to impose this obligation. It follows that it is an abuse to use any subpoena, i.e. even to a party to obtain discovery … of course, discovery as such is otherwise available to a party …”.
I have earlier referred to the submission made on behalf of the husband that as the documents sought within the subpoena were not "identified with any particularity", it was not possible for the wife to demonstrate relevance of the documents sought. Mr North, in arguing that such a proposition was contrary to established principle, correctly in my view, referred to what Moffitt P had to say in Waind's case, (supra) containing the citation to which I have earlier referred.
“It follows that the subpoena can only properly be used for the production of documents described in particular or general terms which does not involve the making of such a judgment. It does not follow, however, that because the party who wishes to issue a subpoena is unaware of the precise description of a particular document, or whether a particular document or documents is in the possession of the witness, or even whether it exists, or is unaware of its contents, that the subpoena, or even a subpoena in general terms, amounts to the use of the subpoena for the purpose of ‘discovery’. To state it does involve a misconception of the different function of discovery and of subpoena for production. Of course it may be that the terms of the subpoena are so wide that it is oppressive, but this is not because it is used for ‘discovery’ … but because it imposes an onerous task on a stranger to collect and produce documents many of which can have no relevance to the litigation. To require the branch of a bank to produce all cheques received by it in a particular year in order to find, if it exists, the cheque of the opponent in a false name would be oppressive, whereas, to require a hospital to produce its file in respect of the medical treatment of the opposing party would not.” (emphasis added)
As Mr North accurately observed, the passages in Waind (supra) to which I have referred were cited by the Family Court of Australia with approval in Hatton (supra), commenting that (save for one exception, which is not relevant to my determination) the principles continued to "be persuasive authority" (at par 47).
It was the overall submission of Mr Dickson that the wife had not demonstrated relevance of the documents sought and which, it was put, were not identified with any particularity. He challenged the "forensic purpose" of the subpoena and submitted that as drafted it amounted to a "fishing exercise". It sought, in effect, non‑party discovery, rather than production of specific documents of relevance to the issues in dispute. He drew heavily upon Hatton's case, (supra) in his analysis.
I do not share the same view at all. It failed to properly understand the principles enunciated in Waind (supra) to which I have already referred. It is important to bear in mind that the contested property applications between the parties and other named respondents joined in the proceedings are soon to commence as a final hearing in June 2007.
Both discovery and the production of relevant documents lies at the very heart of a fair trial in order to properly assess the pool of assets available for distribution. Furthermore, there are complex issues for determination, dealing with the provisions of section 90AE(2) and section 90AE(3) of the Act. I agree with the submission of Mr North that the apparent relevance to the proceedings of the records of the Accountants for the entities named in the subpoena is clear, particularly given the concession made by the husband.
Mr North submitted, the test of relevance is plain, for it is sufficient in order to show apparent relevance by the wife in these proceedings to demonstrate that it is "on the cards" that the documents sought will be relevant to the issues at trial. The mere fact that a small number of documents, being part of the documents sought overall, may not be relevant, is not necessarily sufficient to set aside a subpoena. See, for example, Trade Practice Commission v TNT Management Pty Ltd (No.1) (1981) 55 FLR 197 at 208 per Bowen CJ).
As Mr North made the point, and without demur from the husband's practitioners, the recipient of the subpoena is the Principal Officer of a firm of Chartered Accountants in which an employee, Mr G, has prepared tax returns for both the husband and the wife since 1986, together with the financial accounts and taxation returns for each of the entities referred to in the subpoena. Reference was made to an affidavit of Mr G filed by the solicitors for the husband on 17 January 2007. The relief claimed by the wife is not only under section 79 of the Act but also for orders pursuant to Part VIIIAA of the Act against the other Respondents, apparently all clients of the firm of the accountants, and all (but for the fourth Respondent) mentioned in the subpoena.
Mr North correctly submitted that the order sought against the named Respondents as parties to the proceedings will, if successful, alter the property interests of those respondents and can only be made "in relation to the marriage". I agree with his further submission that the dealings by a party to the marriage, in this case, the husband, with respect to those named Respondents as recorded in the records of his accountant, are likely to be relevant, or are apparently relevant to the serious questions for my determination under section 90AE(2) and section 90AE(3) of the Act.
Mr North made the point, and again without demur from the husband's practitioners, that the nature and extent of the husband's interest and control over those entities revealed by such documents as may be held by his accountant bear relevance not only to orders under Part VIIIAA of the Act, but goes to the heart of the exercise of my discretion under the provisions of section 79 itself, to which I have earlier referred. The issue as to which documents are relevant include, as he correctly submitted, the husband's proprietary interest in the value of his property together with the nature, extent and value of his financial resources.
In an exercise of professional caution, Mr North made the observation that in the course of Mr Dickson's submissions (paragraph 5) he appeared to emphasise the phrase "any documents”. He noted that, if by inference it was intended to demonstrate those words as a direct quotation from the terms of the subpoena, then such was not the case. I otherwise have regard to his further submissions dealing with documents that may have already been discovered and any collateral questions of associated costs.
Having regard to my determination, I propose to order that the documents produced under the three subpoenae addressed at the commencement of this judgment be released for inspection by the wife's professional representatives. I will reserve the question of costs of both parties arising from the oral application for determination at the substantive trial. I will also certify for counsel, including senior counsel.

I certify that the preceding twenty one (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Guest.

Associate:

Date: 4 June 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as INCH & INCH