Jingyi & Chao (No 5)
[2024] FedCFamC1F 473
•16 July 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Jingyi & Chao (No 5) [2024] FedCFamC1F 473
File number: SYC 3653 of 2021 Judgment of: HARPER J Date of judgment: 16 July 2024 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Subpoenas – Where husband issued six subpoenas – Where wife filed Notices of Objections to each subpoena – Where wife contended that subpoenas were excessively broad and did not serve a legitimate forensic purpose – Party issuing impugned subpoena must demonstrate that documents sought have “apparent relevance” to an issue in proceedings – Where subpoena must reasonably particularise the documents it calls for – Where subpoena is impermissibly broad if it requires recipient to make judgments about issues or relevance – Where the subpoenas require a third party to interpret imprecise definitions in order to determine what documents are called for – Consideration of r 6.30 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) requiring service on “any interested person” – No service as required – Objections to the subpoenas upheld and the subpoenas set aside. Legislation: Family Law Act 1975 (Cth) Pt VIIIAB
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 6.16 and r 6.30
Cases cited: Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145
Kehoe & Seden (No 2) [2022] FedCFamC1F 346
Lucas Industries Ltd v Hewitt (1978) 45 FLR 174
McEwan v Rains [2023] QCA 135
Southern Equities Corporation Ltd (in liq); Bond v England (1997) 140 FLR 202
Division: Division 1 First Instance Number of paragraphs: 47 Date of last submission: 16 November 2023 Date of hearing: On the papers Place: Sydney Solicitor for the Applicant: JC Legal Counsel for the First Respondent: Mr Condon with Mr Southwood Solicitor for the First Respondent: Juris Cor Legal Solicitor for the Second, Third and Fourth Respondents: No appearances required ORDERS
SYC 3653 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS JINGYI
Applicant
AND: MR CHAO
First Respondent
MR B CHAO
Second Respondent
C PTY LTD (and another named in the Schedule)
Third Respondent
ORDER MADE BY:
HARPER J
DATE OF ORDER:
16 JULY 2024
THE COURT ORDERS THAT:
1.The objections to the following subpoenas issued on 23 April 2023 to the nominated recipients be upheld and the identified parts of each subpoena are set aside:
(a)Mr Lozano of V Lawyers (“V Lawyers Subpoena”) as to the whole subpoena;
(b)W Pty Ltd (“W Pty Ltd Subpoena”) as to the whole subpoena;
(c)Mr Y and Mr AA of Z Pty Ltd (“Z Pty Ltd Subpoena”) as to the whole subpoena;
(d)the Commonwealth Bank of Australia (“CBA Subpoena”) as to the whole subpoena;
(e)Mr BB and Mr CC of DD Lawyers (“DD Lawyers Subpoena”) as to the whole subpoena;
(f)Mr EE of FF Pty Ltd (“FF Pty Ltd Subpoena”) as to the whole subpoena.
2.The Registry is directed to destroy any documents already produced in answer to the CBA Subpoena and the W Pty Ltd Subpoena within 28 days of the date of this order.
3.All outstanding applications and objections concerning subpoenas are otherwise dismissed.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 Jingyi & Chao has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J:
INTRODUCTION
These are property proceedings under Pt VIIIAB of the Family Law Act 1975 (Cth) (“the Act” between the applicant de facto wife (“wife”) and the first respondent de facto husband (“husband”).
The second respondent is the husband’s father. The third respondent is a company associated with the husband, and of which he is a director. The fourth respondent is the husband’s mother.
On 21 April 2023 the husband issued six subpoenas to produce documents to the Court addressed to:
(a)Mr Lozano of V Lawyers (“V Lawyers subpoena”);
(b)W Pty Ltd (“W Pty Ltd subpoena”);
(c)Mr Y and Mr AA of Z Pty Ltd (“Z Pty Ltd subpoena”);
(d)Mr BB and Mr CC of DD Lawyers (“DD Lawyers subpoena”);
(e)the Commonwealth Bank of Australia (“CBA subpoena”); and
(f)Mr EE of FF Pty Ltd (“FF Pty Ltd subpoena”).
The wife filed a Notice of Objection to each subpoena. The wife claims that each subpoena is excessive in the breadth of material sought, is a fishing expedition with no forensic purpose, or seeks production of documents with no apparent relevance and is an abuse of process.
The addressee of the V Lawyers subpoena Mr Lozano also filed a separate Notice of Objection on 4 May 2023.
Documents have been produced in answer to the W Pty Ltd subpoena and the CBA subpoena.
The matter was first listed before me for case management on 23 October 2023. For reasons which are not clear nothing happened in relation to the objections until 30 October 2023 when the wife filed written submissions in support of her objections. On 16 November 2023 the husband filed written submissions and an affidavit seeking to set aside the objections. On 5 February 2024, after the outstanding notices were brought to the Court’s attention, the Court directed the objections be dealt with in chambers.
This judgment determines the Notices of Objection.
The principles applicable to resolving notices of objection to subpoenas are well known. I adopt what I said in Kehoe & Seden (No 2) [2022] FedCFamC1F 346 at [13]–[17] as follows:
13. The principles applicable to setting aside a subpoena were comprehensively stated by McClelland J (as he then was) in Baumann and Ors & Rushbrooke and Anor [2016] FamCA 905 at [25]–[42] (“Baumann”). McClelland J pointed out the party issuing an impugned subpoena must demonstrate the documents sought have “apparent relevance” to an issue in the proceedings, although, unlike discovery, it is not enough for a party seeking to uphold a subpoena to show that the documents might lead to “a train of inquiry” which might assist his or her case: at [31] citing McMillan Incorporated v Bishopgate Investment Trust (1993) 4 All ER 998 at 1005; Mulley & Marney v Manifold (1959) 103 CLR 341 at 345; T & D [2006] FamCA 1560 at [6]. It is not legitimate to issue a subpoena on the basis of “an outside chance” that something useful might turn up in the documents (at [33] citing R v Ridgeway (1998) 72 SASR 73 at 101) or to issue a “fishing” subpoena with a view to determining whether the issuing party has a case at all (at [35] citing Unitingcare – Unifam Counselling & Mediation & Harkiss and Anor [2011] FamCAFC 159; (2011) FLC 93-476 at 85,856; see also Botany Bay Instrumentation and Control Pty Ltd v Stewart [1984] 3 NSWLR 98 at 100 per Powell J).
14. …
15. The contention that a subpoena is an abuse of process usually rests on the underlying assertion that it has no “legitimate forensic purpose”, for example, because it is “fishing”. The question of apparent relevance in turn often, if not usually, underpins debates about legitimate forensic purpose and allegations of “fishing”. The primary contention of the third parties was that the documents sought in the impugned paragraphs lacked any apparent relevance to the issues in the proceedings.
16. The concept of “apparent relevance” in relation to subpoenas is of long standing. In Trade Practices Commission v Arnotts Ltd (No 2) (1989) 88 ALR 90 at 103, Beaumont J used the expression in posing the question of whether the material sough has “apparent relevance to the issues in the principle proceedings”. Numerous later cases have adopted the same or similar phraseology: Portal Software International Ltd v Bodsworth [2005] NSWSC 1115 at [20]–[24]; Lowery v Insurance Australia Ltd [2015] NSWCA 303; (2015) 90 NSWLR 320 at [12]; Baumann at [32] and [82] (“on the cards”); D v Australian Financial Security Authority [2017] NSWCA 50 at [56] (“sufficient apparent connection”). Re Force Corp Pty Ltd (in liq) [2018] NSWSC 896 at [22] and [24] explained “apparent relevance” as meaning something could “reasonably be expected” to “throw light” on some of the issues in the proceedings (see most recently in this Court Woodcock & Woodcock (2021) 64 Fam LR 489 at [48] (“Woodcock”).
17. The indeterminate boundaries of these verbal formulations are obvious, but it is recognised they have a wide embrace and often include documents about which the issuing party cannot have clear knowledge as to content or actual relevance. Recently, in Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 in the NSW Court of Appeal, Bell P (as he then was) observed at [57] that the apparent relevance of documents is “one of the reasons why medical and telephone records, for example, are frequently the subject of subpoenas, even though it will not be known or knowable ex ante whether or not the subpoenaed material, will, or is likely to, assist the party issuing the subpoena”. He held that to insist on such an added requirement is artificial because it would require an issuing party to be able to predict the contents of potentially relevant documents and would “unduly constrain the ability of litigants to investigate the facts”, citing the decision of Brereton J in A v Z (2007) 212 FLR 255 at 257. Therefore, so long as a subpoena can plausibly be seen to relate to an issue in the proceedings (or to “cast light” on such an issue), and the subpoena is not in other respects too vague or oppressive, it should not be set aside.
It is important to emphasise that an inability to demonstrate it is “on the cards” that documents will materially assist a party’s case, will not necessarily result in a subpoena being set aside. In Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 (“Blacktown City Council”) Bell P pointed out:
80. ... It will generally be sufficient and prima facie evidence of a legitimate forensic purpose if the documents sought to be produced on subpoena have an apparent relevance to the issues in the case and or bear upon the cross examination of witnesses expected to be called in the proceedings.
Bond JA recently observed in McEwan v Rains [2023] QCA 135 at [45] that the approach articulated in Blacktown City Council has been followed in numerous superior courts, including this Court, and at [46(f)] pointed out that the reasons of Bell P in Blacktown City Council explained “apparent relevance” as follows:
(i) The conception refers to adjectival rather than substantive relevance. It is to be understood as conveying the notion that the evidence sought could reasonably be expected to “throw some light” on some of the issues in the proceeding.
(ii) Apparent relevance should be able to be ascertained by an examination of the description or identification of evidence sought by the subpoena in light of the issues in the case, as they present themselves on the pleadings, in particulars and/or in affidavits or witness statements if they have been filed or served at the time of the issue of the subpoena.
It is fundamental that “a subpoena must describe with reasonable particularity the documents for which it calls” (Dunn v KAZ Group Ltd [2006] NSWSC 8 at [15]). In addressing this question, the court should consider how the description in the subpoena is likely to be interpreted by its recipient (Southern Pacific Hotel Services Inc v Southern Pacific Hotel Corp Ltd [1984] 1 NSWLR 710 at 720); acting as a reasonable person with the knowledge of the surrounding circumstances (Southern Equities Corporation Ltd (in liq); Bond v England (1997) 140 FLR 202 at 213). If the subpoena requires the recipient to ascertain issues and make a judgment about relevance it will be too wide (Lucas Industries Ltd v Hewitt (1978) 45 FLR 174 at 188–190).
It is helpful to observe here that each subpoena seeks documents relating to some or all of the following properties:
(a)H Street, Suburb J QLD (Title Reference: …) (“H Street”);
(b)F Street, Suburb G QLD (Title Reference: …) (“ F Street”);
(c)K Street, Suburb G QLD (Title Reference: …) (“K Street”);
(d)L Street, Suburb N NSW (Folio Identifier: …) (“L Street”);
(e)D Street, Suburb E (Folio Identifier: …) (“D Street”); and
(f)HH Street, Suburb O NSW (Folio Identifier: …) (“HH Street”).
By way of relevant background, there was no dispute the wife owned GG Street, Suburb P (“Suburb P”) which she sold in mid-2021. The husband claims he paid $296,000 to the wife to assist with the purchase of Suburb P. The wife purchased HH Street in about late 2021 with Ms Pei, and L Street in early 2021.
The wife contends that the property proceedings primarily concern the existence of a loan owed to her by either the husband or the third respondent. The wife does not seek any adjustment of Australian property interests pursuant to s 90SM of the Act. She seeks declarations of ownership of a property in Country KK, and declarations of ownership of a property in Suburb Q.
The wife further contends that the only claim of the respondents is for unliquidated damages on two bases: first, damages for unlawful interference in the financing arrangements of the respondents, causing loss and damage, and pursuant to an undertaking as to damages given by the wife to obtain an ex parte injunction.
The husband however claims by way of property adjustment orders for H Street, F Street, L Street and D Street be sold by public auction and he receive $500,000 with the balance to go to the wife. He argues that the impugned subpoenas are therefore relevant to the composition of the balance sheet, as will be explained in more detail.
The schedule to each subpoena sets the ambit of documents sought in part by reference to a definition of “[Jingyi Parties]” as follows:
[Jingyi Parties] means each, any, all or any combination of any of the following, whether solely or jointly:
a. [Ms Jingyi] (date of birth: […] 1982);
b. [Ms Pei] (date of birth: […] 1976);
c. [Ms JJ];
d.Brokers of [Ms Jingyi] or [Ms Pei] or [Ms JJ];
e. Any person or entity acting on behalf of [Ms Jingyi] or [Ms Pei] or [Ms JJ].
Ms Pei was a respondent at one time in the proceedings but was removed as a party by court order on 11 November 2022. Ms JJ is the wife’s mother. No allegations are made or relief is sought against either of these individuals. It can be seen that the definition of “[Jingyi Parties]” is imprecise because a recipient of a subpoena which relies upon this definition is obliged to determine which persons or entities are acting on behalf of the wife, her mother or Ms Pei and then determine which documents are relevant so as to fall within the subpoena.
At this point it is necessary to examine the subpoenas individually.
V Lawyers Subpoena
This subpoena seeks documents relating to “the Properties” being H Street, F Street and K Street. The husband argued that because V Lawyers acted as conveyancers on the purchase of F Street, it is a reasonable inference that the same solicitors acted on the purchase of the other two properties.
Paragraph 3 of the schedule to the subpoena seeks the following documents:
all documents relating to the purchase of the Properties by [Ms Jingyi] (dated of birth: […] 1982) and [Ms Pei] (date of birth: […] 1976), including but not limited to the Contract for the purchase of Properties, emails, letters, correspondence, payment receipts, settlement sheet, invoices, trust account ledgers, PEXA settlement records, memorandums and reports during the period from January 2022 to date.
The husband argues these documents have apparent relevance because in her Financial Statement filed on 13 December 2022 the wife disclosed her interest in the defined Properties for the first time, and in the same financial statement she claimed her income was $2,145 with which she serviced mortgages totalling $6,073,000. He asserted that it was improbable that a commercial lender would advance such substantial loans on the basis of the alleged income, so it was reasonable to infer the wife had other assets or sources of income. The husband also argued that it was necessary to clarify the wife’s asset pool in order to frame alternative relief which related to assets solely owned by the wife. He argued that the documents sought “will materially assist by shedding light on the terms and conditions” on which loans were made to the wife and would provide a basis to interrogate whether the wife has accurately disclosed her assets, because they may disclose whether the wife provided other assets as security for the loans.
I am satisfied the documents sought in paragraph 3 probably fall within the concept of apparent relevance for the purposes of a subpoena. I do not accept they are of excessive breadth or constitute a “fishing expedition”. They are appropriately confined to a date range. I am satisfied the documents are sought for a legitimate forensic purpose. Whether any of them ultimately form part of the evidence is an entirely separate question.
However, these conclusions are not the end of the matter. As mentioned earlier, Mr Lozano, the recipient of the subpoena, objects separately on three grounds: the documents sought attract legal professional privilege, do not relate to the husband or include “confidential information relating to a third party”. Mr Lozano provided no evidence or submissions.
As already pointed out I accept the documents relate to the husband in the sense they have apparent relevance. However, r 6.30 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) requires ordinary service of a subpoena on “any interested person”. Since paragraph 3 seeks documents which would require production of emails, letters, correspondence, payment receipts, settlement sheet, invoices, trust account ledgers, PEXA settlement records, memorandums and reports relating to Ms Pei, although she is no longer a party, she is clearly an interested person. The paragraph as formulated may seek production of documents to which a claim of privilege by Ms Pei may attach. There is no evidence that Ms Pei was served with the subpoena.
The claim for privilege raises further considerations. The husband relied on r 6.16 of the Rules which provides that if a party claims privilege from production and another party, “by written notice” challenges the claim, the party making the claim must file an affidavit within seven days setting out the details of the claim. I will assume “party” in r 6.16 includes the recipient of a subpoena.
The husband challenged the claim to privilege in his written submissions dated 16 November 2023. The was no evidence of any other form of written notice being given to Mr Lozano. On the other hand, Mr Lozano made no submissions about his claim of privilege.
If the documents sought in paragraph 3 related only to the wife it would be open to the Court to make orders for any documents in respect of which privilege is claimed to be kept separate in a sealed envelope, pending resolution of any claim for privilege if one is made. However, as pointed out the documents also relate to Ms Pei and she has been afforded no opportunity to respond separately to the subpoena. The way paragraph 3 is formulated it would not be possible to separate documents relating to her from those relating to the wife. In my view, paragraph 3 should be set aside.
Paragraph 4 of the schedule seeks the following documents:
All documents containing the following information:
a. any instructions from [Jingyi Parties] regarding their finance and the Properties;
b. any instructions regarding confirming or amending the settlement date of the Properties;
c.any instructions regarding settlement sheet and cheque directions during the period from January 2022 to date.
As can be seen this paragraph casts a wider net than paragraph 3. It purports to gather up “any instructions” from any of the Jingyi Parties “regarding their finance and the Properties” as well amending settlement dates and cheque directions at settlement. As pointed out the “[Jingyi Parties]” are defined to include not only the wife, her mother and Ms Pei, but their “brokers” and “any person or entity acting on their behalf”. The apparent relevance of “any instructions” rises or falls on the relevance as explained above at [23]. It is unclear what the wording instructions “regarding their finance and the Properties” embraces and how instructions from a non party about their finance could be relevant. I am not satisfied that instructions from a broker or entity acting for the wife or non parties could have apparent relevance. In my view this paragraph is impermissibly wide. I also conclude paragraph 4 imposes on the recipient the obligation to determine what is caught by the subparagraphs of paragraph 4, which does not adequately identify the documents sought, particularly in light of the definition of the “[Jingyi Parties]”. Paragraph 4 will be set aside.
Z Pty Ltd Subpoena, W Pty Ltd Subpoena, CBA Subpoena
The Z Pty Ltd and W Pty Ltd subpoenas both seek production of documents relating to “the Properties” being L Street, D Street and HH Street. The W Pty Ltd subpoena additionally seeks documents for H Street. Z Pty Ltd were responsible for registering mortgages which secured the loans drawn to fund the purchase of the three properties. W Pty Ltd was the mortgagee for each property and also for H Street.
The CBA subpoena seeks production of documents relating to F Street and K Street. CBA was the mortgagee for F Street and K Street.
The relevant paragraphs of the schedule are in the same material terms in the schedule to each subpoena. The W Pty Ltd subpoena can be cited as an example:
3. a copy of the loan application, both in its physical and electronic form, including but not limited to any application, submitted by [Jingyi Parties] for the Properties to [W Pty Ltd] during the period from March 2021 to date.
4. any supporting documents submitted together with the loan application for Properties by [Jingyi Parties] during the period from March 2021 to date.
5. any correspondence including emails, letter, instant messaging records and file notes, concerning the loan agreement signed between [W Pty Ltd] and [Jingyi Parties] during the period from March 2021 to date.
6. any documents containing any due diligence required by [W Pty Ltd], to request or clarify any loans for Properties, and any response from [Jingyi Parties] during the period from March 2021 to date.
7. all loan agreement facility, memoranda of advice of loan, head agreements for the loan, term sheets and drawdown notices issued by [W Pty Ltd] to [Jingyi Parties], pertaining to the Properties during the period from March 2021 to date.
8. all the documents including letters of offer of loan, loan approvals, refinance approvals issued to or sent to [Jingyi Parties] for Properties during the period from March 2021 to date.
9. all updated loan statements that record all transactions, entries, loan accounts held by [Jingyi Parties] for the Properties during the period from March 2021 to date.
10. all invoices, payment records, receipts, and trust account ledgers sent to or received from [Jingyi Parties] during the period from March 2021 to date.
The time frame in the Z Pty Ltd subpoena is January 2021 to date, in the CBA subpoena it is June 2022 to date and in the W Pty Ltd subpoena it is March 2021 to date.
The subpoenas all seek production of documents relating to a loan application, but it is not specified what dealing the loan relates to. The husband argued these documents were relevant to the issues explained above at [23].
A significant problem with the formulation of these paragraphs is exposed by considering the vagueness of the wording “the loan application submitted by [Jingyi Parties] for the Properties” in paragraph 3. The problem is that the reference to “the loan application” cannot be understood by reference to a specific property, because three properties are referred to. The reference to the “[Jingyi Parties]” creates further ambiguity because of the problem identified above at [19] and appears to make Ms Pei or Ms JJ “interested persons” upon whom the subpoena had to be served. It also expands the class of documents sought to include potentially any broker, person or entity acting on behalf of the wife, Ms Pei or Ms JJ. In my view, the paragraphs of the schedule do not adequately identify the documents sought and impose upon the recipient the obligation of determining what falls within the subpoena and make a judgment about what is relevant. The differing date ranges go no satisfactory distance to assisting the recipient in determining these questions.
The objections to these subpoenas are upheld.
Documents have been produced by CBA and W Pty Ltd. These should be returned to the producing party.
FF Pty Ltd Subpoena
This subpoena seeks production of documents relating to “the Properties” being again L Street, D Street and HH Street, in the period January 2021 to date.
The schedule to this subpoena seeks production of the following categories of documents:
3. all documents relating to the purchase of the Properties by [Ms Jingyi] (dated of birth: […] 1982) and [Ms Pei] (date of birth: […] 1976), including but not limited to the Contract for the purchase of Properties, emails, letters, correspondence, payment receipts, settlement sheet, invoices, trust account ledgers, PEXA settlement records, memorandums and reports during the period from January 2021 to date.
4. All documents containing the following information:
a. any instructions from [Jingyi Parties] regarding their finance and the Properties;
b. any instructions regarding confirming or amending the settlement date of the Properties;
c. any instructions regarding settlement sheet and cheque directions
during the period from January 2021 to date.
The husband argues the documents sought are relevant to the issue of how the sale proceeds of the Suburb P property were applied, especially if they were used to fund the purchase of L Street and HH Street.
This may be correct but for the reasons given above in [12], [26] and [29] paragraph 3 should be set aside.
Paragraph 4 is in materially the same terms as paragraph 4 of the V Lawyers subpoena and I uphold the objection for the reasons given in [37] above. Paragraph 4 will be set aside.
DD Lawyers Subpoena
This subpoena seeks documents relating to “the Properties” being H Street, F Street and K Street. The date range is January 2022 to date.
Paragraphs 3 to 10 of the schedule are in materially the same terms as paragraphs 3 to 10 of the schedules to the Z Pty Ltd, W Pty Ltd and CBA Subpoenas. For the reasons given in [36]‑[37] above they will also be set aside.
For the above reasons, the orders set out at the commencement of these reasons will be made.
I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 16 July 2024
SCHEDULE OF PARTIES
SYC 3653 of 2021 Respondents
Fourth Respondent:
MS TIAN
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