Kayce & Wilda

[2023] FedCFamC1F 1140

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Kayce & Wilda [2023] FedCFamC1F 1140

File number:

MLC 14481 of 2022

Judgment of:

STRUM J

Date of judgment:

11 December 2023

Catchwords:

FAMILY LAW – PRACTICE AND PROCEDURE – Subpoenas – Where objection taken on grounds of subpoena not being bona fide for the purpose of obtaining relevant evidence; constituting fishing; and the requirement to comply with the subpoena being oppressive – Where submissions were directed to lack apparent relevance, however no application made to amend grounds of objection – Where duty of disclosure has not been complied with – Discussion of the principle of apparent relevance – Where the bar for establishing apparent relevance is not high – Notices of Objection dismissed – Order for costs made.

Legislation:

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)

Cases cited:

Andrew Garrett Wine Resorts v National Australia Bank Ltd (No. 6) (2005) 92 SASC 419; [2005] SASC 292

Baumann and Ors & Rushbrooke and Anor [2016] FamCA 905

Hunt v Russell and De Pinto (1995) 63 SASR 402

Merhi & Merhi and Ors (No. 3) [2018] FamCA 961

Ryder & Lee [2009] FamCA 531

Unitingcare – Unifam Counselling & Mediation & Harkiss and Anor (2011) FLC 93-476; [2011] FamCAFC 159

Division:

Division 1 First Instance

Number of paragraphs:

40

Date of hearing:

11 December 2023

Place:

Melbourne

Counsel for the Applicant:

Mr Eley

Solicitor for the Applicant:

Blackwood Family Lawyers

Counsel for the Respondent:

Mr Sweeney

Solicitor for the Respondent:

Sayer Jones

Counsel for the Interested Party:

Dr Ingleby

Solicitor for the Interested Party:

Barry Nilsson Lawyers

ORDERS

MLC 14481 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS KAYCE

Applicant

AND:

MR WILDA

Respondent

MS MODESTO

Interested Party

ORDER MADE BY:	STRUM J
DATE OF ORDER:	11 DECEMBER 2023

THE COURT ORDERS THAT:

1.All Notices of Objection filed by the interested party on 14 November 2023 be dismissed.

2.The interested party pay the applicant wife’s costs of this day in the fixed sum of $2,040.64.

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

REASONS FOR JUDGMENT
DELIVERED EX TEMPORE

STRUM J:

1. On 2 October 2023, the applicant wife caused to be issued seven subpoenas in respect of which the objector, to whom none of the subpoenas were addressed but being an interested party, has filed six Notices of Objection, all filed on 8 November 2023. In support of the subpoenas and the Notices of Objection respectively, the wife filed an affidavit on 1 December 2023 and the objector filed an affidavit on 8 December 2023. The latter was filed after the time prescribed by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“Rules”); however, no objection was taken to the late filing.

2. Of the subpoenas to which objection is taken, three are addressed to banks, namely, B Bank, C Bank and the National Australia Bank. The remaining four subpoenas are addressed to D Pty Ltd, E Ltd and F Pty Ltd together, G Pty Ltd and H Services.

3. The subpoenas to the B Bank and the National Australia Bank are in identical form. They seek the following documents in relation to both the objector and J Pty Ltd, a company controlled by the objector, for the period from 1 January 2019 to date:

   (i)Bank statements (and transaction histories for any period that statements are not available) for accounts, including cheque, savings, trading, loan, overdraft, mortgage interest saver, investment, deposit, credit card or other style of account of whatsoever kind, of which the person and/or entity in paragraph 2(a) is an account holder (either solely or jointly), a trustee or otherwise has an interest in.

   (ii)Managers’ diary notes, notes of interview, inter-branch memoranda, correspondence, bank files and like documents.

   (iii)Documents in relation to any loan, credit card or other finance applications including any documents submitted to you in support of any applications.

4. The subpoena to C Bank seeks documents in relation to the husband and other entities, as well as the same documents in relation to the objector and J Pty Ltd. I will refer to those three subpoenas as the “bank subpoenas”.

5. The four other subpoenas are similarly in identical terms in relation to the objector and J Pty Ltd. They seek the following documents from 1 January 2019 to date:

   (i)All records of any and all shareholdings.

   (ii)Current shareholding statements.

   (iii)All share trading transaction histories and statements.

   (iv)All correspondence with the person and/or entity in paragraph 2(a) [being the objector and the company].

   I will refer to those four subpoenas as the “share subpoenas”.

6. The objector filed Notices of Objection to each of the subpoenas, which are all in identical form. Five grounds of objection were raised in relation both to production and inspection. In circumstances where the recipients of the subpoenas have all produced documents, counsel for the objector properly did not pursue the objections to production, but only to inspection. In relation to inspection, counsel for the objector abandoned grounds 2 and 4, being that the subpoena had been issued firstly in an improper manner, namely, in lieu of financial disclosure; and secondly, for an improper purpose, namely, obtaining financial disclosure from a third party.

7. I note that greater care is expected by the Court to be taken by lawyers when drawing Notices of Objection. They are not something that should be merely “copied and pasted” from a pro forma precedent without proper analysis and appropriate drafting. Nevertheless, that is what seems to have occurred in this case.

8. The remaining grounds of objection to inspection which fall for determination by the Court are grounds 1, 3 and 5. Ground 1 contends that each of the subpoenas has not been issued bona fide for the purpose of obtaining relevant evidence. Ground 3 contends that the scope of each of the subpoenas is too wide and/or that it has been issued for a purpose which is impermissible, namely, fishing. Ground 5 contends that the requirement to comply with each of the subpoenas and to produce the described documents would be oppressive.

9. I turn first to ground 5. It makes no sense. It complains that compliance and production would be oppressive, albeit that the objection is to inspection and copying. However, the documents have, as I have indicated, been produced. I raised this matter squarely with counsel for the objector, but no application was made for leave to amend and I therefore dismiss ground 5.

10. Much of the submissions of the wife and the objector were directed to apparent relevance or lack thereof but, surprisingly, no objection on the ground of lack of apparent relevance was taken. Again, I raised the issue squarely with counsel for the objector several times during the course of the hearing. However, he made no application for leave to amend the Notices of Objection. Whilst he valiantly sought to bring apparent relevance within ground 1, for the reasons which follow, I disagree.

11. Turning, then, to the ground of objection that the subpoenas have not been issued bona fide for the purpose of obtaining relevant evidence (ground 1). Nothing in the evidence establishes, or in the submissions of counsel for the objector satisfies me, that any of the subpoenas was not issued bona fide. I do not accept the objection that the subpoenas have not been issued bona fide, for the purpose of obtaining relevant evidence.

12. As I have already said, that objection goes to the bona fides of the issuance of the subpoenas, not to any lack of apparent relevance of the documents sought by them. It is not submitted, nor does the evidence suggest, that the subpoenas were issued for an ulterior purpose, which would, in my view, go to the bona fides of the issuance of the subpoenas. I, therefore, dismiss ground 1 of the objection.

13. The gravamen of the objections, as filed, is to be found in ground 3; that they are too wide or have been issued for a purpose of which is impermissible, namely, fishing. As to the width, all the subpoenas seek to find categories of documents both in relation to the bank subpoenas and the share subpoenas. Counsel for the objector argued that the subpoenas are too broad because they seek documents for the period going back to 1 January 2019 to date.

14. At first blush, that argument might seem to have some merit. The objector deposes and the wife does not, and possibly cannot, deny that the husband and the objector met in or about 2019; began a relationship in December 2020; commenced cohabitation in February of 2021; and they were married in 2023.

15. However, in reply to that contention, counsel for the wife took me to paragraph 37 of her affidavit, where she refers to the husband making payments to the objector from their self‑managed super fund from as early as October 2019.

16. The objector responds at sub-paragraph 20(e) of her affidavit that the husband did not transfer funds to her for her benefit in 2019. She deposes that she managed the “[K Group]”, of which the respondent and she were both members. She further deposes that members and attendees were required to pay in advance of events, so that splitting bills was not an issue. Accordingly, she contends that the respondent transferred funds to her, for his costs associated with the group, from October 2019.

17. The husband was born in 1967. He was, therefore, 52 years of age in 2019, when the transfers first commenced. He is now 56 years of age. No explanation was proffered as to how or why the husband was able to access the self-managed superannuation fund given his age then and now.

18. In circumstances where there were, at least, these financial transactions in and from October 2019, the parties having met in or about that year, I am not satisfied that the subpoenas are too wide in this respect.

19. To be clear, I do not understand how, and I was not taken to any evidence of the husband as to how, he was able to make these payments from a self-managed superannuation fund, given his age in 2019, nor why he was making these payments to the objector from the fund when, on the evidence of the objector, they were not even in a relationship.

20. I turn, therefore, to the objection that the subpoenas have been issued for the impermissible purpose of fishing. In Merhi & Merhi and Ors (No. 3) [2018] FamCA 961, Loughnan J said, commencing at [28] as follows:

    Subpoenas must not be used for the purpose of fishing for information that the party at whose application the subpoena issued, hopes, but does not reasonably expect, is in existence. In Hunt v Russell and De Pinto (1995) 63 SASR 402 it was considered by Perry J whether a fishing complaint should be determined with reference to the documents produced. It was stated at 408:

    Furthermore, I do not think that in a case where the objection taken is that the subpoena, or part of it, is “fishing”, the appropriate procedure is for the judge at the outset to take the documents into his or her custody and then to peruse them to see if any of them might be relevant to the proceedings. To countenance such a course would be simply to pass the fishing rod to the judge.

    …

    I interpolate here that I have not been asked to do that.

21. Perry J, however, relevantly continued at 408 of Hunt v Russell and De Pinto (1995) 63 SASR 402 that:

    Generally speaking, a complaint that a subpoena is “fishing” should be determined by reference to the judge's knowledge and understanding of the case and the description of the documents in the subpoena.

22. Loughnan J said at [29] that further discussion relevantly continued at page 409 of the judgment in Hunt v Russelland De Pinto, namely:

    In my view, consistent with the dicta to which I have referred in Alister, a mere “fishing” expedition should not be allowed, and before a court should proceed to inspect the documents sought to be produced, it must be “on the cards” that the documents “will materially assist the defence”, or, having regard to the terms of s 25 of the District Court Act, it must be “on the cards” that the documents sought to be produced will be of “evidentiary value” in the proceedings.

    If that test is satisfied, the subpoena is not to be characterised as “fishing” and will not be struck out as bad.

    …

23. In an earlier decision of Baumann and Ors & Rushbrooke and Anor [2016] FamCA 905, McClelland J (as his Honour, the Deputy Chief Justice then was), said as follows, commencing at [35]:

    In terms of “fishing”, it is not legitimate for a party to issue a subpoena with a view to determining whether the issuing party has a case at all.

24. His Honour referred at [36] to the well-known decision of the Full Court of this Court in Unitingcare – Unifam Counselling & Mediation & Harkiss and Anor (2011) FLC 93-476; where Coleman J undertook a useful analysis of the relevant authorities and said:

    There is a material distinction between seeking production of documents which, if they exist, can be readily identified and produced in circumstances where such documents may be admissible in evidence, and seeking the production of unspecified documents in the hope that, when produced, they may reveal something capable of being admissible in evidence. The former course is permissible according to general law, and... the Act. The latter offends both.

25. Reference was also made in Baumann and Ors & Rushbrooke and Anor at [37] to the decision of Burr J in Ryder & Lee [2009] FamCA 531, where his Honour adopted the following passage from the decision of Gray J in Andrew Garrett Wine Resorts v National Australia Bank Ltd (No. 6) (2005) 92 SASC 419 at 428:

    It is not enough for the party issuing the subpoena to raise a speculative possibility that the documents sought would assist the resolution of the dispute. The party supporting the subpoena must demonstrate that the documents sought in the subpoena are of real relevance to the issues in the case. It must be more than an outside chance that something useful might turn up in the documents.

26. McClelland J then continued:

    38.In summary, it is not enough for a party issuing the subpoena to raise a “speculative possibility” that the documents sought would assist the resolution of the dispute. While the bar is not high, the party supporting the subpoena must demonstrate that the document(s) sought in the subpoena are of an “apparent relevance” to the issues in the proceedings. It must be more than “an outside chance” that something useful might turn up in the documents.

    39.To avoid being set aside as merely “fishing”, or as being oppressive, a subpoena must specify with reasonable particularity the documents which are required to be produced.

    (Footnotes omitted)

27. In my view, all of the subpoenas, both the banking and share subpoenas, do specify to an acceptable degree, the documents sought to be produced.

28. To consider the objection of fishing, I turn now to some of the evidence. There are a number of transactions which are identified by the wife and which are of concern. 

29. At paragraph 20 of her affidavit, the wife refers to an issue in these proceedings that came before me earlier this year. She deposes that in May 2023, she discovered that the husband had transferred … shares in L Group Pty Ltd, held by M Pty Ltd, to J Pty Ltd, being the company associated with the objector, leaving him with only … shares.

30. At paragraph 21, she deposes to the documents for the transfer having been lodged in March 2023, two days after the husband was served with her Application in a Proceeding seeking injunctions and the day before the hearing thereof, listed on 23 March 2023.

31. She further deposes that the husband did not disclose the transfer of what she says to be the bulk of the most significant asset of the parties at the hearing on 23 March 2023. Rather, she had to discover it for herself. She estimates that the total value of the transferred shares is in the order of $18.72 million. She also refers to the fact that, at a subsequent hearing before me, on 15 June 2023, the husband’s counsel advised me that no consideration had been paid for the transfer. That day, the husband consented to an order to use his best efforts to secure return of the shares and it is common ground that this has occurred. However, in my view, this does not in any way detract from the concerns raised by the wife as to the transactions that the husband entered into.

32. Similarly, commencing at paragraph 31 of her affidavit, the wife deposes that in August of 2023, her lawyer obtained the share registry for N Pty Ltd. It was discovered therefrom that J Pty Ltd holds shares in N Pty Ltd and that, of that shareholding, the husband transferred some shares in N Pty Ltd to J Pty Ltd in November 2022. Further, in May 2023, J Pty Ltd acquired further shares in N Pty Ltd through a non-renounceable entitlement offer available to current shareholders. The wife points, at this interlocutory stage, to the fact that no evidence has been provided that J Pty Ltd has paid any consideration for the shares acquired in N Pty Ltd. She further deposes that on 6 September 2023, the husband’s lawyers, Sayer Jones Family Lawyers, sent a letter to her lawyers advising that M Pty Ltd received $45,000 for these shares, which was applied to pay its taxation liabilities, totalling in the order of $42,000. The letter further advises that the husband instructed his solicitors that the taxation liability was initially paid from a credit card, with the sum being reimbursed upon settlement of the sale of the shares. However, and concerningly, she raises the issue that the enclosures in the letter of 6 September 2023 do not establish that J Pty Ltd in fact paid $45,000, or any other sum, in consideration for the shares in N Pty Ltd. Further, she draws the Court’s attention to the fact that the husband did not see fit to disclose the transfer of the shares in N Pty Ltd until her lawyer discovered it and asked for information. That does not appear to be contested by the husband and, in fact, he has not filed any evidence, albeit that he is not actively participating in the hearing today, to rebut or contradict the matters raised by the wife.

33. Insofar as the husband did not disclose the transfer of shares relating to N Pty Ltd, that is clearly a transaction to which the duty of disclosure applies. The duty of disclosure is an ongoing duty, and this transaction should have been disclosed. I have already referred to the fact that the payments made by the husband to the Objector in and from October of 2019, from the self‑managed superannuation fund’s bank account, without being taken to any explanation by him as to how this could be done.

34. A further issue raised by the wife, and one which was the subject of submissions by counsel for both the Objector and for the wife, is that in April and May 2022, the husband paid the Objector, from one of the parties’ corporate entities, the sums of $34,785, and $11,258. The Objector, at paragraph 17(a) of her affidavit, deposes the funds were to meet her taxation liabilities consequent upon proposed trust distributions to her.

1. The distributions were not made to the Objector, but the money was not returned to the husband and more than a year and a half has passed since then. The Objector merely deposes that “the $46,000 can be made available”. There is no evidence as to why the trust distributions were not made and why the money was not returned to the husband in the following 18 months. More importantly, it was not until I asked and counsel for the Objector sought instructions that I was told that the Objector is not even an eligible object of the trust from which the distributions were proposed to be made. I was told by counsel for the wife that the original deed of declaration of trust has never been discovered. Clearly, that is yet another instance where the duty of disclosure applies and has not been complied with. Many of the matters raised by the wife have not been responded to by the husband, albeit that her affidavit was filed on 1 December 2023, over a week ago.

2. Whilst they are no longer pursued, the husband has previously filed objections to the subpoenas, insofar as they concerned him. It would have been open to him to file an affidavit in reply to that of the wife, and to make submissions, especially in circumstances where he was present in court today, as was his solicitor, and counsel appeared on his behalf but did not make any submissions.

3. The Objector submits that, given that the subpoenas have been issued for the husband’s banking records, the evidence the wife seeks will be obtainable from those documents, without the need for her documents. It is unclear what ground of objection, if any, that relates to; however, that is manifestly not necessarily the case. One need only look at the transactions in April and May 2022, where monies were supposedly earmarked for tax and placed in a term deposit.

4. At sub-paragraph 17(a)(ii), the wife deposes to the effect that, although the trust distributions were not made, the money was not returned to the husband. Rather, the Objector deposes that in April 2023, about a year after the monies were first transferred to her for the payment of tax, she closed the term deposit into which those funds had been initially deposited and deposited them into one of her entirely unspecified existing personal accounts with the National Australia Bank. In circumstances where the money has not been returned by the Objector to the husband, nothing will be disclosed by his bank records produced upon subpoena.

5. Whilst counsel for the Objector, in his oral submissions, raised the issue of lack of apparent relevance, and counsel for the wife anticipated and addressed the issue in his written submissions, notwithstanding my inquiry, no application to amend the Notice of Objection was made.  In the circumstances, there is no need to deal with the issue of lack apparent relevance. The Court proceeds upon filed documents or documents amended with the leave of the Court. In any event, the authorities regarding apparent relevance are well settled. The bar for establishing apparent relevance is not high. The party seeking to resist an objection on the ground of lack of apparent relevance need only establish that it is on the cards that the documents would bear upon, and have apparent relevance to, the issues in the substantive proceedings. Expressed in the reverse, it is not legitimate to issue a subpoena on the basis of an outside chance that something useful might turn up in the documents. This is not such a case, in my view.

6. Having already indicated that grounds 1 and 5 of the objections shall be dismissed, and grounds 2 and 4 not being pressed and therefore to be dismissed, I similarly dismiss ground 3 of the Notices of Objection.

I certify that the preceding forty (40) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Strum.

Associate:

Dated:       1 March 2024