KOSTINOU & KOSTINOU

[2017] FamCA 338

FAMILY COURT OF AUSTRALIA

KOSTINOU & KOSTINOU [2017] FamCA 338

FAMILY LAW – PRACTICE AND PROCEDURE – Interim Orders – Subpoena evidence – Production of material under subpoena – Should parties be allowed to make copies of material – Where no evidence of an ulterior motive by the parties’ to inspect subpoena material –Consideration given to the subpoenaed parties right to confidentiality – Where order made for production of subpoenaed documents and copies to be held by parties’ solicitors.

National Employers’ Mutual General Association Limited v Waind & Hill [1978] 1 NSWLR 372 at 381

APPLICANT: Ms Kostinou

RESPONDENT: Mr Kostinou

FILE NUMBER: ADC 3304 of 2015

DATE DELIVERED: 22 May 2017

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 18 May 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Dura

SOLICITOR FOR THE APPLICANT: Andreyev Lawyers

COUNSEL FOR THE RESPONDENT: Mr Richards

SOLICITOR FOR THE RESPONDENT: Howe Jenkin

Orders

1. That leave is given to the legal representatives of the parties to make copies of the documents produced in answer to the following subpoenas:-

   (a)       B Pty Ltd;

   (b)       C Pty Ltd;

   (c)       D Pty Ltd;

   (d)       D No. 2 Pty Ltd;

   (e)       F Pty Ltd;

   (f)       G Pty Ltd;

   (g)       H Pty Ltd; and

   (h)       I Pty Ltd.

2. That until further order the legal representatives of the parties are restrained from providing or producing copies of the said documents to the parties or permitting the parties to inspect copies of any of the documents produced pursuant to the said subpoenae.

3. That any copies made are to be held by the solicitors and if provided to the single experts appointed pursuant to the order of 27 April 2017 and any counsel instructed then at the conclusion of the proceedings the solicitors for the parties are to ensure that all copies are collected and returned to the Registry of the Family Court of Australia for destruction or return to the solicitor for the subpoenaed parties.

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 Kostinou & Kostinou 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 ADELAIDE

FILE NUMBER: ADC 3304  of 2015

Ms Kostinou

Applicant

And

Mr Kostinou

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. By Amended Initiating Application filed 4 February 2016, Ms Kostinou (“the wife”) seeks orders for settlement of property such that the husband pay to the wife a settlement sum equal to 50 per cent of the parties’ net property.

2. The application also seeks parenting orders and lump sum spousal maintenance.  Those matters are not relevant to the current application.

3. By Response filed 9 December 2015, Mr Kostinou (“the husband”) opposes the wife’s orders and by way of property settlement he seeks that the property of the parties be divided as to 60 per cent to the husband and 40 per cent to the wife and that the superannuation interests of the parties be equalized by way of a superannuation splitting order.

4. The husband has a beneficial interest in eight trusts.  In relation to seven of the trust entities he is an appointor with two other people and in relation to one trust he is an appointor with one other person.

5. The contention between the parties is the extent to which, if any, the husband’s interest as a beneficiary or his involvement in the trust entities should be considered as an interest of value and therefore brought to account in determining an overall property settlement.

6. It would not appear controversial that there is a level of complexity to the financial affairs of the parties, with a particular focus on the husband.

7. The wife has sought discovery from the husband of a range of documents that relate to each of the trust entities.  It is the husband’s position that he does not have the documents in his possession and it is a moot point as to whether he has an entitlement to the documents arising from his right to enquire as to the proper administration of the various trusts and if so, whether he would be obligated to provide them to the wife.

8. In any event, on 27 April 2016 the wife issued subpoenae to the following entitles:-

   (a)B Pty Ltd;

   (b)C Pty Ltd;

   (c)D Pty Ltd;

   (d)D No. 2 Pty Ltd;

   (e)F Pty Ltd;

   (f)G Pty Ltd;

   (g)H Pty Ltd; and

   (h)I Pty Ltd

   (“the trustees”)

   seeking the following range of documents:-

   (1)The constitution or any amendments for each entity;

   (2)The trust deeds for each corporate entity;

   (3)The financial statements;

   (4)Taxation returns;

   (5)Financial statements for any trust in which the entity is the trustee;

   (6)Taxation returns for any trust in which the entity is the trustee;

   (7)      A copy of the ledgers for the entity or any trust for which the entity is the trustee in respect of the loan accounts and entitlements for each of the parties.

9. On 2 August 2016, noting that the subpoenaed parties were represented, a consent order was made by a Registrar that provided for leave to “legal representatives only to inspect only the documents produced in answer to the [subpoenae issued to the trustees]”.

10. The order provided that the legal practitioners were restrained from advising or informing the parties of the name and/or identity of the trustees of the trusts or settlements constituted by and/or described in the trust deeds and/or tax returns and financial statements produced pursuant to the subpoenae.

11. By Amended Application in a Case filed 3 November 2016, the wife seeks leave not only that her legal representatives be able to inspect the subpoenaed documents (already permitted pursuant to the previous order), but to make copies of the documents subject to the condition that the legal practitioners “are restrained from providing or producing copies to the parties or permitting the parties to inspect copies of any of the documents produced pursuant to the said subpoenae.”

12. The wife also sought the appointment of single expert valuers to value real estate and to undertake a business valuation of the husband’s interest in the various entities.

13. On 27 April 2017 orders were made by consent as between the wife and the husband appointing single expert valuers and adjourning further consideration of the extent to which copying of the subpoenaed documents was to be permitted.

14. By reference to the order of 27 April 2017, the valuation to be undertaken of the assets and the businesses was subject to the following conditions:-

    (1)That the two experts shall keep all information and documents obtained during the valuation process confidential and shall not disclose such information and/or documents to any other person without the written consent of the husband or leave of the Court; and

    (2)That the wife be restrained and an injunction be granted restraining her from providing (in hard copy or electronically) a copy, or an excerpt, or a portion of, any valuation report to any other person.

15. In submissions before me, counsel for the subpoenaed parties drew my attention to the framing of the order of 27 April 2017 as an order by consent.  It is his position that he did not consent to the orders, nor it would have been appropriate for him to do so on behalf of the subpoenaed parties in circumstances where the orders (subject to the conditions) are matters as between the applicant and the respondent.

16. To avoid any doubt and noting that there is no opposition by the parties, the order will be amended to reflect that the consent does not include the consent of the subpoenaed parties.

Copying as opposed to access of the documents

1. It is clearly conceded on behalf of the subpoenaed parties that the legal practitioners for the applicant and respondent are able to view and access the subpoenaed documents, make notes and convey that information to the experts as may be necessary for them to undertake the valuation process as ordered.

2. It is argued that “to have a full copy of the document not only verifies the authenticity of the information therein but may also contain far more information than is necessary for the purposes of the Court or the expert”.  Apparently, the cumulative documents produced pursuant to the subpoena totals about 3,000 pages.  It is suggested that not all of the information contained in the documents would be necessary for the valuation process and as such the task for the legal practitioners would be manageable.

3. It is argued on behalf of the wife that the single experts will need to access various documents in order to complete the valuation process and at this stage it would be difficult for the single experts to nominate the category of documents likely to be relevant to the exercise undertaken.

4. It might be considered that the range of documents as set out in the subpoena was drafted with the valuation process in mind.

5. It is also likely that part of the subpoenaed documents may assist not only in respect of the valuation of the business interests of the husband, but also the valuation of commercial real estate which may be affected by the extent of rental income available.

6. The concerns raised on behalf of the subpoenaed parties appear to relate to the integrity and confidentiality of the documents.  There is no suggestion, nor any credible evidence, that either of the parties would seek to disseminate the documents (or information) beyond the use for which they have been produced namely; the litigation between the parties.

7. The wife is prepared to submit to an order restraining the use of the documents for any purpose other than the current litigation and there is no objection raised by the parties to conditions being imposed on the manner in which copies of documents can be used and then either destroyed or returned to the Court.

CONCLUSION

1. In National Employers’ Mutual General Association Limited v Waind & Hill 1 [1978] 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 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 decisions in the case rests.  In these three steps the stranger and the parties have different rights, and the function of the judge differs.

2. At page 382 Moffitt P said:-

   The issue of a subpoena may involve an abuse of process 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 relationship 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.

3. Accordingly, the invasion of privacy of an unrelated party is something which must be carefully considered, but there must also be careful scrutiny where the evidence may point to the closeness of the relationship between one party and the subpoenaed entity.

4. In the present proceedings, an order has been made for the production of documents on the basis that there is sufficient relevance to properly support the subpoena.  A further order has been made that enables the parties to have access to the documents without restriction in respect of the method and manner by which information contained in the subpoenaed documents may be collected.

5. The focus of the documents is clearly to assist in the valuation process both as to real estate and value (as may be directed to the husband’s interests) of the trust entities.

6. There is no evidence of ulterior motive or a suggestion that the parties, but in particular the wife, would use the information contained in the subpoenaed material for any purpose other than the litigation.

7. Moreover, there is no prohibition on the wife reading any valuation report providing she does not disclose the contents to any person (other than her legal advisers).

8. It seems to me that it is an unnecessary and an unwarranted restriction on the parties to not be able to make copies of the subpoenaed material providing that there are appropriate conditions on the manner in which any copies may be used.

I certify that the preceding thirty one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 22 May 2017.

Associate: 

Date:  19 May 2017