Lapham and McEwan and Anor
[2018] FCCA 118
•6 February 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LAPHAM & MCEWAN & ANOR | [2018] FCCA 118 |
| Catchwords: FAMILY LAW – Costs – no costs ordered. |
| Legislation: Family Law Act 1975 (Cth), s.117(2A) |
| Cases cited: Lucas Industries Ltd v Hewitt (1978) 18 ALR 555 |
| Applicant: | MS LAPHAM |
| First Respondent: | MR MCEWAN |
| Second Respondent: | (OMITTED) PTY LTD |
| File Number: | NCC 554 of 2016 |
| Judgment of: | Judge Middleton |
| Hearing date: | 5 June 2017 |
| Date of Last Submission: | 5 June 2017 |
| Delivered at: | Newcastle |
| Delivered on: | 6 February 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Duane |
| Solicitors for the Applicant: | Matthew Peter Fawkner Solicitor |
| Counsel for the First Respondent: | Mrs Kearney |
| Solicitors for the First Respondent: | Joy Popovska and Associates |
| Solicitors for the Second Respondent: | Georgia Seaton Family Law & Mediation |
ORDERS
The application for costs made by Mr McEwan is dismissed.
The application for costs made by (omitted) Pty Ltd is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Lapham & McEwan & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT NEWCASTLE |
NCC 554 of 2016
| MS LAPHAM |
Applicant
And
| MR MCEWAN |
First Respondent
| (OMITTED) PTY LTD |
Second Respondent
REASONS FOR JUDGMENT
Background
The Applicant Wife commenced property proceedings on 7 March 2016.
The Respondent Husband filed his Response on 9 June 2016.
By order of 10 August 2016 the parties were directed to attend mediation.
On 21 December 2016 the proceedings were listed for trial commencing 18 July 2017. Furthermore on that day the parties by consent entered into orders requiring each to provide to the other written notice as to their actual costs, both paid and knowing, their estimated future costs including to the conclusion of a three-day trial, any expenses paid or payable to any expert witness, and the source of the funds for the costs paid or to be paid, if not met by a third party.
On 9 February 2017 the Applicant Wife issued three subpoena to the Respondent Husband and the third party (omitted) Pty Ltd.
Both the husband and the third party objected to the issue of the subpoena. The objection to subpoena hearing was listed for 11 May 2017.
On 11 May 2017 the Applicant Wife withdrew her reliance upon the subpoena issued to the husband and the parties otherwise entered into consent orders regarding the inspection of the third party’s documents. Both the Respondent Husband and the third party sought costs and it was ordered that written submissions relating to those costs be submitted on 5 June 2017.
The parties entered into final property orders on 13 December 2017. Consequently the only outstanding issue is the issue as to costs relevant to the objection to the subpoena.
The arguments
The wife's argument
With respect to the subpoena issued to the husband the wife argues that on 13 April 2017 she provided written notice to the husband's solicitor that the subpoena addressed to the husband would not be pressed and would not be called upon.
With regard to the subpoena issued to the third-party, the wife argues that at her initiation agreement was reached with the third-party to reduce the scope of the documents to be produced and subsequently the parties entered into an agreement for the inspection of those documents.
Furthermore the wife argues that she had a right to access all details of (omitted) Pty Ltd on the basis that she had an interest through (omitted) Pty Ltd in the third-party as shareholders.
Finally the wife argues that as the husband, at the relevant time, was a full-time employee of the third-party, she had a right to inspect documents under subpoena relevant to his wage and/or salary packaging.
The husband's argument
The husband's arguments are as follows:
a)The documents required under subpoena are not relevant to any issue previously outlined in the proceedings;
b)Specifically an order was made on 27 June 2016 for the parties to exchange a market appraisal or valuation of any asset the value of which remained in dispute. The matter was set down for hearing on 3 March 2017 on the basis that the matter was ready for trial;
c)With respect to the payment of fees any payment met by a third party was excluded from the orders sought on 21 December 2016;
d)The wife unreasonably refused an offer made by the husband on 3 March 2017 to withdraw the subpoenaed;
e)The wife should have written to the husband seeking disclosure prior to the issue of subpoena;
f)On 13 April 2017 the wife through her solicitor conceded that the request for various documents of the husband should be more appropriately made directly to the solicitor; and
g)That after consideration of the matters within section 117(2A) the Court would be satisfied that there are circumstances that justify the making of a costs order.
The argument of the third-party
The third-party argues that the subpoena are:
a)An abuse of process;
b)The scope of the subpoena were oppressive;
c)That the solicitor for the wife conceded that the scope of the subpoena was oppressive and proposed to reduce the call on the documents sought;
d)As a result of the oppressive nature of the subpoena, the third-party had to seek advice and had to object to the issue and was therefore put to significant cost.
The law
Part 15 Division 15A.1 of the Federal Circuit Court Rules relates to the issue of subpoena and production of documents.
There is no requirement contained within the rules to make a written request seeking disclosure prior to the issue of subpoena.
There is no right to disclosure in the Federal Circuit Court. Part 14 of the Federal Circuit Court Rules relates to disclosure. The obligation to disclose only arises pursuant to rule 14.02 where a declaration has been made under section 45(1) of the Federal Circuit Court of AustraliaAct 1999 (Cth) to allow discovery on either the application of the party or the courts own motion.
The general principle with respect to the issuing of subpoena to produce documents was discussed by Smith J of the Federal Court in by Lucas Industries Ltd v Hewitt[1] as follows:
‘The purpose of the process of subpoena is to facilitate the proper administration of justice between the parties. For that purpose it is the policy of the law that strangers who have documents may be put to certain trouble in searching for and gathering together relevant documents and bringing them to court. It is according to the same principle that persons who have knowledge of facts are put the inconvenience of being brought to court and required to give evidence.’
[1] (1978) 18 ALR 555
In Epstein & Epstein[2] Treyvaud J said he considered the use of subpoena to obtain inspection of third-party documents prior to the trial a legitimate practice. I concur.
[2] (1993) FLC 93-384
It has been held that the issue of subpoena may be an abuse of process because it imposes too onerous a task (see National Employees Mutual General Association v Waind and Hill[3] (“Waind & Hill")).
[3] (1978) 1 NSW LR 372
The general law relating to the setting aside of a subpoena is not in doubt. As set out in Waind & Hill[4] a subpoena may only be issued for the purpose of litigation and not for an ulterior purpose, and the documents sought to be produced must have apparent relevance to the litigation (my emphasis).
[4] Ibid.
With regards to the issue of relevance to an issue in dispute the Full Court in Hatton & Attorney General of the Commonwealth of Australia and Commonwealth Bank of Australia and Commonwealth Development Bank of Australia[5] held
‘…the only way in which apparent relevance of the subpoena material to the main property settlement proceedings could be established was by reference to the affidavit material filed in the proceedings.’
[5] [2000] FamCA 892
The material
The wife did not set out the material upon which she relied in her written submissions. The wife however has only filed, but for issuing subpoena the following documents:
a)Initiating Application filed 7 March 2016;
b)Affidavit filed 7 March 2016; and
c)Her financial statement filed 7 March 2016.
The husband relied upon:
a)Affidavit of the husband filed 9 May 2017;
b)His Financial Statement filed 9 June 2016;
c)The Financial statement of the wife filed 7 March 2016;
d)‘Exhibit 4’ letter from Joy Popovska dated 2 March 2017; and
e)‘Exhibit 5’ letter to Joy Popovska from Gianacas Argiris McDonald Lawyers dated 13 April 2017
The third-party relied upon:
a)Notice of Objection to Subpoena; and
b)Affidavit of the third-party company director filed 28 March 2017.
Application of the material to the law.
The Affidavit material of the wife particularly at paragraph 53 to 62 asserts that the husband refused to provide any information in relation to the parties interests in the third-party.
The husband at paragraph 71 of his Affidavit lists an interest in the third-party and states the value is unknown. At paragraph 78 of the husband's Affidavit he asserts that he was never a partner or a director of the third-party but has always been employed by the third-party.
It follows that there is an issue between the parties as to the nature and extent of any interest held in the third-party, the value of any interest held in the third-party and the nature of the relationship and/or remuneration paid to the husband by the third-party.
The breadth of the subpoena issued to the husband is consistent with the nature of the issue between the parties.
The husband at paragraph 78 of his Affidavit furthermore asserts that he has no documents relevant to the third-party and the issues in dispute.
An inspection of the subpoena reveals that the schedule of documents required pursuant to the subpoena is indeed broad but nevertheless relevant.
The only real legitimate complaint that the husband raises is that item 13 in the schedule contained within the wife subpoena requests:
‘all receipts, invoices, correspondence and other documents showing the financial resources used in payment of Julie Popovska (solicitor) and Julie Kearney (barrister) by you or on your behalf by any other persons or company.’
The order for disclosure of costs made on 21 December 2016 specifically excluded information relating to payment of costs by any third party and in those circumstances to the extent that item 13 in the schedule seeks that information it is perhaps not consistent with the issues between the parties at the time the matter was set down for trial.
In circumstances where the husband swears that he has no control or possession of relevant documents necessary to value the third-party so as to ascertain the parties’ interest, and value thereof, it is in my view appropriate for the wife to seek such information from the third-party.
Subsequent to having discussions with solicitors acting on behalf of the third-party, the wife conceded that the subpoena was perhaps a little broad and agreed to reduce the scope of the subpoena so that it might be answered.
With regard to the wife submission that she provided written notice on 13 April 2017 to the husband that she would not press the subpoena and that as a result she had offered to relieve the husband of his obligation pursuant to the subpoena, it is important to note that the offer made by the wife was conditional upon each party being responsible for their own costs.
The husband relied upon the case of In the Marriage of Sharp and Dalton[6]. That decision was a decision of a Registrar made pursuant to the Rules of the Family Court. This is the Federal Circuit Court and those rules do not apply unless pursuant to rule 1.05(2):
“…if in a particular case the rules are insufficient or inappropriate, the Court may apply the Federal Court Rules on the Family Law Rules, in whole or in part and nullify or dispense with as necessary”.
[6] (1990) 100 F LR 115
As previously outlined there is a specific rule relating to disclosure in the Federal Circuit Court Rules. In those circumstances I am of the view that the case referred to by the solicitor for the husband in a letter dated 2 March 2017 (Exhibit 4) is not relevant and not binding authority.
Turning to the matters contained within section 117(2A) of the Family Law Act 1975 (Cth). The financial statements of the parties show that the wife earns twice as much as the husband.
Neither party including the third-party is in receipt of any assistance by way of Legal Aid.
With respect to the conduct of the parties the husband argues that the wife's conduct is such that it would support the Court making a costs order in favour of the husband.
The argument is based on the foundation that up until the issue of subpoena there had been no formal request for disclosure made by the wife. This is indeed so. However prior to the matter being listed for trial the parties were engaging in discussions via mediation and in fact attended mediation on two separate occasions. Once the trial date had been set it was open to the wife to seek further information regarding the issues in dispute.
I have already set out the issues in dispute and my view that the subpoena turns to those issues. In circumstances where the wife asserts that the husband was not willing to provide relevant documents relating to the parties’ interests in (omitted) Pty Ltd (the third-party) than any suggestion that a request for those documents be made prior to the issue of subpoena is not consistent with the wife's assertion as to the husband's intended conduct with respect to same.
In those circumstances I am not satisfied that the wife's conduct would support a costs order being made.
The wife withdrew the subpoena on 11 May at the time of the hearing of the objection. In those circumstances she was wholly unsuccessful in those proceedings.
With respect to the subpoena issued to the third-party the parties reached agreement on 11 May as to the documents to be produced and also as to who may inspect those documents. In those circumstances the wife was not wholly unsuccessful in relation to the third-party subpoena.
The husband asserts that he made an offer to the wife to withdraw reliance upon the subpoena on 2 March 2017. That offer was silent as to any costs issue between the parties relevant to the issue of subpoena.
On 13 April 2017 the wife agreed to withdraw her reliance provided disclosure occurred and that the parties each paid their own costs in relation to the issue of subpoena.
There was no agreement in those circumstances as to the treatment of each party's costs and it was therefore reasonable for the wife to refuse or reject the husband's offer to settle the issue relating to the subpoena.
In those circumstances there can be no reliance upon the offer submitted by the husband as a ground in support for a costs order being made.
I am not satisfied that the Respondent Husband has made out a claim for costs sufficient for me to order same. In those circumstances I make no order as to costs in favour of the husband.
I am not satisfied that the issue of the subpoena to the third-party was an abuse of process. Whilst the subpoena is very wide in terms of the documents sought, it is nevertheless appropriate to issue subpoena against the third-party.
In circumstances where the wife clearly put in issue the value, if any, of the parties’ interest in the third-party she was in those circumstances entitled to inspect all relevant documents that could be useful in valuing the third-party so as to ascertain the value, if any, of the interest of the parties.
Ultimately through discussion and negotiation the parties were able to agree on a list of documents to be produced.
For these reasons I am not satisfied that there are circumstances justifying the making of a costs order against the wife in favour of either the husband or the third-party.
I certify that the preceding fifty-five (55) paragraphs are a true copy of the reasons for judgment of Judge Middleton
Date: 6 February 2018
Key Legal Topics
Areas of Law
-
Civil Procedure
Legal Concepts
-
Costs
0
2
4