Lee & Anor and Ryder
[2010] FamCAFC 158
•25 August 2010
FAMILY COURT OF AUSTRALIA
| LEE AND ANOR & RYDER | [2010] FamCAFC 158 |
| FAMILY LAW - APPEAL – LEAVE TO APPEAL – PRACTICE AND PROCEDURE – SUBPOENAS – where there are long running proceedings before the Court with respect to child support – where the mother issued two subpoenas to produce documents to non-parties – where the trial judge dismissed the non-parties’ Notice of Objection – whether the trial judge erred in ordering the production of all documents sought pursuant to the subpoenas – whether the trial judge erred in relying on allegedly hearsay evidence – whether the trial judge erred in concluding the production of the documents was not oppressive – whether the trial judge failed to give any or any sufficient weight to the factual assertions contained in the Notice of Objection – applicants have not established an error of principle or that the decision appealed against works a substantial injustice – leave to appeal refused. FAMILY LAW - APPEAL – COSTS – where the application for leave to appeal was wholly unsuccessful – applicants to jointly and severally pay the respondent’s costs. |
| Family Law Act 1975 (Cth) s 94AA Family Law Regulations 1984 (Cth) reg 15A |
| Adam P Brown Male Fashions Pty Ltdv Philip Morris Inc (1981) 148 CLR 170 Rutherford and Rutherford (1991) FLC 92-255 |
| APPLICANT: | Ms Lee |
| SECOND APPLICANT: | S Company Pty Ltd |
| RESPONDENT: | Ms Ryder |
| FILE NUMBER: | ADF | 5495 | of | 1989 |
| APPEAL NUMBER: | SA | 59 | of | 2009 |
| DATE DELIVERED: | 25 August 2010 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Finn, Thackray and Strickland JJ |
| HEARING DATE: | 6 October 2009 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 17 June 2009 |
| LOWER COURT MNC: | [2009] FamCA 531 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Swan |
| SOLICITOR FOR THE APPLICANT: | Swan Lawyers |
| COUNSEL FOR THE RESPONDENT: | In person |
Orders
The application for leave to appeal be dismissed.
The applicants jointly and severally pay the respondent’s costs of and incidental to this application for leave to appeal as agreed and in default of agreement as assessed.
IT IS NOTED that publication of this judgment under the pseudonym Lee and Anor & Ryder is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT ADELAIDE |
Appeal Number: SA 59 of 2009
File Number: ADF 5495 of 1989
| Ms Lee |
Applicant
And
| S Company Pty Ltd |
Second Applicant
And
| Ms Ryder |
Respondent
REASONS FOR JUDGMENT
Introduction
By Notice of Appeal filed on 24 June 2009 Ms Lee and S Company Pty Ltd (“the applicants”) seek leave to appeal and, if leave be granted, to appeal orders made by Burr J on 17 June 2009 in which his Honour dismissed a Notice of Objection in relation to two subpoenas to produce documents and ordered the production of the documents sought. The subpoenas were issued in the context of long running proceedings between Ms Ryder (“the mother”) and Mr Lee (“the father”) with respect to child support.
Ms Lee is the father’s wife and the Managing Director of S Company Pty Ltd.
Background
As mentioned, these are long running proceedings between the mother and the father. There are two children of the parties’ relationship, J born in April 1989, and L born in April 1991. Both children are therefore now over the age of 18 years. The current issue for determination before the Court is the parties’ competing applications for departure orders from administrative assessments of child support payable by the father dating back to 1998.
In 1992 the father established a company S Company Pty Ltd. The father asserts that he ceased to be a director, secretary or shareholder of this company in 1998 and that Ms Lee took over the running of the company at this time. The father became and continues to be an employee of the company.
In June 1995 the father and Ms Lee purchased land at C (“C property”). The father transferred his interest in the property to Ms Lee in January 1998. Various improvements have been made to the property, including the installation of a kitchen, which was the subject of proceedings commenced in the District Court of South Australia in 2006 by the father and Ms Lee as plaintiffs.
The parties’ competing applications for departure orders were initially heard by Bell J in May 2007. An appeal against his Honour’s orders was allowed by the Full Court (Finn, Thackray and Strickland JJ) and the matter was remitted for rehearing. In due course the matter was listed before Burr J.
On 12 August 2008 the mother was granted leave by Burr J to issue a number of subpoenas to produce documents. On this date the mother issued subpoenas to produce documents to Ms L, in her personal capacity, and to her as the Managing Director of S Company Pty Ltd.
After initial difficulties serving Ms Lee with the subpoenas, Ms Lee filed a Notice of Objection on 29 April 2009. This Notice of Objection related to both subpoenas.
On 29 April 2009 Burr J advised counsel for the mother that the subpoenas needed to be redrafted to better particularise exactly what documents she sought be produced, and the matter was adjourned for that to occur.
The mother subsequently issued two amended subpoenas on 1 May 2009.
When the matter came back before Burr J on 5 May 2009, the Court was informed that these subpoenas required further amendment, and the mother was granted leave to do so.
The mother re-issued subpoenas to Ms Lee and the Managing Director of S Company Pty Ltd on 15 May 2009. In its final form, the subpoena issued to Ms Lee sought the following documents:
Item Number Date Description 1. 1 July 1998 until the date of this subpoena all cheque butts, bank statements, and credit card statements which record payments made for or in relation to improvements upon the property at [C] being that property registered upon Certificate of Title Volume […] Folio […]
2. 1 July 1999 until the date of this Subpoena all cheque butts, deposit slips and bank statements, and credit card statements whether written or electronic relating to the account from which the sum of $91,976.50 (or thereabouts) was transferred to the credit of [G] Pty Ltd (trading as [CN Company]) on or about the 22 day of August 2005
3. 1 July 1999 until the date of this Subpoena all cheque butts, deposit slips and bank statements, and credit card statements whether written or electronic relating to the account from which the sum of $91,976.50 (or thereabouts) was transferred to the credit of [G] Pty Ltd (trading as [CN Company]) in or about January 2006.
Similarly, in its final form, the subpoena issued to the Managing Director of S Company Pty Ltd sought the following documents:
Item Number Date Description 1. Financial years ending 30 June
a. 2000
b. 2001
c. 2002
d. 2003
e. 2004
f. 2005
g. 2006
h. 2007
2008
inclusive
The following documents prepared in respect of [S] Co Pty Ltd namely:
a. Income tax returns;
b. GST ledgers;
c. Profit and Loss Statements;
d. Loan Account Statements;
e. Balance Sheets;
f. Depreciation Schedules
2. from 1 July 1998 until the date of this subpoena all cheque butts, copy of deposit slips, bank statements, and credit card statements whether written or electronic relating to the Account from which the sum of $91,976.50 (or thereabouts) was transferred to the credit of [G] Pty Ltd (trading as [CN Company]) on or about the 22 day of August 2005
3. From 1 July 1999 until the date of this Subpoena all cheque butts, deposit slips, bank statements, and credit card statements whether written or electronic relating to the Account from which the sum of $91,976.50 (or thereabouts) was transferred to the credit of [G] Pty Ltd (trading as [CN Company]) on or about January 2006.
On 27 May 2009 Ms Lee produced to the Court records relating to the wages paid to the father by the company.
On 28 May 2009 a single Notice of Objection was filed by Ms Lee both in her personal capacity and as Managing Director of the company. The subpoenas were objected to on the grounds of lack of relevance, that the subpoenas were a “fishing expedition” and oppression.
The hearing with respect to the objections took place before Burr J on 29 April 2009, 5 May 2009 and 2 June 2009, when judgment was reserved.
On 17 June 2009 Burr J delivered his reasons for judgment and made orders dismissing the Notice of Objection filed in relation to the two subpoenas and requiring production of all documents sought by the subpoenas on or before 4.00pm on Friday 26 June 2009.
On 23 June 2009 the applicants filed an Application in a Case seeking a stay of Burr J’s orders.
On 30 June 2009 Burr J made orders staying the orders of 17 June 2009 pending determination of this appeal. His Honour also ordered that:
2. Any documents currently in the possession of Ms [Lee] either in her personal capacity or in her capacity as Managing Director of [S] Company Pty Ltd not be destroyed and are to be preserved pending finalization of the Appeal process.
The trial in this matter, which had been listed to commence before Burr J in July 2009, was also vacated.
Reasons for Judgment of the trial judge
After briefly recording the background to the proceedings and the procedural history with respect to the subpoenas in question, Burr J outlined the relevant provisions of the Family Law Rules 2004 (Cth) (“the Rules”) with respect to the issuing of subpoenas and the provisions of the Child Support (Assessment) Act 1989 (Cth) that would be relevant to the ultimate determination of the matters before the Court.
His Honour noted that objection was taken to the subpoenas on the grounds of lack of relevance, that the subpoenas were a “fishing” expedition and were oppressive. Objection was also taken on the basis of the confidentiality of the documents sought.
His Honour, in the context of his discussion of the grounds upon which an objection to a subpoena may be made, referred to various authorities, including Hatton v Attorney-Generalof the Commonwealth of Australia and Commonwealth Development Bank of Australia (2000) FLC 93-038 and Commissioner for Railways v Small (1938) 38 SR (NSW) 564.
Counsel for the applicants argued before his Honour that it was not appropriate for a non-party to be subjected to oppressive subpoenas, and that the documents, if relevant, should be discovered by the parties themselves. His Honour then referred to the authorities relied upon by counsel for the applicants on this issue (at paragraphs 39 to 44). His Honour also emphasised the requirements contained in the Rules for full and frank disclosure to be made by all parties.
His Honour concluded that it was appropriate to seek the documents by subpoena to a non-party in this case:
49. … While subpoenas should not be used in effect as an alternative to obtaining discovery from a party, given the history of this matter, it is appropriate to seek the documents by subpoena to a non-party. Here too, the non-party is hardly a stranger, being the present wife, former business partner and now employer of the father.
The trial judge identified that the issue for determination was whether the documents sought were of sufficient apparent relevance, were sought for a legitimate forensic purpose, and whether the subpoenas were oppressive.
His Honour found that counsel for Ms Lee had correctly identified that the principal issue for determination at trial involved an examination of the father’s income during the relevant period and “whether any departure orders from previous assessments should be made.”
His Honour then addressed the submissions of counsel for the mother on the issues of relevance and forensic purpose, outlining the evidence relied upon in support of these submissions, which included reference to bank statements of the father and documents filed in proceedings in the District Court with respect to improvements to the C property. Counsel for the mother submitted before his Honour, inter alia, that the father is the beneficial owner of the company, or alternatively that the company is the alter ego of the father. Counsel also submitted that representations had been made by the father and Ms Lee that they were both owners of the C property and that payments were made with respect to the improvement of this property from company accounts.
His Honour then turned to consider the submissions on behalf of the applicants. In this respect, counsel for the applicants had acknowledged that documents relating to how payments in respect of the kitchen at the C property were recorded did meet the evidentiary test for the issue of and compliance with subpoenas and should be produced. It was submitted, however, that there was no evidence to suggest that any other payments had been made towards the property or for the father’s benefit, and the documents sought would not assist in answering a forensic enquiry as to that issue. It was said to be a case of “classic fishing”.
The trial judge said that in determining an application for a departure from an administrative assessment, the Court must have before it the assets, income and financial resources of the parties, and that in this case, on the evidence, the father’s interest in the C property and his interest in S Company Pty Ltd were clearly put into issue and would be required to be determined at trial.
His Honour found that the documents identified in item 1 of the subpoena to Ms Lee were relevant to the identification of the father’s assets and financial resources and should be produced.
His Honour also concluded that the financial records of the company as sought in item 1 of the subpoena to the company were relevant. His Honour explained that the mother asserted the father is the beneficial owner or that the company is the alter ego of the father, and that it had been established that two payments had been made from a company account for improvements to the property in which it was asserted the father has an interest. In these circumstances, his Honour did not consider it oppressive to require the production of the company’s financial records.
Next, the trial judge turned to consider items 2 and 3 of both subpoenas, which were in very similar terms, together. These items sought the production of documents, namely cheque butts, deposit slips, bank and credit card statements, relating to an account from which two payments were made with respect to the installation of a kitchen at the C property. His Honour acknowledged that this “could be seen as oppressive” as the documents sought related to the records of a business’ trading account for a period of 11 years. However, his Honour said that the mother sought to establish whether any payments had been made from the account for the improvement of the property or otherwise for the father’s benefit. His Honour was satisfied that the documents sought were relevant to this issue and that it was not merely a “fishing expedition”, but a “forensic enquiry relevant to determining the income and financial resources of the father and putting this evidence before the court” (at paragraph 82).
Having found that the documents were relevant, his Honour addressed whether it was oppressive to require the production of all the documents sought over the 11 year period specified.
The trial judge reiterated that the mother’s application clearly put into issue the parties’ assets, income and financial resources from 1998 until present. His Honour concluded that given the breadth of the mother’s application and the established relevance of the documents, he did not consider it to be oppressive to require production to the Court.
Finally addressing issues of confidentiality that had been raised by counsel for the applicants, Burr J concluded that the subpoenas should not be set aside on the basis that the material may be commercially sensitive, outlining the obligation in r 15.27 that documents are only to be used for the case in which they are produced.
Relevant legal principles – leave to appeal
Section 94AA of the Family LawAct1975 (Cth) (“the Act”) sets out the circumstances in which leave to appeal is required, which includes an appeal from a “prescribed decree of the Family Court”. Regulation 15A of the Family Law Regulations 1984 (Cth) provides that a “prescribed decree” for the purposes of s 94AA is an “interlocutory decree (other than a decree in relation to a child welfare matter)”.
The principles applicable to an application for leave to appeal from an interlocutory order are well known. In Rutherford and Rutherford (1991) FLC 92-255, the Full Court had regard to the principles established by the High Court in Adam P Brown Male Fashions Pty Ltdv Philip Morris Inc (1981) 148 CLR 170, where Gibbs CJ, Aickin, Wilson and Brennan JJ said at 177:
An interlocutory order for an injunction is a matter of practice and procedure. See McHarg v. Universal Stock Exchange Ltd. [[1895] 2 QB 81 at 82]; Minister for The Army v. Parbury Henty and Co. Pty. Ltd. [(1945) 70 CLR 459 at 489]; White v. White [[1947] VLR 434 at 438].
Nor is there any serious dispute between the parties that appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure. Counsel for Brown urged that specific cumulative bars operate to guide appellate courts in the discharge of that task. Not only must there be error of principle, but the decision appealed from must work a substantial injustice to one of the parties. The opposing view is that such criteria are to be expressed disjunctively. Cases can be cited in support of both views: for example, on the one hand, Niemann v. Electronic Industries Ltd. [[1978] VR 431 at 440]; on the other hand, De Mestre v. A.D. Hunter Pty. Ltd. [(1952) 77 WN (NSW) 143 at 146]. For ourselves, we believe it to be unnecessary and indeed unwise to lay down rigid and exhaustive criteria. The circumstances of different cases are infinitely various. We would merely repeat, with approval, the oft-cited statement of Sir Frederick Jordan in In re the Will of F.B. Gilbert (dec.) [(1946) 46 SR (NSW) 318 at 323]:
‘... I am of opinion that, ... there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.’
See also Brambles Holdings Ltd. v. Trade Practices Commission [(1979) 28 ALR 191 at 193]; Dougherty v. Chandler [(1946) 46 SR (NSW) 370 at 374]. It is safe to say that the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration.
The Full Court in Rutherford (supra) agreed with the High Court that it was “unnecessary and indeed unwise to lay down rigid and exhaustive criteria”.
Application for Leave to Appeal
The applicants filed a Notice of Appeal in which they seek leave to appeal on the following bases:
1. The proposed grounds of appeal are arguable.
2. The current orders to produce work a substantial injustice against the non party recipients of the subpoenae in that:-
2.1.They operate as virtual discovery orders against the father in circumstances where there is no evidence the father has not complied with his obligation to disclose.
2.2.The sought documentary material is extensive and covers the records of a long period of time.
2.3.The sought documentary material will disgorge extensive business records recoding payments to and from the company in the course of its business, which records could never assist in determining the forensic issues in the substantive hearing.
3. The current orders to produce adversely affect non parties to the substantive hearing and require her and her company to produce, in the most extensive manner, the minute details of the company’s business over a period of up to 11 years, in circumstances where the mother has not established that such company records are likely to assist in her case. At best, any such assistance could only be described as remote or speculative.
4. The learned Judge erred in principle by : -
4.1.Having regard to hearsay in the assessment of whether the mother has discharged her onus to satisfy the Court that the sought documents will be relevant;
4.2.Concluding it was not oppressive to make such orders for production;
4.3.Failing to give any or any sufficient weight to the uncontradicted assertions in the Notice of Objection.
These bases are mirrored in the proposed grounds of appeal, and thus it is convenient to consider them in the context of an examination of those proposed grounds of appeal.
Proposed Grounds of Appeal and Orders Sought
The applicants proposed the following grounds of appeal in the event they were granted leave to appeal:
1. The learned Judge erred in ordering the production of all documents sought pursuant to the subpoena.
1.1The mother has failed to discharge her obligation to satisfy the Court that all of the sought documents will assist her case or will be relevant to an issue in the proceedings.
1.2The father has an obligation to disclose any document relevant to a determination of his income and financial resources [Family Law Rule 4.26] and there is no evidence such obligation has not been discharged.
1.3A non party should not be compelled to produce a multitude of documents as an alternative to the father meeting his disclosure obligations.
2. The learned trial Judge erred in relying upon the hearsay evidence identified at para [64] of the Reasons.
3. The learned trial Judge erred in concluding that the production of the material particularised at item 1 of the subpoena directed to the company will show how the two payments of $91,976.50 have been recorded by the company – para [79] Reasons.
4. The learned trial Judge erred in concluding it was not oppressive to require the production of all of the sought documents – paras [83], [85] Reasons.
5. The learned trial Judge erred in failing to give any or any sufficient weight to the factual assertions in the Notice of Objection.
5.1This material asserted the company had made no payments to the father other than his wages and that Ms [Lee] had made no payments to the father.
5.2This material was uncontradicted and contraindicated the drawing of any inference that payments other than wages had been made to the father.
As with the proceedings before the trial judge, the applicants were represented by the same counsel at the hearing of the appeal and submissions were made on behalf of the applicants jointly.
The applicants seek, in the event leave is granted to appeal, that the appeal be allowed and the orders of 17 June 2009 set aside.
Although represented by counsel before the trial judge, the mother appeared in person at the hearing of this appeal. The mother sought that the application for leave to appeal be dismissed.
Discussion
Proposed Ground 1 – the trial judge erred in ordering the production of all documents sought pursuant to the subpoenas
At the outset, it is necessary for us to record that counsel for the applicants indicated that they were prepared to produce, or had already produced, some of the documents sought by the subpoenas. Counsel advised us that the documents they were prepared to produce are recorded in the Notice of Objection, namely wage books from 24 March 1994 to 30 June 2006 with respect to the father, QuickBooks Accounting records detailing all wages paid by the company to the father since 5 July 2006 and the Group certificates for the father for the financial years 2003 until 2008. In addition counsel informed us that there was a concession at first instance that the records of the company in relation to the recording of the two payments made with respect to the installation of a kitchen at the C property could be produced, with the applicants conceding that the mother had a legitimate interest in relation to those two payments.
Counsel also advised that the applicants were prepared to provide all the “annual accounts” for the company, later clarifying that this would consist of the company’s income tax returns, balance sheets and profit and loss statements.
In his written outline, counsel for the applicants submitted that the documents sought by the subpoenas fall into two categories, namely “[a]ll records of the relevant Company for the last 11 years” and “Bank Statements and all ancillary documents, for example cheque butts and deposit records, for the last 11 years.” We do not agree that the subpoenas go quite as wide as that. In our view the documents sought fall into the following categories: firstly, records relating to payments made in relation to improvements to the C property (item 1 of the subpoena directed to Ms Lee); secondly financial records of the company from 2000 to 2008 inclusive (item 1 of the subpoena issued to the company) and finally records, specifically cheque butts, deposit slips, bank statements and credit card statements, relating to the account from which the two payments were made in respect of the installation of the kitchen at the C property (items 2 and 3 of both subpoenas).
Nevertheless the applicants maintained their position taken at trial that the effect of the subpoenas, and in particular the subpoena issued to the company, is that they require the disclosure of all of the day to day trading activities of the company. While counsel conceded it cannot be denied that whether the father has an interest in the company is a very “live” issue, counsel contended that this does not make every trading record of the company relevant. It was submitted that for the mother to be able to seek production of the documents outlined in the subpoenas, it is necessary for her to establish that the documents sought will assist her case and are relevant. The applicants maintain, however, that the mother is merely on a “fishing expedition” and is hopeful for the disclosure of documents that will provide her with material upon which to make assertions she is presently unable to make. It was also contended that whether or not the father has a beneficial interest in the property is not assisted by reference to the records of the company.
Counsel for the applicants highlighted that it is the father who has the obligation to disclose and discover all relevant documents and submitted that it is not appropriate for a non-party (in this case Ms Lee and also the company) to be compelled to produce documents and for Ms Lee’s business to be consequently disrupted by the proceedings. It was submitted that the mother has not established that she has exhausted all available remedies against the father with respect to the disclosure of the documents sought. Such an argument, however, overlooks the very important fact that the father, and for that matter both applicants as well, contend that he has no control over the company, and thus presumably no ability to provide to the mother the documents sought with respect to the company’s records. We note that counsel for the mother before the trial judge alluded to the difficulties the mother had had in obtaining discovery from the father at that time.
The mother disputed that the subpoenas are a fishing expedition. The mother maintained that the father is, and always has been, the “driving force” behind the company and that his actions in removing himself as a shareholder and director of the company were directed to him avoiding his child support obligations.
The substantive proceedings between the mother and father are competing applications for departure orders from administrative assessments of child support, dating back to 1998. As identified by the trial judge, in determining whether to make a departure order the Court must have regard to the income, property, financial resources and earning capacity of the parents. The trial judge summarised the issues that arise in this case at paragraph 76:
In determining an application for a departure from an administrative assessment of child support, the assets, income and financial resources of the parents are of primary relevance and must be before the court. The material relied upon by both Mrs Lindsay and Mr McQuade for the mother clearly puts into question both the father’s interest in the [C] property and his interest in the company. Both are issues which I will be required to determine at trial for the purposes of dealing with the application for departure orders.
It is clear from the trial judge’s reasons that given the background facts of this case, the father’s interest in the C property and in the company, and whether he has received any payments to his benefit from the company, have been put in issue and will be required to be determined at trial. It is not merely the case, as contended by the applicants, that the respondent has made bald assertions without evidence to support her claims. His Honour outlined in detail the basis for the mother’s assertions that the father is the beneficial owner of the company, or alternatively that the company is the alter ego of the father, and that the father has a beneficial interest in the property, which included (at paragraphs 54 to 69):
53.1A Notice of Decision on Objection by the Child Support Agency dated 25 June 2004 in which the father was recorded as “the beneficial owner of the company”, although it is suggested, and we think correctly, that that stems from an historical finding prior to Ms Lee taking over the company from the father in 1998;
53.2The father’s bank statements showing payments from the company other than in the form of wages;
53.3Representations made in documents filed in proceedings in the Magistrates Court and District Court regarding the ownership of the C property and the business.
At paragraph 81 his Honour said:
It has been identified that the two payments of $91,976.50 [in relation to the kitchen installed at the property] were made from a company account. The mother seeks to establish whether any other payments have been made from this account with respect to improvements to the property or otherwise for the father’s benefit. The mother has referred to the father’s bank statements annexed to his affidavit filed on 6 August 2008, which allegedly show payments made to him by [S], and in particular payments of $40,000 on 23 June 2004 and $38,040 on 15 June 2005. Reference was also made to documents filed in the District Court proceedings in which the father referred to payments having been made from “our business account”. It has been therefore put in issue that payments and benefits may have been received by the father from the company other than in the form of wages.
His Honour was satisfied that the documents sought were relevant and part of a forensic enquiry relevant to determining the income and financial resources of the father (at paragraph 82).
Counsel for the applicants contended that if the father’s business had been sold at arm’s length to a third party, it would not be appropriate to seek the production of documents from such a non-party. However, a central and most significant issue in this case is that the non-parties from which production is sought are closely connected with the father. Ms Lee is the father’s current wife. The father is a former shareholder and director of the company, which was established by him, and which is currently owned and managed by his wife, with him as an employee.
We do not consider that his Honour erred in concluding that the documents sought pursuant to the subpoenas were relevant to the issues for determination at trial. It is evident that given the mother’s claim regarding the father’s interest in the C property that the documents sought in item 1 of the subpoena issued to Ms Lee are relevant. With respect to item 1 of the subpoena issued to the company, many of the documents sought have now been conceded as appropriate to produce by counsel for the applicants. To the extent to which the documents sought are not covered by that concession, we are also satisfied his Honour did not err in concluding that the mother had established their relevance. We are also not satisfied that his Honour erred with respect to ordering the production of the documents referred to in items 2 and 3 of the two subpoenas. His Honour clearly and adequately outlined the basis for this conclusion and no appealable error has been established.
Proposed Ground 2 – the trial judge erred in relying on hearsay evidence
The applicants complain about the evidence to which his Honour referred at paragraph 64 of the reasons namely:
64. Mr McQuade also referred to the following paragraphs of the father’s affidavit in which it is submitted the father claims an interest in the company’s business account.
14.On 22 August 2005, [Ms Lee] and I paid the deposit of 50% of the contract price by electronic funds transfer from our business account …
…
16.In about January 2006 [Ms Lee] and I paid the balance of the contract price by electronic funds transfer from our business account …. (Emphasis in original)
Counsel for the applicants asserts that the trial judge erred in relying on this evidence, which it is contended is hearsay. The evidence complained of is contained in the affidavit of the father filed on 8 August 2007 in the proceedings commenced by the father and Ms Lee in the District Court in relation to improvements made to the C property.
Apart from contending that the evidence is hearsay, counsel also argued that the above extracts do not establish that the father has an interest in the business by merely using the words “our business account.”
As to whether it is hearsay or not, nothing was put to us apart from the bald assertion that it is. We do not consider that it is hearsay, but even if it is, it was deposed to in an affidavit sworn by the father in proceedings in another court, and we consider that his Honour was quite entitled to rely on it in the context of determining the relevance and forensic purpose of the production of documents pursuant to a subpoena. His Honour of course did not have to determine the truth of the assertion in that exercise, and what was important was that it was made. Thus in our view the evidence of what the father said in that affidavit is admissible.
In relation to the alternative submission of counsel, with due respect to counsel, we consider that that misses the point. In other words, it was not necessary for the mother to establish that the father had an interest in the business, what was required was to establish the relevance of the production of the documents sought.
We do not accept that his Honour erred in relying on this evidence of the father, and do not consider there is any merit in this proposed ground.
Proposed Ground 3 – the trial judge erred in concluding that the production of the documents will show how payments have been recorded by the company
At paragraph 79 the trial judge said:
It has been established that the two payments of $91,976.50 were made from a company account for improvements to the property in which it has been asserted that the father has an interest. I agree with the submissions of the mother that how these payments have been recorded by the company is relevant. I am therefore satisfied that it has been established by the mother that the financial records of the company are relevant to the determination of the child support issues. I do not consider it to be oppressive to require the production of a company’s financial records.
The applicants challenge that the production of the documents particularised at item 1 of the subpoena to the company will “show how the payments of $91,976.50 have been recorded by the company”. To repeat, item 1 of the subpoena directed to the company sought the production of the financial records of the company for the financial years ended 2000 to 2008 inclusive, namely the income tax returns, GST ledgers, profit and loss statements, loan account statements, balance sheets and depreciation schedules. We note that the applicants have now conceded that they will produce the income tax returns, profit and loss statements and balance sheets for the years in question. Counsel was of the view that it would be expected that depreciation schedules would be attached to the balance sheets. Presumably that would leave only the GST ledgers and loan account statements in contention. Counsel for the applicants submitted that the GST ledgers were of no relevance.
Counsel did not advance this proposed ground in either written or oral submissions. However, given what we have said above in relation to proposed ground 1 and what we will next say about proposed ground 4 with respect to the production of the documents sought by the subpoenas generally, we do not consider that any error by his Honour has been established.
Proposed Ground 4 – the trial judge erred in concluding that the production of the documents sought was not oppressive
With respect to the challenge on the basis of oppression, the applicants in particular challenge his Honour’s findings at paragraphs 83 and 85 in relation to whether it is oppressive for the documents sought in items 2 and 3 of the subpoenas to be produced. His Honour said:
83. The question is whether it is oppressive to require the production of all the documents sought in these items of the schedules for the specified 11 year period.
84. The mother’s application seeks departure orders from administrative assessments of child support dating back to 1998. The child [L] turned 18 on […] April 2009. However, the mother also seeks in her Further Amended Application filed 6 October 2006 that in the event [L] is enrolled in secondary education in 2009, for the assessment to continue until the final day of school in 2009. Section 151B of the Child Support Assessment Act 1989 allows such an application to be brought. I am not aware at this stage whether the child is enrolled in such secondary education or whether an application has been made to the Registrar pursuant to that provision. Prima facie, however, the current financial positions of the parties are also relevant given the mother’s application.
85. The mother’s application clearly puts in issue the parties’ assets, income and financial resources of the parties from 1998 until the present. Given the breadth of the mother’s application and the established relevance of the documents sought, I do not consider it to be oppressive for the documents sought in items 2 and 3 of the subpoenas to be produced to the court.
As his Honour identified, the parties’ competing applications relate to administrative assessments dating back to 1998. In such circumstances the breadth of time over which the documents are sought is clearly justified. Despite the submission by counsel for the applicants that the subpoenas seek “all documents” of the company for the 11 year period, as well as bank statements and all ancillary documents for the period, the subpoenas only seek the identified documents (cheque butts, deposit slips, bank and credit card statements) in relation to the specified account from which the identified payments for improvements to the C property were made. The subpoenas do not seek all such documents with respect to the company generally. In such circumstances, we do not consider that his Honour erred in concluding that the production of the documents sought was not oppressive.
Proposed Ground 5 – the trial judge erred in failing to give any or any sufficient weight to the factual assertions in the Notice of Objection
Counsel for the applicants submits that the Notice of Objection filed by Ms Lee, in both her personal capacity and as Managing Director of the company, articulates the factual basis for her claim that most of the documents sought by the two subpoenas were irrelevant. Those factual assertions can be summarised as follows:
1.Ms Lee is currently the sole shareholder of the company;
2.Ms Lee has been the sole director of the company since 1 November 2002;
3.Ms Lee has been the sole registered proprietor of the C property since 28 January 1998;
4.The father is an employee of the company;
5.The company has made no payments to the father other than his wages;
6.Ms Lee has made no payments to the father.
Counsel contends that the trial judge gave no weight to these “uncontradicted” assertions.
While the Notice of Objection was signed by Ms Lee, it is not a sworn document. Counsel for the applicants submitted that Ms Lee was available for cross examination, however, and the mother did not avail herself of this opportunity.
Importantly, while Ms Lee outlines that no payments were made to the father by either the company or her, other than in the form of wages, the Notice of Objection is silent as to whether any other payments were made for the father’s benefit, which is the issue in contention in these proceedings. The father’s interest in the C property is also in contention.
We do not accept that there is any merit in the applicants’ arguments in relation to this proposed ground. His Honour was clearly cognisant of, and recorded, the assertions contained in the Notice of Objection, particularly that no payments had been made to the father by the company or Ms Lee other than wages (at paragraph 53). His Honour was also acutely aware that the father is no longer a shareholder of the company and is not a registered proprietor of the C property. We do not accept that no weight or consideration was given to these assertions. Thus this challenge cannot succeed.
Conclusion
We are not satisfied that the applicants have established that his Honour made an error of principle or that the decision appealed against works a substantial injustice as required for leave to appeal to be granted. We would not therefore grant leave to appeal in this case. In any event, had we been minded to grant leave, given our consideration of the proposed grounds of appeal above, we would have dismissed the appeal.
Costs
At the conclusion of the hearing before us submissions were sought from the parties in relation to the costs of the application for leave.
Counsel for the applicants conceded that if they were unsuccessful in the application for leave there was little that could be said in opposition to an order for costs against them.
The mother sought costs against the applicants in the event the application for leave was unsuccessful. Although not represented at the hearing, the mother advised that she was initially represented at the commencement of the process, prior to exhausting her funds, and thus had incurred legal costs.
In the circumstances of the application for leave to appeal being wholly unsuccessful there should be an order that the applicants jointly and severally pay the mother’s costs of and incidental to the application for leave to appeal.
I certify that the preceding seventy-eight [78] paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 25 August 2010.
Associate:
Date: 25 August 2010
0
3
4