Macchione & Ors & Santoro
[2009] FMCAfam 189
•11 March 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MACCHIONE & ORS & SANTORO | [2009] FMCAfam 189 |
| FAMILY LAW – PRACTICE & PROCEDURE – Objections to subpoena – apparent relevance – forensic purpose. |
| Family Law Act 1975, s.79 |
| Deffia & Zuddro and Ors [2008] FamCA 643 O'Hara & O'Hara & Ors [2007] FamCA 1346 |
| Applicants | MR D.MACCHIONE MR A.P. MACCHIONE A & A MACCHIONE PARTNERSHIP A & A MACCHIONE AND F & A VECCHI PARTNERSHIP DOLCI HOLDINGS PTY LTD LABUE PTY LTD TRUSTEES OF SABATINO FAMILY TRUST NO.1 TRUSTEES OF MACCHIONE FAMILY TRUST SABATINO PTY LTD TRUSTEES OF MACCHIONE FAMILY SUPERANNUATION FUND TRUSTEES OF SABATINO FAMILY TRUST SUPERANNUATION FUND |
| Respondent: | MR SANTORO |
| File Number: | SYC 1574 of 2008 |
| Judgment of: | Altobelli FM |
| Hearing date: | 26 February 2009 |
| Date of Last Submission: | 26 February 2009 |
| Delivered at: | Sydney |
| Delivered on: | 11 March 2009 |
REPRESENTATION
| Counsel for the Applicants | Mr Richards |
| Solicitors for the Applicants | Cameron Boyd Gillingham |
| Counsel for the Respondent: | Mr Richardson SC |
| Solicitors for the Respondent: | York Family Law |
ORDERS
Leave is granted to the parties to re-list this matter before Federal Magistrate Altobelli on 7 days notice as regards the interpretation and/or implementation of these reasons for judgment.
Subject to order (1) and otherwise in accordance with these Reasons for Judgment leave is granted to the husband and the wife and their legal representatives to inspect documents produced pursuant to subpoena referred to in these reasons.
IT IS NOTED that publication of this judgment under the pseudonym Macchione & Ors & Santoro is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 1574 of 2008
| MR D.MACCHIONE TRUSTEES OF SABATINO FAMILY TRUST SUPERANNUATION FUND |
Applicants
And
| MR SANTORO |
Respondent
REASONS FOR JUDGMENT
Introduction
The application before me arises out of a number of subpoenae issued on behalf of the respondent husband in the substantive proceedings.
A number of third parties object to the subpoenae and seek to have them struck out, in whole or in part. There is no issue about whether these third parties have a sufficient interest in the matter. The third parties assert that the husband, who has issued these subpoenae, is unable to establish the apparent relevance between the material sought, and the substantive proceedings. Moreover the third parties assert that the subpoena have no forensic purpose, and are in any event oppressive.
Background
The applicant wife in the proceedings is 34 years old and describes herself as a [occupation omitted]. The respondent husband is 36 years old and is a [occupation omitted]. They married in 1995 and separated in 2008. They have 2 children aged 9 and 7 whose parenting orders are contested and listed for hearing before me commencing 28 September 2009. This hearing is intended to cover property matters as well.
In the property proceedings the husband contends that the wife has an interest in a number of assets that are owned or controlled by a number of third parties including her parents, siblings and other members of the extended family. Specifically it was contended that:
i)The wife has an interest as a beneficial owner of a motel at [P]; and
ii)The wife has an equitable right of consideration by the trustees of the Sabatino Family Trust; and that
iii)As a result of the arrangements that had been entered into between the wife during the marriage, and members of her family and extended family, she was entitled to a benefit pursuant to a constructive trust presumably in various property or businesses owned by third parties.
Whilst Mr Richardson, Senior Counsel for the husband, articulated these contentions during the proceedings before me, it was not presented, nor was it received by me, as an exclusive list of the contentions made by the husband, or to be made by him at a final hearing. The purpose of these contentions was to set the context or parameters of a dispute about the apparent relevance of the subpoena in question. In short Mr Richardson was contending that the substantive proceedings would involve issues going to the constitution of the pool of assets for s.79 purposes. Implicit, if not explicit, in this contention is the allegation that the wife had not properly disclosed her assets to the court as she is otherwise required to do.
The husband caused to be issued subpoenae to:
a)Sabatino Pty Ltd as trustee for Sabatino Family Trust trading as [X] Liquor;
b)Mr A. Macchione and Ms A. Macchione;
c)Sabatino Holdings Pty Limited ACN [1];
d)Cameron Gillingham Boyd Solicitors;
e)Commonwealth Bank of Australia;
f)Australia and New Zealand Banking Group Ltd;
g)Capogreco Joseph G & Associate;
h)Rankin & Crestani Accountants;
i)Sydney Tax & Business Services Pty Limited;
j)Smiles & Associates;
Mr Richards of counsel appeared for the following:
a)Mr D. Macchione;
b)Mr A.P. Macchione;
c)A & A Macchione Partnership;
d)A & A. Macchione and F & A Vecchi Partnership;
e)Dolci Holdings Pty Ltd;
f)Labue Pty Ltd;
g)Trustees of Sabatino Family Trust No. 1;
h)Trustees of Macchione Family Trust;
i)Sabatino Pty Ltd;
j)Trustees of Macchione Family Superannuation Fund;
k)Trustees of Sabatino Family Trust Superannuation Fund.
Each of these persons or entities are referred to in some way in the subpoenae listed in paragraph 5 above.
The objections related to various documents belonging to or controlled by the persons and entities referred to in paragraph 6 above.
Mr Richards emphasised that each of his clients were not parties to the proceedings, and that the production and inspection of these documents would be a serious invasion of their privacy.
On the 12th of February 2009, pursuant to a direction I had made, the husband filed an affidavit setting out the evidence on which he relied as to the relevance of the documents sought in the subpoena. Annexed to the husband’s affidavit was a considerable volume of documents purporting to establish this relevance.
The applicable law
A useful summary of the law relating to subpoenae generally is contained in the judgment of Cronin J in O'Hara & O'Hara & Ors [2007] FamCA 1346 at paragraphs 26 – 32.
26. The Family Law Rules provide that in order to obtain information from a non-party, the requesting party is only entitled to obtain a specified document or class of documents relevant to an issue in the proceedings. The approach that in my view is appropriate is that set out by Moffit P in National Employers’ Mutual General Association Limited v Waind & Hill [1978] 1 NSWLR 372 at 381. Moffit P recognised three distinct steps in the procedure for 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 the documents, which includes whether or not permission 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 decision in the case rests. In these three steps the stranger and the parties have different rights, and the function of the judge differs.
27. In relation to the first step of production and/or objection to production, Moffitt P. went on to say at pp 381-382:
Upon the first step the person to whom the subpoena is addressed may seek to, and have, the subpoena set aside on the ground that it was improperly issued and an abuse of the power to compel the production of documents in any one of a number of ways. Such a case is where the subpoena is used for the purpose of discovery. The essential feature of discovery in this connection, as appears from Burchard’s case … and Small’s case … is that the person to whom the subpoena is addressed will have to make a judgment as to which of his documents relate to issues between the parties. It is oppressive to place upon a stranger the obligation to form a judgment as to what is relevant to the issue joined in proceeding, to which he is not a party. Hence it is an abuse of the use of subpoena to impose this obligation. It follows that it is an abuse to use any subpoena, i.e. even to a party to obtain discovery. This was the reasoning in Small’s case. Of course, discovery as such is otherwise available to a party. It follows that a subpoena can only properly be used for the production of documents described in particular or general terms which does not involve the making of such a judgment. It does not follow, however, that because the party who issues a subpoena is unaware of the precise description of a particular document, or whether a particular document or documents is in the possession of the witness, or even whether it exists, or is unaware of its contents, that the subpoena, or even a subpoena in general terms, amounts to the use of the subpoena for the purpose of “discovery”. To state it does involve a misconception of the different functions of discovery and of a subpoena for production. Of course, it may be that the terms of a subpoena are so wide that it is oppressive, but this is not because it is used for “discovery” in the sense used in Small’s case … and Burchard’s case …, but because it imposes an onerous task on a stranger to collect and produce documents many of which can have no relevance to the litigation. To require the branch of a bank to produce all cheques received by it in a particular year in order to find, if it exists, a cheque of the opponent in a false name would be oppressive, whereas, to require a hospital to produce its file in respect of the medical treatment of the opposing party would not. It is a misuse of terms to say the person who inspects the latter is using it for the purposes of discovery, because he is unaware of the contents of the documents or some of them. It is not in point to seek to define the excessive use of the subpoena. The documents in this case are not such, and the witness itself does not so claim.
The issue of a subpoena may involve an abuse of the power 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 relation 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.
28. Rule 15.26 of the Family Law Rules 2004 provides:
If a named person or a person having sufficient interest in a subpoena:
(a) seeks an order that the subpoena be set aside in whole or in part;
(b) objects to the production of a document required by the subpoena;
(c)…
(d) …;
the person must attend court on the court date to apply for the order.
29. The recipients of the subpoena have objected to the very production of the documents.
30. In Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98 at pp 100-101 (which was referred to in Hatton v Attorney General (2000) FLC 93-038, 26 Fam LR 570) Powell J set out a number of examples in which a court should exercise its jurisdiction to set aside a subpoena. Those examples included:
· where the subpoena has been used for the purpose of obtaining discovery against a third party ...
· where to require a party to comply with a subpoena to produce documents would be oppressive ...
· where the subpoena has been issued for a purpose which is impermissible, as, for example, "fishing" ...
31. Powell J went on to say that :
The authorities do not make clear whether such classes of case to which I have referred above are to be regarded as the only cases in which the court will intervene, or, whether such cases are to be regarded as merely particular examples of a broad class of case in which the court will intervene to exercise its jurisdiction to set aside a subpoena, or, indeed, whether the jurisdiction to set aside a subpoena is but one part of a wider jurisdiction of the court. It seems to me, however, that when, as one does, one finds assertions that the court's jurisdiction to set aside a subpoena is but part of the inherent jurisdiction of the court ... coupled with assertions that a subpoena will be set aside if it be issued for an impermissible, or illegitimate, purpose, or if to require compliance with it would be oppressive ... it is difficult to avoid the conclusion that, in reality, the court's jurisdiction to set aside a subpoena is but one aspect of the court's jurisdiction to act to prevent an abuse of process, and that particular classes of case which I have recorded above are to be regarded as no more than examples of situations which the courts, in the past, have held, and, in the future, would hold, to be cases of an abuse of process.
32. The Full Court in Hatton v Attorney General, added lack of relevance as a ground for setting aside a subpoena.
A useful summary of the law relating to “apparent relevance” is contained in another judgment of Cronin J in Deffia & Zuddro and Ors [2008] FamCA 643 at paragraphs 9-14:
9. A subpoena is not a substitute for discovery[1]. In A & A (2006) FamCA 102 Guest J set out the law succinctly. His Honour said that the question of relevance or apparent relevance is an arguable ground or basis for setting aside a subpoena and that a party seeking to uphold the issue of a subpoena seeking documents must demonstrate that those documents have an apparent relevance to the issue or issues before the Court and in respect of which the subpoena was filed. That is what I am looking at here.
10. In Killorgan Investments Pty Ltd v Baycorp Advantage Business Information Services Ltd and Ors [2002] VSC 270 which was an unreported decision of Byrne J in the Supreme Court of Victoria, his Honour said that the degree of relevance for the purpose was not high. The inspecting party need only show a legitimate forensic purpose in the inspection. His Honour said that a party was entitled to inspect documents not only to see if they contain relevant facts but also to see if they contained information that might prove otherwise than through that document. Be that as it may however, the party seeking to uphold the issue of the subpoena has to show the connection between the documents and the issue before the Court. That is sometimes a problem in cases where emotions are running high.
11. The “apparent relevance” test was approved by the Full Court in Hatton v Attorney-General of Commonwealth of Australia and Ors (2000) FLC 93-038.
12. For the purposes of establishing the question of relevance, a court will only read the evidence in the affidavit as the basis for the argument about disclosure. That evidence must be credible and admissible. In other words, broad generalisations are not helpful to establish relevance even though the bar may not be high.
13. It has always been the position of the civil courts and this Court that a subpoena is not to be used for fishing purposes[2].
14. Family law cases are really no different from those which the courts around the Commonwealth have had to deal with for many years. It must be borne in mind that in family law cases as in others, it is not only a large and expensive task for the non-party but also one which is an invasion of their privacy. The focus therefore is clearly on relevance to the proceedings. In family law cases, where there is an allegation that the non-party has links with or is “in league” with a party to the substantive proceedings, the Court should be more cautious about excluding the pursuit of that information. That is where the evidence of the parties on the question of relevance to the substantive proceedings is critical.
[1] Relationships Australia v Pasternak and Children’s Representative (1996) FLC 92-699.
[2] Botany Bay Instrumentation and Control Pty Ltd v Stewart [1984] 3 NSWLR 98.
Preliminary matters
Mr Richards for the third parties raised a number of preliminary matters.
He attacked the integrity of some of the documents annexed to the husband’s affidavit as to relevance and submitted that they were neither credible nor admissible. Indeed he was able to point out a number of curious inconsistencies in at least one of the annexed documents that, he asserted, undermined its integrity. Moreover he submitted that, at the very least, before the issue of apparent relevance could be determined, the husband should be directed to respond to a letter which his instructing solicitor had written to the husband’s solicitor the day before the hearing of this matter. In effect the letter seeks to interrogate the husband about matters relating to when and how the documents were obtained, and to their authenticity.
I declined to make the directions sought. There was no explanation as to why the particulars could not have been sought before the day immediately preceding the hearing of this issue. Indeed there was no reason why any of the third parties could not have filed affidavits going to the factual matters asserted to, or raised by, the husband in his affidavit, insofar as it was relevant to them. In any event I had previously formed and articulated the view to the parties that these proceedings were in the nature of interlocutory proceedings and would be determined by reference to the affidavits of evidence filed, and on the basis that the husband’s case would be taken at its highest.
Mr Richards referred me to the comments of Cronin J at paragraph 12 in Deffia, extracted above, presumably to support his assertion that he was entitled to test the evidence advanced by the husband. I don’t believe, however, that when Cronin J used the words “credible and admissible” he contemplated a testing of the evidence in the manner suggested by Mr Richards. Rather Cronin J was suggesting that a reading of the evidence going to apparent evidence must satisfy the court that it contained far more than mere broad generalisations and was, at least on a prima facie basis, credible and admissible.
For the same reasons I declined to take objections to the said affidavit. A sense of proportionality must be maintained in these applications otherwise the issue of apparent relevance will become the opportunity for parties who might be aligned with one party to litigation to test the evidence of another party to litigation long before a final hearing, and long before the assertions can even be put to the relevant party in evidence.
Apparent relevance
The husband’s evidence about the apparent relevance of the subpoenaed documents is contained in his affidavit sworn 11 February 2009. In submissions I was provided with a quite complex document, partly in tabular form, seeking to systematically link the subpoenaed documents to the issues purportedly raised in this case.
By way of overview of this evidence, and leaving out background which is unnecessary to the determination of the present issue, this affidavit indicates that:
a)The wife asserts that they (i.e. the husband and the wife) owe her parents Mr A. Macchione and Ms A. Macchione $240,898.06 and that this is evidenced by Quicken (an accounting system) records. The husband disputes this assertion and challenges the authenticity of the Quicken records relied on by the wife. Moreover the husband asserts that there were loan transactions between the wife’s parents and the husband and the wife.
b)The husband asserts that the wife was directly or indirectly involved in the financial and business affairs of her family including the wife’s parents, her brothers, and the wife’s extended family. The extent of the wife’s involvement varied from substantial to minor, and from active “hands on” involvement to giving advice, and perhaps as little as simply typing documents.
c)The husband asserts that their lifestyle during the marriage, as well as representations made by the wife about the family finances of the husband and the wife, and about the nature and extent of the wife’s involvement in the family businesses, are now quite inconsistent with what the wife asserts to be the fact in the current property proceedings.
I stress that the above is simply an overview of the evidence and does not do justice to the extent of the husband’s evidence, or to the quantity of supporting documentation annexed to his affidavit. I am satisfied that the husband’s affidavit is, prima facie, and in the context of interlocutory proceedings, credible and admissible. There is a considerable volume of material that supports, on a prima facie basis, most but not all of the assertions made by the husband.
The task that needs to be undertaken, however, is to ascertain the degree of relevance or connection between the detailed documents sought in each of the relevant subpoena and the issues raised in the proceedings. The degree of connection or relevance need not be high.
Conclusion about relevance
Documents sought in the subpoenae to Mr A. Macchione and
Ms A. Macchione (the wife’s parents), or any partnership constituted by them, or either of them, or through an entity controlled by them, whether alone or in partnership with any other person or entity, or any trust in respect of which they are trustee or appointor, appear prima facie to be relevant to the proceedings.
My overall impression of the evidence of the husband, taken at its highest, is that the wife was substantially involved in the business affairs of her parents in the broadest sense. The precise nature and extent of that involvement is a matter for the hearing, and not the present proceedings.
As a result this means that documents sought in subpoenae involving the following entities are, prime facie, apparently relevant to the proceedings:
·Mr A. Macchione and Ms A. Macchione (the parents);
·The partnership consisting of A & A. Macchione and F & A Vecchi;
·Sabatino Pty Ltd as trustee for the Sabatino Family Trust trading as [X] Liquor. In this regard the parents are the directors of Sabatino Pty Ltd and the Appointors of the said trust;
·Sabatino Holdings Pty Ltd for the same reasons as set out above. So too for any superannuation fund of which the company is trustee;
·Rankin and Crestani Accountants but only insofar as the documents sought relate to the entities that are referred to in this section of my reasons for judgment;
·Sydney Tax and Business Services Pty Ltd, but only insofar as the documents sought relate to the entities that are referred to in this section of my reasons for judgment;
·Smiles & Associates, but only insofar as the documents sought relate to the entities that are referred to in this section of my reasons for judgment;
·ANZ Bank; but only insofar as the documents sought relate to the entities that are referred to in this section of my reasons for judgment;
·Commonwealth Bank of Australia; but only insofar as the documents sought relate to the entities that are referred to in this section of my reasons for judgment;
·Cameron Gillingham Boyd Solicitors;
·Joseph G Capogreco & Co, but only insofar as the documents sought relate to the entities that are referred to in this section of my reasons for judgment.
There are other persons and entities however, where apparent relevance is not so clear. I am not satisfied that annexures I16 or M19 establish the apparent relevance of any documents relating to the wife’s brother Mr A.P. Macchione. In the absence of any other evidence the letters in question create the impression that the wife was only writing in a representative capacity, and nothing more. In relation to the wife’s other brother, Mr D. Macchione, I am not satisfied that the documents annexed to the husband’s affidavit establishes anything other than that the wife may have worked for her brother, hence the only documents that could be apparently relevant are documents relating to that employment, and nothing else. Dolci Pty Ltd appears to be a company controlled by the wife’s two brothers. Annexure M13 does not, in my opinion, establish the apparent relevance of any documents that could be produced by this company, to these proceedings. There is no evidence to indicate the apparent relevance of Labue Pty Ltd to the proceedings.
Accordingly, insofar as any subpoena refers to Mr A.P. Macchione, Dolci Pty Ltd or Labue Pty Ltd, I strike out the same. In relation to the subpoena to Mr D. Macchione, insofar as the subpoena refers to any documents relating to the wife’s employment by or in the said businesses, I uphold the same, but the rest is otherwise struck out.
The submissions and the husband’s affidavit refer to various trusts and superannuation funds, but it is not clear who is the trustee of the same. If the trustee is Sabatino Pty Ltd or Sabatino Holdings Pty Ltd, or the wife’s parents or any company controlled by them then I am satisfied about the apparent relevance of these documents. If these trusts are not so controlled, however, the subpoena are struck out insofar as they require the production of documents by either the Macchione or Sabatino Family Superannuation Funds. The same comments above apply to the Macchione Family Trust.
I still need to consider whether the documents sought have a forensic purpose in these proceedings, or are otherwise oppressive. The nature of the proceedings between the husband and the wife, and the husband’s contentions as set out earlier in my judgment, must necessarily mean that it is not unreasonable to cast the net widely. In this regard I consider the relevant time period to be the period from
1 July 2003. Subject to the matters I have set out above in relation to apparent relevance, I am satisfied that the documents sought have a forensic purpose in these proceedings. I am satisfied that the subpoenae do not require the subpoenaed parties to make a judgment about which documents relate to the proceedings. I am satisfied that there is no credible suggestion of ulterior motives as regards the subpoenae.
Rather than attempt to formulate an order that attempts to give effect to these reasons, I propose to leave it to the parties and their legal representatives to implement these reasons. If there is any difficulty in implementing these reasons I grant leave to re-list on 7 days notice to my Associate.
By way of conclusion I am satisfied that there is a legitimate forensic purpose for these subpoenae and they are not oppressive. Any concerns that the third parties have about privacy can be met by limiting inspection to parties and their legal representatives and not allowing photocopying.
I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate:
Date: 11 March 2009
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