Mansfield & Mansfield
[2017] FCCA 13
•11 January 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MANSFIELD & MANSFIELD | [2017] FCCA 13 |
| Catchwords: FAMILY LAW – Property proceedings – subpoena issued to third parties – objection taken – objectors directors of trustee company in control of discretionary trust – relevance – husband beneficiary of trust – objectors his father and sister – preliminary use of documents sought – legitimate forensic purpose – fishing – oppression – abuse of process – lack of conduct money – objections dismissed. |
| Legislation: Family Law Act 1975, s.79 Federal Circuit Court Act 1999, s.45(1) |
| Cases cited: Mansfield & Mansfield [2016] FCCA 2233 Harrington-Smith v Western Australia (2003) 130 FCR 424 Dillon & Dillon and Anor [2012] FamCA 319 National Employers’ Mutual General Association Ltd v Waind & Hill [1978] NSWLR 372 Hatton v Attorney-General of the Commonwealth of Australia & Ors (2000) FLC 93-038 Papadoupoulos & Papadopoulos (No.2) [2007] FamCA 1683 Kennon v Spry (2008) 238 CLR 366 Sand v Sand (2012) 271 FLR 259 Harris v Harris [2011] FamCAFC 245 Searle v Pencious [2013] FamCA 345 Pittman v Pittman (2010) 43 Fam LR 121 Simmons & Simmons [2008] FamCA 1088 McIlwain v Ramsey Food Packaging Pty Ltd & Ors (2006) 221 ALR 785 Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98 Moriarty & Moriarty [2009] FamCA 369 |
| Applicant: | MS MANSFIELD |
| Respondent: | MR MANSFIELD |
| File Number: | ADC 4119 of 2014 |
| Judgment of: | Judge Brown |
| Hearing dates: | 16 November 2016; written submissions received 22 August 2016; 16 September 2016 and 15 November 2016 |
| Date of Last Submission: | 16 November 2016 |
| Delivered at: | Adelaide |
| Delivered on: | 11 January 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Jordan |
| Solicitors for the Applicant: | Jacqui Ion Pty Ltd |
| Counsel for the Respondent: | Mr McGinn |
| Solicitors for the Respondent: | Scanlan Carroll Pty Ltd |
ORDERS
The objections to the subpoenae filed on 20 May 2016 are each dismissed.
The costs of this application be reserved to the trial.
IT IS NOTED that publication of this judgment under the pseudonym Mansfield & Mansfield is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 4119 of 2014
| MS MANSFIELD |
Applicant
And
| MR MANSFIELD |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties to these proceedings are Ms Mansfield “the wife” and Mr Mansfield “the husband”. The wife has issued two subpoenae which relate to a number of trusts asserted to be associated with the husband and members of his family.
The recipients of the subpoenae in question are Mr Mansfield Senior. “Mr Mansfield Senior”, the husband’s father and Ms B “Ms B”, his sister. They object to the production of the documents sought, which relate to two trusts – the Mr Mansfield Trust and the Mansfield Trust. They are each directors of the company – (business omitted) Pty Ltd, which is the trustee of the Mr Mansfield Trust.
Significant controversy arises in respect of the relevance of the second trust to the current proceedings. I have not been provided with any documents which relate to it. As a consequence, the main focus of these proceedings has been on the Mr Mansfield Trust.
The husband is not currently a director of (business omitted). Pursuant to the applicable deed of trust, the trustee of the Mr Mansfield Trust has a discretion as to the application of the assets of the trust in question. The husband is, however, specifically nominated as a beneficiary of the trust, as is Ms B. It is the husband’s position that he has no control over the trust and accordingly cannot determine what it does with any assets allocated to it.
In 2010, the trust received a gift in excess of $900,000.00 from Mr Mansfield Senior. The gift has not apparently been distributed by the trust and so remains an asset of the trust. In theory, it is open to the trustee to allocate some or all of the sum in question to the nominated beneficiaries of the trust which include the husband.
It is the wife’s position that as a beneficiary of the trust, the husband has a potential proprietary interest in the trust in question. The husband disputes this assertion deposing that he has never received any distributions from the trust and has no control over its actions. In these circumstances, it his position that it is erroneous for the wife to assert that the trust, in any way, forms part of the parties’ matrimonial property.
At this juncture, it is important to point out the court is not, as yet, called upon to determine whether the trust is property for the purposes of the Family Law Act 1975. As such, the court is not required to consider whether the documents sought should or should not be admitted into evidence. Rather the court must determine whether the wife and her solicitors should be permitted to inspect the documents concerned. Primarily, this question turns on the relevance of the documents sought.
In this context, it is the husband’s position that the documents are not relevant, essentially because he has no control over the trust in question and holds no proprietary interest in it. On the other hand, it is the wife’s position that the documents are likely to be relevant because the trust has significant assets which may potentially be distributed to the husband.
These reasons for judgment are directed to the resolution of the objections taken to the two subpoenae in question, pending a trial of the competing property and children’s proceedings between the parties.
Background
The wife commenced proceedings, in this court, on 5 November 2014, seeking orders relating to the settlement of matrimonial property and parenting arrangements. The husband responded to this application on 24 December 2014. Their competing applications have been fixed for final hearing in this court on 14 February 2017.
The parties married on (omitted) 2008. They are the parents of two children, X born (omitted) 2006 and Y born (omitted) 2007. The parties met in (omitted) in 2005, and have lived in the area of the town ever since. Mr Mansfield is a long-time resident of the (omitted) of the state. Ms Mansfield has lived in (omitted) since 2002 and has had employment as a (occupation omitted) in the town.
Ultimately, the wife seeks to relocate the children’s place of residence from the (omitted) area to suburban Adelaide, so that she can pursue employment prospects as a (occupation omitted) in a larger centre. She seeks a division in her favour of the parties’ matrimonial property of 65/35%. The husband opposes the children’s relocation and proposes a 70/30% division of property in his favour.
In her initiating affidavit, filed in support of her application for property settlement, the wife deposed as follows:
“Mr Mansfield’s father owns extensive farming properties together with the (omitted), plus two apartments on the (omitted) in Darwin and according to Mr Mansfield has properties of a combined worth between $18m and $20m. … I am aware that Mr Mansfield’s father has set up a family trust fund for him entitled the ‘Mr Mansfield Trust’ to provide for Mr Mansfield’s financial security. … I don’t know the details of any assets which are held by the Mr Mansfield Trust to provide for Mr Mansfield’s financial security.”[1]
[1] See wife’s affidavit filed 5 November 2014 at paragraph 36 & 38
In his responding affidavit, the husband deposed as follows:
“… the Mr Mansfield Trust is an asset that is owned by my father. My father is the appointor of that trust and the trustee is a trustee company. It is a discretionary trust and I am listed in the class of beneficiaries as is my sister. I am not aware of any distribution from this trust that I have received and I have certainly not received any distribution that I am aware of during our marriage. I do not have any interest in the assets of that trust and as such they do not form part of the matrimonial asset pool that falls for division.”[2]
[2] See husband’s affidavit filed 24 December 2014 at paragraph 15
The husband values the parties’ marital assets and liabilities at a net value of approximately $1.2 million. The wife, in her financial statement filed on 5 November 2014, indicates that she owns property to the value of $164,500.00, which is subject to significant liabilities. For reasons outlined in an earlier judgment relating to interim parenting arrangements in respect of X and Y, the parties currently have a poor and mistrustful relationship with one another.[3]
[3] See Mansfield & Mansfield [2016] FCCA 2233
The parties’ competing applications first came before the court on 26 November 2014. On this occasion it was agreed that the parties should complete mutual informal discovery of all relevant financial documents and thereafter attend a conciliation conference in mid-February 2015.
The parties attended this conference, with their respective counsel, but it was further adjourned to 12 August 2015 on the basis that there were “issues re interest in family trust” – this being the registrar’s note entered on the conciliation conference report, which was returned to me.
In this context, on 23 September 2015 the wife’s solicitors issued a subpoena to the husband requiring production of the following documents:
·a copy of the Mr Mansfield (sic) Mansfield Trust Deed;
·financial returns for the Mr Mansfield Trust for the past five years including tax returns, profit and loss statements and balance sheets; and
·a copy of the Ms B Trust Deed.
No apparent objection was made to this subpoena and accordingly, a copy of the Mr Mansfield Trust Deed and related financial documents were produced to the court on 13 October 2015 and were subsequently inspected by those advising the wife.
As a consequence of this inspection, Ms Ion, the wife’s solicitor filed an affidavit on 20 July 2016, in which she set out what she regarded as being the salient information to be gleaned from these documents relating to the Mr Mansfield Trust, particularly its connection with the husband’s father, Mr Mansfield senior and other entities, particularly the Mansfield Trust and Mr Mansfield Senior & Mansfield Trust.
In particular, Ms Ion deposed that the Mr Mansfield Trust had been settled by deed on 23 April 1996. (business omitted) is the trustee and Mr Mansfield Senior is the appointor of the trust and personally neither a capital nor income beneficiary of it. Both the husband and his sister, Ms B are potential income and capital beneficiaries of the trust. (business omitted) Pty Ltd is the settlor of the trust.
In a schedule to the trust deed, the husband and Ms B are specifically named as beneficiaries to the trust, as are their spouses and children. The relevant trust deed provides that the trustee has an uncontrolled discretion regarding the application of both capital and interest held by the trust.[4] The property of the trust includes any money or investments transferred to it.[5]
[4] See clause 10
[5] See clause 1.3
As such, in general terms, it is appropriate to characterise the trust as a discretionary trust. Pursuant to the provisions of the relevant trust deed, the trustee has authority to vary the provisions of the trust, including appointing new beneficiaries or classes of beneficiary.[6]
[6] See clause 25.1
Ms B and Mr Mansfield Senior are directors of (business omitted). The husband was previously a director but ceased his directorship on 9 October 2014, shortly prior to the parties’ separation. The husband, Ms B and Mr Mansfield Senior, are recorded as being the only shareholders of (business omitted). Mr Mansfield Senior is the holder of a majority of the shares in the company.
Financial records for the Mr Mansfield Trust were provided for the financial years between 2010 and 2014. In each year the trust is recorded as having gross income. In each year, apart from 2011, it recorded net profits of between $68,031.00 and $184,817.54. The profits were allocated to Mr Mansfield Senior and drawn by him.
In 2010, the balance sheet of the Mr Mansfield Trust indicates that a gift of $954,116.20 was received from Mr Mansfield Senior. This entry is maintained in each subsequent year of the relevant accounts. This sum is significant so far as the wife’s case is concerned regarding the potential relevance of the documents sought by her pursuant to subpoena.
In 2010 and subsequent years, the balance sheet of the Mr Mansfield Trust indicates liabilities, in the form of loans, from Mr Mansfield and the Mr Mansfield senior & Mansfield Trust, as follows:
Year
Mr Mansfield Senior
Mr Mansfield Senior & (omitted) Trust
2010
$319,000.00
$2.067 million
2011
$319,000.00
$2.07 million
2012
$374,000.00
$1.9 million
2013
$2.138 million
nil
2014
$2.138 million
nil
In each year in question, the trust is indicated as holding net assets in excess of $500,000.00. Despite the distributions to him referred to above, the trust deed of the Mr Mansfield Trust does not record Mr Mansfield Senior as being either an income or capital beneficiary of the trust.
On 22 April 2016, the wife’s solicitor issued two further subpoenae, addressed to Mr Mansfield Senior and Ms B respectively in their capacity as directors of (business omitted). The former subpoena (addressed to Mr Mansfield Senior) sought production of the following documents:
·documents relating to the gift of $954,116.20 to the Mr Mansfield Trust in the relevant financial years;
·all documents relation to the Mansfield Trust.
The latter subpoena (addressed to Ms Mansfield) sought production of the following documents:
·any deeds of variation and/or resettlement of the Mr Mansfield Trust between (business omitted) Pty Ltd and (business omitted);
·documents relating to the indebtedness of the Mr Mansfield Trust to Mr Mansfield Senior for the financial years between 2010 to 2015;
·documents relating to the indebtedness of the Mr Mansfield Trust to the Mr Mansfield Senior & Mansfield Trust for the financial years 2010, 2011 and 2012;
·all documents relation to the Mansfield Trust.
Both Mr Mansfield Senior and Ms B objected to the production of these documents, citing the same grounds of objection which are as follows:
·the document were irrelevant to the determination of the family law proceedings between the husband and wife;
·it was oppressive to seek production of the documents sought as it was akin to seeking discovery from a person who was not a party to the proceedings;
·no conduct money had been provided and it was burdensome and costly to provide the documents sought;
·the production requests were too broad and ambiguous;
·the subpoenae amounted to an abuse of process;
·in each case, the person subpoenaed was a director of (business omitted), which was not the trustee of the Mansfield Trust.
Mr Mansfield Senior was personally served, with the subpoena directed to him at (omitted), on 30 April 2016. Ms B was personally served at an address in (omitted), Queensland, on 29 April 2016.[7] There appears to be no controversy that neither individual was provided with conduct money when the applicable subpoenae were served.
[7] See affidavits of service filed on 12 May 2016
It is the wife’s position that the husband has “an interest in the Mr Mansfield Trust and that is property within the meaning of the Family Law Act.”[8] As previously indicated, it is the husband’s position that the Mr Mansfield Trust cannot be matrimonial property amenable to the operation of the Act.
[8] See affidavit of Ms Ion filed 20 July 2016 at paragraph 12
The husband’s position
The husband deposes that the Mr Mansfield Trust is owned and controlled by his father. He further deposes that he has not received any distributions from the trust. A statement of fact, which he asserts is supported by his personal income tax returns for the years in question which reveal no such receipts of income.
As such, it is his position that his only interest in the trust is as a beneficiary. In these circumstances, he asserts that the trust is not a financial resource to which he has either access or control and, as such should be excluded from the parties’ pool of matrimonial assets.[9]
[9] See husband’s affidavit filed 21 August 2015 at paragraph 4
Mr McGinn, counsel for the husband (and by necessary implication each of the objectors concerned) asserts that it is erroneous for the wife and her solicitor to contend that the husband has any proprietary interest in the trust in question, as he is not currently a director of the trustee company and in the past, when he has held a directorship of the company, was not in a position to exercise effective control of it.
In these circumstances, Mr McGinn submits that the documents sought by the wife are not relevant to the issues to be determined by the court, pursuant to Part VIII of the Family Law Act 1975, as the trust is not a matrimonial asset.
In addition, Mr McGinn relies on the provisions of rule 15A.7 of the Federal Circuit Court Rules 2001, which read as follows:
Conduct money
(1) The person serving a subpoena must give the person subpoenaed conduct money sufficient for return travel between the place of residence or employment (as appropriate) of the person subpoenaed and the court.
(2) The amount of conduct money must be at least $25.
It is his submission that neither Ms B nor Mr Mansfield Senior was provided with the necessary conduct money.
It is Mr McGinn’s further position that it would be oppressive for both Mr Mansfield Senior and Ms B to have to comply with the subpoenae, as the subpoenae are, in effect, attempting to obtain discovery from individuals who are not parties to the proceedings in question.
Mr McGinn further submits that the subpoenae in question do not adequately describe the documents sought which amounts to a contravention of the provisions of rule 15A.02(4), which reads as follows:
(4) A subpoena requiring a person to produce a document or thing must include an adequate description of the document or thing and the time and place for production.
In all these circumstances, it is Mr McGinn’s submission that the subpoenae amount to an abuse of process and therefore the objections to them should be upheld.
Finally, Mr McGinn asserts that (business omitted) is not the trustee of the Mansfield Trust. As a consequence, neither Mr Mansfield Senior nor Ms B are in a position to comply with the direction to provide the various documents sought in respect of the Mansfield Trust.
The wife’s position
It is the submission of Mr Jordan, counsel for the wife, that the various documents sought are relevant to the proceedings before the court. He contends that the documents already provided pursuant to the earlier subpoena indicate a high degree of interconnectedness between the husband’s affairs and the financial affairs of Mr Mansfield Senior and the Mansfield Trust. In particular, Mr Mansfield Senior gifted the trust the sum of $954,116.20 in 2010.
In addition, Mr Jordan points to the fact that, although not a nominated beneficiary of the Mr Mansfield Trust, Mr Mansfield Senior has been allocated profits from the trust which he has drawn upon. In addition, documents relating to the trust indicate that it is indebted to the Mansfield Trust in a significant sum of money.
As such, Mr Jordan submits that it amounts to a legitimate forensic enquiry to seek documents which indicate whether or not the husband has an interest, whether as a beneficiary or otherwise, in the Mansfield Trust. He characterises the nature of the various documents sought as being not only relevant to these proceedings but seminal to the resolution of the dispute between the parties in that it relates to the husband’s interests in and value of his interests in the Mr Mansfield Trust and the Mansfield Trust.
Mr Jordan further submits that as the court’s rules limit discovery in family law proceedings, it cannot be said that the subpoenae in question are oppressive in nature.[10] Rather, the two recipients of the subpoenae in question are merely required to collate the various documents concerned without exercising any judgment about their relevance – this being a task for others.
[10] See Federal Circuit Court Act 1999 at section 45(1) and Federal Circuit Court Rules at Rule 14.02
In this context, it is Mr Jordan’s submission that the two objectors have misconceived the purpose of conduct money, which applies only to subpoena ad testificandum or a subpoena requiring a person to physically travel from his or her home or place of business to the court to provide oral evidence.
Mr Jordan further contends that neither of the subpoenae in question are open to criticism on the basis of any form of imprecision or ambiguity. Rather, he submits that the documents sought have been precisely specified, either in the relevant subpoenae or in subsequent correspondence. As such, he submits there is no basis for the contention that either amounts to an abuse of process.
Discussion
The court has authority to set aside a subpoena pursuant to the provisions of Rule 15A.09 of the Federal Circuit Court Rules.In this context, it should also be noted that the Rules provide a specific division (Division 15A.2), which deals with the production of documents pursuant to subpoena. Pursuant to Rule 15A.14, a person required to produce documents before the court may object to the production of any or all of the documents sought, provided grounds of objection are provided.
Accordingly, at least tacitly, the Rules recognise a distinction between a subpoena requiring a person to appear personally in court to give oral evidence (subpoena ad testificandum) and one requiring the production of a thing or document (subpoena duces tecum). In my view, this distinction is significant when the issue of conduct money is discussed.
The Evidence Act 1995 (Cth) provides a statutory code regarding the admissibility of evidence in proceedings before the court. Pursuant to section 56 only relevant evidence is admissible in proceedings before the court, whilst evidence, which is not relevant is inadmissible.
Section 55 provides as follows:
55Relevant evidence
(1) The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding.
(2) In particular, evidence is not taken to be irrelevant only because it relates only to:
(a) the credibility of a witness; or
(b) the admissibility of other evidence; or
(c) a failure to adduce evidence.
The test of relevance, provided by section 55, is a wide one. To be relevant, the evidence in question must relate to a fact in issue in the case. The section requires a rational or logical connection between the evidence sought to be led and the fact in issue.
The connection may be minimal and it may be indirect but there must be such a connection. Lindgren J put it as follows: relevance depends on “an objective test grounded in human experience, on the application of which minds may differ, but which does not allow for the exercise of discretion.”[11]
[11] See Harrington-Smith v Western Australia (2003) 130 FCR 424 at 426
In Dillon & Dillon and Anor Cronin J described what was the fact in issue in property proceedings brought under the Family Law Act 1975 in the following terms:
The fact in issue in the property dispute is the entitlement of the respective parties to a division of whatever property either or both of them has having regard to the provisions of s 79 of the Act. To test whether something would rationally affect the probability of a fact in issue requires consideration of the probative value of the material. In respect of material pursued under a subpoena, it must be asked whether that material would be reasonably expected to throw some light on the issue in the proceeding.[12]
[12] Dillon & Dillon and Anor [2012] FamCA 319 at [10]
The use of subpoenae, in proceedings before the court, involves a three step process. Firstly, the recipient of a subpoena must obey it by bringing the documents sought to court. Secondly, the court must then determine what preliminary use may be had of those documents. Necessarily this turns on whether to exercise a discretion to permit inspection. Thirdly, the court determines whether the documents should be admitted into evidence.[13] As Moffit P said,
“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.”
[13] See National Employers’ Mutual General Association Ltd v Waind & Hill [1978] NSWLR 372 at 381 per Moffit P
The difficulty, which arises for both the court and the parties concerned, at the second step stage, is that it is invariably difficult to determine whether or not a particular document or class of document will throw light on an issue in the relevant proceedings without actually inspecting the document or documents in question.
In Waind & Hill Moffit P went on to say as follows:
“The crucial question in relation to the exercise of discretion to permit inspection in the second step is whether the documents have apparent relevance to the issues. It is at the third step that questions between the parties of relevance in fact and admissibility are ruled upon.”
The apparent relevance test was endorsed by the Full Court in Hatton v Attorney-General of the Commonwealth of Australia & Ors.[14]In Dillon Cronin J said as follows:
“The words ‘apparent relevance’ still have a nebulous quality about them. Other courts have approached the question of relevance by asking whether the subpoena has a legitimate forensic purpose or is ultimately likely to add, in some way or other, to the relevant evidence in the case…”[15]
[14] Hatton v Attorney-General of the Commonwealth of Australia & Ors (2000) FLC 93-038
[15] See Dillon (supra) at [9]
In Papadoupoulos & Papadopoulos (No.2)[16] Cronin J discussed the question of relevance, in the context of the pursuit of documents, by a party from non-parties, through the mechanism of subpoenae. His Honour referred to a number of Victorian Supreme Court authorities, which indicated that although caution should be exercised in respect of any order for non-party provision of documents, it was appropriate to make such an order, if their provision would assist the timely resolution of issues between parties concerned. It being in the overall interests of justice that cases should be determined efficiently. Ultimately, Cronin J concluded that such considerations had particular relevance to family law proceedings.
[16] Papadoupoulos & Papadopoulos (No2) [2007] FamCA 1683 at [50]
In this context, Cronin J concluded as follows:
“Accordingly, the bar is not set very high in respect to the question of relevance in a civil proceeding as between strangers. It should be less so in family law proceedings provided the pursuit of information is genuinely designed to assist in determining the issue and not for some illicit or harassing type of reason.”
It is Mr McGinn’s submission that the various documents sought by the wife have no such legitimate forensic purpose because the husband has no demonstrable proprietary interest in the trust concerned as he has no control over it whatsoever and is, at best, only a potential beneficiary, amongst others, of it. As such the documents in question cannot be relevant to a fact in issue in the proceedings.
Mr Jordan contends otherwise, arguing that the provision of the documents is likely to be central to how the court ultimately determines what assets are available to be divided between the parties at trial. Implicit in this submission is the proposition that this should occur, as far as is practicable, prior to the commencement of the final hearing between the parties. The resolution of the question turns on what is the proprietorial status of a person who is a beneficiary of a discretionary trust, which he or she does not actually control.
The High Court discussed these issues in Kennon v Spry. [17]In the case, French CJ said as follows:
“The beneficiary of a non-exhaustive discretionary trust who does not control the trustee directly or indirectly has a right to due consideration and to due administration of the trust but it is difficult to value those rights when the beneficiary has no present entitlement and may never have any entitlement to any part of the income or capital of the trust.”[18]
[17] Kennon v Spry (2008) 238 CLR 366
[18] Ibid at [77]
Gummow and Hayne JJ (with whom French CJ agreed) characterised the right of a beneficiary of a discretionary trust to due administration of the trust concerned as being property for the purposes of the Family Law Act 1975.French CJ described these rights as being in the nature of equitable choses in action.
In Spry, the sole trustee of the relevant trust was the husband, who was a party to proceedings relating to the division of matrimonial property. As such, he had a significant degree of control over the trust concerned. That is not the case in the current matter. The husband is a mere beneficiary of the trust in question. The wife is not in a position to assert that Mr Mansfield Senior is a puppet of the husband or that he (the husband) has some indirect form of control over the trust.
The Family Court, in a number of matters, has recently examined cases involving discretionary trusts where there has been no legal control of the trust by a spousal party and whether it could be established, in such a situation, whether there was a relevant proprietary interest for the purposes of section 4 of the Family Law Act 1975.[19]
[19] See Sand v Sand (2012) 271 FLR 259; Harris v Harris [2011] FamCAFC 245; Searle v Pencious [2013] FamCA 345; and Pittman v Pittman (2010) 43 Fam LR 121
Each of these cases has turned on the applicable factual matrix concerned, particularly the contents and purpose of the trust deed in question; previous distributions; the relationship between the individuals concerned, particularly in the sense of actual as opposed to legal control of the relevant trust.
In Pittman the Full Court said as follows:
“Decisions of this court … have established that the definition of “property” in s 4 of the Act (as property to which a party is “entitled, whether in possession or reversion”) is capable of a wide interpretation. This position has been confirmed by the reasons for judgment of French CJ and of Gummow and Hayne JJ in Kennon v Spry …” (citations removed) [20]
[20] Pittman v Pittman (supra) at [66]
Accordingly, the fact, of itself, that the husband is only a potential beneficiary of the discretionary trust concerned and has no legal control over it does not necessarily conclude the issue of whether or not any expectation which he has in respect of the trust property, is or is not a proprietary interest or is a form of financial resource which is relevant for the purposes of the proceedings.
In my view, these are issues which have the obvious potential to come to the fore at the third step of the proceedings (as identified by Moffit P), namely when questions of overall admissibility are to be determined. However, we have not as yet reached that point and, as Moffit P observed, the parties’ rights and the functions of the court are different at each stage of the process arising in respect of discovered documents.
I am currently far removed from the step of considering the final relevance of the documents concerned or what application they may or may not have to the construction of any table of marital asset to which the provisions of section 79 are to be applied, much less whether any trust asset represents a potential source of payment to the wife, either directly or otherwise.
Mr Jordan relies on what was said by Watt J in Simmons & Simmons, [21] in which His Honour emphasised the court’s need to make factual finding prior to any determination of the nature of a spouse’s proprietorial interest, if any, in a discretionary trust. His Honour said as follows:
“The Full Court has previously emphasised the need to determine issues such as those raised in the current proceeding in light of contemporary trends. In the Marriage of Davidson their Honours Simpson, Murray and Nygh JJ observed that:
‘Whatever may have been the position one hundred years ago, Australian courts today have to look at the reality of the situation and the purpose which family trusts serve today.’
In R and R, an unreported decision the Full Court of this Court comprising of Simpson, Strauss and Smithers JJ:
‘…whether the property of the trust is in reality the property of the parties or one of them or a financial resource of the parties or one of them is a matter dependent upon the facts and circumstances of each particular case …’ (citations removed)
[21] Simmons & Simmons [2008] FamCA 1088 at [115] – [116]
As a consequence of these matters, I have come to the conclusion that the wife has a legitimate forensic purpose in seeking access to the documents sought by her by means of the two relevant subpoenae. In this regard, I note that the bar is not set very high in respect of the application of considerations of the potential relevance of such documents, particularly in family law matters, at the stage of proceedings prior to the actual final hearing.
That is not the end of the objections to the relevant subpoenae, which I consider can be summarised under the rubric of being abusive or oppressive to Mr Mansfield Senior and Ms B because they are in the nature of fishing; too broad in their scope; and fail to comply with applicable regulatory provisions.
In McIlwain v Ramsey Food Packaging Pty Ltd & Ors[22] Greenwood J summarised some of the principles, relevant to these issues, in the following terms:
“The documents must be relevant to an issue raised on the pleading and be used to illicit documents to support the applicant’s existing case. It cannot be used for purposes of ‘fishing’ or for the purpose of determining a preliminary question as to whether the party has a supportable case, or to investigate the character of the opposing parties’ evidence.”
[22] McIlwain v Ramsey Food Packaging Pty Ltd & Ors (2006) 221 ALR 785 at 785
In respect of the issue of any potentially oppressive impact on the recipient of a subpoena, His Honour said as follows:
“The issue of the subpoena must not, in all the circumstances, be oppressive in terms of its impact on the recipient. That is, the issue of the subpoena must not be ‘seriously unfairly burdensome, prejudicial or damaging’ and ‘productive of serious and unjustifiable trouble and harassment’.”
The wife’s case, for its outset, has been that the husband has some form of proprietary interest in the trust in question. Accordingly, I do not consider that the subpoena in question amount to some form of fishing expedition per se.
It is also well established that a subpoena is not a substitute for discovery. In Botany Bay Instrumentation & Control Pty Ltd v Stewart[23]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" ...
[23] Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98 at 100-101
The rationale for setting aside a subpoena, which was considered to amount to discovery, was explained by Moffit P in Waind & Hill as follows:
“The essential feature of discovery in this connection … 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.”[24]
[24] National Employers’ Mutual General Association Ltd v Waind & Hill (supra) at 381
It is in this context that Mr Jordan points to the statutory prohibition, applicable to the Federal Circuit Court, regarding discovery. It being his submission, as I understand it, that in the absence of formal mechanisms for discovery, his client had no alternative other than to issue the subpoenae in question.
I do not consider that this submission has a great deal of weight to it. Firstly, notwithstanding the prohibition contained in section 45(1) of the Federal Circuit Court of Australia Act 1999, the parties to property proceedings, brought under the Family Law Act 1975, in this court, are under a duty to make a “full and frank disclosure” of their financial circumstances.[25]
[25] See Federal Circuit Court Rules (2001) at Rule 24.03
The rationale of the prohibition contained in section 45(1) is found when reference is had to the objects of the court as set out in section 3 of the Federal Circuit Court of Australia Act 1999. They include enabling the court to operate informally and to use streamlined procedures. Accordingly, the absence of a formal discovery process does not abrogate the responsibility incumbent on litigants to provide proper disclosure of their financial affairs.
Secondly, it should also be noted that, pursuant to section 45(1) of the Act, the court is empowered to permit discovery, if it is considered to be in the interests of justice to do so. Considerations relevant to the exercise of this discretion include whether allowing discovery would be likely to contribute to the fair and expeditious conduct of the relevant proceedings. Neither party has sought such a declaration in the current matter.
In any event, I have come to the conclusion that the subpoenae in question are not tantamount to discovery or fishing in nature. The documents sought are specified clearly and with some precision. In this context, in my view, neither recipient will be required to exercise any independent judgment regarding what documents are required to be produced.
Accordingly, the subpoena cannot be regarded as oppressive in nature. In additions, for the reasons provided above, I am of the view that the documents have sufficient relevance to the proceedings, at this stage, to justify their production to the court, for the wife’s inspection. As a consequence, I do not regard either subpoena to be an abuse of the court’s processes.
The final issue relates to the absence of conduct money provided to both Mr Mansfield Senior and Ms B. In my view, there is substance to Mr Jordan’s submission that the provision of conduct money relates to subpoena ad testificandum rather than subpoena duces tecum. I reach this conclusion because of the distinction, in the Rules, regarding the two types of subpoenae as evidenced by Division 15A.2.
In particular, Rule 15A.11, which is headed costs of complying with subpoena if not a party deals with the court’s jurisdiction to make orders in respect of the costs of complying with a subpoena by a person, who is not a party to the proceedings concerned.
The rule reads as follows:
“Cost of complying with subpoena if not a party
(1) This rule applies if:
(a)a subpoena is addressed to a person who is not a party in the proceeding; and
(b)before complying with the subpoena, the person subpoenaed has given the issuing party notice that substantial loss or expense would be incurred in properly complying with the subpoena, including an estimate of the loss or expense; and
(c)the Court is satisfied that substantial loss or expense is incurred in properly complying with the subpoena.
(2)Unless the Court or a Registrar otherwise directs, the amount of the loss or expense estimated under paragraph (1)(b) is payable by the issuing party.
(3)The Court may fix the amount payable having regard to the scale of fees and allowances payable to witnesses in the Supreme Court of the State or Territory where the person is required to attend.
(4)The amount payable is in addition to any conduct money paid.
(5)If a party who is to pay an amount under this rule obtains an order for the costs of the proceeding, the Court may:
(a)allow the amount to be included in the costs recoverable; or
(b) make any other order it thinks fit.”
Accordingly there is a specific mechanism available to the objectors to recoup their costs of complying with a subpoena to produce documents. The mechanism allows the recipient of a subpoena to provide notice if he or she is liable to incur substantial loss or expense in complying with the subpoena in question. Thereafter, the overall propriety of the amount sought is subject to the court’s oversight.
In these circumstances, it seems to me that the absence of conduct money is largely irrelevant, notwithstanding the provisions of Rule 15A.11(4). Neither Mr Mansfield Senior nor Ms B was required to be physically present at court on any specified day. In addition, they had available to them a process through which to recoup their costs arising from collating and delivering the documents sought to the court.
In Moriarty & Moriarty Cronin J considered the application of Rule 15.23 of the Family Law Rules 2004, which is headed Conduct Money and Witness Fees.Again it should be noted that it is significantly different, in form, to the applicable Federal Circuit Court Rule in that it does not have a provision which allows for the recipient of a subpoena to give an estimate of the costs likely to be incurred in complying with the subpoena in question.
Rather the rule provides for a person to be paid conduct money of an amount sufficient to meet the reasonable expenses of complying with the subpoena. Thereafter, pursuant to Rule 15.23(3) if the recipient of the subpoena incurred a substantial loss or expense that is greater than the amount of the conduct money application might be made for reimbursement.
Cronin J, in my view, righted pointed out that what was reasonable to ensure compliance was likely to depend, like beauty, on the eye of the beholder. He also considered that the subpoena process was an integral part of the administration of justice. As such, he considered that, it was in the public interest that the community (I assume in the sense of individual members of it) should bear some of the costs of subpoena compliance costs, so that all could benefit from the efficient administration of justice.[26]
[26] Moriarty & Moriarty [2009] FamCA 369 at [56]
In this context, Cronin J made a number of useful comments as follows:
“Notwithstanding the administration of justice issue, the rules are not intended to put the individual presenting the documents in a position where they lose income or capital. The rule however refers to a substantial expense and each situation must be determined on its peculiar facts.
However, if the subpoena is simple and clear, requiring the production of the recipient’s own documents, the inconvenience is intended and expected to be minimal.” [27]
[27] Ibid at [59] – [60]
Accordingly, in the context of a subpoena ad testificandum, the provision of conduct money is not an essential pre-condition of compliance with the subpoena in question or a specific ground for setting it aside. I respectfully agree with Cronin J that proper compliance with a subpoena is an integral incident of the administration of justice in this country and, as such, there is a public interest in individuals playing their part in it without demur.
In the case of both Mr Mansfield Senior and Ms B, putting aside their more substantive objections to the subpoenae in question, it was open to them to forward the documents sought to the court by means of the post or some other public carrier. This would have amounted to a minimal and reasonable level of financial inconvenience.
Accordingly, I have come to the conclusion that the objections to the subpoenae in question should be dismissed. I will reserve the question of the costs of these proceedings to the trial scheduled for later this year.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding ninety-nine (99) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 11 January 2017
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