Meinhardt (Hong Kong) v Estate of Meinhardt - [2006] FMCA 853

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MEINHARDT (HONG KONG) v ESTATE OF MEINHARDT

[2006] FMCA 853

PRACTICE & PROCEDURE – Bankruptcy – subpoena – whether documents subject to statutory privilege – whether subpoena abuse of process.

Bankruptcy Act1966 (Cth), s.244
Administration and Probate Act 1958 (Vic),s.15
Guardianship and Administration Act 1986 (Vic) Part 5 Divisions 3 and 3A, s.48
Victoria and Civil and Administrative Tribunal Act 1998 (Cth), ss.34,35,36

Lloyd's Ships Holdings v Queensland v Merchant Holdings (1986) 11 FCR 287
Mandie v Phillips [2005] FCA 1279

Applicant:

MEINHARDT (HONG KONG) LTD

Respondent:

ESTATE OF WILLIAM LINDSAY MEINHARDT (DECEASED)

File number:

MLG 566 of 2006

Judgment of:

Phipps FM

Hearing date:

13 June 2006

Date of last submission:

13 June 2006

Delivered at:

Melbourne

Delivered on:

15 June 2006

REPRESENTATION

Counsel for the Applicant:

Mr P Fary

Solicitors for the Applicant:

Maddocks

Counsel for W. E. Meindhart:

Mr G Bigmore QC & Mr K Lyons

Solicitors for W. E. Meindhart:

Chambers & Co

Counsel for the State Trustees

Mr R Moore

Solicitors for the State Trustees

Holding Redlich

Counsel for the Named Executors:

Mr A Muller

Solicitors for the Named Executor

Dibbs Abbott Stillman

Counsel for Victoria Treyvaud

Mr Foster

Solicitors for Victoria Treyvaud:

Foster Harris

ORDERS

The subpoena issued on 2 June 2006 at the request of William Edward Meinhardt requiring production of all documents in the possession, custody or power of State Trustees Ltd in respect of the financial affairs of the late William Lindsay Meinhardt is set aside to the extent that it requires production of any document that has come into State Trustees Ltd possession, or would disclose any information that has come to State Trustees notice, as a result of a disclosure to State Trustees Ltd under s.34 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic).
The application by Victoria Barbara Treyvaud to set aside the subpoena is dismissed.
The time in which State Trustees Ltd is to comply with the subpoena is extended to 4.00pm on 20 June 2006.
W.E. Meinhardt pay the costs of State Trustees Ltd of the application to set aside the subpoena and of complying with the subpoena and that the question of any other parties contribution or liability for those costs is reserved.
The matter be adjourned to 21 June 2006 at 9.30am in the Federal Magistrates Court of Australia at Melbourne before Federal Magistrate Hartnett.
Otherwise costs are reserved.
Certify for advocacy.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

M566 of 2006

MEINHARDT (HONG KONG) LTD

Applicant

And

ESTATE OF WILLIAM LINDSAY MEINHARDT (DECEASED)

Respondent

REASONS FOR JUDGMENT

The applicant petitions under s.244 of the Bankruptcy Act1966 (Cth) for administration of the estate of William Lindsay Meinhardt (deceased).
An issue is whether proceedings have been commenced in a court for the administration of the deceased's estate under a law of a State or Territory. If they have, under s.244(13) of the Bankruptcy Act, the petition cannot be presented except by leave of the Court. The applicant says leave is not required. William Edward Meinhardt (Will), a son of the deceased, and a beneficiary of his will, says that it is.
Various affidavits filed in this proceeding show the following facts and circumstances. Not necessarily all of them are relevant to the current issue, that is, whether a subpoena should be set aside.
Will has been served with the petition. A subpoena has been issued on his behalf to State Trustees Ltd. State Trustees and Victoria Barbara Treyvaud (Victoria), a daughter of the deceased, and half-sister of Will have applied to set aside the subpoena.
Will is the only son of the deceased's second marriage. Victoria and Sally Veall (Sally) are daughters from his first marriage. The deceased died on 30 November 2003. The executors named in his will are Timothy Jonathan Browne and Roderick Charles McKenzie (the named executors). The residuary beneficiaries under the will are Victoria, Sally and Will.
On 23 November 2005 Will commenced proceedings in the Supreme Court of Victoria against the named executors under s.15 of the Administration and Probate Act 1958 (Vic). He sought orders that the named executors show cause why they should not renounce probate of the will and why administration of the will should not be granted to State Trustees Ltd.
On 22 December 2005 the named executors applied for a grant of probate. Will has objected to the grant of probate. The Supreme Court has ordered that the s.15 proceeding and the named executors application for a grant of probate proceeding be heard together. The Supreme Court has made various procedural orders including discovery orders.
On 17 June 2003 the Victorian Civil and Administrative Tribunal appointed State Trustees Ltd administrator of the estate of the deceased pursuant to Part 5 Divisions 3 and 3A of the Guardianship and Administration Act 1986 (Vic). This was done on the application of Sally.
Will alleges that while Victoria held a power of attorney from the deceased prior to any administration order she used the power of attorney to remove the deceased as a director of the Trustee companies of two family trusts and appoint her husband in his place. This, Will alleges, left Victoria and her husband as the sole directors of the two trustee companies.
Will alleges that the assets of the trusts, many millions of dollars, were then vested, largely in Victoria, her husband and their children. Will has commenced proceedings in the Supreme Court of Victoria about the manner in which the assets of the trusts were vested. Amongst other things, Will claims that the estate of the deceased has a claim against Victoria in relation to the vesting of the trust assets. He claims this is relevant to determining whether the estate of the deceased is able to pay its debts should that be an issue in the application for administration of the estate under the Bankruptcy Act.
The applicant claims a debt of about $1.6 million. It claims it lent the deceased $2.2 million in January 2001 to help him make a property settlement payment of $4 million to his second wife. After various adjustments, the applicant claims the balance owing is about $1.6 million. Will disputes the existence of the debt.
The named executors have filed an affidavit in this proceeding. They intend withdrawing their probate application. They support the application for an order for the administration of the estate of the deceased under s.244 of the Bankruptcy Act. They consider, on the basis of information they have available to them, that the debt claimed by the applicant is owed to it by the estate of the deceased and they consider that the estate is insolvent.
The subpoena is addressed to "the Proper Officer, State Trustees Ltd". It requires production of "all documents in the possession, custody or power of State Trustees Ltd in respect of the financial affairs of the late William Lindsay Meinhardt".
State Trustee’s powers as administrator of the estate of the deceased are set out in s.48 of the Guardianship and Administration Act 1986 (Vic). The powers are such that their exercise may have resulted in documents about the existence or otherwise of the debt, claimed by the applicant, and about the assets and liabilities of the deceased being in the possession of State Trustees.
Sections 34, 35 and 36 of the Victoria and Civil and Administrative Tribunal Act 1998 (Cth) provide:
34.    Secrecy
(1)     This section applies to any person who is or has been–
(a)     a member of the Tribunal;
(b)     a registrar or other member of staff of the Tribunal;
(c) a person acting under the authority of the Tribunal.
(2)     Except as permitted by this section, a person to whom this section applies must not directly or indirectly make a record of, or disclose to any person, any information about the affairs of a person acquired in the performance of functions under or in connection with this Act or an enabling enactment.
Penalty:    60 penalty units.
(3)     A person to whom this section applies may record or disclose information referred to in sub-section (2)–
(a)     with the written consent of the person to whom the information relates; or
(b)     in connection with the performance of functions under this Act or an enabling enactment.
(4)     A person to whom this section applies may disclose any information referred to in sub-section (2) to a member of the police force for the purposes of reporting a suspected offence or assisting in the investigation of a suspected offence.
(5)     A person to whom this section applies may disclose any information referred to in sub-section (2) for statistical purposes to a person approved by the Minister provided that the information does not identify any person to whom it relates.
(6)     Nothing in this section applies to the recording or disclosure of–
(a)     anything said or done at a hearing of the Tribunal (other than at a hearing that the Tribunal has directed to be held in private); or
(b)     any decision or order of the Tribunal or the reasons for any such decision or order.
35.    Prohibition on secondary disclosures
(1)     A person to whom information referred to in section 34(2) is disclosed, and any employee of that person, is subject to the same obligations and liabilities with respect to the recording or disclosure of the information as they would be if they were a person referred to in section 34(1) who had acquired the information in the performance of functions under this Act or an enabling enactment.
(2)     Sub-section (1) does not apply to a member of the police force to whom information is disclosed under section 34(4).
36.    Further restriction on disclosure
(1)     Subject to this section–
(a)     a person referred to in section 34(1) is not, except for the purposes of this Act or an enabling enactment, required–
(i) to produce in a court any document that has come into his or her possession; or
(ii)     to disclose to a court any information that has come to his or her notice–
in the performance of functions under or in connection with this Act or an enabling enactment; and
(b)     a person referred to in section 35 is not, except for the purposes of this Act or an enabling enactment, required–
(i) to produce in a court any document that has come into his or her possession; or
(ii)     to disclose to a court any information that has come to his or her notice–
as a result of a disclosure to that person under section 34.
(2)     If–
(a)     the Minister certifies that it is necessary in the public interest that specified information should be disclosed to a court; or
(b)     the person to whom information relates has given written consent for it to be disclosed to a court–
a person referred to in sub-section (1) may be required to disclose the relevant information or produce the relevant document to the court.
(3)     A person referred to in sub-section (1) may be required–
(a)     to produce in a court a document that has come into his or her possession; or
(b)     to disclose to a court any information that has come to his or her notice–
in any proceeding for an indictable offence, including a committal proceeding and a summary hearing of an indictable offence.
(4)     In this section–
"court" includes a tribunal and any person who has power to require the production of documents or the answering of questions.
State Trustees Ltd has documents in its possession which contain information to which s.35(1) applies. That is, documents containing information referred to in s.34(2) which have been disclosed to State Trustees Ltd. That is information about the affairs of the deceased acquired by a person described in s.34(1) in the performance of functions under or in connection with the Victorian Civil and Administrative Tribunal Act or an enabling enactment, in this case the Guardianship and Administration Act.
In Lloyd's Ships Holdings v Queensland v Merchant Holdings (1986) 11 FCR 287, Spender J considered a provision of the Australian Trade Commission Act 1985 (Cth) which contained similar secrecy provisions. Section 94 (5) of that act provided:
A person to whom this section applies shall not be required to divulge or communicate to a court any information referred to in subsection (2) or to produce in a court any document referred to in that subsection, except when it is necessary to do so for the purposes of, or a prosecution for an offence against this Act or the Export Market Development Grants Act 1974.
Spender J considered that this section created statutory privileges against the communication of certain information and the production of certain documents to a court. He considered that the section showed a legislative intention to override the ordinary policy that courts should be able to secure information relevant to issues which they are called upon to determine.
No material difference exists between the section his Honour considered and s.36 of the Victorian Civil and Administrative Tribunal Act. State Trustees claims privilege and so cannot be required to produce documents to which the privilege applies.
Counsel for Will argued that the exception in s.36(1)(b), "except for the purposes of this act or an enabling enactment" applies because the production of the documents was required for the purpose of the administration of the estate. Even if an application for an administration order under s.244 of the Bankruptcy Act can be described as something done for the purposes of administering the estate of the deceased, it cannot come within the exception. In the exception "this act" is the Victorian Civil and Administrative Tribunal Act, and the relevant enabling enactment is the Guardianship and Administration Act. The exception does not apply.
State Trustees does not object to production of documents in its possession not covered by the privilege. This means that, for this reason, the subpoena need be set aside in part only. However, Victoria has applied to have the subpoena set aside wholly.
Victoria argues that the subpoena should be set aside wholly as an abuse of process. Part of the argument is that an affidavit by the solicitor for Will purports to swear to facts which cannot be within the personal knowledge of the solicitor. This may be so, but the relevance of the solicitor’s affidavit, and other affidavits deposing to matters about the affairs of the deceased and his estate not within the deponent’s personal knowledge, are not that they are evidence of the truth of what is alleged. The relevance is that they show the issues in the application for an order for the administration of the deceased estate.
The solicitor for Victoria referred to Mandie v Phillips [2005] FCA 1279, a decision of Conti J. His Honour reviewed principles and authorities concerning the use of subpoenas and the circumstances in which subpoenas should be set aside.
The solicitor for Victoria argued three grounds for setting aside the subpoena:
i)the subpoena was not issued for the purpose of a pending trial, hearing or application;
ii)the subpoena was issued for the purpose of obtaining discovery against a third-party;
iii)the subpoena was issued for an impermissible purpose, for example "fishing".
A copy of an affidavit sworn by Will in the Supreme Court proceedings concerning the administration of the trusts is exhibited to an affidavit by Victoria's solicitor. Will’s affidavit describes considerable animosity between Victoria and him concerning the personal care of the deceased before his death, his business and financial affairs and the affairs of the trusts.
The argument for Victoria refers to a number of attempts by Will to obtain access to the documents held by State Trustees. They include an application for third-party discovery in the Supreme Court Victoria, an application not yet dealt with. The argument is that this is a further attempt to obtain these documents.
Will may wish to obtain access to documents held by State Trustees for reasons which have nothing to do with the application under s.244. Even if this is so, if they are potentially relevant to the current proceeding, then the subpoena should not be set aside because a party may have another but impermissible reason for wanting access to the documents. Other means are available to prevent use of the documents for an impermissible reason.
An aspect of this case relevant to the subpoena issue is that the respondent to the application, the estate of the deceased, is not represented. Until probate or administration is granted by the Supreme Court of Victoria, or an order for administration is made under the Bankruptcy Act, there is no representative of the estate.
State Trustees does not represent the estate. Section 58D of the Guardianship and Administration Act is headed "Action upon a person ceasing to be a represented person". It requires an administrator, upon receiving notice that the represented person has died, to pay to that person's personal representative any money standing to the represented person's credit with the administrator and to deliver to the personal representative all property part of the estate and all documents relating to the estate.
State Trustees does not hold documents concerning the affairs of the deceased as an administrator. State Trustees role as an administrator ceased upon the deceased's death. It cannot deliver the documents to the person entitled to them because the person has not yet been appointed. It holds the documents until a representative is appointed, but does no more than hold them.
Whether the applicant is a creditor of the estate of the deceased and whether the estate can pay its debts as they fall due are issues in the application under s.244 for an order for the administration of the estate. They are issues which commonly arise in a disputed bankruptcy application. The normal process of discovery is usual in cases where these issues exist. The normal process of discovery cannot occur in this case because there is nobody on the respondent’s side against whom discovery can be obtained because nobody represents the estate. If there was a representative, discovery could be obtained, and the documents subject to the discovery process would include relevant documents now held by State Trustees.
The purpose of the subpoena process is to enable relevant information to be put before the Court deciding the issues in dispute. The documents held by State Trustees may contain relevant information about whether the applicant is a creditor and whether the estate can pay its debts as they fall due. The subpoena is not an attempt to obtain discovery from a third-party. The subpoena’s purpose is to obtain access to potentially relevant documents, there being no other way of doing it.
The documents may or may not be relevant to the preliminary issue whether the applicant needs leave under s.244(13) of the Bankruptcy Act. That does not affect the validity of the subpoena because there are issues in the proceeding as a whole to which the documents may be relevant.
The subpoena has a relevant and permissible purpose. That is, to have produced to the Court, documents which may then be inspected to determine whether any may be used as evidence about relevant issues.
Consequently the subpoena should only be set aside to the extent that it seeks documents subject to State Trustee’s privilege.

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Phipps FM

Associate:

Date: 15 June 2006