Merrill and Burt - [2016] FamCA 647

FAMILY COURT OF AUSTRALIA

MERRILL & BURT

[2016] FamCA 647

FAMILY LAW – DISCOVERY – where the respondent seek disclosure – where it is the applicant’s position that she has complied with her obligation to make full and frank disclosure – where consideration is given to the “directly relevant” test – where the respondent’s application is dismissed.

Federal Court Rules 2011 (Cth) pt 20
Family Law Rules 2004 (Cth) ch 13, 15

Alanco Australia Pty Ltd v Higgins (No 2) [2011] FCA 1063
Briese & Briese (1986) FLC 91-713
Denis v Chambers Investment Planners Pty Ltd [2012] FCA 63
Hatton & Attorney-General of the Commonwealth of Australia (2000) FLC 93-038
Lucas Industries Ltd v Hewitt (1978) 18 ALR 555
Martin & Martin and Anor (No 2) [2014] FamCA 232
Re McGorm; Ex parte Co-operative Building Society of South Australia (1989) 86 ALR 275
Woley & Humboldt (No 3) [2009] FamCA 546

APPLICANT:

Ms Merrill

RESPONDENT:

Mr Burt

FILE NUMBER:

MLC

9912

2013

DATE DELIVERED:

11 August 2016

PLACE DELIVERED:

Adelaide

PLACE HEARD:

Adelaide

JUDGMENT OF:

Berman J

HEARING DATE:

1 August 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Bartfeld QC

SOLICITOR FOR THE APPLICANT:

Farrar Gesini Dunn

COUNSEL FOR THE RESPONDENT:

Mr Walmsley QC

SOLICITOR FOR THE RESPONDENT:

Effron & Associates

Orders

That the Application in a Case filed 31 May 2016 is dismissed.
That the question of costs of each of the parties is reserved.
That the hearing of the interim application is a matter fit for counsel including senior counsel.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Merrill & Burt has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: MLC 9912 of 2013

Ms Merrill

Applicant

And

Mr Burt

Respondent

REASONS FOR JUDGMENT

introduction

By Further Amended Initiating Application filed 19 February 2016, Ms Merrill (“the applicant”) seeks carefully crafted orders that if made would result in the respondent having no further claim or entitlement in respect of the following:-
1.C Pty Ltd (ACN …) (“C”).
2.L Street, Suburb E (“the former family home”).
3.1 M Street, Suburb D.
4.2 and 3 M Street, Suburb D.
5.N Street, Suburb D.
6.Car parks situate at 4 M Street, Suburb D registered in the name of C.
7.Any funds received in respect of the VCAT proceedings no. ...
By Amended Response to Initiating Application filed 31 May 2016, Mr Burt (“the respondent”) seeks orders by way of settlement of property that the applicant transfer her interest in the former family home to the respondent and assign her right and entitlement in respect of the VCAT proceedings.
That thereafter the respondent would do all things necessary to withdraw caveats lodged by him or on his behalf in respect of the Suburb D properties and would have no further right, claim or entitlement in respect of same.
The respondent also seeks that the applicant indemnify him against all liabilities that arise out of any assessment of taxation liability as may be made from time to time by the Australian Taxation Office (“ATO”) either in respect of the applicant’s personal taxation liability or any tax liability arising in respect of an entity in which the applicant has been a director, shareholder, unit holder or otherwise the holder of a beneficial interest.
The proceedings have been listed for final hearing in the Melbourne Registry of the Family Court of Australia to commence 22 August 2016.
It is not controversial that discovery and the extent to which each of the parties has made full and frank disclosure has been a live issue throughout the proceedings to date.
The complaint of the respondent is conveniently summarised in paragraph 292 of his trial affidavit filed 31 May 2016. In essence, the respondent argues that irrespective of order or application, the applicant has refused, but in any event failed to comply with her discovery obligations and that the category of documents as sought by him are relevant to the proceedings and in particular as to the property (or liabilities) that should form the pool of property available for division. This includes a claim that the applicant has wasted a substantial sum of money namely, $3.7 million disbursed, assigned or spent by the applicant between 17 October 2013 being the date of separation and May 2016.
For her part, the applicant denies that she has failed to comply with her obligations to make full and frank disclosure and refers to the extensive discovery that has been made by her. Whilst she argues that all requests for discovery and all reasonable obligation to make disclosure have been both provided and complied with, the ongoing requests for documents by the respondent is oppressive and not relevant to the issues that are to be decided.
It is against that background that the Court is required to hear and determine the Application in a Case filed by the respondent on 31 May 2016 and the Response filed by the applicant on 1 July 2016.

DOCUMENTS RELIED UPON

The respondent relies upon the following documents:-
1.Application in a Case filed 31 May 2016
2.Affidavit in support filed 31 May 2016
3.Trial Affidavit filed 31 May 2016
4.Outline of Submissions prepared by the respondent’s counsel Mr Walmsley QC
The applicant relies upon the following documents:-
1.Response to an Application in a Case filed 1 July 2016
2.Affidavit of wife filed 1 July 2016
It is notable that the applicant responds to the claim of the respondent by reference to annexure “NMM1” which sets out a table that responds to the orders sought by the respondent.

PRINCIPLES TO BE APPLIED

Chapter 13 of the Family Law Rules 2004 (Cth) (“the Rules”) imposes an obligation of full and frank disclosure on the parties to Family Court proceedings and provides specific mechanism by which that obligation must be fulfilled.
In his Outline of Submissions, the respondent’s counsel summarises the obligation in the following terms:-
It is almost trite to observe that in the Family Court the duty of disclosure is absolute, both inter partes, and as a duty to the Court. (Family Law Rules (2004) Chapter 13). As noted in Briese and Briese (1986) FLC 91.713, ‘the need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance’.
Despite the breadth of the duty to disclose, there are concerns about the over-broad disclosure of documents in Family Court proceedings. The restriction on the obligation of discovery has been the subject of discussion as it relates to subpoenas to produce documents. Smithers J in Lucas Industries Ltd v Hewitt (1978) 18 ALR 555 at 570 said:-
The purpose of the process of subpoena is to facilitate the proper administration of justice between parties. For that purpose it is the policy of the law that strangers who have documents may be put to certain trouble in searching for and gathering together relevant documents and bringing them to court. It is according to the same principle that persons who have knowledge of facts are put to the inconvenience of being brought to court and required to give evidence.
In Hatton & Attorney-General of the Commonwealth of Australia (2000) FLC 93-038 the relevance of documents in the context of a subpoena was considered by the Full Court and the following examples were given where a Court may determine that it is proper to set aside a subpoena:-
·    If the subpoena is for an improper purpose namely to obtain discovery against a third party.
·    Where it might be oppressive to comply with a subpoena.
·    Where a party embarks upon a “fishing expedition”.
·    That the subpoena should be set aside because it lacks relevance to the proceedings.
In Martin & Martin and Anor(No 2) [2014] FamCA 232, Cronin J found that the focus of the Court should be whether it was “on the cards” that the documents would materially assist. His Honour considered his own comments in Woley & Humboldt (No 3) [2009] FamCA 546 where he said:-
[39]In Hudson Timber & Hardware Limited v Chaudhary Group Pty Ltd [2002] FCA 832, the Full Court of the Federal Court examined the issue of apparent relevance and said that the relevant principles governing the obtaining of documents on subpoena which have “apparent relevance” were that inter alia that:-
(1)The relevance of the documents was not limited to documents directly admissible in themselves in proof of an issue raised in pleadings; and
(2)If a class of document which has material forensic relevance could be shown to exist, then a subpoena would not normally be set aside.
The obligation to make discovery is not in the abstract but rather, requires the parties to consider the relevance that the documents may have to an issue in dispute. The objective should be to assist the Court in the disposal of an issue or the dispute in general.
At an early stage in the proceedings it is not necessarily easy to define the issues and therefore the extent to which a document or a category of documents may have a sensible relevance. As the proceedings progress, the issues are cast more clearly and accordingly the parties are better able to ascertain what documents are truly relevant and germane to the task that the Court is required to undertake.
Obviously, the respondent’s application must be determined in the context of the orders that each of the parties seek and the evidence they rely upon as set out in the trial affidavit material.
In recent years superior courts have taken a more modern approach to general discovery. In part this is as a result of the enormous amount of documentation that is involved and the burden and cost of discovery in many cases where it may not be necessary. The discovery process has been criticised as having disadvantages including the swamping of parties with masses of material which tend to delay the proceedings and to fog the real issues.
On 1 August 2011 the Federal Court of Australia adopted the Federal Court Rules 2011 (Cth) and its revised regime for discovery in pt 20. These changes have impacted upon the extent and the cost of discovery.
Part 20 provides for:-
·Increased judicial control of discovery;
·A default or standard form of discovery (r 20.14) that require the documents be “directly relevant” to issues in the pleadings and in the parties “control” after conducting a “reasonable search”; and
·A more flexible and responsible non-standard discovery regime (r 20.15) that can be tailored to the specific case, such as those that are likely to be document intensive, especially where the documents stored electronically.
The new regime for discovery in the Federal Court proceedings is on the basis of two principles namely, that a party must not apply for discovery unless the making of an order will “facilitate the just resolution of the proceedings as quickly, inexpensively and efficiently as possible” and that a party is not able to provide discovery unless the Court has made an order for discovery.
The focus is to prevent unnecessary discovery: see Denis v ChambersInvestment Planners Pty Ltd [2012] FCA 63.
In Alanco Australia Pty Ltd v Higgins (No 2) [2011] FCA 1063 the following is said at paragraphs [8]-[9]:-
For that purpose under the 2011 Rules, discovery is to be given only when ordered by the Court rather than pursuant to any private arrangement between the parties (r 20.12). Under both sets of Rules, documents must be directly relevant to the issues raised in the proceedings by pleading or affidavit or affidavits accompanying the originating application, in addition, it is necessary that the documents must meet at least one of the following criteria (r 20.14(2) of the 2011 Rules):
a.The documents are those on which the party intends to rely;
b.The documents adversely affect the party’s own case;
c.The documents support another party’s case;
d.The documents adversely affect another party’s case.
While more extensive and special discovery may be permitted where the party satisfies a court as to the need (r 20.15 of the 2011 Rules), the overriding objectives and purpose must always be borne in mind.
Accordingly, the purpose of the rules is to require parties to consider the extent to which discovery is required and whether the document or documents are necessary as being relevant to the issues raised, that a party is aware of them and that they are or have been in a parties control.
For discovery to be the subject of an order the document must pass the “directly relevant” test.
The direct relevance test is aimed at narrowing the scope of discovery. The meaning of direct relevance is that of relevance in the sense of requiring the document be directly on point and that it tends to prove or disprove the allegation in issue.
It is understood that the current proceedings do not necessarily fall within the category of “commercial proceedings”. It is also important to differentiate proceedings under the Family Law Act 1975 (Cth) where the parties may have different levels of control and advantage. In many cases, without the clear obligation on a party to make full and frank disclosure, matters that could well be relevant to the issues that the Court needs to determine may not be known by any other means.
Accordingly, the Rules impose a more generous obligation in respect of discovery than might now be the practice in other superior courts. That obligation falls short of discovery without forensic focus.

ORDERS SOUGHT

The respondent has conveniently separated the orders that he seeks acknowledging the comments of the applicant as set out in her response containing the attachment schedule to her affidavit marked “NMM1”.

Paragraph 1(a) of the Application in a Case

The respondent seeks an order requiring the applicant to comply with her discovery obligations arising from orders 3 to 7 inclusive of orders made by Thornton J on 6 August 2014.
In that regard, it is alleged that the applicant “has failed to provide without redaction”:-
a.Full account details of all bank accounts;
b.The account numbers of all bank accounts;
c.The names of all bank accounts;
d.The date of opening of all bank accounts;
e.The date of closing (where relevant) of all bank accounts;
f.All statements in full in respect to all bank accounts;
g.Details including documentation evidencing each withdrawal or transfer from all bank accounts;
h.Full and Frank disclosure of all assets and financial resources under her control including but not limited to bank statements in respect of the above bank accounts.
Paragraph 7 of the respondent’s affidavit concedes that the disclosure made by the applicant did disclose some financial transactions undertaken by her, but “without providing sufficient details and despite repeated demands failed to provide adequate clarification or explanations (my emphasis) relating to transactions as set out”.
The focus is therefore upon her Honour’s orders and in particular order 6 which provides:-
(6) The de facto wife provide to the de facto husband’s solicitors:
(a)details and documentation evidencing each withdrawal from the bank accounts mentioned in orders 4 and 5 hereof including transactions of all credit cards held in her name since 1 October 2009 to present;
(b)an accounting including the date, detail of the transaction/purchase, copy of any receipt, to whom the payment was made, method of payment; and
(c)an accounting for all withdrawals from the children’s account from 1 October 2007 to the present date.
The applicant’s response is that she has filed an updated financial statement on 19 February 2016 and has provided extensive discovery in particular in respect of orders 3 to 7 of the orders of 6 August 2014.
It is conceded by the respondent that on 18 September 2014, the applicant disclosed the following:-
1.         Client’s bank statements printout
2.         Bank statements for 493-495 Little Bourke
3.         Bank statements for C
4.         Bank statements for O
5.         List of bank accounts
6.         Children’s bank statements
7.         Insurance Policies
8.         Assets and Financial Resources
The response of the respondent is contained in a letter dated 19 September 2014 and referred to in paragraph 19 of his trial affidavit. Notwithstanding the extent and scope of the documents sought by the respondent, the complaint is set out in the responding correspondence in the following terms:-
2.You have failed to provide the account names for the accounts.
3.You are well aware that we cannot determine the account names as your client has blocked all access.
4.We require the account names with matching account numbers.
5.We require the dates each and every account was opened. Please do not provide account numbers with dates opened with no names as that presents meaningless data as you would be well aware.
In addition, the respondent requests all and any receipts for transactions. The applicant argues that whilst some of the account statements have been redacted as to the full account name and number, nonetheless, the discovery has been comprehensive and is in any event entirely adequate for the forensic purpose for which the documents are sought.
The apparent relevance of the documents as sought is to do with the respondent’s assertion that the applicant’s expenditure post separation has been “exorbitant and unreasonable” and is needed to explain his assertion that post separation there has been a substantial diminution of the asset pool.
Those matters are set out in detail in paragraphs 213-215 of the respondent’s trial affidavit.
The respondent alleges that the applicant unnecessarily purchased a new motor vehicle for $124,000 in May 2015 and paid advance rental of $120,000 for the Suburb B property occupied by her.
In addition, it is alleged that the applicant has travelled extensively, has spent up to $4,000 per week on clothing and alleges in detail the following:-
(g)From [Ms Merrill’s] credit card statements, it is evident that between December 2013 and June 2014 (a 6-month period) [Ms Merrill] spent $254,414.75 on her credit card alone;
(h)From [Ms Merrill’s] financial documents it is evident that in June 2014 alone, [Ms Merrill] spent $337,000 in one month;
(i)In her Financial Statement sworn 18 February 2016 [Ms Merrill] deposed to personal expenditure of $18,369 per week which I do not accept as being plausible or legitimate;
(j)In her Financial Statement sworn 17 September 2014 pursuant to the orders of Thornton J, [Ms Merrill] left “PART N” being weekly expenses untouched and it was not filled out at all;
(k)From [Ms Merrill’s] bank statements; it is evident that there have also been many unexplained cash withdrawals totalling hundreds of thousands of dollars.
The respondent further alleges that the applicant consulted with a counsellor and “paid him an exorbitant amount of money”.
It is demonstrable from the detail provided by the respondent in support of his assertion that the applicant has wasted property, or has incurred expenses that were “exorbitant and unreasonable” that the information must have come from the documents provided by the applicant.

Reference is made to a letter sent by the respondent’s former solicitors P Lawyers on 2 September 2015 being annexure “GDE21” to the respondent’s affidavit.
The letter confirms that since the orders of Thornton J there has been discovery and production of documents including bank statements.
The letter refers to correspondence from the applicant’s solicitors of 19 August 2015 that apparently enclosed documents. The following is stated:-
We have reviewed your client’s account statements, which have given rise to some queries in relation to:-
a.The source of particular funds deposited into your client’s account; and
b.How funds withdrawn from your client’s accounts have been applied by your client.
We have summarised below the transactions in respect of which our client requires further information. We would be grateful if you could obtain your client’s instructions and revert to us as soon as possible in relation to each transaction.
The letter then encloses particular accounts and describes a number of transactions with the detail of deposits, withdrawals and where available, a description.
It is also to be noted that notwithstanding a complaint by the respondent that the applicant redacted account details, each account that is the subject of a query bears the name of the particular account and the last four digits of the account number.
In addition and in respect of a Commonwealth Bank Account ending in with …, a query is made in terms of transactions in May, June, July and August of 2014. Further information is sought in respect of a further transaction on 8 August 2014 in respect of the Commonwealth Bank Account ending … as to the transfer details of $500,000 and in respect of NAB iSaver Account ending …, the fate or whereabouts of a balance in that account as at 29 August 2014 of $711,260.
The schedule of transactions that the respondent seeks to investigate and explore are set out at paragraph 7 of his affidavit. The amounts are substantial, the accounts are identified together with the last four numbers of the account.
Even if the response of the applicant was to agree that there had not been compliance with the order of Thornton J as to the discovery and provision of documents, it would be difficult to see the relevance of the extent and breadth the documents as sought by the respondent to the proceedings.
The applicant however denies that she has not complied with her obligation to make full and frank discovery and asserts that she has “particularly answered paragraphs 3-7 of the 6 August 2014 orders on 18 September 2014”.
The issue is further taken up by reference to the respondent’s further notice to produce dated 19 January 2016 being annexure “GDE16” to his affidavit and the response of the applicant dated 8 February 2016 being annexure “GDE17”.
It is difficult to understand with precision the respondent’s complaint. It is not suggested that particular documents or a category of documents has not been provided, but rather, the issue seems to be that the applicant has not complied with the orders of Thornton J in that whatever documents may have been provided, there has not been compliance with the obligation to provide “details and documentation” in 6(a) and “an accounting” in 6(b) and (c) of the orders.
It is conceded that the words used in order 6 have the meaning of an explanation rather than the provision of a particular document.
It was put to me by counsel for the respondent that the nature of the application is one of enforcement in respect of the perceived non-compliance by the applicant in not providing an explanation in respect of each withdrawal from bank accounts including all credit card transactions since 1 October 2009 to the present, an accounting in relation to the date, detail and transaction/purchase, copy of any receipt or other method of payment and to whom monies may have been paid and an accounting of all withdrawals from the children’s account from 1 October 2007 to the present date.
It is acknowledged that the number of potential transactions are at least several hundred and could be several thousand. Such is asserted by the applicant’s counsel.
Notwithstanding that the P Lawyers letter of 2 September 2015 sought information in respect of a limited number of transactions, I am advised that no conclusion could or should be drawn from that letter that suggests it represents the scope of the further enquiry by the respondent. If that is the case, a question arises as to why such a letter was sent if not properly intended to focus on what are likely to be the real issues for the Court’s determination.
If the application is truly one of enforcement as opposed to a re-statement of her Honour’s order, it is difficult to see how the applicant can be forced to provide an explanation in respect of each and every transaction however modest or insignificant and where that power comes from in terms of a parties obligation to make full and frank disclosure.
There is no criteria for the manner in which an explanation should be framed, nor indeed is the form and format for such a response prescribed.
It may be contended by the applicant that she has already provided sufficient information in terms of that which is apparent from the various bank statements namely, withdrawal details, date of transaction/purchase and the amount involved.
That the respondent may be dissatisfied with the applicant’s explanation (even if that could be required), is likely to be a matter for evidence. At this stage, given the trial affidavit material now filed and the narrowing of the issues in dispute, it is difficult to opine the relevance of the entirety of the documents sought, irrespective of explanation, to the issues under consideration.
Whilst not now relied upon, the reference to the Q Accountants Report dated 17 February 2016 being annexure “GD18” in paragraph 1(c) of the application is informative. Whilst not now pressed, the respondent sought a “detailed explanation” of the unexplained transactions as identified in the Q Accountants Report dated 17 February 2016”. Again, what was sought was an explanation of the unexplained transactions rather than documents in respect of same. Moreover, there was at least some recognition in the Q Accountants Report that the Court would not be assisted by amounts less than $2,000. It is likely that this would still represent a significant number of transactions and certainly more than as set out in the P Lawyers letter.
The instructions given to Q Accountants are contained in paragraph 1.2 of the letter dated 17 February 2016:-
We understand that you and your client, [Mr Burt], is seeking a summary of any gaps in information and the tasks that would be required in order to quantify the nature and quantum of expenditure that [Ms Merrill] has incurred from an array of credit cards and bank accounts that formed part of the matrimonial asset pool.
The letter acknowledges that there has been a significant quantity of discovery provided, but recognise that:-
Given the number of accounts and sheer volume of transactions involved, this would be an extremely costly exercise if carried out by a professional services firm. Also, explanation in respect of a very significant number of transactions would be required from [Ms Merrill].
Accordingly, we consider that the onus of this task should be placed on [Ms Merrill].
There then follows an analysis of various accounts including credit card facilities and bank accounts of the applicant and it is noted that the author of the letter had been provided with sufficient information to be able to identify the last three or four numbers of the account.
At various parts of the letter, the author considers that the applicant would have information available to her to enable a tracing exercise to be undertaken in respect of transfers made in relation to expenditure and repayments of various credit card facilities and monies transferred to and from identified bank accounts. There has been no attempt made to consider the specific issues raised by the author, but it is clear that the areas of interest are identified and are not as broad as was sought in paragraph 1(c) of the application or in terms of the discovery and information that is generally required by the respondent.
To require the applicant to work out what are “the unexplained transactions as identified in the [Q Accountants] Report” is an inappropriate and ill-defined obligation to be placed on the applicant.
Moreover, it is not a complaint with the extent of the documentation that has been provided by the applicant but rather, how it might be interpreted or used by the respondent and ultimately the Court.
It is a matter for the applicant as to the extent to which she would wish to provide ancillary information in circumstances where if she did so it may resolve one or more outstanding issues. That she can have no obligation to do so is a matter entirely for her understanding as she would that at some point she may be the subject of cross examination.
I do not propose to make orders in terms of paragraph 1(a) of the application, nor do I propose to compel the wife to provide an explanation in respect of the P Lawyers letter or the Q Accountants letter.

Paragraph 2 of the Application in a Case

I am uncertain as to the intent behind the orders sought in paragraph 2. It is conceded that much of the information is included in a consideration of paragraph 1.
What is again required is not discovery but rather information in relation to all bank accounts that the respondent has or has had in the last six years detailing the account information and the dates upon which such accounts have been opened or closed.
The applicant’s response is that save as to the complete account numbers, she has made discovery of all accounts and has provided further discovery of recent date.
I am uncertain whether the documents provided make clear the dates upon which each account has been opened and if applicable closed. At this stage, I am uncertain as to the relevance of that information, but the applicant is well aware of the request and if it becomes a relevant issue and the relevant documents have not been provided which would establish those details, then there are clear and adverse consequences for the applicant.
Counsel for the respondent concedes that the wife has provided a substantial quantity of copies of bank statements and that her advice is that she has provided all of her statements which she has or has had in her physical possession. It is suggested by counsel that “there may be further documents that are within the applicant’s control, but not necessarily her physical possession”.
In the decision of Re McGorm; Ex parte Co-operative Building Society of South Australia (1989) 86 ALR 275 at 278:-
The obligation resting on a party obliged to give discovery requires that he make proper inquiries and efforts to identify and disclose all relevant documents that are not in his possession. The obligation extends to making inquiries from the person in whose possession the documents now are: see Mertens v Haigh (1863) 3 De GJ & Sm 528 at 531; 46 ER 471 at 472. It was said in the nineteenth century case of Taylor v Rundell (1841) Cr & Ph 104 ; 41 ER 429 at 433 by Lyndhurst LC: “If it is in your power to give the discovery, you must give it; if not, you must show that you have done your best to procure the means of giving it”; see also Palmdale Insurance Ltd (in liq) v L Grollo and Co Pty Ltd[1987] VR 113.
The scope of the inquiries which should be made will depend on the circumstances of the case having regard to the need for discovery in order to dispose fairly of the matters in question, or to save costs in the proceedings. The inquiries must be reasonable, but do not demand of the party giving discovery that he goes to lengths which are oppressive…
It is a matter for the applicant to determine the relevance either to her case or the respondent’s case in respect of bank statements which establish the date that the account was commenced and if relevant closed.
There is nothing in the respondent’s trial affidavit which would assist as to the relevance of the documents sought.
It will be a matter for trial.
I do not propose to make an order in terms of paragraph 2 of the application.

Paragraphs 3 (i) (ii) (iii), 4 and 5 (i) of the Application in a Case

The respondent does not pursue the orders sought in respect of the above paragraphs of the application.

Paragraphs 3 (iv) (v) (vi) (vii) (viii) (ix) and 5 (ii) of the Application in a Case

The issue of the outstanding tax liability of the wife both as to her personal liability but also in terms of associated related entities has been a live issue for some period of time.
The observations of the respondent’s counsel is accurate in that there have been various estimates given on behalf of the applicant as to the extent of the taxation that may be applicable to the applicant and each of the various entities under her control. The estimates have ranged from about $5 million to possible $2 - $3 million.
The applicant has appointed Ms F, accountant, to advise and represent her in respect of the liability.
There remains a dispute between the parties as to the extent to which each of them bears any responsibility in terms of the failure to lodge income tax returns and receive appropriate assessments, but it is acknowledged by the applicant that in some cases returns have not been filed since 1994.
On advice from Ms F, the applicant is to undertake a management plan with respect to a voluntary approach to the ATO which will entail a private ruling.
Ms F has filed a trial affidavit on 19 February 2016. Ms F confirms that upon an application for a private ruling, the ATO guidelines stipulate that it will be processed within 28 days and that there will then be a management plan put in place by the ATO to assess the extent of taxation liability and for the lodgement of relevant returns for the applicant and various entities, but in particular C. Paragraph 27 of Ms F’s affidavit advises that returns have been prepared for C for the financial years ending 2003, 2004, 2010, 2011, 2012, 2013 and 2014.
The applicant’s response is that in respect of paragraph 3(iv) there is no communication between the applicant’s solicitors and the ATO. In relation to paragraph 3(v)-(viii), the applicant acknowledges that the respondent served Notices to Produce dated 19 January 2016 and 20 May 2016 and that the said notices have been answered under cover of letter dated 8 February 2016 and 31 May 2016.
By necessary implication, the applicant’s response is that all documents that are relevant to the issue of the taxation liability have been provided and any further documents will be discovered and produced if and when they come into existence.
The applicant seeks a vast range of documents which include all records that relate to communication to and from the ATO either with the applicant’s solicitors or Ms F. Further, the respondent seeks her working papers and any supporting documentation in respect of any taxation liability and/or dealings with the ATO.
Other than to state the obvious namely, that even on the applicant’s best estimate the potential tax liability will be substantial, it is not alleged that the applicant is not taking appropriate steps, nor is there a suggestion that she is likely to compromise the liability to the ATO adverse to her interests.
It is not a matter where it could be considered to the advantage of the parties for them to collaborate in respect of attempting to reach an agreed position as to the extent of tax that should or could be paid. Whilst there is an issue in respect of the documents that the applicant says remain in the possession of the respondent and if produced would make the task of resolution easier, there is no basis upon which the parties are likely to be able to collaborate cooperatively.
It is not unreasonable that as taxation returns are prepared that they should be discovered and produced to the respondent.
At this stage there appears to be no basis or justification for the working papers of Ms F to be the object of close scrutiny by the respondent.
In any event, the respondent has caused a subpoena dated 22 July 2016 to be issued to Ms F which seeks a raft of documents in respect of the applicant and her related entities.
It is difficult to understand why the orders sought in the application are being pursued in circumstances where a decision has been made to obtain the documents by way of subpoena.
Additionally, the respondent seeks that the Court require accountants instructed by each of the parties to confer to “discuss the current state of negotiations between the wife and the Australian Taxation Office with a view to expediting those negotiations to conclusion”.
In the event that the parties fail to appoint such accountants, then a single expert is sought pursuant to ch 15 of the Rules.
At this stage there is no suggestion that the process undertaken by the applicant upon the advice of her accountant is misguided or outside of normal practice.
Whilst it was hoped that by the time of the commencement of the trial the taxation issue would have at least crystalized as to an amount alleged to be outstanding to the ATO, that has not happened. Nonetheless, given the endless litigation process I consider that there is merit in the trial proceeding and if necessary the proceedings can be adjourned part-heard to accommodate any disagreement as to the extent of liability to the ATO.
There may well be convenient summaries that have been prepared or other memoranda which sets out relevant calculations without the need for the production of each and every piece of paper, letter, note, document or working paper that the accountant, the applicant or the solicitors have ever brought into existence in respect of the taxation issue.
As currently drafted, the order sought by the respondent is oppressive. In any event, it is proposed that the documents sought by the respondent will be the subject of a subpoena to the accountant.

COSTS

Given the level of contention between the parties and the extent to which each of them assert that the other has not made full and frank disclosure, the extent to which documents may be available and could have been provided either by the respondent or the applicant may ultimately play out in the evidence at trial and be relevant to the issue of costs.

CONCLUSION

I propose to dismiss the Application in a Case and reserve the question of costs.

I certify that the preceding one hundred and eight (108) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 11 August 2016.

Associate:

Date: 11 August 2016