Morris & Morris (No 3)

Case [2023] FedCFamC1F 927

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Morris & Morris (No 3) [2023] FedCFamC1F 927

File number(s): SYC 4955 of 2021
Judgment of: SCHONELL J
Date of judgment: 30 October 2023
Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Notice of objection – Legal professional privilege – Where the wife issued a subpoena to a firm of accountants in New Zealand – Where the husband filed a Notice of Objection to the subpoena on the basis of legal professional privilege Where the Court is satisfied that the documents the subject of the subpoena are covered by both advice and litigation privilege – Where the wife contended that there had been a waiver – Where the Court is satisfied that the husband has waived privilege to the documents the subject of the subpoena – Where the husband objected on the basis of relevance in relation to the production of tax invoices – Where the Court is satisfied that the tax invoices could have relevance – Notice of Objection set aside.      
Legislation:

Family Law Act 1975 (Cth) Div 2, Pt XIA, s 106B

Income Tax Act 2007 (NZ)

Cases cited:

Adanguidi v The King [2023] NSWCCA 91

Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 40 NSWLR 12

Attorney-General (NT) v Maurice (1986) 10 FCR 134

AWB Ltd v Cole (No. 5) (2006) 155 FCR 30; [2006] FCA 1234

Commissioner of Taxation v Rio Tinto Ltd (2006) 151 FCR 341; [2006] FCAFC 86

Commonwealth of Australia v Teemwood Holdings Pty Ltd & Ors [2002] WASC 107

Daniels Corporation International Pty Ltd v ACCC (2002) 213 CLR 543; [2002] HCA 49

Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46

Fort Dodge Australia Pty Ltd v Nature Vet Pty Ltd [2002] FCA 501

Hancock v Rinehart (Privilege) [2016] NSWSC 12

Hastie Group (In Liq) v Moore (T/as Deloitte Touche Tohmatsu) (2016) 339 ALR 635; [2016] NSWCA 305

Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66

Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152

Viterra Malt Pty Ltd v Cargill Australia Ltd (2018) 58 VR 333; [2018] VSCA 118

Division: Division 1 First Instance
Number of paragraphs: 52
Date of hearing: 26 and 30 October 2023
Place: Sydney
Counsel for the Applicant: Mr Richardson SC with Mr Hollo (on 26 October 2023) and with Mr Roberts (on 30 October 2023)
Solicitor for the Applicant: Barkus Doolan Winning
Counsel for the Respondents: Mr Smallbone
Solicitor for the Respondents: Prime Lawyers

ORDERS

SYC 4955 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS MORRIS

Applicant
AND:

MR MORRIS

First Respondent

D2 LIMITED

Second Respondent

F LIMITED ATF THE D TRUST (and another named in the Schedule)

Third Respondent

ORDER MADE BY:

SCHONELL J

DATE OF ORDER:

30 OCTOBER 2023

THE COURT ORDERS THAT:

1.The Notice of Objection filed 19 October 2023 is set aside.

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AGLC
Morris & Morris (No 3) [2023] FedCFamC1F 927
Case
[2023] FedCFamC1F 927
Decision Date

CaseChat Overview and Summary

In the Federal Circuit and Family Court of Australia, the case of Morris & Morris (No 3) involved a dispute between Ms Morris and Mr Morris concerning the admissibility of certain documents subpoenaed from Y Accountants in New Zealand. The wife sought the production of documents related to the husband's transfer of shares to D2 Limited. The husband filed a Notice of Objection to the subpoena on the grounds of legal professional privilege and relevance. The court was required to determine whether the documents were covered by legal professional privilege and, if so, whether any waiver had occurred. Additionally, the court had to assess the relevance of the documents, specifically tax invoices, in relation to the proceedings.

The court examined the nature of the documents and whether they were created for the purpose of obtaining legal advice or were covered by litigation privilege. The husband's counsel argued that the documents were privileged, citing the advice provided by Mr CC, a tax partner at Y Accountants, who had prepared legal advice concerning the tax implications of the share transfer. However, the court found that the husband had waived privilege to the documents due to his conduct in making the transfer and in the course of the proceedings. Furthermore, the court determined that the tax invoices, which the husband objected to on the grounds of relevance, could indeed have relevance to the proceedings.

The Federal Circuit and Family Court of Australia set aside the Notice of Objection filed by the husband. The court dismissed the husband's oral application for an objection on the grounds of relevance. It granted leave to the parties to inspect the documents produced under subpoena, with the operation of that order staying until a specified time on the following day, contingent on the husband filing a Notice of Appeal. The court reserved costs for all parties and directed the husband to file his material in support of any stay application by a specified time. The husband's foreshadowed stay application was listed for hearing at a specified time.

The orders included setting aside the Notice of Objection, dismissing the husband's application for an objection on relevance, granting leave for the parties to inspect the documents with a conditional stay, reserving costs, directing the husband to file his stay application material by a specified time, and listing the husband's stay application for hearing.

Orders

Orders of the court

SYC 4955 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS MORRIS

Applicant

AND:

MR MORRIS

First Respondent

D2 LIMITED

Second Respondent

F LIMITED ATF THE D TRUST (and another named in the Schedule)

Third Respondent

ORDER MADE BY:

SCHONELL J

DATE OF ORDER:

30 OCTOBER 2023

THE COURT ORDERS THAT:

1. The Notice of Objection filed 19 October 2023 is set aside.

2. The husband’s oral application for an objection on the grounds of relevance is dismissed.

3. Leave is granted to the parties to inspect the documents produced under subpoena by Y Accountants but the operation of that order is stayed until 4.30 pm tomorrow 31 October 2023 upon the condition that the husband file a Notice of Appeal by no later than 6.00 pm today.

4. Costs of all parties are reserved.

5. The husband is directed to file his material in support of any stay application by midday tomorrow 31 October 2023.

6. The husband’s foreshadowed stay application is listed for hearing at 4.30 pm tomorrow 31 October 2023 via Microsoft Teams.

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

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

The wife relied upon the following documents:(1)Affidavit of wife filed 24 October 2023;(2)Affidavit of husband filed 29 January 2022;(3)Points of Claim dated 6 June 2023;(4)Points of Defence dated 3 July 2023; and (5)Written submissions filed 25 October 2023. BACKGROUND The husband was born in 1953 and is currently 70 years of age. The wife was born in 1957 and is currently 67 years of age. The parties commenced cohabitation in 1997, married in 1999 and separated in or around 2021. On 7 July 2021, the wife commenced proceedings in the Family Court of Australia (as it then was). In late 2021, the husband transferred 48 million shares held by him personally in the company B Limited (a company listed on the Australian Securities Exchange) to D2 Limited (being the second respondent). The husband in his affidavit filed 29 January 2022 said: 17. I presently control 58 million [B Limited] shares with a book value of some $736.6 million at today’s list price of [over $12] per share. [In late] 2021 I transferred 48 million of shares held in my personal name to a company I control ‘[D2 Limited]’, which is a company incorporated in New Zealand. My solicitors notified my wife’s solicitors of the transfer of shares. The transfer was made for accounting and estate planning purposes. On 4 October 2023, the wife caused a subpoena to be issued to the accounting firm Y Accountants seeking the production of documents relating to the transfer. On 19 October 2023, the husband filed a Notice of Objection on the basis that the documents produced are the subject of legal professional privilege. In the course of submissions, the husband’s counsel conceded that the husband retained control over the trust and that the trust was his alter ego.ARE THE DOCUMENTS THE SUBJECT OF THE SUBPOENA COVERED BY THE DOCTRINE OF LEGAL PROFESSIONAL PRIVILEGE The husband contended that the documents called for in the subpoena are subject to a claim for legal professional privilege in that they were brought into existence for the purposes of obtaining legal advice and/or are covered by litigation privilege. The husband relied upon an affidavit prepared by Mr CC, who described himself as a tax partner of Y Accountants, New Zealand where he has worked for 24 years. Mr CC is a chartered accountant and says that he is qualified in the legal profession. Mr CC gave evidence that he has acted for Mr Morris for many years. In his affidavit, he identified that at the time of preparing advice on 12 October 2021, he was of the view that the husband was “a prime candidate to be the subject of an investigation by Inland Revenue” (affidavit of Mr CC, paragraph 28). He gave evidence that at some point in 2021, he spoke to the husband about providing advice to set up a structure to hold his shares in the company B Limited. He said that he provided written advice as to the legal consequences of any transfer of capital from his personal name into a new corporate or trust structure, with particular focus on the anti-avoidance provisions of the Income Tax Act 2007 (NZ) (“the Income Tax Act”). He said that in preparing that advice, he considered and dealt with provisions of the Income Tax Act and case law (affidavit of Mr CC, paragraphs 36 and 37). In particular, he said:38. I considered this legislation and authorities having formed the view that there was a strong likelihood that a transfer of shares to a New Zealand entity would be investigated by Inland Revenue, and furthermore, given the deemed value involved (in the order of hundreds of millions), it was my view at that time that any dispute with Inland Revenue arising out of the proposed transfer would likely end in litigation between [Mr Morris] and Inland Revenue.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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