Naiman & Naiman

[2020] FCCA 3677

FEDERAL CIRCUIT COURT OF AUSTRALIA

Naiman & Naiman [2020] FCCA 3677

File number(s):	SYC 6945 of 2018
Judgment of:	JUDGE B SMITH
Date of judgment:	7 October 2020
Catchwords:	FAMILY LAW – Property – subpoena – third party – objection – husband subpoenas family trust controlled by wife’s parents – family trust loaned considerable sums to parties – family trust seeks repayment – family trust may be a financial resource – family trust objections entirely unsuccessful – set aside notice of objection.
Legislation:	Evidence Act 1995 (Cth), s.55 Family Law Act 1975 (Cth)
Cases cited:	Esso Australia Resources Limited v The Federal Commissioner of Tax (1999) 201 CLR 49 Mann v Carnell (1999) 201 CLR 1
Number of paragraphs:	26
Date of hearing:	6 October 2020
Place:	Sydney
Counsel for the Applicant:	Ms Coulton
Solicitor for the Applicant:	O’Sullivan Legal
Counsel for the Respondent:	Mr Blackah
Solicitor for the Respondent:	Atkinson Vinden
Solicitor for the Independent Children's Lawyer:	Legal Aid NSW
Counsel for the Other:	Ms Reid
Solicitor for the Other:	Lander & Rogers

ORDERS

SYC 6945 of 2018

FEDERAL CIRCUIT COURT OF AUSTRALIA

BETWEEN:

MR NAIMAN

Applicant

AND:

MS NAIMAN

Respondent

AND:

AND:

INDEPENDENT CHILDREN'S LAWYER

K LIMITED

Other

ORDER MADE BY:	JUDGE B SMITH
DATE OF ORDER:	2 DECEMBER 2021

THE COURT ORDERS THAT:

1.The Notice of Objection filed against the subpoena issued to K Limited as Trustee of the K Trust be dismissed.

2.Leave be granted to the parties to inspect any documents produced on subpoena to K Limited as Trustee of the K Trust.

3.The Court reserves the question of conduct money of the subpoena issued on K Limited as Trustee of the K Trust.

4.Within 7 days, the husband file and serve written submissions, of no more than 10 pages, as to costs of the interim hearing together with any additional documents they seek to tender.

5.Within a further 7 days, the wife and K Limited each file and serve written submissions of no more than 10 pages, as to costs of the interim hearing together with any documents they seek to tender.

6.The question of costs of the interim hearing be reserved for delivery on a date to be fixed.

AND THE COURT NOTES THAT:

A.      The matter remains listed on 12 March 2021 at 9:30am for mention.

IT IS NOTED that publication of this judgment under the pseudonym Naiman & Naiman is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

EX-TEMPORE REASONS FOR JUDGMENT

JUDGE B SMITH:

INTRODUCTION

1. These are oral reasons for decision in respect of a notice of objection to a subpoena which was argued before me yesterday. Whilst written reasons are always preferable, given the workload of the Court and the delay before such written reasons could be published, I consider it more appropriate, particularly given the narrow scope of the issues as the matter was run, to give an oral decision.

2. The overall proceedings are both parenting and property proceedings between the applicant husband, Mr Naiman, now 42, and the respondent wife, Ms Naiman, now 40 pursuant to the Family Law Act 1975 (Cth). They have two children, X, nine, and Y, seven.

3. The subpoena objection relates to the property proceedings. The short background is that the wife’s parents, Mr B and Ms C, control a company, K Pty Limited, which is the trustee for the K Trust. I will refer to the company and the trust jointly as “the Trust” for the purpose of this judgment. The Trust loaned the parties a substantial sum of money, or else provided the parties with a substantial sum of money, in respect of the purchase of the matrimonial home. The wife says those funds are a loan repayable to the trust. I understand that is the Trust’s position as well.

4. The Trust was offered the opportunity to be joined as a party to the proceedings by certain Orders I made, but the Trust has indicated it does not seek to be joined. As I understand it, the Trust takes the view that its position can be adequately protected by the wife, who seeks the repayment of those monies to the Trust. It is accepted by the Trust, quite appropriately, that but for the Trust, the assets of the Trust would be owned by the wife’s parents, and further, that the wife’s parents are the true controllers of the Trust. The Trust is a form of family trust commonly seen in this jurisdiction.

5. Now, the Trust funds were said by Counsel on behalf of the Trust to be in the range of New Zealand $40 million dollars, and that is a not an insubstantial sum for private individuals or a family trust to hold. 

6. I note that, in respect of the subpoena question, this is not a pleadings jurisdiction, so the question of relevance must be taken from the affidavits and other known facts. There is the issue of what is said to be a loan from the Trust to assist the wife, which is a substantial sum, and also given the substantial assets of the Trust it is clear that the issue of the Trust as a potential financial resource also clearly arises in these proceedings. The question of whether the Trust holds any assets or other interests for the wife’s benefit, whether directly for her or through another entity, is clearly relevant, as is the question of whether or not the Trust has provided financial assistance to any sibling of the wife, noting that I was informed there is a sibling, or siblings.

7. The husband, therefore, issued a subpoena on the Trust.  The Trust filed an objection on 27 May 2020.  I made certain orders in relation to preparation of the matter.  Now, ultimately, the Trust abandoned its primary objections to relevance, as I think it had to, and has produced the relevant documents in an unredacted form.

8. The Trust nevertheless maintains its objection or position with regards to two issues.  The first of the submissions for the Trust, which also set out a very useful and I believe accurate summary of the law, sought that the Trust be allowed to:

   “redact from the financial statements the names of the corporate entities in which the trust invests”

9. And secondly, that: 

   The husband’s solicitors be restrained from providing a copy of the documents produced under subpoena to the husband.

10. Now, the basis of the claim is that there is on the basis of confidentiality.  The only fact that I understood to be relevant that I was referred to was the fact that the husband is a commodities trader for the Australian and New Zealand Banking Corporation. 

11. I note that the orders are opposed by the husband.  The Trust clearly bears the onus, as I think counsel for the Trust accepts. 

12. The first submission, set out at paragraph 7 of the Trust’s written submissions, were that:

    Given the husband’s stated purpose, the names of the particular corporate entities the Trust invests in is not relevant to any issue in the proceedings.

13. Before I consider that, I will note that section 55 relevance under the Evidence Act1995 (Cth) and the authorities around it are not the end of the position here. I refer to the decision in Mann v Carnell (1999) 201 CLR 1 and then Esso Australia Resources Limited v The Federal Commissioner of Tax (1999) 201 CLR at 49. It is quite clear that the test of relevance the Court is required to apply here is a very wide one.

14. I note the material to be obtained does not even need to be admissible. It is going to be sufficiently relevant if a genuine forensic interest is demonstrated, or if it is likely to assist in the preparation of the case or its overall investigation. The test of relevance is wide, in the context where the person issuing the subpoena does not necessarily know, or does not know precisely, what the contents of the materials produced are going to be. Now, to some extent, I think that is the answer.

15. The Trust says the names of the entities the Trust invests in are not relevant.  I think the position is that they may not be relevant, but they may be relevant, and it is something which cannot be known until it is known which corporate entities the Trust invests in.

16. In particular, it may be relevant in reference to investments to private companies, other trusts or businesses. This may be relevant either to show that the wife has a beneficial interest in some other entity, or that there is a course of conduct of the Trust in providing financial support to the wife’s sibling or siblings of the kind which has been provided to the wife.   That might lead to a submission being made, whether it is going to be accepted or not, that it is likely or possible that if the money is repaid, then once the proceedings are over, the money, which was a loan, will just be given or loaned back to the wife again. 

17. Now, it may well not establish that, but it is a possibility.  And these things I think are well within the ambit of relevance given both the questions of financial resources as well as of whether or not the wife may have other interests. 

18. I note that there is also a question about confidentiality in respect of the commercial strategies of the Trust. They were said to be commercially sensitive. And on one view, I accept that might be the case, but the husband works for one of the four major banks, and whilst $40 million is a very substantial sum for individual or family, it pales into relative insignificance in terms of investment by a major bank who has literally teams of people employed to analyse all the major companies, markets, industries and different items that can be traded on different exchanges across Australasia.

19. Further, to the extent to which historical investments going back a number of years have been made in public companies or exchange traded items, the historical impact of the trades on the market has taken place.  So, and with no disrespect to the directors of the Trust, the wife’s parents, as to their commercial acumen, it does not seem to me that having access to that knowledge is likely to assist the ANZ, nor can I see how, in this context, it could disadvantage the Trust.  I was not directed to anything specific in submissions.

20. I am satisfied, given the test of relevance which applies, and given the issues in the case, that it would not be appropriate to allow the redaction of names of non-public companies, or non-exchange traded assets, as redacting would create a gap which affects the intelligibility and potential usefulness of the documents produced, and which goes to the heart of why these documents are relevant.  I am also not satisfied it is necessary to redact the names of public companies or publicly traded funds or items.

21. As I have said, the historical material would show that the trades have been embedded in the overall market, and although it is a very substantial sum for individuals to hold and trade, given the resources available to the ANZ and to the husband as a trader at the ANZ, I am not satisfied that this meets the relevant test of commercially sensitive information requiring redaction to protect the interests of the Trust.  I am satisfied that the implied undertakings of the husband and his solicitor in the normal way, which come with the provision of access to a subpoena, are sufficient to protect the interests of the Trust in this case. 

22. I therefore dismiss the Trust’s notice of objection to subpoena, filed 27 May 2020. 

23. Those are my reasons. 

24. I note that there is an issue as to the costs producing subpoena.  The husband’s solicitor says that the $25 from that money, which is required to be paid, is sufficient.  I think that is a complete misstatement of the law.  Where you issue a subpoena, there is an implied undertaking to meet the reasonable costs of production. 

25. It seems to me that there is no possibility that $25 covers the reasonable costs of a trust searching through and producing the documents that were required in a subpoena.  It may be that $2600 is too much.  I do not know at the moment. 

26. I will just make a note, the Court anticipates that the husband will be required to pay the reasonable costs of production, pursuant to the rules.  The Court is not in a position to determine that at the moment.  The parties are to see if they can agree.  If not, they will have to mention at some stage the fact that this is an outstanding issue.

I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of Judge B Smith.

Dated:       24 January 2022