Nugent & Nugent

[2013] FCCA 1512

FEDERAL CIRCUIT COURT OF AUSTRALIA

NUGENT & NUGENT & ANOR [2013] FCCA 1512

Catchwords:
FAMILY LAW – Discovery – objections to subpoenas relating to a third party’s bank and business records – objections based on the subpoenas being a fishing expedition, an abuse of process and they sought documents with ‘no apparent relevance’ – third party is the de facto partner of the Husband – final hearing adjourned part heard after Husband gave evidence confirming he hid his financial relationship with his de facto partner – adjournment granted on application of the Wife to issue the subpoenas now the subject of objection – application to set aside subpoenas dismissed, save in part.

Legislation:  
Evidence Act 1995, s.55

Commissioner for Railways v Small (1938) 38 SR (NSW) 564

Re Restech International Limited; Flora Chiang; John Leslie Thompson and John Cameron Rowntree v Australian Securities Commission; Campbell Flemming; Michael Jerabek and Peter Riordan [1992] FCA 571

Hatton & Attorney-General of the Commonwealth of Australia & Commonwealth Bank of Australia & Commonwealth Development Bank of Australia [2000] FamCA 892

Applicant: MR NUGENT

First Respondent: MS NUGENT

Intervenor MS HARRIS

File Number: SYC 7705 of 2011

Judgment of: Judge O'Dwyer

Hearing date: 3 May 2013

Date of Last Submission: 3 May 2013

Delivered at: Melbourne

Delivered on: 7 October 2013

REPRESENTATION

Counsel for the Applicant: Ms Hilton

Solicitors for the Applicant: Mills Oakley Lawyers

Counsel for the First Respondent: Mr Puckey

Solicitors for the First Respondent: Dellios West & Co

Counsel for the Intervener Ms Dellidis

Solicitors for the Intervener York Family Law

ORDERS THAT

1. Mr R comply with the subpoena issued on 4 March 2013 and personally served on him on 8 March 2013 by 4:00 pm on 11 October 2013.

2. The Respondent Wife serve a sealed copy of this order on Mr R as soon as practicable.

3. In the event Mr R fails or refuses to comply with Order 1 above, leave is granted to the Respondent Wife to apply on short notice to seek orders for the enforcement of this order; including, but not limited to, having a warrant issued for the arrest of Mr R and proceeding against him for contempt of Court.

4. The applications to set aside the subpoenas to: -

   ·   (omitted) Bank;

   ·   (omitted) Bank; and

   ·   (omitted) Bank

   are dismissed.

5. The Intervener produce all the documents required under the subpoena served on her, save for the following:-

   ·   BAS statements for the Intervener’s business(es);

   ·   The latest statement of the Intervener’s superannuation entitlement(s); and

   ·   The documents described in [13] of the subpoena

   by 4:00 pm on Friday 14 October 2013.

6. All documents produced under subpoena are able to be inspected and copied by the parties.

WARNINGS:

A.Mr R is warned that a failure to comply with order 1 above shall result in the issuing of a warrant for his arrest to bring him before the Court.  Should contempt proceedings be successfully prosecuted against him, the penalties he could face include a fine or imprisonment, or both.

B.The Intervener is warned that a failure to comply with order 5 above shall result in the issuing of a warrant for her arrest to bring her before the Court. Should contempt proceedings be successfully prosecuted against her, the penalties she could face include a fine or imprisonment, or both.

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

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT MELBOURNE

SYC 7705 of 2011

MR NUGENT

Applicant

And

MS NUGENT

First Respondent

And

MS HARRIS

Intervener

REASONS FOR JUDGMENT

Introduction

1. This proceeding comes back to Court on the application of the Intervener (the Husband’s de facto partner with whom he now lives) (“the Intervener”) to have subpoenas set aside that are directed at obtaining a disclosure of the Intervener’s business and financial interests in so far as they disclose a financial relationship between her and the Husband.[1] In total there are four subpoenas in respect of which the Intervener has objections and for which she seeks orders setting them aside.  They are to:

   1)(omitted) Bank;

   2)(omitted) Bank;

   3)(omitted) Bank; and

   4)The Intervener herself, seeking production of a long list of documents which are addressed in more detail below.

   [1] The power to set aside is pursuant to Rule 15A.09 of the Federal Circuit Court Rules 2001.

2. The subpoenas directed to the banks seek the production of the particulars and statements of all accounts held by:

   a)the Husband and Intervener solely or jointly from January 2009;

   b)the named business of  the Intervener since January 2008; and

   c)any loan applications made by the Intervener.

3. In addition, there is one further subpoena directed to the Husband’s accountant which has not been answered and for which I will make an order that the accountant comply with the subpoena within seven days, failing which necessary proceedings will be taken to enforce the subpoena and the Court's order.[2]

   [2] See Rule 15A.16 of the Federal Circuit Court Rules 2001 and generally the powers of contempt available to the Court for breach of the Court’s orders.

Background

1. The background to this proceeding is important in understanding the issues to be determined in this interlocutory application. The principal proceeding is part heard after a final hearing was commenced on

   
   

   21 February 2013. On the first day of the hearing the Husband gave evidence in which he conceded that he went to some trouble to alter documentary evidence in respect of his bank statements to hide payments he had made to the Intervener. It was, in my view, an elaborate process he adopted, changing as he did on the original statements the named recipient of payments or in some other way hiding that such payments were paid to the Intervener.  His explanation was that he was trying to protect her from becoming embroiled in the litigation.

2. When this evidence came out, Counsel for the Wife sought an adjournment on the basis that there was clear evidence the Husband had attempted to mislead the Wife, and indeed this Court, about his financial relationship with the Intervener. The adjournment was sought, and was granted, to allow subpoenas to be issued that would disclose the financial dealings between the Husband and the Intervener on a not unreasonable assumption that full disclosure had not been made, based upon the evidence presented in respect of one discrete aspect, and that the Court could have no confidence in the Husband's evidence that, having admitted in his evidence to a deliberate act of concealment, there may not be others.

3. It is also relevant for the determination of this interlocutory proceeding to highlight that the Wife, in addition to seeking a determination of her property proceedings, is also seeking spousal maintenance. 

   
   

   The relevance of which is the need to have an understanding of the financial circumstances of the Husband and the Intervener, as it is not disputed they live as a couple in a property in (omitted), New South Wales (“the (omitted) property”).

4. A significant concern of the Wife is that the (omitted) property was purchased in the sole name of the Intervener at a time it was admitted that she and the Husband were in a relationship; albeit not living together at that stage.  In his financial disclosure the Husband claims a weekly payment to the Intervener of $575 per week for rent for occupying, with the Intervener, the (omitted) property.  The Wife is suspicious of this and believes it represents a commitment by the Husband to pay the mortgage on the (omitted) property.

5. The grounds for objection in respect of the subpoenas were briefly stated as:

   “1. Fishing expedition; 2. Abuse of process; 3. No apparent relevance”

Contentions

1. Ms Dellidis for the Intervener developed the stated reasons for objecting to the subpoenas, principally arguing that there was no ‘apparent relevance’ in respect of the documents sought, and she contended that the Wife had the onus to establish such relevance between the documents sought and the substantive proceeding before the Court in respect of the parties’ property dispute. She categorised the extensive list of documents sought from the Intervener as evidence of the fishing nature of the subpoenas[3]. She drew attention, for instance, to the request that the Intervener provide details of her superannuation entitlements and details of her BAS statements in respect of her business.

   [3]    For definition of this phrase, see Commissioner for Railways v Small (1938) 38 SR (NSW) 575 and Re Restech International Limited; Flora Chiang; John Leslie Thompson and John Cameron Rowntree v Australian Securities Commission; Campbell Flemming; Michael Jerabek and Peter Riordan [1992] FCA 571.

2. Ms Dellidis relied upon the decision of the Full Court of the Family Court in Hatton & Attorney-General of the Commonwealth of Australia & Commonwealth Bank of Australia & Commonwealth Development Bank of Australia.[4]  That case examined issues pertinent to whether subpoenas should be set aside and how to determine such issues. Of particular relevance to this case, and supportive it was said of Ms Dellidis’ contention, was the concept of "apparent relevance". The apparent relevance of a subpoena, or more particularly the documents sought to be brought before the Court pursuant to subpoena, was to be found in evidence before the Court that would indicate that disputed documents would be relevant to an issue in the proceeding. In that case there was an examination by the Full Court of the evidence before it, which by the necessity was restricted to an examination of the affidavit material filed by the parties. Clearly, in my view, this Court is not so restricted to only considering the affidavit evidence, for such a restriction ignores the reality of the evidence given in the witness box by the Husband. It also ignores the reality that a final hearing was adjourned part heard, based upon that evidence, to allow relevant subpoenas to be issued in respect of the Intervener. The evidence given on the first day of trial was conclusive of the fact that the Husband had undertaken an elaborate process to conceal his financial relationship with the Intervener.

   [4] [2000] FamCA 892

3. Ignoring the Husband’s evidence, Ms Dellidis implicitly sought to restrict consideration, to a determination of the "apparent relevance" of the subpoenaed documents already produced to the Court by the banks and the documents requested from Intervener, to passages from the Wife's affidavit material where the Wife's suspicions, and to some extent clear speculation, about the financial relationship between the Husband and Intervener were expressed. It was said that those expressions of suspicion were vague and conjectural, unsupported by evidence. As I have already said, that ignores the reality of the first day’s hearing and the reason for the adjournment to allow the issue of subpoenas relevant to a determination of an issue in the proceeding; namely, the nature and extent of the financial relationship between the Husband and Intervener and what, if any, properly described matrimonial asset has not been disclosed. Also, as stated earlier, another issue for determination by this Court is the question of spousal maintenance and in order to determine the capacity of the Husband to provide such, if the need is found to exist, then the present financial circumstances of the Husband, which includes obviously an understanding of his financial relationship with the Intervener with whom he lives, needs to be disclosed.

4. Section 55(1) of the Evidence Act 1995 provides a definition of what is ‘relevant evidence’; namely,

   “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 preceding.”

5. Then having determined that evidence reflective of any financial relationship between the Husband and the Intervener would be relevant in the assessment of a fact; namely, the denial of any such relationship by the Husband, it also follows that any such evidence is of "apparent relevance" per se. As highlighted in Hatton there are three steps involved before any subpoenaed documents are admitted into evidence. It is the second of these steps that demands a consideration of apparent relevance. In respect of the four subpoenas under challenge, those to the banks are said by the Intervener to lack apparent relevance and therefore, although before the Court, should not be disclosed. In respect of the subpoena to the Intervener herself, those documents are not before the Court and objection is taken to them on the bases that it is an abuse of process as the effort of producing the documents required to is oppressive in nature, of no apparent relevance and amounts in effect to a fishing expedition on the part of the Wife.

6. The subpoenaed documents, and those sought from the Intervener demand examination, by way of description only, to determine whether such documents are of apparent relevance to any issues before the Court or whether the nature and breadth of the documents sought amounts to an abuse of process by the oppressive nature of the task required to produce them and/or whether the documents sought reflect what can properly be described as a fishing expedition.

The Banks’ Documents

1. In respect of the three subpoenas to the banks, the documents sought, in my view, have apparent relevance to an issue before the Court; namely, the nature of any financial relationship between the Intervener and the Husband. The period for which statements are requested is not oppressive and falls within the known and agreed facts in respect of the relationship between the Intervener and the Husband. In particular, the documents that may evidence the Intervener’s loan application(s) to the (omitted) Bank have apparent relevance to an issue before the Court; namely, as to how the (omitted) property may have been funded, and what interest (if any) the Husband has in this property. There is also the question of the apparent relevance of the documents required relating to the Intervener’s business.  Again, as the period to which this requirement arises correlates with the admitted relationship period between the Husband and the Intervener, there is an apparent relevance.

2. All documents produced to the Court under these subpoenas, therefore, are properly able to be inspected and copied.  I note, nonetheless, that whether such documents will be admitted into evidence still remains an extant issue for trial.

The Intervener’s Documents

1. The documents sought here are more problematic.  On the face of them (13 paragraphs of identified documents) they have the appearance of being oppressive and some, immediately on reading, not of apparent relevance.

2. I make the observation, however, that where the evidence (given by the Husband under cross-examination) shows a considered plan, supported by an elaborate undertaking to alter original documents by him to hide his financial relationship with the Intervener, it opens the door, if it can be expressed this way, wider than may be the case without that evidence before the Court.

3. Addressing each paragraph, giving each the same paragraph designation as appears in the subpoena, I find the following:

   [2]In the context of this hearing and the evidence before the Court, the documents sought must be provided to the Court. 

   
   

   The period covered is not onerous or oppressive in nature.

   [3]In its scope, it is unrestrained in respect of the period for which the requested documents cover.  It should be limited to the period of 2008 and years following.

   [4]As this request, by its description speaks of extant partnerships, these documents (if any) should be produced to Court.

   [5]The documents required by this demand, having regard to the question of the funding of the purchase of the (omitted) property and the issues associated with spousal maintenance, should be produced to the Court.

   [6]This should be complied with, particularly having regard to the issues associated with spousal maintenance claims.

   [7]The documents required concern the business(es) of the Intervener and the demand, in short compass, taxation returns, profit and lost statements and any banking records evidencing contracts with that business (howsoever structured) with financial institutions for a loan facility or banking accounts, for the last three financial years.  It also demands BAS statements for any such business during the same time.  Apart from the BAS statements, which demand for production I do find oppressive and of no apparent relevance, the other documents under this paragraph have apparent relevance in determining the level, if any, of the Husband’s financial relationship with the Intervener or her business(es).  Accordingly, these documents must be produced to the Court.

   [8] & [9]The particulars and documents required under these paragraphs, in my view, are of apparent relevance having regard to the issue of determining the financial relationship of the Husband with the Intervener, and more generally gaining an understanding of the financial capacity of the Husband to meet any need found for spousal maintenance.

   [10]This document is clearly, in my view, not of apparent relevance and there is therefore no need to comply with this request.

   [11]Whilst the details of such trusts are of apparent relevance, the breadth of documents required under this paragraph is oppressive and the requirement should be limited to trust deeds over which the Intervener was an appointor, trustee or beneficiary, but otherwise there be only profit and loss statements for any such trust from the time of the acknowledged start of the relationship between the Intervener and the Husband and any minutes of the trustee, or any other documentary evidence, of any distributions made to either the Intervener or the Husband over the last three financial years.

   [12]The documents under this paragraph are manifestly relevant and, indeed, it was conceded that they should be provided.

   [13]The documents sought here are the minutiae of matters already identified in other documents and particulars, which are required to be produced and particulars, given under previous paragraphs in the subpoena.  Accordingly, the demands in this paragraph are more properly described as abusive of process and oppressive.  They need not be provided to the Court.

4. All documents required to be produced to the Court are able to be inspected and copied by the parties.

Conclusion

1. In objecting to the production, or allowing the inspection, of the documents required pursuant to the subpoena served on the Intervener, the Intervener relied heavily upon the concept contained in Hatton about “apparent relevance”. In doing so, Counsel for the Intervener relied on the material before the Court in the form of the Wife’s affidavits. This, however, ignored the reality of the earlier hearing before the Court. The evidence brought out under cross-examination of the Husband was quite unequivocal. The Husband conceded that he had gone to some effort to alter original bank statements to hide payments made to the Intervener with a view to excluding from the Court’s consideration the prospect of a financial relationship between himself and the Intervener. There was evidence, therefore, before the Court that the Husband had endeavoured to hide a financial relationship between himself and the Intervener. The issue before the Court then, as now, is whether, and to what extent, such a financial relationship exists; which issue is relevant to the determination of the parties’ property dispute, and further, the determination of the Wife’s claim for spousal maintenance.

1. In my view, the documents produced by the banks, together with those sought from the Intervener (save for the exceptions outlined above) are all apparently relevant to an issue to be determined by the Court, an issue of fact in dispute; namely, the nature of the financial relationship (if any) between the Husband and the Intervener.

2. Accordingly, I have made the orders as sought by the Wife, save for those documents identified as being excluded for being oppressive by the nature of the breadth and extent sought, or not being relevant to an issue before the Court.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Judge O'Dwyer

Associate: 

Date:  7 October 2013