Prosdokimos and Prosdokimos and Anor
[2015] FamCA 375
•22 May 2015
FAMILY COURT OF AUSTRALIA
| PROSDOKIMOS & PROSDOKIMOS AND ANOR | [2015] FamCA 375 |
| FAMILY LAW – PRACTICE & PROCEDURE – Where a third party objects to subpoenas – Consideration of rule 15.26(1) – Where a registrar made a decision to uphold the objector’s notice of objections with certain exceptions – Where the wife seeks a review of the registrar’s decision – Where the objector is the appointer of the trust – Whether the objector has a sufficient interest in a subpoena – Whether the subpoenas are an abuse of process – Whether the subpoenas are a fishing expedition – Whether the subpoenas lack relevance – Where the objections to the subpoenas are dismissed. |
| Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) r 15.26(1) |
| Bailey v Beagle Management Pty Ltd [2001] FCA 60 Cahill & Cahill (No 2) [2013] FamCA 453 Hatton v The Attorney General (Cth) (2000) FLC 93-038 National Employees Mutual General Association Limited v Waind & Hill [1978] 1 NSWLR 372 Sadek and Ors & Hall and Anor [2015] FamCAFC 23 Witness v Marsden & Anor [2000] NSWCA 52 |
| APPLICANT: | Ms Prosdokimos |
| FIRST RESPONDENT: | Mr Prosdokimos |
| SECOND RESPONDENT: | Ms B |
| FILE NUMBER: | SYC | 1401 | of | 2014 |
| DATE DELIVERED: | 22 May 2015 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Aldridge J |
| HEARING DATE: | 13 April 2015 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Loweson |
| SOLICITOR FOR THE APPLICANT: | Konstan Lawyers |
| COUNSEL FOR THE FIRST RESPONDENT: | No appearance |
| SOLICITOR FOR FIRST RESPONDENT: | Karras Partners |
| COUNSEL FOR SECOND RESPONDENT: | Mr Kearney SC |
| SOLICITOR FOR SECOND RESPONDENT: | York Family Law |
Orders
That the objections lodged by Ms B as to the subpoenas filed on 7 August 2014 and directed to:
(a) D Pty Ltd;
(b) E Pty Ltd;
(c) F Accounting; and
(d) G Pty Ltd.
are dismissed.
That the documents are to be produced within fourteen (14) days of today.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Prosdokimos & Prosdokimos has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 1401 of 2014
| Ms Prosdokimos |
Applicant
and
| Mr Prosdokimos |
First Respondent
and
Ms B
Second Respondent
REASONS FOR JUDGMENT
Introduction
In property proceedings between Ms Prosdokimos (“the wife”) and Mr Prosdokimos (“the husband”), the wife issued subpoenas to a number of third parties. Ms B, the husband’s mother (“the second respondent”), lodged objections to those subpoenas.
The issues before the court are whether the second respondent has the standing to object and, if so, whether the subpoenas seek documents that have relevance to the proceedings.
Those objections were determined by Registrar George on 19 December 2014. The Notice of Objection to the subpoena served upon D Pty Ltd was upheld except in relation to paragraph 2.11 of that subpoena. The Notice of Objection to the subpoena served upon F Accounting was upheld except in relation to paragraph 2.11 of that subpoena. The Notice of Objection to the subpoena served upon E Pty Ltd was upheld in full. The Notice of Objection to the subpoena served upon G Pty Ltd was dismissed.
On 5 January 2015 the wife filed an application in a case seeking to review the Registrar’s decision. On 10 April 2014 the second respondent sought to review the decision of the Registrar to dismiss the Notice of Objection filed by her in relation to the subpoena served upon G Pty Ltd as to paragraph 2.9 of that subpoena.
The husband and the wife were married in 1997 and separated on
14 December 2013. They have four children aged 13, 12, 11 and 8 years old. The husband is presently employed as a buyer by E Pty Ltd. Throughout most of the marriage the husband was employed by a company now known as H Pty Ltd. That company operated a business known as E Pty Ltd which operated at Suburb E. It was placed into liquidation on 6 September 2013. The liquidators appointed were members of the firm F Accounting. The husband was a director of H Pty Ltd until 19 March 2009. It was the husband’s evidence that when employed by H Pty Ltd he was paid a salary which he said, “…in retrospect, proved to be excessive both in relation to a reasonable remuneration level payable to me by reference to the work undertaken and as evident by the ultimate failure of the business...” (Affidavit of Mr Prosdokimos filed 12 June 2014 at [55]).
The husband said that he is directly involved in G Pty Ltd and is the director and secretary of that company.
It was the wife’s evidence that, after separation, she found a number of documents, including tax returns, which showed that she had been employed by one of the husband’s companies as a book keeper earning $58 240 in the year ending 30 June 2011. She also found PAYG Payment Summaries for the years ending 30 June 2012 and 30 June 2013 and a letter to her in her capacity as trustee of a self-managed superannuation fund. She says she was not aware of those documents, had not acted or been employed in those positions and had not received any income for doing so.
The second respondent is the appointor of the E Pty Ltd Family Trust. The terms of the E Pty Ltd Family Trust are not in evidence but it was assumed by the parties that as appointor, the second respondent was entitled to replace the trustee of the E Pty Ltd Family Trust whenever she wished. It was said that this gave her, in effect, control of the E Pty Ltd Family Trust.
There was no evidence that the second respondent was a beneficiary of the E Pty Ltd Family Trust.
The trustee of the E Pty Ltd Family Trust is I Pty Ltd. The director of that company is Ms J Prosdokimos, the husband’s sister and the daughter of the second respondent. The shareholders are Ms J Prosdokimos, Mr K and Mr L.
The E Pty Ltd Family Trust owns 85 per cent of the units in D Unit Trust. The trustee of the D Unit Trust is D Pty Ltd. It, as trustee, owns the store and business operating at Suburb D. The director of D Pty Ltd is Mr M and the shareholder is I Pty Ltd. The husband was a director of this company until 3 August 2012.
G Pty Ltd has as its director Mr Prosdokimos. Its shareholder is I Pty Ltd. According to the evidence of the husband, the business of G Pty Ltd is owned by the G Trust. The second respondent is the appointor of that trust.
Thus, it is submitted, save for the company that is in liquidation, the business of each of the E Pty Ltd Companies (Suburbs E, D and G) in effect, is owned by trusts, the appointor of which is the second respondent.
The husband was a director of H Pty Ltd until 19 March 2009. The second respondent was a director until 31 August 2013. It’s shareholders are Mr N, Ms B, Mr Prosdokimos and Mr O Prosdokimos. As I have said, liquidators were appointed to the company on 6 September 2013.
At the hearing of the application to review the Registrar’s decision, but not before the Registrar, the wife asserted that the second respondent did not have standing to object to the subpoena.
Rule 15.26(1) of the Family Law Rules 2004 (Cth) (“the rules”) provides:
(1) If a named person or a person having sufficient interest in a subpoena:
(a) seeks an order that the subpoena be set aside in whole or in part;
(b) objects to the production of a document required by the subpoena;
(c) seeks to be paid for any loss or expense relating to the person's attendance, or the production of a document, in compliance with the subpoena; or
(d) seeks any other relief in relation to the subpoena;
the person must attend court on the court date to apply for the order.
The phrase “person having a sufficient interest in a subpoena” directs the attention of the court to the objector’s interest in a particular subpoena. It is neither necessary nor desirable to try and set out the circumstances in which a person might have a sufficient interest. The term is deliberately broad but the court must be satisfied that the objector has an interest sufficient to be able to object to the production of the documents.
There are precious few authorities that deal with this issue. In Witness v Marsden & Anor [2000] NSWCA 52 Heydon JA listed a number of authorities where subpoenas have been set aside on the application of a non-party. He concluded by saying at [60]:
The authorities indicate that there numerous circumstances in which the recipient of a subpoena ad testificandum, or equivalent process, can move to have it set aside.
The possibility of a recipient of a subpoena applying to set it aside is now provided for by the rule itself.
In Cahill & Cahill (No 2) [2013] FamCA 453 Cronin J said at [8]:
… The bar is not set high for what is sufficient interest. Asserting a capacity is not the test but rather whether the interest can be established. In this case, the objector is mentioned numerous times throughout the affidavit material and correspondence. I reject the suggestion therefore that the objector has to prove the asserted capacity to have standing.
No doubt his Honour came to the view that the objector’s standing was well established by the references to the affidavit material and correspondence and that no further proof was required.
Accepting that the phrase “sufficient interest” is to be read broadly and that the test is not an onerous one, it is still necessary to look at the subpoena in question and consider whether the party objecting to the subpoena has a sufficient interest in objecting to their production. Mere assertion of an interest is insufficient. What is required is a sufficient connection between the interests of the objector and the documents the subject of subpoena to justify the application.
It will, accordingly, be necessary to deal with the issue of standing in relation to each subpoena.
It is asserted by the second respondent that the documents sought lack apparent relevance and that they are an impermissible fishing expedition. Secondly, it is said that they amount to an abuse of process as they were intended to obtain documents not for the purpose of the proceedings but to try to identify the wealth of the second respondent. Finally it is said that the documents insofar as they seek production of a list of employees, are abusive and they breach privacy issues in respect of the employees.
Again they are issues that must been determined by having regard to each subpoena in turn.
It is clear that for a subpoena to be validly issued there must be some connection between the documents and the issues before the court. In Sadek and Ors & Hall and Anor [2015] FamCAFC 23, after referring to the well known authorities of National Employees Mutual General Association Limited v Waind & Hill [1978] 1 NSWLR 372 and Hatton v The Attorney General (Cth) (2000) FLC 93-038, the Full Court said at [25]:
A stranger’s documents will be made available to the parties in the proceedings where that is requisite for the purpose of justice. Although, as Moffit P said, the documents will be made available so far as is necessary for the proper conduct of the litigation, that necessity will generally be met by the documents having apparent relevance to the issues in the proceedings. As was pointed out by his Honour, concepts of disclosure, and particularly its extent, vary. In this court there is a heavy obligation on parties in property cases to make complete disclosure. The requirements of justice, in those cases, may well require a stranger to disclose those documents more fully than in other courts where there are lesser requirements for disclosure.
As to “fishing” the Full Court of the Federal Court in Bailey v Beagle Management Pty Ltd [2001] FCA 60 said at [25] – [35]:
25.Secondly, the notices to produce in the present case are simply not fishing at all, in the sense in which that term is used metaphorically in the law relating to discovery, interrogatories, subpoenas, notices to produce and other forms of compulsive interlocutory process, that is to say where
"... a person who has no evidence that fish of a particular kind are in a pool desires to be at liberty to drag it for the purpose of finding whether there are any there or not." (Associated Dominions Assurance Society Pty Ltd v John Fairfax & Son Pty Ltd (1952) 72 WN(NSW) 250 at 254 per Owen J)
26.In the present case it can be safely assumed that the documents sought by the notices to produce in fact exist, they being standard financial documents which the law and proper accounting practice would require companies of any substance to generate. Likewise, as already mentioned, there can be no doubt that these documents contain information relevant to the issues which arise on a security for costs application. The only uncertainty is whether that information would help or hinder the security application. But unpredictability of response has never been a bar to the pursuit of relevant evidence, as many a hapless cross-examiner who received an unexpected answer will attest.
27.Thirdly, even if the notices to produce are properly to be regarded as fishing, that concept has undergone substantial rethinking in this Court in recent years. In a number of cases it has been pointed out that O 15A r 6 (discovery before action) expressly contemplates what once might have been castigated as fishing and that it would be incongruous if the power to order discovery were less extensive in favour of a party to a proceeding properly brought in the Court than in favour of someone unable for lack of evidence to mount a case: Caltex Refining Co Pty Ltd v AMWU (unreported, Full Court, 6 December 1990), Trade Practices Commission v CC (New South Wales) Pty Ltd (1995) 58 FCR 426 at 436 (Lindgren J), Treasurer v CanWest Global Communications Corp [1997] FCA 578 (Full Court), Microsoft Corporation v Adelong Electronics Pty Ltd[1977] FCA 224 (Burchett J), Bertran v Vanstone [1999] FCA 1753 at pars 18-23 (Kenny J), In the matter of Davison, Donnelly v Davison[2000] FCA 1396 (Branson J). Also one should not lose sight of what the majority of the High Court in Grant v Downs[1976] HCA 63; (1976) 135 CLR 674 at 685 noted as the public interest
"...which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available."
28.The applicants' suggested rule imposes a requirement that, to avoid the stigma of fishing, a party must already be in possession of some evidence before issuing a notice to produce (or, presumably, any other compulsive interlocutory process). But historically the concept of fishing was not concerned with the prior possession of evidence but rather that there was a prior pleading which raised issues for which the evidence sought by the process would be relevant. In Edward Bray's "Principles and Practice of Discovery" (1885) - described by R P Meagher QC in the 1981 Foreward to a reprinted edition as "the standard Victorian [era] masterpiece on the subject" - the learned author, speaking of the stage at which discovery can be required said (at 16, emphasis added):
"... the right to discovery is limited to supporting a definite case set up, and does not extend to fishing out a case from the opponent; and therefore a party cannot have discovery before he has stated his case, whether in the claim as plaintiff or the defence as defendant."
29.This principle underlies the common practice whereby a plaintiff who has no recollection of the accident issues a statement of claim alleging negligence by reason of excessive speed, failure to keep a proper lookout etc. The plaintiff then interrogates the defendant as to factual circumstances of the accident. The plaintiff may have no other evidence, and is plainly seeking to make out a case, but such interrogatories are not considered objectionable on the ground of fishing.
30.The substantive issue for present purposes is not the ultimate liability of the respondents but the question of security for costs. There are no pleadings as to that, but for practical purposes the issues on the security application have been raised in the correspondence between the parties. At the risk of tedious repetition, we note again that the documents sought are relevant to those issues.
31.Moreover, often a holding that interlocutory process is fishing on closer examination appears to be more a question of oppression. In Small, immediately after the passage already quoted (par 13) above), Jordan CJ goes on to say:
"Even if the documents are specified, a subpoena will be set aside as abusive if great numbers of documents are called for and it appears they are not sufficiently relevant."
32.His Honour appears to accept that, when the documents sought from a party to the proceeding are described with reasonable particularity and are relevant, they could not be said to be sought for the purpose of fishing, although if a large number of documents of only marginal relevance were sought, the subpoena would be set aside as oppressive.
33.Fourthly, there is a further practical consideration in relation to applications for security for costs. Delay in making the application will operate as a discretionary factor against the ordering of security, it being obviously unfair to allow the other party to incur costs which might be rendered fruitless as a result of inability to comply with a belated order for security. So if the suggested rule applied, a party might delay a security for costs application while seeking to obtain sufficient material to raise a "reasonable apprehension" of inability to pay costs before serving a notice to produce. The party might then be met with the argument that the application should fail because of delay.
34.In the light of such considerations, modern techniques of case management suggest a more pragmatic and flexible approach than the structured, rule-laden regime proposed by the applicants.
35.Finally, in the circumstances of this case, there was, prior to the service of the notices to produce, at the very least a suspicion that grounds for ordering security existed, proof of which was likely to be aided by the notices to produce: WA Pines Pty Ltd v Bannerman[1980] FCA 79; (1980) 41 FLR 175 at 181 per Brennan J.
·The assets of Equus were subject to a number of charges which secured amounts well in excess of its paid up capital and which would crystallise upon any process of execution being issued.
·On its own account, it was engaged in a huge amount of litigation, some of which at least had already proved unsuccessful. The potential liability for costs orders was obvious.
Each of these cases emphasises the importance of the court considering the relevance to issues in the proceedings of the documents of which production is sought as a significant, if not key factor, in determining whether they should be produced. If the documents are relevant, or, more correctly, do not lack apparent relevance, generally speaking and subject to other grounds of production, they should be produced. As Adams J said in Roads and Traffic Authority of New South Wales v Conolly (2003) 57 NSWLR 310 at 315:
I consider that the identification of the legitimate forensic purpose together with the reasonable chance that the documents in question might support the defence, is sufficient to justify a subpoena seeking the documents. It is not necessary for a party to show that it is more probable than not either case.
D Pty Ltd
The subpoena to D Pty Ltd sought the following documents:
2.Copies of the following documents relating to [D Pty Ltd] in its capacity as the Trustee of the [D] Unit Trust which operates the “[E]” business at [Suburb D]:
2.1All documents relating to any loans provided by [D Pty Ltd] (in its capacity as the Trustee of the D Unit Trust) to:
-Directors of [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust)
-Shareholders of [D Pty Ltd] (in its capacity as the Trustee of the [D ] Unit Trust)
-Employees of the [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust)
Or any other persons relating or not related to [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust)
2.2All documents relating to any loans provided to [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust) by:
-Directors of [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust)
-Shareholders of [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust)
-Employees of [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust)
or any other persons relating or not related to [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust).
2.3Company Tax Returns for [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust) for the financial years ending 30 June 2010, 2011, 2012, and 2013.
2.4Financial Statements for [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust) prepared for the financial years ending 30 June 2010, 2011, 2012 and 2013.
2.5All quarterly Business Activity Statements for [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust) prepared for the period 1 July 2011 to date.
2.6Statements of all savings and investment account/s in the name of [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust) for the period 1 July 2011 to date.
2.7Statements of all mortgage and loan account statement/s in the name of [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust) for the period 1 July 2011 to date.
2.8All cash book ledgers kept by [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust) for the business for the period 1 July 2011 to date.
2.9A list of employees employed by [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust) for the business for the period July 2011 to 30 June 2014.
2.10A list of any dividend distribution by [D Pty Ltd] (in its capacity as the Trustee of the [D] Unit Trust) for the period 1 July 2011 to date.
2.11A list of all discretionary trust distributions of the [D] Trust for the period 1 July 2011 to date.
This subpoena, as with each of the others was objected to for the following listed reasons:
1. Fishing expedition.
2. Abuse of process.
3. A lack of apparent relevance.
4. Privacy issues.
It is to be recalled that I Pty Ltd, as trustee of the E Pty Ltd Family Trust, is the sole shareholder in this company. The E Pty Ltd Family Trust owns the majority of shares in the D Unit Trust, which owns the business. The trustee is D Pty Ltd company.
The only link between this company and the second respondent is her role as appointor of the trust which owns the shares.
The documents set out above clearly relate to the business activities of the business conducted as D Pty Ltd and its relation to the other companies which appear to operate similar businesses with a similar name. The husband was a director of this company until 3 August 2012. Thus a number of the documents sought such as tax returns ending 2010 and 2011 and financial statements are from when he was a director.
None of the categories of documents sought make any reference to the second respondent. It is not suggested that the documents that will be produced will refer to her in any way. It is difficult to see how production of these documents bear upon the private or business affairs or the interests of the second respondent. She has not adduced any evidence to suggest that they would, or indeed could, do so.
The fact that she has the power to replace the trustee does not, of itself, indicate that she had any control of either the actual operation of the trusts or the company’s operations.
In those circumstances I am not satisfied that the second respondent has a sufficient interest to object to the production of the documents by the company.
Further, I am not satisfied that even if the second respondent had standing, that the objection should be upheld.
The business of affairs of the husband and the relationship between his business affairs and those of his family, if any, is not clear.
The husband has yet to provide disclosure. On 21 January 2014 the wife’s lawyers forwarded a detailed request for disclosure. The response from the husband’s lawyers on 30 January 2014 indicated that it would take “just a little while to take proper and comprehensive instructions”. On 10 February 2014 they advised that the husband was “currently collating his financial disclosure documents” and that they would be provided once received. On 6 March 2015 the lawyers for the husband wrote the letter as follows:
The documents are currently being collated and we will shortly be in a position to provide them to you. However, the documents will only be provided to your client on the basis that she signs the Undertaking in the attached form.
(Exhibit DP-1 “Z”, affidavit of Ms Prosdokimos filed 11 March 2014)
Attached to the letter was an undertaking restricting the use of any disclosed documents by the wife. The letter did not explain why it was that the husband thought he was entitled to have the wife sign the attached undertaking as a condition of him complying with his obligations of disclosure.
The short point, is the husband is yet to provide any disclosure at all.
The husband was a director of D Pty Ltd until 3 August 2012.
The wife adduced evidence including documents produced by the E companies describing the husband as the “Managing Director of the E team”. There are similar documents and press articles that describe him as the owner of the business. These matters do not, of course, support any basis whatsoever for finding that the husband was in fact the Managing Director or the owner but they do, in circumstances where the husband has not yet given disclosure, provide ample basis for properly seeking documents that are relevant to those issues from third parties.
It appears, at least on the limited evidence available and by reason of the close family relationship between the owners and directors of the various companies, that there is a family connection. The wife is seeking production of documents that identify the husband’s interests, if any, in those businesses and what other benefits, if any, he has received. That is not fishing. It cannot be said that the documents sought by the wife lack apparent relevance to the issues in the proceedings.
Given that there is no suggestion that the second respondent is a beneficiary of any of the relevant trusts and is not a shareholder or director of the relevant companies there is no evidence upon which the court could be satisfied that the production of these documents is to identify the wealth of the second respondent. No evidence was called to explain how the production of these documents would lead to an investigation of her wealth. Therefore the claim that the subpoena is an abuse of process as it improperly seeks to ascertain information about that matter must fail.
It is clear that the production of the documents will identify the employees of the company. To that extent their privacy will be affected. Nonetheless it is part of the necessary compromise between the rights of strangers and the rights of parties to litigation. Any entitlement of the employees to privacy must yield to the interests of justice in this litigation. It is to be recalled that the wife has evidence which suggests she was treated as an employee of this company and has received wages when she had no knowledge of that. She has recently received a letter of demand for unpaid income tax in respect of employment of which she says she has no knowledge. A list of employees is therefore a relevant issue in the proceedings.
The objection to the subpoena to D Pty Ltd will be dismissed.
E Pty Ltd
The subpoena served on this company is as follows:
2.Copies of the following documents relating to [E Pty Ltd] and its operation of the “E Pty Ltd” (or alternatively “E”) business at [Suburb E]:
2.1All documents relating to any loans provided by [E Pty Ltd] to:
-Directors of [E Pty Ltd]
-Shareholders of [E Pty Ltd]
-Employees [E Pty Ltd]
or any other persons relating or not related to [E Pty Ltd]
2.2All documents relating to any loans provided to [E Pty Ltd] by:
-Directors of [E Pty Ltd]
-Shareholders of [E Pty Ltd]
-Employees of [E Pty Ltd]
or any other persons related or not related to E Pty Ltd.
2.3Company Tax Returns for [E Pty Ltd] for the financial years ending 30 June 2010, 2011, 2012, and 2013.
2.4Financial Statements for [E Pty Ltd] prepared for the financial years ending 30 June 2010, 2011, 2012 and 2013.
2.5All quarterly Business Activity Statements for [E Pty Ltd] prepared for the period 1 July 2011 to date.
2.6Statements of all savings and investment account/s in the name of [E Pty Ltd] for the period 1 July 2011 to date.
2.7Statements of all mortgage and loan account statement/s in the name of [E Pty Ltd] for the period 1 July 2011 to date.
2.8All cash book ledgers kept by [E Pty Ltd] for the business for the period 1 July 2011 to date.
2.9A list of employees employed by [E Pty Ltd] for the business for the period July 2011 to 30 June 2014.
The Notice of Objection was the same four grounds as previously noted in relation to D Pty Ltd.
The second respondent was a director of this company until 1 November 2002. It is not suggested, however, by her that documents sought in categories 2.1 or 2.2 cover documents that relate to her period as a director. The other categories of documents are limited by time to seek production of documents between 2010 and 2014. It is difficult therefore to see if she has any interest arising as a former director of the company.
The second respondent did not seek to rely on that as giving her a sufficient interest but rather as her role as appointor of the E Pty Ltd Family Trust. Assuming that is, for the moment, to be the same as ‘E Pty Ltd Discretionary Trust’, which is a shareholder in E Pty Ltd, the same reasoning as was applied to deny her sufficient interest in the D Pty Ltd subpoena applies here.
For similar reasons I would not be satisfied that the subpoena issued on E Pty Ltd was an abuse of process, was fishing or sought documents that did not have apparent relevance. It is to be recalled that this company is the current employer of the husband which adds to the relevance of the documents sought in the subpoena.
F Accounting
The subpoena to F Accounting sought the following documents:
2.Copies of the following documents in relation to the liquidation of [H Pty Ltd]:
2.1 All documents relating to any sale or proposed sales of the business known as “[E Pty Ltd]” (or alternatively, “E”) for the period of 1 January 2012 to 30 June 2014.
2.2All documents relating to any loans provided by [H Pty Ltd] to:
-Directors of [H Pty Ltd]
-Shareholders of [H Pty Ltd]
-Employees [H Pty Ltd]
or any other persons related or not related to [H Pty Ltd].
2.3All documents relating to any loans provided by [H Pty Ltd] to:
-Directors of [H Pty Ltd]
-Shareholders of [H Pty Ltd]
-Employees [H Pty Ltd]
or any other persons related or not related to [H Pty Ltd].
2.4Company Tax Returns for [H Pty Ltd] for the financial years ending 30 June 2010, 2011, 2012, and 2013.
2.5Financial Statements for [H Pty Ltd] prepared for the financial years ending 30 June 2010, 2011, 2012, and 2013.
2.6All quarterly Business Activity Statements for [H Pty Ltd] prepared for the financial years ending 30 June 2010, 2011, 2012, and 2013.
2.7Statements of all savings and investment account/s in the name of [H Pty Ltd] for the period 1 July 2011 to date.
2.8Statements of all mortgage and loan account statement/s in the name of [H Pty Ltd] for the period 1 July 2011 to date.
2.9All cash book ledgers kept by [H Pty Ltd] for the period 1 July 2011 to date.
2.10A list of employees employed by [H Pty Ltd] for the business for the period July 2011 to 30 June 2014.
2.11All pay records including payslips, superannuation payments and PAYG annual statement for [Ms Prosdokimos] for all time periods of her employment (if any) with [H Pty Ltd] and/or the business operated by it.
Again the objection was on the same grounds.
Senior counsel for the second respondent conceded that, in the light of the wife’s evidence as to the documents that suggest she might be an employee, the documents as sought in paragraph 2.11 of the subpoena had apparent relevance to the proceedings but submitted that the other documents were clearly fishing and went beyond the legitimate reach of a subpoena.
The second respondent was a director of this company until 31 August 2013, six days before the liquidators were appointed. She is a shareholder of the company. Although she did not rely on those matters but sought solely to rely on her position as appointor of the E Pty Ltd Family Trust, this sufficies to give her an interest to apply to object to the subpoena.
The husband remains a shareholder of the company and was a director until 19 March 2009.
The wife deposed:
Not long after the Respondent left the former matrimonial home, the Suburb E outlet of the seafood business now known as “[E]” (operated by the Respondent, his mother and his sister) was sold. I recall the Respondent telling me in October 2013 that he had sold the business for the sum of $370,000.00, but apart from that information I have at no time been provided with any other details of the proceeds of the sale of the business.
(Affidavit of Ms Prosdokimos filed 12 March 2014 at [59])
The wife is entitled to satisfy herself that the sale of that business was a proper commercial transaction and was at arm’s length.
For the reasons already given, the other documents have apparent relevance to the proceedings and the objection to the subpoena will be dismissed.
G Pty Ltd
The second respondent seeks to review the decision of the Registrar in relation to the G Pty Ltd subpoena by maintaining the objection to paragraphs 2.8 and 2.9 of that subpoena. They seek the following documents:
2.8All cash book ledgers kept by [G Pty Ltd] for the business for the period 1 July 2011 to date.
2.9A list of employees employed by [G Pty Ltd] for the business for the period July 2011 to 30 June 2014.
The husband is the current director of this company.
The only interest the second respondent has identified in this subpoena is that she is an appointor of the E Pty Ltd Family Trust. The trustee is the sole shareholder of G Pty Ltd. For the reasons given earlier, this does not give her a sufficient interest to apply to set aside the subpoena.
Similarly, for the reasons given earlier, the list of employees is a relevant issue. The cash book ledgers do contain documents relevant to the issues which could establish whether or not there had been payments to family members recorded in those books including payments allegedly made to or on behalf of the wife.
The appropriate orders therefore are that the objections lodged by the second respondent as to the subpoenas directed to D Pty Ltd, E Pty Ltd, F Accounting and G Pty Ltd issued on 7 August 2014 are dismissed. The documents are to be produced within fourteen days of today.
I certify that the preceding sixty-five (65) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 22 May 2015
Associate:
Date: 22 May 2015
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