Rahal & Rahal (No 4)

Case [2023] FedCFamC1F 1070

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Rahal & Rahal (No 4) [2023] FedCFamC1F 1070

File number: SYC 7908 of 2020
Judgment of: MCGUIRE J
Date of judgment: 14 December 2023
Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Review of a decision – wife seeks a review of senior judicial registrar upholding objections to a subpoena issued by the wife in property proceedings – application successful and objections to subpoena are dismissed
Legislation: Family Law Act 1975 (Cth)
Cases cited:

Baumann and Ors & Rushbrooke and Anor [2016] FamCA 905

Ryder & Lee [2009] FamCA 531

Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145

Unitingcare – Unifam Counselling & Mediation & Harkiss and Anor (2011) FLC 93-476

Division: Division 1 First Instance
Number of paragraphs: 55
Date of hearing: 7 December 2023
Place: Hobart, delivered Launceston
Counsel for the Applicant: Ms Winning
Solicitor for the Applicant: Barkus Doolan Winning
Counsel for the Respondent: Mr Dickson KC
Solicitor for the Respondent: Braun Abrhams Burreket

ORDERS

SYC 7908 of 2020

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

MS RAHAL

Applicant
AND:

MR RAHAL

Respondent

ORDER MADE BY:

MCGUIRE J

DATE OF ORDER:

14 DECEMBER 2023

THE COURT ORDERS THAT:

1.The wife have leave to file and prosecute an Application for Review out of time.

2.The objection to subpoena issued and directed to FF Lawyers be dismissed.

3.The documents at Court under subpoena issued and directed to FF Lawyers be released to the parties, for inspection and photocopying.

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.

IT IS NOTED that publication of this judgment by this Court under the pseudonym of Rahal & Rahal (No 4) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

MCGUIRE J:

APPLICATION

  1. The wife Ms Rahal (“the wife”) seeks a review of orders of a Judicial Registrar made 25 September 2023 upholding objections to a subpoena issued by the wife in property proceedings where such subpoena was directed to a solicitors’ firm, FF Lawyers. 

  2. The subpoena seeks conveyancing files in respect of two purchases of real property being, firstly, GG Street, Suburb HH, New South Wales in 2014 with the purchaser being a corporate entity, L Pty Ltd and, secondly, at JJ Street, Suburb KK, New South Wales with the purchaser being P Pty Ltd.

  3. Specifically,…

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Details
AGLC
Rahal & Rahal (No 4) [2023] FedCFamC1F 1070
Case
[2023] FedCFamC1F 1070
Decision Date

CaseChat Overview and Summary

The case of Rahal & Rahal (No 4) involved the wife, Ms Rahal, seeking a review of the decision of a Senior Judicial Registrar who had upheld objections to a subpoena she issued in the context of ongoing property proceedings with her husband, Mr Rahal. The wife sought access to conveyancing files held by FF Lawyers, which she believed contained documents relevant to her claim that Mr Rahal had not fully disclosed his assets and interests, particularly in relation to entities associated with his father, a prominent property developer. The husband objected to the subpoena, arguing that it was issued on speculation and was not relevant to the proceedings.

The primary legal issue before the court was whether the subpoenaed documents were relevant to the proceedings and whether the wife had a legitimate forensic purpose in seeking them. The court considered whether the documents were apparently relevant and capable of providing a legitimate basis for cross-examination, in accordance with the principles set out by Brereton JA in Secretary of the Department of Planning, Industry and Environment v Blacktown City Council. The wife argued that the documents were necessary to test inconsistencies in Mr Rahal's statements about his interests in his father's entities and to verify the source of a significant financial injection into his bank account. The husband contended that the subpoena was speculative and not directly related to the property proceedings.

The court found that the documents were sufficiently particularised to avoid claims of speculation or fishing. Given Mr Rahal's concession of his directorship and shareholding in the companies in question, and the wife's need to verify his assertions about the nature of his interests, the court concluded that the documents were relevant. The wife had a legitimate forensic purpose in seeking to clarify the discrepancies between Mr Rahal's statements and the evidence presented, particularly in light of the husband's failure to fully disclose his assets. The court also noted that the wife's withdrawal of her application to join the father's entities did not undermine the relevance of the subpoenaed documents, as her claims were directly against Mr Rahal.

The court granted the wife leave to file and prosecute her application for review out of time and dismissed the objections to the subpoena. The documents held by FF Lawyers were ordered to be released to the parties for inspection and photocopying. This decision ensures that the wife can pursue her claims regarding the husband's undisclosed assets and interests, thereby contributing to a fair and transparent resolution of the property proceedings.

Orders

Orders of the court

SYC 7908 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS RAHAL

Applicant

AND:

MR RAHAL

Respondent

ORDER MADE BY:

MCGUIRE J

DATE OF ORDER:

14 DECEMBER 2023

THE COURT ORDERS THAT:

1. The wife have leave to file and prosecute an Application for Review out of time.

2. The objection to subpoena issued and directed to FF Lawyers be dismissed.

3. The documents at Court under subpoena issued and directed to FF Lawyers be released to the parties, for inspection and photocopying.

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

Before me, the objectors are represented by Mr Kearney of Senior Counsel. The husband is represented by Mr Dickson of Kings Counsel. The wife, pressing the release of the subpoenaed materials, is represented by Ms Winning, solicitor.BACKGROUND The parties married in 2009 and separated in February 2020. There are substantive property, parenting, spousal maintenance, and child support proceedings between the husband and the wife. The matters are not yet listed for trial. The wife is 45 years of age. She has not been engaged in remunerative employment for a number of years. She continues to reside in the former matrimonial home and has the primary care of the parties’ two children aged 12 aged 10 years. The husband is 48 years old. He describes himself in documents filed in court as a “manager” in a business. His sworn financial statement discloses an income from all sources of gross $276,328 per annum. The husband provides a balance sheet in the proceedings disclosing gross assets of the parties at value of $12,486,653 and liabilities of $4,057,663 or net non-superannuation property at value of $8,428,900. He pursues the sale of the matrimonial home at Suburb E valued at $11,500,000 with attendant mortgage of $3,300,000 or a net equity of $8,200,000. The wife seeks to retain the home at Suburb E in the ultimate s 79 distribution of property (and probably unencumbered). In mounting this case she argues that the husband has not made full disclosure of his property/assets and specifically his interests in corporate and trust entities owned or operated by his father where the husband’s father is, on the available evidence, a prominent property developer. The husband denies any legal, equitable or beneficial interest in any of his father’s corporate or trust entities. It is uncontroversial that the husband received an injection of funds into his bank account in February 2023 in the sum of $483,275 where the wife suggests that generally this to be evidence of a beneficial interest of the husband in his father’s entities. The husband says only that it was the repayment to him of the loan. The status of the source of the injection of funds remains to be tested. The wife argues broadly that the husband has entered into a course of divesting himself of assets and funds together with a failure to make full disclosure as a tactical ploy pending a final s 79 settlement. Pending before me is a separate Review Application made by the husband in respect of interim orders made by the Senior Judicial Registrar on 31 May 2023 where inter-alia he seeks the sale of the Suburb E property with a consequent partial property settlement on each of the parties and hence the discharge of a current interim spousal maintenance order in favour of the wife. At the first hearing of that Review Application on 26 July 2023, the wife indicated that she intended to join 22 entities of the husband’s father as parties to the substantive proceedings. On that basis, I considered any determination to be premature. Whilst the wife did indeed file an application to join those entities, that application has since been withdrawn.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The wife asserts that statements inconsistent with the husband’s assertion of not having any personal interest in the property in his father’s entities is contradicted by evidence given to an ICAC enquiry and relevantly in a statement made by the principal solicitor of the firm now subpoenaed to provide the conveyancing files, to the effect that the husband did, in fact, have an interest in real estate through a relevant trust. The wife says that this evidentiary inconsistency should be tested and that the subpoenaed material is consequently directly relevant. CONSIDERATION I accept the test for relevance is that set out by Brereton JA in Secretary of the Department of Planning, Industry and Environment v Blacktown City Council (supra) with reference to apparent relevance and legitimate forensic purpose where “… the essential question is whether the documents called for are apparently relevant, or capable of providing a legitimate basis for cross-examination, in which case there is a legitimate forensic purpose for the issue of the subpoena”.[4][4] At [89]. I accept that the subpoenaed directed to each of L Pty Ltd and P Pty Ltd are sufficiently particularised so as to meet any challenge of “speculation” or “fishing”. Where the husband: (i)concedes that he is a director of and 50 per cent shareholder in each of L Pty Ltd and P Pty Ltd; (ii)asserts that he holds any legal interest by way of a of resulting trust; and(iii)I accept the wife’s submission that she should be able to test the veracity of the claimed resulting trust and specifically in respect of the relevant purchases by L Pty Ltd and P Pty Ltd. Where the Court Expert is unable to definitively explain the status of an asserted “bare trust” obtaining substantial loans in respect of the relevant purchases then I am of the view that the wife should be able to test any apparent contradiction and that the conveyancing files are therefore directly relevant. Where the wife asserts an apparent inconsistent statement made at ICAC as to the husband’s ownership of property and where such statement is made by the principal of the firm the subject of the subpoena then the wife is entitled to test the asserted inconsistencies. Where the wife’s own “shadow accountant” deposes to requiring further information including from L Pty Ltd and P Pty Ltd in order to give advice to the wife as to a settled property pool then the material is relevant consistent with the statements of Brereton JA in the Secretary of the Department of Planning, Industry and Environment v Blacktown City Council (supra). I am not persuaded that the wife’s withdrawal of her application to join the husband’s father’s 22 entities is indicative of the subpoena being issued merely on “speculation”. Ultimately, it is the husband against whom the wife claims legal or equitable interest. She is entitled to pursue materials directly relevant to him. Consequently, I am persuaded that the wife makes out a legitimate forensic purpose in the issuing of subpoena to L Pty Ltd and P Pty Ltd and hence that the documents sought are relevant.