Ryder & Lee
[2009] FamCA 531
•17 June 2009
FAMILY COURT OF AUSTRALIA
| RYDER & LEE | [2009] FamCA 531 |
| FAMILY LAW – PRACTICE AND PROCEDURE – SUBPOENA – where the mother issued subpoenas for the production of documents directed to the father’s wife in her personal capacity and as the Managing Director of a company – objection to the production of documents – whether it is appropriate to seek the production of the documents from non-parties – whether the documents are relevant to the Court’s determination of competing applications for Child Support departure orders – whether the documents are sought for a legitimate forensic purpose – whether it would be oppressive to require production – whether the subpoenas should be set aside due to the asserted confidentiality of the documents sought – notice of objection dismissed – order for the documents to be produced to the Court |
| Child Support (Assessment) Act 1989 (Cth) ss 117 & 151B Family Law Rules 2004 (Cth) rr 4.26, 13.01, 13.07, 15.26, 15.27 15.31 & 15.33 |
| Hatton v Attorney- General of the Commonwealth of Australia & Commonwealth Bank of Australia & Commonwealth Development Bank of Australia (2000) FLC 93-038 Woley and Humboldt [2008] FamCA 699 Commissioner for Railways v Small (1938) 38 SR (NSW) 564 Anton and Malitsa [2009] FamCA 70 Grollo and Bussolaro and Victoria Square Pty Ltd [2006] FamCA 929 Macks v Tucker & Ors & QBE Insurance (Australia) Ltd (No. 4) [2007] SASC 255 Hunt v Judge Russell and de Pinto (1995) 63 SASR 402 Andrew Garrett Wine Resorts & Anor v National Australia Bank Limited (No. 6) (2005) 92 SASR 419 Senior v Holdsworth, Ex Parte Independent Televisions News Ltd (1976) 1 QB 23 Lane v The Registrar of the Supreme Court of New South Wales (1981) 148 CLR 245 Apache Northwest Pty Ltd and Others v Western Power Corporation (1998) 19 WAR 350 Seven Network v News Ltd (No. 5) (2005) 216 ALR 147 |
| APPLICANT: | Ms Ryder |
| RESPONDENT: | Mr Lee |
| OTHER PARTY: | Ms A |
| OTHER PARTY: | S Company Pty Ltd |
| FILE NUMBER: | ADF | 5495 | of | 1989 |
| DATE DELIVERED: | 17 June 2009 |
| PLACE DELIVERED: | Darwin |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Burr J |
| HEARING DATE: | 9 & 29 April, 5 May & 2 June 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mrs Lindsay and Mr McQuade |
| SOLICITOR FOR THE APPLICANT: | David Fidler & Co |
| COUNSEL FOR THE RESPONDENT: | N/A |
| SOLICITOR FOR THE RESPONDENT: | N/A |
| COUNSEL FOR THE OTHER PARTIES: | Mr Nicholas Swan and Mr Crocker |
| SOLICITOR FOR THE OTHER PARTIES: | Swan Lawyers |
Orders
That the Notice of Objection to subpoena filed on 28 May 2009 in relation to the two subpoenas to produce documents directed to Ms A and the Managing Director of S Company Pty Ltd and issued by the mother on 15 May 2009 is hereby dismissed.
That the documents sought pursuant to the aforesaid subpoenas be produced on or before 4.00pm on Friday 26 June 2009.
That liberty be granted to the parties to apply on three (3) days notice on the issues of costs and conduct money.
IT IS NOTED that publication of this judgment under the pseudonym Lee & Ryder is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADF 5495 of 1989
| MS RYDER |
Applicant
And
| MR LEE |
Respondent
And
| MS A |
Other Party
And
| S Company Pty Ltd |
Other Party
REASONS FOR JUDGMENT
Introduction
I have before me for determination objections to two subpoenas to produce documents. Those subpoenas are issued to the father’s wife, Ms A, and to the Managing Director of S Company Pty Ltd. Ms A is the Managing Director of that company.
These are long running proceedings. The current issue for determination by the Court relates to child support matters. Both parties seek departure orders with respect to various administrative assessments of child support payable by the father made since 1998, in relation to the parties’ two children J born in April 1989 and L born in April 1991.
The parties’ competing applications for departure orders were heard by Bell J in May 2007, and his Honour made orders on 8 May 2007. An appeal against those orders was allowed, the Full Court setting aside the orders and remitting the matter for hearing.
On 12 August 2008 I granted leave to the mother to issue and serve a number of subpoenas to produce documents, including to Ms A, the father’s wife, and the Managing Director of S Company Pty Ltd.
The mother issued a subpoena to Ms A on 12 August 2008 seeking production of the following documents from 1 July 1998 to the date of the subpoena:
“1.all cheque butts, deposit slips and bank statements, credit card statements and other financial records whether written or electronic relating to the Account from which the sum of $91,976.50 (or thereabouts) was transferred to the credit of [G] Pty Ltd (trading as [CN Company]) on or about the 22nd day of August 2005.
2. all cheque butts, deposit slips and bank statements, credit card statements and other financial records whether written or electronic relating to the Account from which the sum of $91,976.50 (or thereabouts) was transferred to the credit of [G] Pty Ltd (trading as [CN Company]) in or about the January 2006.”
These payments relate to work done at a property at C with respect to which proceedings were subsequently brought in the District Court by the father and Ms A against G Pty Ltd.
The mother issued a subpoena to the Managing Director of S Company Pty Ltd, also on 12 August 2008 seeking production of the following documents:
Item Number Date Description 1. 2000/2001 Financial Returns for [S] Company Pty Ltd 2. 2000/2001 Income Tax Return for [S] Company Pty Ltd 3. 2004/2005 Financial Returns for [S] Company Pty Ltd 4. 2004/2005 Income Tax Return for [S] Company Pty Ltd 5. 2005/2006 Financial Returns for [S] Company Pty Ltd 6. 2005/2006 Income Tax Return for [S] Company Pty Ltd 7. 2006/2007 Financial Returns for [S] Company Pty Ltd 8. 2006/2007 Income Tax Return for [S] Company Pty Ltd 9. 2007/2008 Financial Returns for [S] Company Pty Ltd 10. 2007/2008 Income Tax Return for [S] Company Pty Ltd 11. From the 1st July 1998 to the date of this subpoena all cheque butts, deposit slips and bank statements, credit card statements and other financial records whether written or electronic relating to the Account from which the sum of $91,976.50 (or thereabouts) was transferred to the credit of [G] Pty Ltd (trading as [CN Company]) on or about the 22nd day of August 2005. 12. From the 1st July 1998 to the date of this subpoena all cheque butts, deposit slips and bank statements, credit card statements and other financial records whether written or electronic relating to the Account from which the sum of $91,976.50 (or thereabouts) was transferred to the credit of [G] Pty Ltd (trading as [CN Company]) in or about the January 2006.
On 23 October 2008 I extended the time for compliance with both subpoenas to 25 November 2008. On 2 December 2008 I further extended the time for compliance with the subpoena issued to Ms A to 23 December 2008.
On 26 February 2009, after being informed by counsel for the mother that the mother had been unable to effect service of the subpoena directed to Ms A in her personal capacity or in her role as Managing Director of S Company Pty Ltd, I ordered that service would be deemed to be effected by substituted service upon Ms A care of the father at his family law solicitors, with a copy to his solicitors F Firm, and with a copy to also be directed to Ms A at an identified post office address.
When this matter came back before me on 9 April 2009 I was informed that Ms A had by that time been served with the subpoena. Mr Christopher Swan who appeared for Ms A on this occasion advised that Ms A was able to produce the records relating to two payments made to G Pty Ltd, but that Ms A objected to the breadth of the subpoena. A Notice of Objection to the subpoena had not been filed, however. I made orders on that date that Ms A provide copies of all deposit slips, bank statements and cheque butts relating to the transactions to G Pty Ltd (trading as CN Company) in two amounts of $91,976.50 upon the mother’s solicitors providing conduct money and costs associated with the production of the documents fixed at $80.00. The matter was listed for further consideration on 29 April 2009. Those documents were produced on 9 April 2009.
Ms A filed a Notice of Objection on 29 April 2009.
At the hearing before me on 29 April 2009, Mr Nicholas Swan appeared on behalf of Ms A and S Company Pty Ltd. As noted by Mrs Lindsay for the mother, there was however only one notice of objection with respect to the subpoenas. No formal notice of objection had been filed on behalf of S Company Pty Ltd. Mr Swan raised on this occasion in the course of his submissions, technical problems with the subpoenas, in particular the subpoena issued to S Company. In particular, Mr Swan pointed out that the mother did not appear to be seeking the tax returns or financial records for the years 2001/2002, 2002/2003 and 2003/2004. Mr Swan also queried what the mother sought by use of the term “financial returns”, which he submitted is a “meaningless term”. There was also a complaint on behalf of Ms A of lack of specificity in the subpoenas generally.
Mrs Lindsay for the wife clarified that the mother was seeking records for the years 2001/2002, 2002/2003 and 2003/2004 also and in effect that she sought the company’s profit and loss statements, balance sheets and Business Activity Statements for the years in question.
After hearing the parties’ submissions with respect to the objections, I advised the mother at the hearing on 29 April that the subpoena needed to be redrafted to better particularise exactly what it is the mother is seeking be produced. I therefore adjourned the matter for further consideration to 5 May 2009 for that to occur.
On 1 May 2009 the mother issued two amended subpoenas directed to Ms A and The Managing Director, S Company Pty Ltd.
At the hearing on 5 May 2009 it was identified that these subpoenas required further amendment and I thus granted the mother leave to issue further Amended Subpoenas again directed to Ms A and The Managing Director, S Company Pty Ltd. Those subpoenas were issued on 1 May 2009.
The subpoena directed to Ms A now seeks production of the following documents:
Item Number Date Description 1. 1 July 1998 until the date of this subpoena all cheque butts, bank statements, and credit card statements which record payments made for or in relation to improvements upon the property at [C] being the property registered upon Certificate of Title Volume […] Folio […] 2. 1 July 1999 until the date of this Subpoena all cheque butts, deposit slips and bank statements, and credit card statements whether written or electronic relating to the account from which the sum of $91,976.50 (or thereabouts) was transferred to the credit of [G] Pty Ltd (trading as [CN Company]) on or about the 22 day of August 2005 3. 1 July 1999 until the date of this Subpoena all cheque butts, deposit slips and bank statements, and credit card statements whether written or electronic relating to the account from which the sum of $91,976.50 (or thereabouts) was transferred to the credit of [G] Pty Ltd (trading as [CN Company]) in or about January 2006.
The amended subpoena issued to S Company Pty Ltd now seeks production of:
Item Number Date Description 1. Financial years ending 30 June
a. 2000
b. 2001
c. 2002
d. 2003
e. 2004
f. 2005
g. 2006
h. 2007
2008
inclusive
The following documents prepared in respect of [S] Co Pty Ltd namely:
a. Income tax returns;
b. GST ledgers;
c. Profit and Loss Statements;
d. Loan Account Statements;
e. Balance Sheets;
f. Depreciation Schedules
2. from 1 July 1998 until the date of this subpoena all cheque butts, copy of deposit slips, bank statements, and credit card statements whether written or electronic relating to the Account from which the sum of $91,976.50 (or thereabouts) was transferred to the credit of [G] Pty Ltd (trading as [CN Company]) on or about the 22 day of August 2005 3. From 1 July 1999 until the date of this Subpoena all cheque butts, deposit slips, bank statements, and credit card statements whether written or electronic relating to the Account from which the sum of $91,976.50 (or thereabouts) was transferred to the credit of [G] Pty Ltd (trading as [CN Company]) on or about January 2006.
On 27 May 2009 Ms A produced to the court records relating to wages paid to the father by the company.
On 28 May 2009 a single Notice of Objection was filed by Ms A in her personal capacity and in her capacity as Managing Director of S Company Pty Ltd.
On 2 June 2009 further submission were made by the mother and on behalf of Ms A in her personal capacity and as the Managing Director of the company. I reserved judgment on that date.
Family Law Rules 2004 (Cth)
Part 15.3 of the Family Law Rules 2004 (Cth) addresses the issuing of subpoenas. The following rules in particular are relevant:
Rule 15.26
Objection to subpoena
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.
Note An application to set aside a subpoena issued in an appeal will be listed for determination before the court hearing the appeal.
Rule 15.31
Objection to inspection or copying of document
(1) This rule applies if the named person, or a person having sufficient interest in a subpoena for production:
(a) objects to the production of a document identified in the subpoena; or
(b) objects to a document identified in the subpoena being inspected or copied by any of the parties.
(2) The person must, as soon as practicable after being served with the subpoena and at least 10 days before the court date, give written notice of the objection, or other order sought, in accordance with Part F of the Subpoena, to:
(a) the Registry Manager;
(b) the named person, if applicable;
(c) the other parties; and
(d) any independent children’s lawyer.
(3) A notice under this rule operates as a stay on the operation of the parties’ and independent children’s lawyer’s right, under subrule 15.30 (4), to inspect and copy a document produced under a subpoena.
Rule 15.33
Claim for privilege
The court may compel a person to produce a document to the court for the purpose of ruling on an objection to the production of the document under a subpoena for production.
Unlike the Federal Court Rules (see Order 27, rule 4) there is no express provision in the Family Law Rules for the setting aside of a subpoena. However, the power of the Court to set aside a subpoena has long been accepted or assumed by the Court. (See Hatton v Attorney-Generalof the Commonwealth of Australia & Commonwealth Bank of Australia & Commonwealth Development Bank of Australia (2000) FLC 93-038 at 87,598, referring to Sharpe and Dalton (1990) FLC 92-167; Epstein (1993) FLC 92-384; White and Tulloch v White (1995) FLC 92-640; Re Z (1996) FLC 92-694 at 83,240; and Relationships Australia v Pasternak (1996) FLC 92-699).
Child support provisions
It is relevant in the context of this matter to outline the provisions of the Child Support (Assessment) Act 1989 (Cth) to which the Court will have regard in the ultimate determination of the competing applications for child support departure orders.
Section 117 outlines the matters about which the court must be satisfied before making a departure order.
Court may make departure order
(1) Where:
(a) application is made to a court having jurisdiction under this Act for an order under this Division in relation to a child in the special circumstances of the case; and
(b) the court is satisfied:
(i) that one or more of the grounds for departure mentioned in subsection (2) exists or exist; and
(ii) that it would be:
(A) just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(B) otherwise proper;
to make a particular order under this Division;
the court may make the order.
Subsection (2) outlines the grounds of departure:
(2) For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:
(a) that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of:
(i) the duty of the parent to maintain any other child or another person; or
(ii) special needs of any other child or another person that the parent has a duty to maintain; or
(iii) commitments of the parent necessary to enable the parent to support:
(A) himself or herself; or
(B)any other child or another person that the parent has a duty to maintain; or
(iv) high costs involved in enabling a parent to spend time with, or communicate with, any other child or another person that the parent has a duty to maintain;
(aa) that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of the responsibility of the parent to maintain a resident child of the parent (see subsection (10));
(b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
(i) because of high costs involved in enabling a parent to spend time with, or communicate with, the child; or
(ia) because of special needs of the child; or
(ib) because of high child care costs in relation to the child; or
(ii)because the child is being cared for, educated or trained in the manner that was expected by his or her parents;
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(i) because of the income, earning capacity, property and financial resources of the child; or
(ia) because of the income, property and financial resources of either parent; or
(ib) because of the earning capacity of either parent; or
(ii) because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975 or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child.
The mother by her Further Amended Application filed on 6 October 2006 seeks a departure order relying on the ground outlined in s 117(2)(c).
In determining whether it would be just and equitable to make a departure order as required by s 117(1)(b)(ii)(A), the court must have regard to the matters in subsection (4), which includes paragraphs (d) and (da):
…
(d) the income, property and financial resources of each parent who is a party to the proceeding; and
(da) the earning capacity of each parent who is a party to the proceeding;…
Subsection 117(7A) also provides:
(7A) In having regard to the income, property and financial resources of a parent of the child, the court must:
(a) have regard to the capacity of the parent to derive income, including any assets of, under the control of, or held for the benefit of, the parent that do not produce, but are capable of producing, income; and
(b) disregard:
(i) the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child, or who has such a duty but is not a party to the proceeding, unless, in the special circumstances of the case, the court considers that it is appropriate to have regard to them; and
(ii) any entitlement of the child or the carer entitled to child support to an income tested pension, allowance or benefit.
It is clear from these provisions that it determining whether to make a departure order, the court must have regard, inter alia, to the income, property, financial resources and earning capacity of the parents.
Discussion
At the hearing on 29 April 2009 the parties made submissions with respect to the objections to the subpoenas as they were drafted at that time. Further submissions were made on 2 June 2009 with respect to the subpoenas as they are now drafted.
At the hearing on 29 April 2009 Mr Swan outlined that objection was taken to the subpoenas on the grounds of lack of relevance, in that it is a “fishing expedition”, and that the subpoenas are oppressive. The most recent Notice of Objection filed outlines that production of the documents sought by the subpoenas is objected to on the grounds of relevance and oppression and that the material relates to the “confidential workings” of the company.
Lack of relevance is a sufficient ground in itself to set aside a subpoena. (See Hatton v Attorney- General (supra) at 87,606). The onus is on the applicant to establish that the documents sought pursuant to the subpoena are relevant. In Family Court proceedings, where there are no pleadings, relevance is to be determined by reference to the affidavit material filed. (See Hatton v Attorney- General (supra) at 87,607 and more recently Woley & Humboldt [2008] FamCA 699).
A subpoena may be set aside for being oppressive where the subpoena places an unreasonable burden on the person to whom the subpoena is issued, for example the documents sought are not sufficiently specified, the person will be put to unreasonable expense or effort or will be required to make a judgment regarding the relevance of documents. (See Commissioner for Railways v Small (1938) 38 SR (NSW) 564).
In the decision of Anton and Malitsa [2009] FamCA 70, Cronin J said at [32], with respect to the width of a subpoena:
It is clear that a subpoena must specify with reasonable particularity the documents which are required to be produced. A subpoena ought not to be issued simply requiring the recipient to search for and produce all such documents as he may have in his possession or power relating to a particular matter. That subpoena must be clear, precise and enable the recipient to go direct to the documents.
A subpoena to produce documents may also be set aside where it is considered to be “fishing”. In Commissioner for Railways v Small (supra) Jordan CJ stated at 575:
... a party is no more entitled to use a subpoena duces tecum than he is a summons for interrogatories, for the purpose of "fishing", ie endeavouring, not to obtain evidence to support his case, but to discover whether he has a case at all... or to discover the nature of the other side's evidence...
This explanation of the term “fishing” was adopted by Young J in G & B and Anor [2006] FamCA 929 (unreported). (See also discussion in Adelaide Steamship Co v Spalvins (1997) 24 ACSR 536.) Most recently in Anton and Malitsa (supra), Cronin J said at [41]:
“Fishing” occurs where a person pursues a stranger to the litigation to discover evidence. That question can be answered in this case on the basis of whether or not there is some legitimate forensic purpose involved. (Footnotes omitted)
Documents sought pursuant to subpoena must therefore be sought for a legitimate purpose related to the case.
Mr Swan argued that it is not appropriate for a non-party to be subjected to oppressive subpoenas and that the documents, if relevant, should be discovered by the parties themselves. He submitted the appropriate step was for discovery to be sought from the father and not his client.
Mr Swan referred me to a number of decisions which have addressed the issuing of a subpoena to a non-party. In a decision of the Supreme Court of South Australia, Macks v Tucker & Ors & QBE Insurance (Australia) Ltd (No. 4) [2007] SASC 255, where a subpoena was issued to a non-party, Bleby J summarised the principles to apply with respect to the issues of relevance and “fishing”. Mr Swan in particular referred me to his Honour’s comments at [34]:
34.The primary purpose of a subpoena to produce documents is to have documents relevant to an issue available for use in the trial. If on the face of the subpoena the documents required to be produced are shown to have little or no relevance to any issue in the proceedings, they will be of no evidentiary value. If such circumstances can be demonstrated from the terms of the subpoena, it will be an abuse of the process of the court to require the person to whom the subpoena is directed to produce the documents to the court. It will serve no useful purpose.
35.It is not for the judge to require the documents to be produced and then to peruse them and see if any of them might be relevant to an issue in the proceedings The defendants are unable to say that the documents sought to be produced will assist their case or to assert their relevance to an issue in the proceedings. In those circumstances, the dictum of Gibbs CJ in Alister v The Queen is apposite:.
Both Burmah Oil Co. Ltd. v Bank of England and Air Canada v Secretary of State for Trade support the view that where the Crown objects to the production of a class of documents on the ground of public interest immunity, the judge should not look at the documents unless he is persuaded that inspection would be likely to satisfy him that he ought to order production; in the words of Lord Wilberforce in Air Canada v Secretary of State for Trade, he must have "some concrete ground for belief which takes the case beyond a mere ‘fishing’ expedition". In the latter case the House of Lords divided on the question whether, before inspection is ordered, the documents should appear likely to support the case of the party seeking discovery, or whether it is enough that they should appear likely to assist any of the parties to the proceedings; the majority favoured the former view. (Footnotes omitted)
Mr Swan also highlighted Bleby J’s reference to the decisions of Perry J in Hunt v Judge Russell and de Pinto (1995) 63 SASR 402 and Gray J in Andrew Garrett Wine Resorts & Anor v National Australia Bank Limited (No. 6) (2005) 92 SASR 419. In the latter case Gray J said at 428:
It is not enough for the party issuing the subpoena to raise a speculative possibility that the documents sought would assist the resolution of the dispute. The party supporting the subpoena must demonstrate that the documents sought in the subpoena are of real relevance to the issues in the case. It must be more than an outside chance that something useful might turn up in the documents. (Footnotes omitted)
In the decision of Macks v Tucker & Ors & QBE Insurance (Australia) Ltd (No. 4)(supra), Bleby J concluded that the more appropriate course in that matter was for further and better discovery to be first sought from the plaintiffs.
I was also referred to the decision of Senior v Holdswoth, Ex parte Independent television News Ltd (1976) 1 QB 23 and the comments of Scarman LJ at 40 with respect to the oppressive nature of the subpoena issued to a non-party in that case.
Mr Swan relied on this decision in support of his submission that non-parties should not generally be subjected to oppressive subpoenas and that the material should first be sought from the parties themselves. It is submitted that it is an abuse of the court’s process to require a non-party to discover the documents.
Until recently the Family Law Rules 2004 did contain a provision with respect to obtaining documents from a non-party through service of a Notice of Non-Party Production of Documents in the former Division 13.4.2 of the Rules. However, this Division was repealed by the Family Law Amendment Rules 2009 (No 1) [SLI No.33 of 2009].
All parties in proceedings have a duty to provide the Court and the other parties to the proceedings with full and frank disclosure of all relevant information (rule 13.01) and more specifically to disclose all relevant documents (rule 13.07).
Rule 4.26 sets out the evidence to be provided in a child support application:
(1) This rule applies to a child support application under section 98, 111, 116, 123, 129, 136, 139 or 143 of the Assessment Act or section 111C of the Registration Act, or a child maintenance application.
(2) On the first court date and the hearing date of the application, each party must bring to the court the following documents:
(a) a copy of the party’s taxation returns for the 3 most recent financial years;
(b) the party’s taxation assessments for the 3 most recent financial years;
(c) the party’s bank records for the period of 3 years ending on the date on which the application was filed;
(d) if the party receives wages or salary payments — the party’s payslips for the past 12 months;
(e) if the party owns or controls a business, either as sole trader, partnership or a company — the business activity statements and the financial statements (including profit and loss statements and balance sheets) for the 3 most recent financial years of the business; and
(f) any other document relevant to determining the income, needs and financial resources of the party.
Note 1 Documents that may need to be produced under paragraph (f) include documents setting out the details mentioned in rule 13.04.
Note 2 For variation of a maintenance order, see subsection 66S (3) of the Act.
(3) Before the hearing date, a party must produce the documents mentioned in subrule (2) for inspection, if the other party to the proceedings makes a written request for their production.
(4) If a request is made under subrule (3), the documents must be produced within 7 working days of the request being received.
On the issue of a subpoena being used as a substitute for discovery, Mrs Lindsay also referred me to the decision of Lane v The Registrar of the Supreme Court of New South Wales (1981) 148 CLR 245 where at 259 the High Court stated:
A subpoena to produce documents is an important means of establishing the facts in issue in litigation and thereby enabling justice to be done. (Emphasis added)
The Court continued immediately thereafter:
However, it is an instrument which may be misused. It is not right that a subpoena addressed to a person who is not a party to the action should be in such wide and general terms that it requires the witness to make a "burdensome search for evidence at his own expense", to use the words of Page Wood V.C. in Lee v. Angas [18] , at p. 63. To avoid putting a person who may have no interest in the suit to inconvenience and expense, a subpoena to produce documents must "specify with reasonable particularity the documents which are required to be produced": Commissioner for Railways v. Small [19] , at p. 573.
Mrs Lindsay has referred to the difficulties in obtaining discovery from the father. While subpoenas should not be used in effect as an alternative to obtaining discovery from a party, given the history of this matter, it is appropriate to seek the documents by subpoena to a non-party. Here too, the non-party is hardly a stranger, being the present wife, former business partner and now employer of the father.
The issue for determination is whether the documents sought are of sufficient apparent relevance to the proceedings and are sought for a “legitimate forensic purpose”, and also whether the subpoenas are oppressive.
Counsel for Ms A correctly identifies that the principal issue for determination in the trial will be an examination of the father’s income during the relevant periods and a determination as to whether any departure orders from previous assessment should be made. It is submitted on behalf of Ms A, in her personal capacity and as the Managing Director of S Company that most of the documents sought are of no relevance to this issue.
It is acknowledged that the father’s group certificates and a summary of the father’s wages may be relevant to the issues at trial and that these documents have therefore been produced to the Court. Ms A has also produced the relevant pages of the company’s bank statements in relation to the two payments made on or about 22 August 2005 and January 2006 referred to previously.
Ms A objects to the production of any further documents, however. It is submitted that the documents are irrelevant as the father owns no shares in the company, no payments have been made by the company to the father other than wages and no payments have been made by Ms A to the father.
Addressing the issue of relevance and forensic purpose, Mrs Lindsay referred to the father’s evidence with respect to the history of his interest in the company, as outlined in his affidavit filed on 6 August 2008. Mrs Lindsay highlighted that at paragraph 14 of that affidavit, the father states that Ms A took over the day to day administration of the company from him in 1998 at which time he ceased to be a director, secretary or shareholder of the company. The father claimed that the business was “not performing well” at this time.
Mrs Lindsay also referred to ‘Annexure C’ to the father’s affidavit, which is the Child Support Agency’s Notice of Decision on Objection dated 25 June 2004. Reference is made at page 4 of that document to the tax returns of the company for the 2000/2001, 2001/2002 and 2002/2003 financial years, indicating the company’s gross turnover for those years and the income received by the husband. It is stated in the Notice of Decision on Objection that the father is “the beneficial owner of the company”.
Mrs Lindsay also referred me to the father’s bank statements annexed to his affidavit (Annexure ‘F’), which show payments made to him by S Company, and in particular payments of $40,000 on 23 June 2004 and $38,040 on 15 June 2005. Mrs Lindsay submitted that it is the mother’s case that the father is the beneficial owner of the company, or alternatively that the company is the alter ego of the father, and that the mother has therefore satisfied the “threshold” of apparent relevance and that she seeks the documents for a legitimate forensic purpose.
Mr McQuade further advanced the arguments of the mother at the hearing on 2 June 2009 with respect to the relevance and forensic purpose of the documents now sought.
Addressing first the subpoena issued to Ms A in her personal capacity, Mr McQuade has taken me to material which it is submitted establishes the relevance of the documents sought and that they are sought for a legitimate forensic purpose.
Firstly, Mr McQuade refers to an Application filed in the Adelaide Magistrates Court pursuant to the Building Works Contractors Act 1995 (SA) by Ms A and the father as applicants on 15 November 2006 (Annexure ‘A’ to the affidavit of Mr Fidler sworn on 25 January 2008 and Annexure ‘O’ to the affidavit of the mother filed on 5 August 2008). The application was signed by both the father and Ms A. At paragraph 1 of that application it is stated that “[t]he applicants are owners of a house at [C] …”. (Emphasis added)
Mr McQuade also referred to a Statement of Claim filed in the District Court in March 2007 by Ms A and the father as plaintiffs against G Pty Ltd (Trading as CN Company) and Ms JG (Annexure ‘B’ to the affidavit of Mr Fidler sworn on 25 January 2009 and Annexure ‘P’ to the affidavit of the mother filed on 5 August 2008). It is asserted in paragraph 1 of that Statement of Claim that “[t]he plaintiffs are the owners of a house at [C]…” (Emphasis added)
In an Amended Statement of Claim filed in the District Court by the father and Ms A on 21 August 2007 (Annexure ‘C’ to the affidavit of Mr Fidler sworn on 25 January 2009 and Annexure ‘Q’ to the affidavit of the mother filed on 5 August 2008), it is again asserted in paragraph 1 that “[t]he plaintiffs are the owners of a house at [C]…” (Emphasis added).
Reference was also made to further paragraphs of the Amended Statement of Claim, in particular paragraphs 6.6 and 11. Paragraph 6.6 states:
…the company required payment of the whole of the Contract price in advance, namely $183,953.00 which the plaintiffs duly paid. (Emphasis added)
Paragraph 11:
…the plaintiffs are entitled to a refund of the amount of $183,953.00 paid… (Emphasis added)
Mr McQuade also refers to the further representations by the father that he has an interest in the property in his affidavit sworn on 25 July 2007 and filed in the District Court on 8 August 2008 (Annexure ‘R’ to the affidavit of the mother filed 5 August 2008). The father says at paragraphs 1 and 2 of that affidavit:
1.My wife [Ms A] and I are the plaintiffs in this matter.
2.[Ms A] and I built a new home in [C], South Australia over a period of 6 years to 2006.
14. On 22 August 2005, [Ms A] and I paid the deposit of 50% of the contract price by electronic funds transfer from our business account …
…
16. In about January 2006 [Ms A] and I paid the balance of the contract price by electronic funds transfer from our business account …. (Emphasis added)
Mr McQuade also referred to the following paragraphs of the father’s affidavit in which it is submitted the father claims an interest in the company’s business account.
It was submitted that representations have clearly been made in the District Court proceedings that both the father and Ms A, as plaintiffs in the proceedings, were the owners of the C property and made payments with respect to improvements to that property. It was submitted by Mr McQuade that the documents sought in item 1 of the subpoena issued to Ms A are therefore relevant as the court needs to know what payments were made with respect to the construction and improvements of the C property in light of the representations by the father and Ms A that the father indeed has an interest in the property.
It was submitted that the documents sought in items 2 and 3 of the subpoena are also relevant due to matters arising from the District Court proceedings, and in particular the assertions of the father that payments were made from “our business account”, thereby asserting an interest in the account of S Company. The mother seeks the bank statements and other records of the account from which the two payments of $91,976.50 were made to provide the Court with a clear picture of the resources available to the father from that account.
With respect to items 2 and 3 of the subpoena issue to the Managing Director of S Company, which are in substantially the same terms as items 2 and 3 of the subpoena issue to Ms A, it was submitted that these records are relevant as the payments made were drawn on a company account.
It was submitted that consequently the records sought in item 1 of the subpoena issued to the company, namely financial records for the financial years ended 30 June 2000 to 30 June 2008 inclusive are relevant. The mother submits it is necessary to know how the payments were categorised in the financial records of the company, for example whether there was a loan account.
Counsel also submitted that the documents identified in item 1 are relevant due to the father’s representations in his affidavit of 25 July 2007, where the father said that the payments made to G Pty Ltd with respect to the work done at the C property were made from “our” business account.
In response to these submissions, Mr Crocker who appeared for Ms A at the hearing on 2 June 2009 submitted that, at its highest, there may be a basis for an inference that there is material suggesting that the father and Ms A view themselves as “owners” of the property and made the decision to have the work done.
Mr Crocker identified that there were two forensic enquiries sought by the mother namely:
1.How have the two identified payments been recorded in the company’s accounts for the 2005/2006 financial year?
2.Whether there has been any other company money expended on the house or for the benefit of the father?
With respect to the first enquiry, Mr Crocker acknowledged that the material before the court satisfied the evidentiary test for issue and compliance of subpoenas and accepts that Ms A should therefore produce any documents as to how the payments were recorded.
With respect to the second enquiry, it was submitted that there is no evidence to suggest that there had been any other payments, and that this was “classic fishing”. It was submitted that there was no evidence, direct or hearsay, for any inference that there has been any other payments made, and that the evidence was in fact quite to the contrary. In this respect, reference was made to Ms A’s Notice of Objection in which she says that the company has made no payments to the father other than his wages (at paragraph 7.2). It was queried by Mr Crocker how obtaining all the financial records of the company for a period of 9 years and all of the transaction documents from the general working account of the company for 11 years (items 2 and 3 of the subpoena) would assist in answering the forensic enquiry as to whether there has been any other company money expended on the house or for the benefit of the father.
With respect to item 1 of the subpoena issued to Ms A, it was submitted that for the purposes of determining the assets of the father, the monies expended in building the property probably do not show the property’s true value and what is needed is the value of the land and the improvements.
Mr Crocker submitted that when the schedules to the two subpoenas were put together, there were essentially three classes of documents being sought namely: 1) all payments with respect to the construction of the house; 2) all records of the company for the last 11 years; and 3) bank statements and all ancillary documents, for example cheque butts and deposit records, for the last 11 years. It was submitted it was a “very broad net”.
In determining an application for a departure from an administrative assessment of child support, the assets, income and financial resources of the parents are of primary relevance and must be before the court. The material relied upon by both Mrs Lindsay and Mr McQuade for the mother clearly puts into question both the father’s interest in the C property and his interest in the company. Both are issues which I will be required to determine at trial for the purposes of dealing with the application for departure orders.
With respect to item 1 of the subpoena issued to Ms A personally, the documents filed in the District Court proceedings contain representations that the father has a beneficial interest in the C property. This item seeks the records of the improvements made to that property. I am satisfied that the documents sought in this item are relevant not only to the identification of the father’s assets, but also the financial resources available to him for the purposes of determining the application for departure orders. These records should be produced to the Court.
Item 1 of the subpoena issued to S Company seeks production of the company’s financial records for a period of 9 years. The father’s interest in the company has been raised as an issue by the mother. It is submitted that the father is the beneficial owner of the company or alternatively that the company is the alter ego of the father. I note that the Child Support Agency in the Notice of Decision on Objection dated 25 June 2004 considered the father to be “the beneficial owner of the company”.
It has been established that the two payments of $91,976.50 were made from a company account for improvements to the property in which it has been asserted that the father has an interest. I agree with the submissions of the mother that how these payments have been recorded by the company is relevant. I am therefore satisfied that it has been established by the mother that the financial records of the company are relevant to the determination of the child support issues. I do not consider it to be oppressive to require the production of a company’s financial records.
Finally, items 2 and 3 of both subpoenas seek essentially the same documents, namely all cheque butts, deposit slips, bank statements and credit card statements, whether written or electronic, with respect to the account from which two payments of $91,976.50 were made to G Pty Ltd with respect to the work at the C property. Item 2 of the subpoena to Ms A seeks the documents with respect to the account from 1 July 1999 and item 2 of the subpoena issued to the company seeks the documents from 1 July 1998. Arguably this could be seen as oppressive as it relates to the records of a business’ trading account for a period of 11 years.
It has been identified that the two payments of $91,976.50 were made from a company account. The mother seeks to establish whether any other payments have been made from this account with respect to improvements to the property or otherwise for the father’s benefit. The mother has referred to the father’s bank statements annexed to his affidavit filed on 6 August 2008, which allegedly show payments made to him by S Company, and in particular payments of $40,000 on 23 June 2004 and $38,040 on 15 June 2005. Reference was also made to documents filed in the District Court proceedings in which the father referred to payments having been made from “our business account”. It has been therefore put in issue that payments and benefits may have been received by the father from the company other than in the form of wages.
I am satisfied that the documents sought are relevant and that it is not merely a “fishing expedition” on the part of the mother, but is a forensic enquiry relevant to determining the income and financial resources of the father and putting this evidence before the court.
The question is whether it is oppressive to require the production of all the documents sought in these items of the schedules for the specified 11 year period.
The mother’s application seeks departure orders from administrative assessments of child support dating back to 1998. The child L turned 18 in April 2009. However, the mother also seeks in her Further Amended Application filed 6 October 2006 that in the event L is enrolled in secondary education in 2009, for the assessment to continue until the final day of school in 2009. Section 151B of the Child Support Assessment Act 1989 allows such an application to be brought. I am not aware at this stage whether the child is enrolled in such secondary education or whether an application has been made to the Registrar pursuant to that provision. Prima facie, however, the current financial positions of the parties are also relevant given the mother’s application.
The mother’s application clearly puts in issue the parties’ assets, income and financial resources of the parties from 1998 until the present. Given the breadth of the mother’s application and the established relevance of the documents sought, I do not consider it to be oppressive for the documents sought in items 2 and 3 of the subpoenas to be produced to the court.
Ms A also raised issues of confidentiality with respect to the production of the documents sought. Ms A outlined in her Notice of Objection filed 5 May 2009 that the information is of a commercially sensitive nature and has outlined her concerns that the applicant may release the information to a competitor, in particular Mr D who is apparently a friend of the wife and the Managing Director of a direct competitor of S Company.
Confidentiality of documents is not generally a ground for setting aside a subpoena to produce documents, and a claim of confidentiality is usually dealt with by the Court restricting access to, and the use of, documents produced pursuant to the subpoena.
In Apache Northwest Pty Ltd and Others v Western Power Corporation (1998) 19 WAR 350, the Court approved (at 380) the approach taken by the trial judge where her Honour accepted that, although confidentiality is not a ground on its own for setting aside a subpoena, it is a factor to be taken into account. The court’s observations were accepted as correct by Sackville J in Seven Network v News Ltd (No 5) (2005) 216 ALR 147 at [11].
Rule 15.27 of the Family Law Rules provides:
(2) A person who inspects or copies a document under these Rules or an order must:
(a) use the document for the purpose of the case only; and
(b) not disclose the contents of the document or give a copy of it to any other person without the court’s permission
Mr Swan sought an order that only the mother’s solicitors and counsel have access to the documents and that they keep such information confidential. Mrs Lindsay submitted that the mother be able to inspect the documents, but that they not be released to her. I am advised that the mother is willing to enter a confidentiality undertaking that she will not disclose the information.
I do not consider that the subpoenas should be set aside on the basis that the material produced may be commercially sensitive. Rule 15.27 clearly outlines the obligation that documents produced pursuant to subpoena are only to be used for the purpose of the case in which they were produced.
Conclusion
I will therefore make orders for the production of all documents sought pursuant to the subpoenas directed to Ms A and the Managing Director of S Company Pty Ltd and issued by the mother on 15 May 2009.
Conduct money
I raised with counsel the issue of conduct money at the hearing on 2 June 2009.
Mr McQuade indicated that the mother proposed to provide $300 conduct money.
Mr Crocker indicated that dependent on the documents ordered to be produced, there may be a need to consult an accountant and it was therefore not known how much conduct money would therefore be required. Mr Crocker flagged that he would therefore wish to be heard on this issue in due course.
I certify that the preceding ninety-five (95) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Burr.
Associate:
Date: 17 June 2009
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