SCVG and KLD (No. 2)

[2018] FamCA 78

FAMILY COURT OF AUSTRALIA

SCVG & KLD (NO. 2) [2018] FamCA 78

FAMILY LAW – EVIDENCE – Unlawfully or improperly obtained – Section 138 Evidence Act 1995 – Documents obtained in other proceedings

Family Law Act 1975 (Cth)

Administrative Appeal Tribunal Act 1975
Evidence Act 1995 (Cth) s - 138
Family Law Act 1975 (Cth)

Hearne v Street [2008] HCA 36

APPLICANT: Mr SCVG

RESPONDENT: Ms KLD

FILE NUMBER: SYC 4380 of 2008

DATE DELIVERED: 16 February 2018

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Gill J

HEARING DATE: 15 February 2018

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Self-representing

COUNSEL FOR THE RESPONDENT: Mr A Stenhouse

SOLICITOR FOR THE RESPONDENT: Macphillamy Lawyers

Orders

1. SVG2 pages C115 to C148 are admitted in the proceedings save in so far as they refer to J Pty Ltd.

2. The proceedings are adjourned to 10am on 30 July 2018 for further hearing.

3. In the event that Mr Stenhouse of counsel is not available on that date then liberty is granted to the respondent’s solicitors to contact my Chambers to seek a relisting of the matter to obtain an alternate date provided they contact Mr SCVG in writing prior to contacting Chambers.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym SCVG & KLD (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT CANBERRA

FILE NUMBER: SYC 4380 of 2008

Mr SCVG

Applicant

And

Ms KLD

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. An objection was taken on behalf the respondent against annexure SVG2 of the applicant’s primary affidavit, in support of his application to set aside the costs order made by Justice Cronin, from the affidavit that was taken as filed on 4 December 2017 and was annexed to the affidavit filed 8 January 2018 hereinafter referred to as the primary affidavit.

2. The judgment is directed to pages C115 to C148 of SVG2.  Objection was taken to pages 1 to 148 but only 115 to 148 were read in the proceedings by the applicant. 

3. Two particular matters were raised to support the exclusion of this material.  The first was a relevance question.  SVG2 comprises documents that have been obtained from the Administrative Appeals Tribunal (the AAT) regarding proceedings conducted between the applicant, respondent and the Child Support Agency.  The documents that were provided to the applicant and annexed as SVG2 were subsequently recalled by the AAT, and returned with a number of the items having been removed, apparently on the basis that they are irrelevant to the AAT proceedings.  It was not identified which items had been removed and it was suggested that the fact that it could not be identified which items were irrelevant from the AAT’s perspective rendered the whole of SVG2 inadmissible.  However, the question of relevance stands to be determined, not on whether the AAT regard the documents as relevant or irrelevant to the AAT proceedings, but whether or not they are relevant to the proceedings before this Court which is a matter to which I will return later.

4. The second and the primary objection taken to SVG2 is one of unlawfulness or impropriety.  The allegation in support of that assertion is that the documents were provided by the applicant firstly in contravention of an implied undertaking or obligations as set out in the case of Hearne v Street[1] and, secondly, in contravention of an order made by the AAT under the Administrative Appeals Tribunal Act that prohibited the use of those documents for any proceedings other than a strictly specified set of proceedings.  That prohibition has criminal penalties attached to it. 

   [1] [2008] HCA 36

5. A question arose as to the extent of the Hearne obligations.  The Hearne obligations can be seen at [96] of Hearne v Street where it is said

   Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence.

6. A question arises as to whether or not those obligations attach to the AAT, as it is not a court.  Absent direction to authority it is questionable whether or not it has direct application to the AAT.  However, that is not a matter that is necessary to resolve given the exercise of the AAT of its statutory powers to prohibit the use that was done in this particular case, and the orders by which it was done which are contained at exhibit R5 of the respondent’s primary affidavit.  The applicant concedes that he received orders in the same terms as are set out in exhibit R5.  The statutory effect of those orders is analogous to the Hearne obligations and renders the conduct of the provision of the documents as criminal conduct.  For the purposes of establishing unlawfulness or illegality it seems that there is no useful distinction to be drawn between whether or not this was a breach of Hearne obligations or a breach of the order made under the statutory power. 

7. The applicant argued, not unreasonably, that his use of the material before this Court fit into an exception that was expressed at exhibit R5 of the respondent’s primary affidavit at [2e].  That exception was the subject of specific argument during the proceedings before me, however I determined that that exception only applies to use of those materials before a Court exercising jurisdiction under the Family Law Act 1975 where the parties are the same as the parties who were before the AAT.  While the two parties before this Court were parties before those proceedings one party is absent.  The Child Support Agency is not involved in these proceedings and was involved in the AAT proceedings.  I pause to note that the reference in those orders made by the AAT are probably a relic of the Family Court of Australia’s previous jurisdiction regarding child support disputes given the other exceptions that are set out in the same paragraph.  However, given that there is not the sameness of parties in these proceedings as in the AAT proceedings that exception does not apply here to allow the applicant to use those documents in these proceedings.  What that means is that the applicant is in direct breach of the AAT order, an order that has criminal sanctions attached to it. 

8. Notwithstanding the fact that the material was initially lawfully or properly obtained by the applicant, it is here the conversion of that material into evidence before the Court, which is the relevant obtaining of evidence such as to bring it within the wording of s 138 Evidence Act 1995.Section 138 of the Evidence Act 1995 sets out:

   Evidence that was obtained:

   (a)improperly or in contravention of an Australian law; or

(b)in consequence of an impropriety or of a contravention of an Australian law;

is not to be admitted unless the desirability of admitting the evidence outweighs the undesirability of admitting evidence that has been obtained in the way in which the evidence was obtained.

1. The obtaining here relates to the conversion of the material into evidence.  Until that step was taken it was lawful or proper for the applicant to have the material.  On the conversion, or the attempted conversion into evidence, it becomes evidence that was obtained improperly or in contravention of an Australian law.

2. Section 138 sets out the discretion to admit material that has been unlawfully or improperly obtained. The starting point is that it is not to be admitted unless the desirability of admitting that evidence outweighs the undesirability given the circumstances in which it has been procured. The question then arises should those pages that have been objected to by the respondent and obtained unlawfully, or in contravention of an Australian law by the applicant be admitted in these proceedings?

3. The question then arises as to what are the documents that are in dispute?  The documents on their face are represented as being internal documents to the Australian Taxation Office. 

4. They comprise documents in relation to an entity known as K Pty Ltd and in relation to the financial circumstances of that entity between 1 July 2015 and 30 June 2016.  In relation to that entity, documents annexed to the applicant’s later affidavit material established that the respondent, along with two other people, holds four of the four available ordinary shares in that entity, at least as of 2012/2013.  The financial records for the 2015/2016 financial year indicate an income in relation to that entity of approximately $6,500 and expenditure of approximately $5,500, along with assets of $970,000 and liabilities of $600,000. 

5. The second entity is J Pty Ltd.  I was not able to find any material that indicated ownership on the part of the respondent in relation to this entity.  The financial documents are for a period between 1 July 2015 and 30 June 2016.  They show a total income of $5 million, expenditure of $3 million, profit of $2 million, taxable income of $2 million and tax of $600,000.  

6. The third entity is L Pty Ltd.  Evidence annexed to the applicant’s other affidavit in support of his application show that in 2012 the respondent beneficially held 198 of 990 ordinary shares and none of the preference shares in this entity.  The Australian Taxation Office document for the period 1 July 2015 to 30 June 2016 showed taxable income of $90,000, tax of $25,000, assets of $5.7 million and a liability of $700,000.

7. The next entity was the trustee for M Settlement.  Again I was unable to find on the applicant’s material a link between the respondent and that particular entity.  That entity disclosed a net income of $1.6 million and losses of $226,000 that were carried forward, assets and liabilities such as the liabilities were greater than the assets by $200,000 and a distribution to Ms KLD of income in the sum of $25,000.

8. The next entity is N Pty Ltd.  Again the documents annexed to the later affidavit of the applicant show that in 2013 the respondent held 2,765 of 17,000 ordinary shares.  The Australian Taxation Office records for 1 July 2015 to 30 June 2016 showed a profit and loss with a profit of $200,000, tax liability of $70,000, assets of $4.7 million and liabilities of $1.7 million.  Further records were for 1 July 2016 to 30 of June 2017 showing a profit of $300,000, assets of $4.2 million and liabilities of $1 million.

9. Aside from the entity J Pty Ltd these matters appear to be significant to the case of fraud mounted by the applicant in that the applicant’s case is that at 2015, when the costs matter was before Justice Cronin, he alleges that a fraud was perpetrated by the respondent by means of a gross misrepresentation of her financial position. 

10. SVG1 of the applicant’s primary affidavit annexes the respondent’s affidavit and financial circumstances statements that were filed in those proceedings at 16 March 2015.  Her affidavit material in those proceedings asserted that the financial circumstances for her were as set out in that financial statement.  In relation to the entities N Pty Ltd, L Pty Ltd and K Pty Ltd the respondent disclosed either nominal or nil in relation to those being assets of value in respect of her. 

11. The evidence sought to be led by the applicant in these proceedings may have the capacity to establish that those statements made by the respondent were materially false.  It was argued that the records that were provided are not relevant to that issue because they postdate by a period of approximately three months the timing of the filing of the material by the respondent in those costs proceedings.  They predate, or at least a part of the period predates, the judgment that was delivered by Justice Cronin on that matter.  However, it may be seen that an inference could be available to say that the financial records of the relevant entities bear upon an understanding of the financial position of the respondent at the time of the filing of her material for the proceedings before Justice Cronin. 

12. Section 138(3) sets out the matters that I must take account of in determining whether or not to admit material under s 138(1). It is not an exclusive list.

13. Paragraphs (a) and (b) of s 138(3) mean that I am to consider the probative value of the evidence and the importance of the evidence in the proceedings. The probative value is potentially high if used to establish a nondisclosure on the part of the respondent. The material is of essential importance to establishing the case of fraud.

14. I am also to consider the nature of the relevant offence, cause of action or defence and the nature of the subject-matter of the proceeding.  There are two aspects of the subject matter of the proceedings and one is that it relates to a costs application but the second is that it relates to an application to set aside that order on the basis that those proceedings were tainted by fraud. 

15. I am to consider the gravity of the impropriety or contravention.  Here that is a direct breach of provisions disallowing the use of the material under criminal penalty, which it may be assumed are provisions designed to protect the integrity of proceedings before the AAT. 

16. I am to consider whether or not the impropriety or contravention was deliberate or reckless.  The conduct in providing the material was deliberate but without knowledge that it was in fact in breach of the AAT’s order.  As I have previously indicated it was not unreasonable for the applicant to be in error as to whether or not the material fit within an exception to the orders made by the AAT.

17. Paragraph (f) sets out that I am to consider whether or not the impropriety or contravention was contrary to or inconsistent with a right recognised by the International Covenant on Civil and Political Rights.  That does not appear to be relevant in these proceedings.

18. Paragraph (g) means I am to consider whether or not there may be other proceedings.  There is no material to indicate one way or another.

19. Paragraph (h) sets out that I am to consider the difficulty of obtaining the material without impropriety.  Mr SCVG’s unchallenged evidence was that he was unable to obtain this material otherwise.  However, no evidence was presented of any attempts to apply to the AAT for a dispensation from the order preventing the other use, hence I cannot determine whether or not there was a difficulty in obtaining the material for this Court absent a contravention.

20. In this case the nature of the cause of action is related to the integrity of the proceedings in this Court.  That matter carries great weight in the balance of determining the desirability of admission.  It outweighs a consideration of the gravity of the impropriety even though that impropriety is the equivalent of, if not greater than, that of a breach of the Hearne v Street obligations, given the criminal sanctions that directly attach to it.  Combined with a consideration, in particular, of the importance and potential probative value I will allow its admission save as to the entity for which no link was able to be inferred between that entity and the respondent. 

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 16 February 2018

Associate: 

Date:  21 February 2018