Stavri and Stavri & Ors
[2020] FamCA 559
•13 July 2020
FAMILY COURT OF AUSTRALIA
| STAVRI & STAVRI AND ORS | [2020] FamCA 559 |
| FAMILY LAW – PRACTICE AND PROCEUDRE – Subpoenas – Where orders were previously made for the second to fifth respondents to produce documents – Where some documents have been produced with some documents redacted – Where a subpoena was then issued to the accountants of the second respondent for the production of documents – Where the accountants and second to fifth respondents object to the subpoena – Whether the documents are relevant to the issues in the proceedings – Whether the subpoena is oppressive or too wide – Whether the subpoena is an abuse of process – Whether the documents could be sought by way of an order for discovery – Subpoena set aside. |
| Family Law Rules 2004 (Cth) ch 13, r 15.26 |
| Andrew Garrett Wine Resorts & Anor v National Australia Bank Limited (No. 6) (2005) 92 SASR 419 Dupont & Chief Commissioner of Police and Anor (2015) FLC 93-648 Egglishaw v Australian Crime Commission (No. 2) [2009] FCA 12 GE Capital Corporate Finance Group Ltd v Bankers Trust Co & Ors [1995] 1 WLR 172 Gray v Associated Book Publishers (Aust) Pty Ltd [2002] FCA 1045 Hatton v Attorney-General of the Commonwealth of Australia & Ors (2000) FLC 93-038 Hennessy v Wright (No.2 ) 1980 24 QBD 225 Lucas Industries Ltd v Hewitt and Ors (1978) 18 ALR 555 Macks v Tucker & Ors & QBE Insurance (Australia) Ltd (No. 4) [2007] SASC 255 Martin & Martin and Anor (No.2) [2014] FamCA 232 National Employers’ Mutual General Association v Waind and Hill [1978] 1 NSWLR 372 Papadopoulos & Papadopoulos (No 2) [2007] FamCA 1683 Re McGorm; Ex parte: the Co-Operative Building Society of South Australia (1989) 20 FCR 387 Ryder & Lee [2009] FamCA 531 Telstra Corporation v Australis Media Holdings (unreported, Supreme Court of New South Wales, McLelland CJ, 10 February 1997) Unitingcare – Unifam Counselling & Mediation & Harkiss and Anor (2011) FLC 93-476 Woley & Humboldt (No.4) [2009] FamCA 546 X Pty Ltd and Ors & Merhi [2015] FamCA 622 |
| APPLICANT: | Ms Stavri |
| 1st RESPONDENT: | Mr Stavri |
| 2nd RESPONDENT: | B Pty Ltd |
| 3rd RESPONDENT: | Ms C Stavri |
| 4th RESPONDENT: | Mr D Stavri |
| 5th RESPONDENT: | Legal Personal Representative for the Estate of Mr E Stavri |
| FILE NUMBER: | ADC | 1721 | of | 2018 |
| DATE DELIVERED: | 13 July 2020 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 18 June 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Scragg |
| SOLICITOR FOR THE APPLICANT: | Peter Scragg & Associates |
| COUNSEL FOR THE 1st RESPONDENT: | Litigant in Person |
| SOLICITOR FOR THE 1st RESPONDENT: |
| COUNSEL FOR 2nd TO 5th RESPONDENTS : | Mr Edmonds-Wilson QC |
| SOLICITOR FOR 2nd TO 5th RESPONDENTS: | WBH Legal |
Orders
That the subpoena directed to the Proper Officer, L Firm filed 12 May 2020 be set aside.
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 Stavri & Stavri 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 ADELAIDE |
FILE NUMBER: ADC 1721 of 2018
| Ms Stavri |
Applicant
And
| Mr Stavri 1st Respondent And B Pty Ltd 2nd Respondent And Ms C Stavri 3rd Respondent And Mr D Stavri 4th Respondent And Legal Personal Representative for the Estate of Mr E Stavri |
5th Respondent
REASONS FOR JUDGMENT
Introduction
By Amended Initiating Application filed on 29 May 2020 Ms Stavri (“the applicant”) seeks the following orders by way of property settlement:-
1.Declarations pursuant to s 78 and s 113 of the Family Law Act 1975 (Cth);
a.that the sum of THREE HUNDRED AND TWENTY FIVE THOUSAND DOLLARS ($325,000) (“the sum”) paid to WBH Legal Trust Account on 15 July 2014 is an asset of the marriage;
b.in the alternative to paragraph 1(a), that the sum is held on trust for the benefit of the parties.
2.A declaration pursuant to s 78 and s 113 of the Family Law Act 1975 (Cth);
a.that the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000) paid to NAB “F Business Cheque Account” number …09 facility held in the name of the respondent husband and Mr D Stavri jointly on 15 July 2014 is an asset of the marriage;
b.in the alternative to paragraph 2(b), that the sum is held on trust for the benefit of the parties.
3.The assets of the marriage be divided 65% in favour of the applicant wife or such other sum as this Honourable Court thinks fit.
4.In the alternative to paragraph 3 hereof, the funds held on trust by and for the benefit of the parties be divided 65% in favour of the applicant wife or such other sum as the Honourable Court thinks fit.
5.In the alternative to paragraphs 3 and 4 hereof, and pursuant to s 90AE(2) of the Family Law Act 1975 (Cth) the respondent husband, B Pty Ltd (ACN …) Mr D Stavri, Ms C Stavri and the legal personal representative for the estate of Mr E Stavri (jointly or severally) pay to the applicant wife the sum of FOUR HUNDRED AND TWENTY FIVE THOUSAND DOLLARS ($425,000) or such other sum as this Honourable Court thinks fit.
6.In the alternative to paragraphs 3, 4 and 5 hereof, and pursuant to s 79(5), these proceedings be adjourned until such time as determined by this Honourable Court.
The wife also seeks her costs of and incidental to the proceedings to be assessed on an indemnity basis.
Mr Stavri (“the respondent”) opposes the orders sought by the applicant.
B Pty Ltd, Ms C Stavri, Mr D Stavri and the Legal Personal Representative for the Estate of Mr E Stavri (“the Estate of Mr E Stavri”) being the second to fifth respondents oppose the orders for declarations as sought and the order by way of mandatory injunction that they pay the sum of $425,000 to the applicant.
B Pty Ltd is the trustee for the G Trust which was settled in or about 1989,
The applicant complains that there has been a lack of disclosure by the husband but in particular the second to fifth respondents. The extent of the applicant’s complaint is readily apparent from the affidavit of Ms H filed on 20 May 2019 wherein the following appears:-
Non-compliance by the non-parties with the orders of 22 January 2019
2.On or about 14 March 2019, I received copies of the affidavit of Mr D Stavri filed in these proceedings. Mr D Stavri purports to have authority to file affidavit material on behalf of Ms C Stavri, on behalf of Ms Stavri in her capacity as the director of B Pty Ltd and on behalf of the legal personal representative of the estate of Mr E Stavri.
3.A number of the documents annexed to the affidavit of Mr D Stavri were redacted. The documents largely relate to transactions which occurred prior to the date of the respondent husband (“the Husband”) being declared bankrupt on … July 2015.
4.Of the documents annexed to the affidavit of Mr Stavri, there is no disclosure about which (if any) funds were received following the sale of the property situated at J Street, Suburb K in the State of South Australia (“the Suburb K property”) and how they were applied.
5.On 5 April 2019, I wrote to the solicitors for the non-parties expressing concerns that:
·many of the documents produced were redacted in circumstances where there had been no prior indication to my firm, or to the court, that there were concerns about sensitive information;
·the documents produced did not show any transactions relevant to the time of the non-parties purporting to have received funds on or about 14 July 2014;
·did not disclose any evidence of a loan agreement between the non-parties and the Husband, including terms of the loan, or any information to support the expectation of repayment on account of funds being advanced to the Husband;
·Mr D Stavri had failed to discharge his obligation to produce tax returns and any evidence in support of his purported equitable interest as an individual in the Suburb K Property;
·Ms C Stavri had failed to discharge her obligations to provide personal tax returns and bank statements in support of her purported equitable interest as an individual in the Suburb K property;
·Mr D Stavri is not an officeholder or shareholder of the entity “B Pty Ltd” and his efforts to assert that he held authority on behalf of the company were rejected by the Wife.
6.As at the date of affirming this affidavit, I have not received any further communication from the solicitors for the non-parties.
On 22 January 2019 the proceedings came before Judge Cole for further directions and argument. The applicant was represented by her solicitor, there was no appearance by the respondent, however, the second to fifth respondents, described at the time as “the proposed third parties” were represented.
The following exchange between the solicitor representing the second to fifth respondents and his Honour, as appears at page 3 of the transcript, is relevant:-
Mr O:Your Honour, the - because of the Christmas and New Year break, our clients weren’t able to produce the documents. There were bank statements that relate over 10 years period, over – since 2008. So our clients haven’t been able to produce all of those documents. They have given us some of those documents that span over hundreds and hundreds of pages, and we haven’t been able to go through those documents.
His Honour: So what you’re saying is that your clients don’t have any objection to providing the paper trail---
Mr O:That’s right. They’re agreeing to provide the documents.
His Honour: ---for these purported loans, etcetera.
Mr O:That’s right.
His Honour: But – and at this stage would seek to do that before they become parties to the proceedings. Is that it?
Mr O:That’s right, your Honour. So our client doesn’t object to producing those documents to show that they had caveatable interest from the property, but they require some more time to be able to produce those documents. As I indicated, they relate to over 10 years’ time, and some of the documents that they’ve produced mainly involve bank statements of the company, and they’re over hundreds and hundreds of pages. And given that there was Christmas and New Year’s holidays, they haven’t been able to do that within that – within this period of time.
His Honour: I wonder if we did it this way Mr O.
Mr O:Mr O, your Honour, yes.
His Honour: Thank you. What if you were to have your clients file an affidavit of discovery and a response – an affidavit in response to the application to join them, including an affidavit of discovery, so they’re on oath with respect to the documents.[1]
[1] Affidavit of Ms H filed 30 July 2019 at page 35.
As a result of the exchange between the solicitor who appeared for the second to fifth respondents and his Honour, the following orders were made:-
1.During the period of the adjournment, within twenty-eight (28) days, the following respondents file an affidavit in reply to the application in a case and make disclosure on oath being:
a.“B Pty Ltd” ACN …;
b.Ms C Stavri;
c.The legal personal representative of the estate of Mr E Stavri; and
d.Mr D Stavri;
of such documents to include, but are not limited to, all documents, minutes, records and receipts in their possession from 2008 until the present date with respect to any transactions between them which form the basis of the caveatable interest registered over the land situated at J Street, Suburb K SA and its discharge (NOTING the respondents will produce copies of all tax returns and financial statements filed by them from 2008 until 2017, including the returns of any trust they are responsible for).
The applicant considered that the respondent’s disclosure was inadequate.
It appears that the second to fifth respondents have made substantial disclosure in circumstances where, by reference to the affidavits of Mr D Stavri filed 14 March 2019 and 24 April 2020, it is asserted on behalf of the respondents that all documents relevant to the applicant’s claim are annexed or have been produced.
The applicant continues to assert that the second to fifth respondents have been selective in the documents that they have produced and given the substantial redactions in respect of the bank statements produced on behalf of B Pty Ltd, the applicant is prejudiced in her ability to substantiate her claim seeking equitable relief and declarations from the second to fifth respondents.
It appears that out of a sense of frustration, the applicant instructed her solicitors to cause a subpoena to be directed to the Proper Officer, L Firm dated 12 May 2020, being the accountants for B Pty Ltd and the G Trust seeking the following documents be produced:-
2.a copy of the deed establishing The G Trust (ABN …), including any annexures or supplementary documents which may vary the deed since the date of establishment;
3.all, records, minutes, reports, bank statements, company statements, tax returns, notes, deeds, working papers and correspondence held by you on behalf of B Pty Ltd (ACN …) and the G Trust (ABN …) (“the Trust”) prepared or retained in relation to the trading activities and operation of the Trust from the financial year ending 30 June 2009 until the date of this subpoena, including but not limited to:
a.loans made by the Trust to any beneficiaries;
b.loans made to the Trust by any beneficiaries;
c.the income of the Trust;
d.loans made to the Trust by the National Australia Bank;
e.all payments made by the Trust to the beneficiaries, spouses or children;
f.all payments received by the Trust from beneficiaries or their spouses or children.
By Notices of Objection filed 1 June 2020, Mr E Stavri of L Firm and B Pty Ltd lodged objections to the subpoena.
The details of the objections are expressed in similar terms but can be summarised as follows:-
(1)The subpoena does not comply with r 15.17(2) of the Family Law Rules 2004 (Cth) (“the Rules”) and should be set aside.
(2)Conduct money was not tendered pursuant to r 15.23(1) of the Rules;
(3)The documents sought by the subpoena are not documents that are the property of L Firm but are documents in their possession in their capacity as accountants for B Pty Ltd and accordingly are documents of the company and confidential to it.
(4)That the use of a subpoena to L Firm is an abuse of process in circumstances where the proper course of action is to seek discovery of documents from B Pty Ltd who is a party to the proceedings.
(5)That the subpoena is an abuse of process because:-
(a)The documents sought are too widely stated and not confined to documents which may be relevant;
(b)The documents sought are described in a manner which is too wide or oppressive;
(c)The period for which the documents are sought is too wide and traverse issues unrelated to the proceedings.
Background
The parties were married on … 2004.
On … June 2008 the parties purchased a property at J Street, Suburb K (“the Suburb K property”).
In late October 2008 the parties commenced significant renovations to the Suburb K property. There is some contention between the parties as to the cost of the renovations.
In 2006 the respondent and his brother Mr D Stavri purchased a business. It is not controversial that the business struggled and a financial crisis was reached in April 2014 when the landlord locked the respondent out of the premises due to his inability to pay rent.
The financial circumstances of the parties was such that a decision was made to sell the Suburb K property in 2014. By this time a number of caveats had been placed over the Suburb K property.
In particular, on 21 June 2013 B Pty Ltd, Mr E Stavri, Ms C Stavri and Mr D Stavri registered a caveat over the property claiming to be beneficially entitled to an interest in the property in some (at present) indefinable share by virtue of having contributed directly and/or indirectly to the acquisition, maintenance, conservation and improvement to the property.
It is a relevant consideration that as between the parties, the Suburb K property was held by the applicant as to 99 undivided 100th parts and as to the respondent one undivided 100th part.
The property was sold in July 2014 and in order to effect, sale the mortgage to the National Australia Bank (“NAB”) was discharged in the sum of $1,141,069.44, a sum was paid on behalf of M Firm in the sum of $1,714.31, a further sum to N Business of $3,095.91 and a lump sum of $325,000 was paid to the above described caveators necessary to withdraw their caveat.
The net proceeds of sale was $29,596.89.
The applicant contends that she was not made aware of any direct or indirect contribution by the second to fifth respondents. She rejects any contention that money was contributed by the second to fifth respondents in the sum of $325,000, but if so, that it gave the respondents a caveatable interest.
The respondent husband did not provide any particulars to the applicant. The contention of the second to fifth respondents is that the respondent husband behaved deceptively in respect of his involvement with B Pty Ltd and the G Trust, but strongly maintain that monies were transferred from the accounts of B Pty Ltd and used for the renovation and improvement of the Suburb K property.
The applicant seeks a declaration as to a further sum of $100,000.
It appears that the claim that the second to fifth respondents should repay the sum of $325,000 is separate to the further claim for the repayment of $100,000.
The claim for $100,000 arises from the respondent and his brother’s involvement in the business.
The applicant gave a guarantee and indemnity dated 29 June 2012 for the sum of $100,000 in favour of the NAB.
Whether it was as a result of an action by the NAB to cancel the loan facility secured over the Suburb K property, or whether the parties considered that their financial circumstances were now so precarious that the Suburb K property needed to be sold, Mr D Stavri considers that when the Suburb K property was sold the NAB recovered the amount of $100,000 pursuant to the guarantee.
It is also alleged that the respondent made unauthorised drawings and withdrawals from the B Pty Ltd account for his own use and that of the applicant.
The respondent’s loan account as at 24 June 2013 was in the total sum of $549,998.
Mr D Stavri agrees with his late father, mother and B Pty Ltd instructions were given for the lodgement of the caveat over the Suburb K property and for its withdrawal upon the payment of the sum of $325,000.
It is not controversial that at settlement the caveators’ solicitors received a cheque for $325,000 in exchange for the signed withdrawal of caveat.
There is some contention as to who was the recipient of the payment. The applicant refers to a transcript of proceedings on 30 October 2018[2] wherein the solicitor who appeared for the second to fifth respondents acknowledged that the settlement statement for the Suburb K property referred to the amount to withdraw the caveat being recorded, but she agreed that it was not apparent from the settlement statement who was the recipient of the settlement sum.
[2] See Affidavit of Ms H filed 30 July 2019 at annexure “Ms H2”.
His Honour was critical of the lack of detail contained on the settlement statement which might be used to identify where the settlement sum was paid.
In the affidavit of Mr D Stavri filed 24 April 2020 he asserts that a bank cheque for $325,000 was handed to his solicitors and was subsequently paid to B Pty Ltd. He denies that the monies were received by him or his parents.
Mr D Stavri contends that there was a genuine debt due to B Pty Ltd and it was reasonable that the respondent’s debts be repaid notwithstanding his bankrupt status.
Legal principles
Chapter 13 of the Rules imposes an obligation of full and frank disclosure on parties to Family Court proceedings and provides specific means by which that obligation must be fulfilled.
Despite the breadth of the duty to disclose, there are concerns about the over-broad disclosure of documents in Family Court proceedings, particularly as it relates to subpoenas.
The general practice as it relates to subpoenas to produce documents is explained by Smithers J in Lucas Industries Ltd v Hewittand Others (1978) 18 ALR 555 at 570:-
The purpose of the process of subpoena is to facilitate the proper administration of justice between parties. For that purpose it is the policy of the law that strangers who have documents may be put to certain trouble in searching for and gathering together relevant documents and bringing them to court. It is according to the same principle that persons who have knowledge of facts are put to the inconvenience of being brought to court and required to give evidence.
A named person or a person who has sufficient interest in a subpoena may seek an order for the subpoena to be set aside in whole or in part, or may object to production, inspection or photocopying of the documents required by subpoena.[3]
[3]Family Law Rules 2004 (Cth) r 15.26.
The primary test is the relevance of the documents to the issues before the Court. The Full Court in Hatton v Attorney-General of the Commonwealth of Australia & Ors (2000) FLC 93-038 considered the test of relevance and set out examples of where a Court may determine where it is proper to set aside a subpoena:-
·If the subpoena is for an improper purpose namely to obtain discovery against a third party;
·Where it might be oppressive to comply with the subpoena;
·Where a party embarks upon a “fishing expedition”; and
·That the subpoena should be set aside because it lacks relevance to the proceedings.
The decision of X Pty Ltd and Ors & Merhi [2015] FamCA 622 concerned an application seeking review of orders made by the Registrar dismissing objections to subpoenas issued by the Court. The applicants were twelve companies that had been served with subpoenas (companies of which the husband had an interest in). McClelland J found that the subpoenas were inappropriate because:-
43.… Essentially, they are speculative in the sense that they are a “train of inquiry” that might assist the wife’s case rather than it being “on the cards” that they will result in the production of documents that will be relevant to the issues in the case. To that extent the subpoenas to those companies amount to “fishing” and should be set aside.
His Honour gave an overview of the law referring to the power of the Court to issue a subpoena set out in Pt 15.3 of the Rules, and the power to set aside a subpoena so issued.
At [25] his Honour refers to Hatton (supra), in particular the relevant stages of having a third party bring documents to the Court being a three step process:-
The relevant stages of having a third party bring documents to court were described in Hatton (supra) at [38], by reference to National Employers’ Mutual General Association v Waind and Hill [1978] 1 NSWLR 372, as being a three step process:
The first [step] is obeying the subpoena, by the witness bringing the documents to the court and handing them to the judge. This step involves the determination of any objections of the witness to the subpoena, or to the production of the documents to the court pursuant to the subpoena. The second step is the decision of the judge concerning the preliminary use of the documents, which includes whether or not permission should be given to a party or parties to inspect the documents. The third step is the admission into evidence of the document in whole or in part; or the use of it in the process of evidence being put before the court by cross-examination or otherwise…This application by the applicant companies concerns the first step referred to in Hatton (supra)…
In Dupont & Chief Commissioner of Police and Anor (2015) FLC 93-648 the Full Court applied the principles enunciated in National Employers’ Mutual General Association Limited v Waind and Hill [1978] 1 NSWLR 372 and Hatton (supra) and found that a subpoena must only be used for a legitimate forensic purpose. A subpoena that does not have a legitimate forensic purpose is an abuse of process and must be set aside. In this case, an objection was made to the production of documents under subpoena on public interest immunity grounds. The Full Court helpfully outlined the “usual procedure adopted”[4] when a subpoena for the production of documents is issued:-
36.… This first step involves the determination of any objections to the subpoena or to the production of the documents. It is at this stage that the court will consider any claim by the person to have the subpoena set aside on the basis it is oppressive, is an abuse of process and the like and, relevantly, public interest immunity. …
…
40.The second step is the decision concerning the preliminary use of the documents, which includes whether or not permission should be given to a party or parties to inspect the documents produced to the court and under its control. In this regard, the crucial question is whether the documents have apparent relevance to the matters in issue or are themselves the subject matter of the litigation. …
41.The third step is the admission into evidence of a document or its use in the process of taking evidence. It is at this step that questions between the parties of relevance in fact and admissibility are determined…
(Citations omitted)
[4]Dupont & Chief Commissioner of Police and Anor (2015) 93-648 at [35].
In Martin & Martin and Anor (No.2) [2014] FamCA 232 Cronin J found that the focus of the Court should be whether it was “on the cards” that the documents would materially assist the proceedings. Cronin J referred to his own comments in Woley & Humboldt (No. 4) [2009] FamCA 546, where he said:-
39.In Hudson Timber and Hardware Ltd v Chaudhary Group Pty Ltd [2002] FCA 832 the Full Court of the Federal Court examined the issue of apparent relevance and said that the relevant principles governing the obtaining of documents on subpoena which have “apparent relevance” were that inter alia:
(1)The relevance of documents was not limited to documents directly admissible in themselves in proof of an issue raised in pleadings; and
(2)If a class of document which has material forensic relevance could be shown to exist, then a subpoena would not normally be set aside.
40.In White v Tulloch (1995) FLC 92-640, the Full Court of the Family Court referred to the test in terms of documents having “a sufficient apparent connection to justify their production or inspection”.
41.In Trade Practices Commission v Arnotts Ltd (No 2) (1989) 21 FCR 306, Beaumont J saw relevance as something where a document “could possibly throw light on the issues in the main case”.
42.In Portal Software International Pty Ltd v Bodsworth, [2005] NSWSC 1115, Brereton J looked at a number of authorities including of this Court and said:
Thus it is plainly not the question at this (first) stage whether the documents, production of which is sought, will definitely advance the case of the parties issuing the subpoena, nor whether they will be admissible in evidence at the trial. It is sufficient that they could “possibly throw light” on the issues in the substantive proceedings, or that it appears to be “on the cards” that they will do so. What are the issues in the proceedings will appear from the pleadings (where there are pleadings), the affidavits, and the legal principles which govern the claims for relief in the substantive proceedings.
In Martin (supra) at [29] Cronin J also referred to his decision in Papadopoulos & Papadopoulos (No. 2) [2007] FamCA 1683 where he observed:
49.The question of what is relevant takes on significance. The objective must be to assist the parties and the court in the determination of the issues in dispute. How does one determine that at an early stage? The issue was considered in the Victorian Supreme Court in Killorgan Investments Pty Ltd v Baycorp Advantage Business Information Services Limited and Ors where Byrne J said:
The degree of relevance for this purpose is not high: the inspecting party need only show a legitimate forensic purpose in the inspection. A party is entitled to inspect documents not only to see if they contain relevant facts, but also to see if they contain information which may be proved otherwise than through that document.
50.Accordingly, the bar is not set very high in respect to the question of relevance in a civil proceeding as between strangers. It should be less so in family law proceedings provided the pursuit of information is genuinely designed to assist in determining the issue and not for some illicit or harassing type of reason.
51.The onus in establishing the relevance lies on the person seeking the production of the documents either by way of subpoena or through discovery.
In terms of “fishing”, it is not legitimate for a party to issue a subpoena with a view to determining whether the issuing party has a case at all. In Unitingcare – Unifam Counselling & Mediation & Harkiss and Anor (2011) FLC 93-476 the Full Court at [69] referred to Hennessy v Wright (No. 2) (1980) 24 QBD 225 at 448 whereby the concept of a “fishing expedition” was described as occurring where:
…the plaintiff wishes to maintain his questions, and to insist upon answers to them, in order that he may find out something of which he knows nothing now, which might enable him to make a case of which he has no knowledge at present.
In deciding that a subpoena to a third party should be set aside in Ryder & Lee [2009] FamCA 531, Burr J adopted the following passage from the decision of Gray J in Andrew Garrett Wine Resorts & Anor v National Australia Bank Limited (No. 6) (2005) 92 SASR 419 where his Honour 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 summary, it is not enough for a 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.
As has been noted, a subpoena that is tantamount to discovery is likely to be set aside as an abuse of process. As an extension of that principle, it is impermissible for a subpoena to be used to rectify inadequate discovery by a party to the proceedings. In Macks v Tucker & Ors & QBE Insurance (Australia) Ltd (No. 4) [2007] SASC 255, Bleby J said at [49] that in such a case:
It seems to me that the more appropriate course for the defendants to follow is to seek an order for further and better discovery from the plaintiffs, if they have a genuine concern about the adequacy of the plaintiff’s discovery and if they can point to reasons why that appears to be inadequate.
Discussion
It is not controversial that the applicant considers that the respondent husband is working in concert with the second to fifth respondents.
The applicant’s assertion that the second to fifth respondents have been selective in the documents that they are prepared to discover and produce has been an ongoing thread through the warp and weft of the proceedings. The applicant’s complaint is crystalized in the affidavit of Ms H filed 1 June 2020.
It is readily apparent that the subpoena directed to the accountants for B Pty Ltd was a reaction based upon the applicant’s frustration at her various requests for documents either being refused or provided in a heavily redacted form.
The issue of discovery has been complicated by the level of uncertainty as to the status of the second to fifth respondents in the proceedings.
I cannot be certain as to the initial intention of the applicant to seek orders against the second to fifth respondents. Certainly the original Initiating Application did not seek direct orders against them. The Amended Initiating Application of 31 July 2019 did seek declarations and orders for the respondents to pay the applicant such sum as agreed or determined. It could not be said that the generality of the proposed order as pleaded gave any assistance in understanding what orders were actually being sought and whether it was the applicant’s intention that the named parties be joined as parties to the proceedings.
The status of the second to fifth respondents was not assisted by the representation made by their solicitor Mr O before Judge Cole on 22 January 2019 where he effectively consented to the order that his Honour subsequently made for the “proposed third parties” to provide discovery on oath.
That hearing and the concession made by the solicitor for the second to fifth respondents is to be seen against the submissions made by Ms P who appeared on behalf of the husband and Mr O who appeared on behalf of the second to fifth respondents before Judge Cole on 30 October 2018.
On 14 February 2020 orders were made listing interim proceedings for argument on 21 February 2020. The order contained a notation that the Court did not consider that the second to fifth respondents had ever been joined to the proceedings notwithstanding the order that had been made effectively by consent on 22 January 2019.
Following the applicant filing a Further Amended Initiating Application on 3 March 2020, an order was made on 8 May 2020 which joined the second to fifth respondents as parties to the proceedings.
Whilst it is likely that Judge Cole did not have power to make the order of 22 January 2019, the concession by the solicitor representing the second to fifth respondents could be seen as an indication that the documents referred to in the order were relevant to the proceedings.
By reference to the category of documents sought in item 3 of the Schedule to the subpoena, I consider that as drafted it could be interpreted to encompass effectively every document in existence relating to the operation and management of B Pty Ltd and the G Trust.
Whilst it may well be likely that the specific categories of documents referred to in sub-items 3(a) to (f) inclusive could have relevance to the proceedings, item 3 does not seek to limit the documents to those categories but rather to merely include them as sub categories of documents sought.
The primary basis for the objection to the subpoena is that it should be seen as an abuse of process in that the documents sought from the accountants are capable of an order for discovery and production against a party to the proceedings.
That proposition must be correct in the absence of any submission that the documents are in some way peculiar to the accountants and that it is not merely a matter of the second to fifth respondents being recalcitrant in their preparedness to provide discovery and produce documents, but that they are unable to do so and it is only by a subpoena to the accountants that the documents can be obtained.
In Re McGorm; Ex parte: the Co-Operative Building Society of South Australia (1989) 20 FCR 387 at 389 – 390 Von Doussa J considered the extent of a party’s obligation to make discovery in respect of documents that are not in his or her possession:
The obligation resting on a party obliged to give discovery requires that he make proper enquiries and efforts to identify and disclose all relevant documents that are not in his possession. The obligation extends to making enquiries from the person in whose possession the documents now are: see Mertens v Haigh (1863) 3 De GJ & S 528 at 531; 46 ER 471, at 742. It was said in the nineteenth century case of Taylor v Rundell (1841) Cr & Ph 104 at 113; 41 ER 429, at 433 by Lyndhurst LC: “If it is in your power to give the discovery, you must give it; if not, you must show that you have done your best to procure the means of giving it.”…
The scope of the inquiries which should be made will depend on the circumstances of the case having regard to the need for discovery in order to dispose fairly of the matters in question, or to save costs in the proceedings. The inquiries must be reasonable, but do not demand of the party giving discovery that he goes to lengths which are oppressive. …
If it were to be the case that the accountants for the second to fifth respondents held documents that were relevant to the proceedings but which were not in the possession of the second to fifth respondents then it would not be considered onerous for a request to be made for the documents to be provided.
The further complaint of the applicant is that documents that she considers critical to the proceedings are the subject of redaction.
The historic position as discussed in GE Capital Corporate Finance Group Ltd v Bankers Trust Co & Ors [1995] 1 WLR 172 is that a party providing discovery has a right to cover up irrelevant information as long as it does not destroy or mislead the remaining information.
The contemporary position is that as set out in Telstra Corporation v Australis Media Holdings (unreported, Supreme Court of New South Wales, McLelland CJ, 10 February 1997) which provides that documents may be specified by “class or classification” and not by reference to a fact in issue. This was extended in Gray v Associated Book Publishers(Aust) Pty Ltd [2002] FCA 1045 to consider the decision of GE Capital (supra) in which it was held that a party seeking to redact portions of a document bears the onus of either obtaining consent from the other party or the authority of the Court. Even an affidavit as to relevance is not conclusive evidence of the appropriateness of redaction.
In Egglishaw v Australian Crime Commission (No. 2) [2009] FCA 12 Besanko J drew a distinction between an order for “general discovery” and a more limited order.
The current view is that where a document has been redacted without the consent of the other party or the authority of the Court, the Court may inspect documents and assess whether the redaction is appropriate.
The Court in considering the relevance of documents may also have regard to matters of public interest in determining whether redaction is an appropriate course of conduct.
Conclusion
At this stage of the proceedings the high water mark of the applicant’s case focuses on a pool of at best $425,000.
The Court is concerned that the potential for the costs of the parties may render even the most meritorious outcome as nugatory.
Given the effective consent by the second to fifth respondents to the order made by Judge Cole on 22 January 2019, it might be considered that a better way forward could be found than by pressing an objection to the applicant’s subpoena.
Any perceived victory to be achieved by the parties will be pyrrhic.
Nonetheless, the Court must protect its proper process and in the circumstances as presented, the subpoena directed to the accountants is an abuse of process and should be set aside.
I make orders as appear at the commencement of these reasons.
I certify that the preceding eighty two (82) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 13 July 2020.
Associate:
Date: 13 July 2020
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