Stopford Malloy & Malloy
[2021] FedCFamC1F 123
•13 October 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)Stopford Malloy & Malloy [2021] FedCFamC1F 123
File number(s): ADC 2595 of 2015 Judgment of: HARPER J Date of judgment: 13 October 2021 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Discovery – Duty of disclosure applicable to all information relevant to the proceedings – Disclosure and production of documents overlap but not the same – Obligation to provide disclosure by a list of documents under the rules – Purpose of disclosure is to give parties equal access to information peculiarly or largely in the possession on one party – Overarching purpose of family law practice and procedure directions – Duty to provide a list of documents to which duty of disclosure applies – Duty to provide a list is separate to duty to produce documents – Orders for list of documents made. Legislation: Evidence Act 1995 (Cth) s 122(5)
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 67 and 68
Federal Circuit and Family Court of Australia (Consequential Amendments and Transitional Provisions) Act 2021 (Cth) s 37
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 1.04, 1.12, 6.01, 6.03, 6.06, 6.09, 6.10, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.18
Family Law Repeal Rules 2021 (Cth) sch 1
Family Law Rules 2004 (Cth) rr 13.01, 13.12, 13.13, 13.20, 13.22
Cases cited: CanWest Global Communications Corporation v Australian Broadcasting Authority (1997) 71 FCR 485; (1997) 147 ALR 539; (1997) 24 ACSR 405
Caltex Refining Co Pty Ltd v Amalgamated Metal Workers Union (1990) 51 IR 113
In the Marriage of Black and Kellner (1992) 106 FLR 154; (1992) 15 Fam LR 343; (1992) FLC 92-287
In the Marriage of Briese (1985) 82 FLR 369; (1985) 10 Fam LR 642; (1986) FLC 91-713
In the Marriage of Giunti (1986) 11 Fam LR 160; (1986) FLC 91-759
In the Marriage of Mezzacappa (1987) 11 Fam LR 957; (1987) FLC 91-853
In the Marriage of Morrison (1994) 18 Fam LR 519; (1995) FLC 92-573
In the Marriage of Stein (1986) (1986) 11 Fam LR 353; FLC 91-779
Joubert and Anor & Verhoeven and Anor [2020] FamCA 53
Kent Coal Concessions Ltd v Duguid [1910] AC 452; (1910) 79 LJKB 872; (1910) 103 LT 89; (1910) 26 TLR 571
Malloy & Stopford Malloy [2019] FamCA 986
Malloy & Stopford Malloy (2020) 61 Fam LR 449; [2020] FamCA 506
Martell v Victorian Coal Miner’s Association (1903) 28 VLR 643; (1903) 9 ALR 174a
Mulley & Marney v Manifold (1959) 103 CLR 341; (1959) 33 ALJR 168
Oriolo v Oriolo (1985) FLC 91-653; (1985) 10 Fam LR 665
Pendelbury v O’Neill (1911) 11 SR (NSW) 188; (1911) 28 WN (NSW) 59
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; (1998) 72 ALJR 841; (1998) 153 ALR 490; [1998] HCA 28
Stopford Malloy & Malloy (No 3) [2016] FamCA 931
Stopford Malloy & Malloy [2017] FamCA 116Waterman & Waterman [2017] FamCAFC 23
Number of paragraphs: 79 Date of last submission/s: 13 April 2021 Date of hearing: On the papers Place: Sydney Counsel for the Applicant: Mr Wells QC and Mr McGinn Solicitor for the Applicant: Piper Alderman Solicitor for the First Respondent: Mr Malloy in person Counsel for the Second to Fourth Respondents: Mr Richardson SC and Mr May Solicitor for the Second to Fourth Respondents: Barnes Brinsley Shaw Lawyers ORDERS
ADC 2595 of 2015 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS STOPFORD MALLOY
Applicant
AND: MR MALLOY
First Respondent
DD PTY LTD
Second Respondent
MR Q MALLOY (and another named in the Schedule)
Third Respondent
ORDER MADE BY:
HARPER J
DATE OF ORDER:
13 OCTOBER 2021
THE COURT ORDERS THAT:
1.Without limiting his continuing obligation to make full disclosure in compliance with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”), by no later than 4.00 pm on 12 November 2021, the First Respondent Husband (“the husband”) file and serve upon the Applicant Wife (“the wife”), a List of Documents for the period 14 July 2015 to the date of this Order disclosing:
(a)communication(s) or correspondence between the husband, and/or or on his behalf, and Mr Q Malloy and/or his legal representatives; and
(b)communication(s) or correspondence between the husband’s legal representatives and Mr Q Malloy and/or on his legal representatives
relevant to the issues in dispute in the proceedings.
2.The list provided pursuant to Order 1 shall comprise, in relation to each communication or correspondence:
(a)the date of such communication or correspondence;
(b)the method of such communication or correspondence;
(c)the sender(s);
(d)the addressee(s);
(e)a brief description of the content of the communication or correspondence; and
(f)in the case of any claim of privilege, the claimed ground of privilege and a description of the communication or correspondence sufficient to enable the claim to be ascertained.
3.Pursuant to r 6.18(1)(b), the husband provide an affidavit of documents verifying the List referred to in Order 1.
4.Without limiting their obligation to make full disclosure in compliance with the Rules, by no later than 4.00 pm on 12 November 2021, the Second to Fourth Respondents file and serve upon the wife, by her solicitors, a List of Documents relevant to the issues in dispute, complying with r 6.09.
5.The list provided pursuant to Order 4 shall include the following:
(a)for the period 14 July 2015 to the date of this order, communication(s) and/or correspondence between the husband and the Second to Fourth Respondents, or on their behalf (including by their solicitors) and the husband and/or his legal representatives relating to matters relevant to the within proceedings, including but not limited to details of the frequency of such discussions or communications, the type of communication, and the record of the communication;
(b)all documents which both directly refer to, or relate to, the husband and also record succession plans for the group of entities known as the Malloy Group upon the death, retirement, and/or disablement of Mr Q Malloy, including but not limited to a copy of Mr Malloy’s will; and
(c)all documents and information relating to any call or demand or communication between the husband and his father and the Second to Fourth Respondents (and/or their respective agents) to execute any mortgages, including the mortgages entered into on 7 August 2015.
6.Pursuant to r 6.18(1)(b), each of the Second to Fourth Respondents provide an affidavit of documents, verifying the List referred to in Order 4.
7.No further interim or interlocutory applications may be filed by any party, without leave of the Court.
THE COURT NOTES THAT:
A.The proceedings are listed for mention on 18 November 2021.
B.On 18 November 2021, the Court expects the parties to inform the Court of the status of the Application in a Proceeding filed by the wife on 13 September 2021.
THE COURT FURTHER ORDERS THAT:
8.By no later than 4.00 pm on 17 November 2021, the parties submit to the Chambers of the Honourable Justice Harper a draft agreed statement of issues for final hearing.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Stopford Malloy & Malloy has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J
INTRODUCTION
These prolonged and complex proceedings involve both parenting and financial disputes between the applicant wife, Ms Stopford Malloy (“the wife”), and the respondent husband, Mr Malloy (“the husband”). In addition, a number of third parties have been joined as respondents to the financial aspects of the proceedings. These are DD Pty Ltd, Mr Q Malloy, and the Malloy Group (“the third parties”). Mr Q Malloy is the husband’s father.
Although both the parenting and property disputes were set down for final hearing to commence on 3 May 2021, it became clear that the financial aspects would not be ready to proceed at that time.
The wife makes complaint about outstanding disclosure from the respondents. She filed two Applications in a Case on 23 February 2021 (“the February application”) and 12 March 2021 (“the March application”) respectively. These seek orders for specific disclosure from the husband and third parties respectively, without which, she argues, she cannot proceed to final hearing.
Both the husband and the third parties oppose such orders being made. This judgment deals with those applications.
There have been no less than twenty earlier judgments delivered in these complex and tortuous proceedings. A number of these judgments outline the background of the dispute in great detail. As a result, a detailed history in this judgment is unnecessary. I will refer only to relevant aspects of the background as required in these reasons.
The parties agreed that the discrete dispute involving disclosure could be determined on the papers and in Chambers. Orders were accordingly made for the filing of relevant submissions, which have been complied with.
MATERIAL RELIED UPON
In support of the orders sought, the wife filed the following material:
(1)Affidavit of Ms AN (the wife’s solicitor), filed 23 February 2021;
(2)Affidavit of Ms AN, filed 12 March 2021; and
(3)Two sets of written submissions, both filed on 29 March 2021.
As ordered, the husband filed an affidavit in response to the February application on 29 March 2021. In that affidavit, he makes it clear that he opposes any orders for disclosure being made and seeks that the February application be dismissed. The husband did not otherwise file any written submissions.
During a mention on 19 March 2021, the third parties stated that they did not seek to file any responsive affidavits in relation to the March application. Notwithstanding this, they opposed the application and sought for it to be dismissed. In compliance with orders made, the third parties filed written submissions confirming this position on 6 April 2021. However, they also raised objections to paragraphs 4 and 10 of the Affidavit of Ms AN filed on 12 March 2021. For the purposes of an interlocutory procedural hearing, I allow those paragraphs.
Following the filing of written submissions by the third parties, the wife requested and was granted leave to file a response. This response was filed and accepted into evidence on 13 April 2021.
FEBRUARY APPLICATION
By her February application, the wife seeks the following orders against the husband:
1.That within 14 days of this Order, the Husband do provide a list of documents for the period 14 July 2015 to the date of this Order as to:
a. Communication(s) or correspondence between the Husband, and/or or on his behalf, and [Mr Q Malloy] and/or his legal representatives; and
b. Communication(s) or correspondence between the Husband’s legal representatives and [Mr Q Malloy] and/or on his legal representatives.
2.That the list provided pursuant to Order 1 herein comprise in relation to each communication or correspondence:
a. the date of such communication or correspondence;
b. the method of such communication or correspondence;
c. the sender(s);
d. the addressee(s);
e. a brief description of the content of the communication or correspondence; and
f. and in the case of any claim of privilege the claimed ground of privilege and a description of the communication or correspondence sufficient to enable the claim to be ascertained.
3.That unless the Husband has provided to the Wife’s solicitors copies of the documents in that list of documents, within 14 days of the provision of the list of documents pursuant to paragraph 1 herein, the Husband do produce to the Wife, at a time during office hours nominated by the Wife’s solicitors in writing upon three business days’ notice to the Husband, at the offices of the Wife’s solicitors during office hours, any copy record or documents referred to in his list of documents for inspection and copying by the Wife’s solicitors.
4.Costs.
5.Such further or other orders as determined by this Honourable Court.
Both applications are premised on the duties of the husband and the third parties to provide disclosure. This requires some detailed reference to the applicable rules of Court.
Applicable law
On 1 September 2021 the Federal Circuit and Family Court of Australia Act2021 (Cth) (“the new Act”) commenced. Section 37 of Part 5, Schedule 5 of the Federal Circuit and Family Court of Australia (Consequential Amendments and Transitional Provisions) Act2021 (Cth) provides that Division 4, Part 5 of Chapter 3 (Case management) of the new Act “applies in relation to a proceeding commenced before, on or after the commencement day,” which was 1 September 2021.
Both applications were brought at a time when the Family Law Rules 2004 (Cth) (“2004 Rules”) were operative. The 2004 Rules have also been repealed (Family Law Repeal Rules 2021 (Cth), Schedule 1). The Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) also commenced on 1 September 2021 (“the new Rules”). These apply to proceedings not finally determined before the repeal of the 2004 Rules (FCFCOA Practice Direction – TRANSITIONAL ARRANGEMENTS, Clause 2.1). The 2004 Rules no longer have any application. The practice direction makes clear the new Rules should not apply if they cause unfairness or injustice. Rule 1.12 gives the Court a broad discretion to dispense with the new Rules.
For the purposes of this judgment, there is no material different between the applicable 2004 Rules and the new Rules. It is convenient to refer primarily to the new Rules, with some additional reference to the 2004 Rules as necessary.
Duty of disclosure
The duty of disclosure is now explained in r 6.01 of the new Rules, in terms materially identical to the 2004 r 13.01:
6.01 General duty of disclosure
(1) Subject to subrule (4), each party to a proceeding has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the proceeding, in a timely manner.
Note: The proceedings to which the duty of disclosure applies include both parenting proceedings and financial proceedings. Failure to comply with the duty may result in the court excluding evidence that is not disclosed or imposing a consequence, including punishment for contempt of court.
(2) The duty of disclosure applies from the start of the proceeding and continues until the proceeding is finalised.
The terms of r 6.01 (2004 r 13.01) make clear that the duty of disclosure applies to “all information relevant to the proceeding”. The test, therefore, is whether documents are relevant to the issues in the proceedings.
Menzies J in Mulley & Marney v Manifold (1959) 103 CLR 341 (“Mulley”) said at 345:
… discovery is a procedure directed towards obtaining a proper examination and determination of these issues—not towards assisting a party upon a fishing expedition. Only a document which relates in some way to a matter in issue is discoverable, but it is sufficient if it would, or would lead to a train of enquiry which would, either advance a party's own case or damage that of his adversary.
As Mulley makes clear, the test of relevance is met by discovery of documents which not only relate to issues in the proceedings, but that the obligation also extends to any document that may lead to a “train of inquiry”.
In other jurisdictions where pleadings are used, it is trite to state that the extent of a party’s obligation to give discovery is regulated by the pleadings. Many have rules which limit the extent or manner of discovery. To take one example, under Division 1 of Part 21 of the Uniform Civil Procedure Rules 2005 (NSW), a court may order discovery of categories of documents relevant to a fact in issue. This Court is not a court of pleadings. Parties are under a continuing duty of disclosure. As pointed out below at [29]-[36], the new Rules (as did the 2004 Rules) provide for parties to initiate the service of a list of documents for disclosure without, at least initially, the intervention of the Court.
In this matter, the issues are given more definition because the wife was ordered to file and serve, and relies upon, contentions articulated in her Points of Claim, which have many features analogous to a formal pleading. I will return to these Points of Claim below. It is sufficient to observe here that the husband and third parties put in issue all the central allegations in the Points of Claim. Consequently, the disputed issues raised by the Points of Claim govern the ambit of relevance for the purposes of discovery. The obligation of the husband and the third parties to give discovery extends, therefore, to documents which may lead to a “chain of enquiry” concerning the disputed allegations in the Points of Claim.
This Court has commented on the purpose of its disclosure rules many times, and earlier decisions on previous versions of the rules continue to be apt. It is clear, in the interests of justice, that each party to a proceeding must know the extent of the property available for adjustment pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”). The rules concerning disclosure aim, particularly, to protect vulnerable parties, or parties who are not privy to, and therefore not aware of, the financial circumstances of the martial relationship: In the Marriage of Briese (1985) 82 FLR 369 (“Briese”) cited with approval in Oriolo v Oriolo (1985) FLC 91-653 (“Oriolo”), In the Marriage of Giunti (1986) 11 Fam LR 160 (“Giunti”), and In the Marriage of Black and Kellner (1992) 106 FLR 154. The duty of disclosure continues until proceedings are finalised, and is a duty owed both to the other party and to the Court: Waterman & Waterman [2017] FamCAFC 23 at [32] (see also r 6.01(2)).
It has long been said that the obligation to provide disclosure is considered “so crucial” to the family law jurisdiction that specific negative inferences can be made against a non-disclosing party: In the Marriage of Morrison (1994) 18 Fam LR 519 citing In the Marriage of Stein (1986) 11 Fam LR 353, In the Marriage of Mezzacappa (1987) 11 Fam LR 957, and Giunti.
Furthermore, the Rules are not intended to impose an “outer [limit]” on the “obligation of financial disclosure”, but instead provide “avenues towards disclosure”: Oriolo at 667, citing Briese.
The wife argued, and I accept, that the duty of disclosure in this Court does not depend on a request for disclosure by another party. Each party is required to turn their minds to what information should be disclosed to fulfil the duty, and to do so as a continuous process.
I accept, as pointed out by the third parties, that there are long established general constraints on discovery. For instance, an order for discovery will not be made as a result of a speculative possibility of non-disclosure: Martell v Victorian Coal Miner’s Association (1903) 28 VLR 643, Pendelbury v O’Neill (1911) 11 SR (NSW) 188, and Kent Coal Concessions Ltd v Duguid [1910] AC 452.
For parties discharging the duty of disclosure, and for the Court in applying the rules concerning disclosure or making practice and procedure directions, it is also necessary to take account of s 67 of the new Act. Section 67 reiterates and elaborates on the overarching purpose of the family law practice and procedure provisions, which are defined in s 67(4). It also continues to impose a duty to promote the overarching purpose in applying the rules. Section 68 obliges parties to act consistently with this overarching purpose. There is also the overarching purpose of the new Rules to consider. This is now set out in r 1.04, which is to facilitate the just resolution on the proceedings “according to law and as quickly, inexpensively and efficiently as possible.” This overarching purpose is replicated from the 2004 Rules. Those Rules also provided for the parties to take necessary steps to help achieve, and imposed a duty on the Court to promote the overarching purpose, which duties, as pointed out, are now found in s 67 of the new Act.
Clearly, the duty of disclosure must be discharged by a party in a manner which promotes and helps achieve the overarching purpose of family law practice and procedures, regardless of whether this is under the 2004 Rules, or the new Act and Rules. In determining the wife’s February and March applications, the Court must also have regard to the need to promote the overarching purpose.
Rules concerning disclosure of documents
The Rules make specific provision for the disclosure of documents. Disclosure and production should be kept separate even if they overlap. Rule 6.03 is as follows:
6.03 Duty of disclosure—documents
The duty of disclosure applies to each document that:
(a) is or has been in the possession, or under the control, of the party disclosing the document; and
(b) is relevant to an issue in the proceeding.
Rule 6.06 sets out, in lengthy subrules, an extensive list of categories of disclosure in financial proceedings. The subrules only apply to a third party to the extent that a party’s financial circumstances are relevant to the issues in dispute. Subrule (10) also makes clear that parties are not required to provide a document that has already been provided to the other parties.
Rule 13.20 of the 2004 Rules was applicable when both the February and March applications were filed, and is materially replicated in the new rr 6.09 and 6.10, which are as follows:
6.09 Disclosure by list of documents
(1) After a proceeding has been allocated a first court date, a party (the requesting party) may, by written notice, ask another party (the disclosing party) to give the requesting party a list of documents to which the duty of disclosure applies.
(2) The disclosing party must, within 21 days after receiving the notice, serve on the requesting party a list of documents identifying:
(a) the documents to which the duty of disclosure applies; and
(b) the documents (if any) no longer in the disclosing party’s possession or control to which the duty would otherwise apply (with a brief statement about the circumstances in which the documents left the party’s possession or control); and
(c) the documents (if any) for which privilege from production is claimed.
(3) If a document that must be disclosed is located by, or comes into the possession or control of, a disclosing party after service of the list under subrule (2), the party must disclose the document within 7 days after it is located or comes into the party’s possession or control.
6.10 Request for disclosed document
(1) This rule applies to a document disclosed under rule 6.09.
(2) The requesting party may, by written notice, ask the disclosing party to:
(a) provide a copy of the document in accordance with rule 6.13; or
(b) produce the document for inspection in accordance with rule 6.14.
There are also provisions for the production of disclosed documents in rr 6.11, 6.12, 6.13, and 6.14. It is unnecessary to set out these rules here.
In the 2004 Rules, rr 13.20(1) and (2) were almost identical to the new rr 6.09(1) and (2). In both versions, subrule (1) provides that a requesting party can, by “written notice,” request a disclosing party to provide a list of documents within 21 days to which the disclosing party’s duty of disclosure applies.
Subrule (2) then places responsibility on the disclosing party, the husband in this case, to provide a list of the documents to which the duty of disclosure applies. The use of the verb “must” in both versions of the rules makes clear this is obligatory. Following the High Court in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 390, [93], it is unnecessary to express a view whether this is “mandatory” or “procedural”. Rather, the question is whether the purpose of subrule (2) is to impose responsibility on the disclosing party to provide a list of documents. I am satisfied that it does. It does not matter whether the documents identified are no longer in the possession or control of the disclosing party, or subject to a claim for privilege. They must still be identified in the list.
Reading the terms of r 6.09 in their ordinary meaning, it appears that it is the written notice referred to in subrule (1) that enlivens the obligation in subrule (2) to provide a list. Once written notice is served upon her, him or it, the disclosing party must provide a list of such documents. The obligation to provide a list is not conditioned in any express way except that it relates only to documents “to which the duty of disclosure applies”.
If, having received written notice, the disclosing party refuses or fails to provide the obligatory list, r 6.18, which is similar to the 2004 r 13.22, allows a party to make an application to the Court for an order compelling that party to comply with r 6.09. Rule 6.18 also allows parties to make an application for a range of other orders for enforcing disclosure obligations, such as the filing of an affidavit of documents, filing of an affidavit stating documents do not exist, or production of specific documents. The February and March applications was made pursuant to the 2004 r 13.22, but the new r 6.18 now applies.
The disclosing party may raise discretionary arguments as to why the obligation enlivened by the requesting parties’ written notice should be enforced pursuant to r 6.18.
The husband points out that Orders 1 and 2 of the February application repeat requests for disclosure made by the wife’s solicitors in correspondence dated 25 January 2021. In my view, that letter constituted “written notice” within the Rules and, prima facie, enlivened the husband’s obligation to produce the list required by r 6.09(2).
Therefore, the starting point to determining the February application is a recognition that, by reason of the service of written notice on the husband, he was obliged under r 6.09 (and previously r 13.20) to provide a list of documents “to which the duty of disclosure applies”. This obligation is imposed by the Rules and operates in tandem with the general duty of disclosure set out in r 6.01.
Rule 6.15 provides, in terms materially the same as 2004 r 13.12, as follows:
6.15 Documents that need not be produced
(1) A party must disclose, but need not provide a copy of nor produce to the party requesting it:
(a) a document for which there is a claim of privilege from production; or
(b) a document that is no longer in the disclosing party’s possession or control; or
(c) a document a copy of which has already been provided, if the copy contains no change, obliteration or other mark or feature that is likely to affect the outcome of the proceeding.
Discussion
The wife relies upon her Points of Claim, filed 14 July 2020, as the basis upon which to determine relevance in relation to her claims against both the husband the third parties. Her Points of Claim are as follows:
30.1 In 2012, the Husband and [Mr Q Malloy] (for himself and [Malloy Group]) came to an Agreement, Arrangement or Understanding (the 2012 Agreement) pursuant to which, for a nominal consideration of $1, the Husband settled upon [Mr Q Malloy] and [Malloy Group] certain assets belonging to the Husband or controlled by him (the Transferred Assets) upon terms that [Mr Q Malloy] and [Malloy Group] would re-convey, or cause to be re-conveyed to the Husband, at and upon the Husband’s request, the Transferred Assets, or so much of the assets of [Mr Q Malloy] and [Malloy Group] as would then be the equivalent in value of the Transferred Assets; and until re-conveyance, [Mr Q Malloy] and [Malloy Group] would provide to the Husband an income in the form of non-repayable loans and other supportive benefits;
30.2 By reason of the 2012 Agreement:
(a) there was a Settlement (“Settlement”) between the Husband and [Mr Q Malloy] (alternatively, [Mr Q Malloy] and [Malloy Group]), within the meaning of s 85A of the Act;
(b) further or alternatively, [Mr Q Malloy] is constructive trustee (“Constructive Trustee”) of [Mr Q Malloy]’ controlling shares in trustee companies in the [Malloy Group], and [Malloy Group] is a constructive trustee of the trust assets held by the trustee companies in the [Malloy Group] of which [Mr Q Malloy] (the Husband’s father) is the sole director and (controlling) shareholder - to a value equivalent to the value of the Transferred Assets; alternatively, those assets (shares and trust assets) are charged in favour of the Husband to that value. The constructive trust has arisen by reason of:
(1) an Estoppel (“an Estoppel”) operating in favour of the Husband and against [Mr Q Malloy] and [Malloy Group]; and
(2) alternatively, a Joint Venture (“Joint Venture”) represented by the 2012 Agreement.
(c) further, or in the further alternative, by refraining, and continuing to refrain, from claiming back the Transferred Assets, or their equivalent in value (as he is, and has been, entitled to do), the Husband has made, or caused to be made, by him or on his behalf or by his direction or in his interest, a disposition within the meaning of s 106B (“106B”), and an order should be made pursuant to s 106B, setting aside the disposition by requiring him to call in the Transferred Assets which he has refrained from calling in, thereby varying a right attaching to an interest in a company or trust.
30.3 Section 106B: Following service of the Wife’s Initiating Application in July 2015 and the matter coming before the Family Court:
(a) the Husband caused the proceeds of a [luxury] motor vehicle to be paid to [Malloy Group];
(b) the application of the proceeds of sale was intended to or otherwise had the effect of defeating orders that the Wife sought from this Honourable Court; and
(c) at the time of the payment by the Husband to [Malloy Group] [Mr Q Malloy] knew of the parties separation and that proceedings were pending.
30.4 UPEs: The Husband has, or has had, unpaid present entitlements (UPEs) of in excess of $4.5 million dollars including one UPE of about $1.8 million in [Malloy Group] which of themselves and the rights that accompany each of them (including by reason of [Mr Q Malloy] and [Malloy Group’s] knowing assistance in breach of trust and/or knowing receipt of trust property) constitute property for the purposes of the Act;
30.5 Section 106B: Following the commencement of these proceedings and the service of the proceedings:
(a) the Husband also entered the following transactions:
(1) on or about 07 August 2015 executed a Memorandum of Mortgage registered no. […] over the former matrimonial home at [Suburb E];
(2) on or about 7 August 2015 executed a Memorandum of Mortgage registered no. […] over a house property at [Suburb B]; and 6.
(3) on 7 August 2015 entered into a loan agreement with [DD Pty Ltd].
(b) those transactions were intended to, or otherwise had the effect of defeating the orders that the Wife has sought in this Honourable Court; and (c) at the time of entering into the transactions [Mr Q Malloy] knew of the parties’ separation and that proceedings were pending in this Honourable Court.
The above provides a summary of the wife’s claims against the third parties. She relies upon the summary in her submissions. The third parties also rely upon it, but for the limited purpose of indicating what issues are relevant. Somewhat surprisingly, the wife in her written submission filed on 13 April 2021 disclaimed the accuracy of the above summary, saying that “it should not be taken” that she agrees with the summary. She also reserved the right to make changes or amendments. It is certainly the case that the proceedings are not finalised, so there remains the possibility that the wife may amend her claims, subject to leave or resistance by the other parties.
However, for the purposes of determining her February and March applications, her own present formulation of her claims must, in my view, set the parameters of what the relevant issues are. The Summary identifies a range of dealings or transactions at specific times or in specific time frames. The allegations are further particularised in the Points of Claim more generally. In her submissions, for example, the wife points to the nature of the relationship between the husband and the third parties as justification for why communication since July 2015 between himself and Mr Q Malloy should be considered relevant material subject to the duty of disclosure. Her Points of Claim allege ongoing collaboration between the husband, Mr Q Malloy, the Malloy Group, and the retainment of the same legal practitioners. These allegations are all in issue.
In his affidavit filed 29 March 2021, the husband includes excerpts of his response to the wife’s 25 January 2021 letter, which he sent on 15 February 2021. These appear to form the basis of his argument against the wife’s application.
The husband responded to the written notice of 25 January 2021 by stating that he would not provide the material requested. He suggests that “the only references [the husband has] made to [Mr Q Malloy] throughout the proceedings, is that he refuses to provide [the husband or the wife] with any financial support”. The husband does accept that he received a relevant letter from his father on 8 April 2020 refusing to give him more money, however he states that this was already disclosed to the wife. He otherwise claims that he does not have “any other communication in [his] custody or control… [and that] [i]n any event, this information would be subject to professional privilege and is not relevant in the proceedings.”
As for the wife’s request for any communication between his previous counsel and Mr Q Malloy, the husband states that he has not had communication with his previous counsel for “nearly two years”. He claims he has no other information in his “custody or control”. As r 6.15 makes clear, the husband does not have to produce a document that has already been produced.
The wife submits, correctly, that a claim of privilege does not impact the husband’s duty of disclosure by way of a list, but rather, may affect any requirement for subsequent production. Rule 6.15 specifically requires disclosure, but provides that certain categories of document, including those where there is a claim of privilege, need not be produced. The wife pointed out that there is a proper procedure which should be followed in the event the husband pursues his claim of privilege.
It is important, therefore, to emphasise that the wife’s proposed Order 1 in her February application seeks a list identifying “communication(s) or correspondence between the Husband, and/or or on his behalf”, and “[Mr Q Malloy] and/or his legal representatives” and “between the Husband’s legal representatives and [Mr Q Malloy] and/or on his legal representatives” from 2015 to date. Production of disclosed documents is a separate question.
Order 2 then specifies more detail to be included in the husband’s list. The level of detail contained in the wife’s application is not uncommon in financial cases of some factual complexity. It also requires identification of any document over which privilege is claimed, and clarifies that no production is required if a listed document has already been produced.
The husband has produced no list. The first question, then, is whether he should be ordered to do so.
As already pointed out, the husband’s obligation is to provide a list of documents “to which the duty of disclosure applies”. Rule 6.09 does not specify which party determines the question of relevance. One purpose of Division 6.2.2 of Part 6.2 of the new Rules is to ameliorate the disparity where there is a clear imbalance between parties in their access to relevant financial information.. It has been said many times in this Court, and in these proceedings, that where there is an inequality in knowledge and records, the need for equal knowledge and a level playing field becomes a principal requirement for the administration of justice: Stopford Malloy & Malloy (No 3) [2016] FamCA 931 at [16]; Stopford Malloy & Malloy [2017] FamCA 116 at [15]; Malloy & Stopford Malloy [2019] FamCA 986 at [132]. In this case, there is no doubt that the husband and the third parties hold the knowledge and records of their own dealings and affairs. The wife does not. This superiority of knowledge places an onus on the husband and the third parties to determine which documents, among the many falling into the request, are or may be relevant to an issue in the proceedings by reference, among other things, to the wife’s Points of Claim.
I am satisfied that Orders 1 and 2 of the February application should be made. The husband has refused to provide a list, even though the 2004 Rules required, and the new Rules require, him to do so. Therefore, an order compelling this is justified. It is also justified because these proceedings have been on foot for some six years. Although there has been disclosure and production by the husband, there appears to be no clarity about what has and has not been disclosed, especially in relation to the issues raised by the wife’s Points of Claim. A list will contribute to bringing clarity to the state of disclosure by the husband and to equalising the possession of information between the parties. It will help identify documents without the immediate necessity of production. Any claims of privilege can be dealt with later if they are challenged by the wife and production sought by her. A list is also consistent with the overarching purpose of the new Act and Rules, and will materially assist in achieving the finalisation of these proceedings quickly, inexpensively and as efficiently as possible, against their lengthy and acrimonious background.
In light of the history of these proceedings, I am also satisfied that the husband’s list should be verified by affidavit, which may be ordered under r 6.18(1)(b).
At present, I am not convinced any other order should be made. The documents sought in Order 1 are likely to raise questions of legal professional privilege. I take account of the fact the husband is self-represented. In my view, Order 2 sought by the wife does not risk any waiver of privilege because the husband is protected by s 122(5)(a)(iii) of the Evidence Act 1995 (Cth). Once the documents are identified in a list in accordance with r 6.09, claims for privilege and challenges to them can be agitated in a context in which the relevant documents are clearly identified. As pointed out below, I propose to prohibit any further interlocutory applications without leave. Therefore, any challenges to claims to privilege should be resolved by agreement.
MARCH APPLICATION
By way of her Application in a Case filed 12 March 2021, the wife seeks the following orders against the third parties:
1.That within 14 days of the within order, the Second to Fourth Respondents do file and serve upon the Wife by her solicitors a List of all Documents relevant to the issues in dispute, verified by each of the Second to Fourth Respondents on oath, and complying with Rule 13.20(2).
2.Without limiting the obligation of the Second to Fourth Respondents to make full disclosure in compliance with the Rules, that the List referred to in Order 1 include the following:
a. for the period 14 July 2015 to the date of this order, communication(s) and/or correspondence between the Husband and the Second to Fourth Respondents, or on their behalf (including by their solicitors) and the Husband and/or his legal representatives relating to matters relevant to the within proceedings, including but not limited to details of the frequency of such discussions or communications, the type of communication, and the record of the communication;
b. signed financial statements for the [Malloy Group] for the period from the 2011 to 2020 financial years;
c. all documents that constitute the records of such succession plans for the group of entities known as the [Malloy Group] upon the death, retirement, and/or disablement of [Mr Q Malloy], including but not limited to a copy of [Mr Malloy’s] will; and
d. all documents and information relating to any call or demand or communication between the Husband and his father and the Second to Fourth Respondents (and/or their respective agents) to execute any mortgages, including the mortgages entered into on 7 August 2015.
3.That in the List provided for in Order 1, where documents are said to not exist, that the List include specifically:
a. that a specified document, or a class of documents, does not exist or has never existed; and
b. the circumstances in which a specified document or class of documents ceased to exist or passed out of the possession or control of the Second to Fourth Respondents.
4.That the Second to Fourth Respondents do produce for inspection and copying those documents disclosed pursuant to Orders 1 and 2 at their solicitor’s office within 7 days of the service of the affidavit referred to in paragraph 1 of this Order, such documents to be produced for inspection and copying at such time as agreed between the parties’ solicitors and upon 48 hours’ notice in writing by the Wife’s solicitors.
5.Costs.
6.Such further or other orders as this Honourable Court deems fit and proper.
I repeat what I have said above at [16]-[43], which apply equally to the March application.
The list sought by wife from the third parties is clearly much more extensive than that sought from the husband. However, it is limited to the issues in dispute.
The wife claims that on 14 July 2020, having received her Points of Claim, she requested that the third parties comply with their duties of disclosure. No response was received. By 23 February 2021, the wife had written to the third parties requesting specific disclosure of communications between the husband and Mr Q Malloy. She claims that the third parties should have inferred that the request related to communication relevant to matters in issue.
By 26 February 2021, the third parties had responded, claiming that the request was “oppressive” and “offensive”. Although the wife requested further particulars for this refusal, she was not satisfied with the response. In her summary of argument of the March application, she states that
2R-4R have provided no explanation for their failure to comply with their duty of disclosure other than the 12 purported particulars of “oppression” and “inappropriateness” given in the annexed letter from their solicitor dated 15 March 2021.
The wife submitted that her requests are relevant to the issues raised by her Points of Claim. She contends that because the Points of Claim make reference to financial transactions from as early as 2008, it is therefore appropriate to seek information from such time.
The wife also maintains that the husband and Mr Q Malloy have acted “collaboratively in the course of the proceedings”. Both the husband and third parties dispute this. The wife argues that communication between the parties is therefore relevant and goes to an issue in dispute.
The wife further argues that confidentiality is not a ground for resisting disclosure, and, moreover, that potential claims of legal privilege do not impact the duty to disclosure, but rather the procedure taken by the third parties.
The third parties have received “written notice” within r 6.09 as pointed out above at [58]. They have an obligation to provide a list under the rules. Thus, the initial question is, again, whether the third parties’ obligation to provide a list of documents should be enforced by Court order.
The third parties resist the wife’s application because
(a)the application is unsupported by any evidence of inadequate disclosure;
(b)the application is a fishing expedition seeking irrelevant documents; and
(c)the documents sought are oppressive, as they include communications between a father and a son over a period of over five years.
None of these contentions provide a reason why the third parties should not provide disclosure by way of a list in accordance with r 6.09. As already pointed out, r 6.09 creates an obligation which is to provide a list of documents “to which the duty of disclosure applies.” Having been given written notice, the third parties are subject to the obligation under the rules. Order 1 of the March application seeks an order for a list of such documents. Rule 6.18(1)(a) specifically provides for an order for compliance with r 6.09. The contents of the list would be determined by relevance. Irrelevant documents are not required to be included in the list. As discussed, the relevant issues are raised by the wife’s Points of Claim, which the third parties deny entirely. The reasons why the third parties should bear the burden of preparing the list and forming a view about which documents the duty of disclosure applies to are the same as those given at [50] and [51] above. The other considerations which favour the order being made are set out above at [52]. It is not a prerequisite that, before an order for a list of documents can be made, a requesting party must prove there is evidence of inadequate disclosure by the disclosing party. In my view, the provision of a list by the third parties is necessary before any view can be formed about the adequacy of disclosure.
Describing an application for a list of documents as “fishing” does not take the debate very far, as decisions in other jurisdictions have observed several times. In CanWest Global Communications Corporation v Australian Broadcasting Authority (1997) 71 FCR 485, Hill J said that
In one sense, every application for discovery will involve some element of 'fishing'. A party seeking discovery will often, perhaps usually, not know what material is in the possession or power of the other party which may advance or tend to advance the case of the person seeking discovery or denigrate from the case of his or her opponent.
This observation was echoed in Caltex Refining Co Pty Ltd v Amalgamated Metal Workers Union (1990) 51 IR 113, by Burchett J (with whom Lockhart and Gummow JJ agreed) at 116. It can be seen that disparity of knowledge is a factor which not only underlies the duty of disclosure in this Court, but is universal as an underlying consideration weighing in favour of discovery. In this Court, where, under the rules, in the first instance it is the disclosing party who must turn their mind to what documents fall within their duty of disclosure for the purpose of producing a list of documents, allegations of “fishing” are not persuasive.
I propose to make Order 1. As I understand Order 2, it is intended to specify particular categories of relevance. Order 2(a) is materially similar to Order 1 of the February application. The objections raised to this order by the third parties are directed to production, not to the preparation and provision of a list. Again, if there are claims for privilege, these affect production, not what documents should be identified on the list. I will also make Order 2(a).
According to the third parties, the documents specified in Order 2(b) have been provided to the wife by consent. The wife did not challenge this assertion.
Order 2(c) seeks a range of succession documents. The third parties claim these have no relevance. However, a succession plan for the Malloy Group which places the husband in charge of companies or assets by the allocation of shares, for example, may constitute some kind of financial resource. This may ultimately be a weak argument for the wife. I do not know, but the question here is relevance for the purposes of disclosure. I will make Order 2(c), but limit it to succession plans which directly relate to the husband.
I will make Order 2(d). In my view, it is sufficiently specific in what it relates to, and this is an issue which is raised by the wife’s Points of Claim.
I decline to make any order for production at this stage. One good reason is that, according to concessions of the wife in earlier procedural hearings, she has received already copies of a vast number of documents. It will be more efficient if the third parties provide a list and any subsequent applications for production of a document be limited to documents not already provided to the wife. Until the list is provided by the third parties, it will not be possible to determine this with any clarity.
Again, in light of the history of these proceedings, I am also satisfied that the third parties’ list should be verified by affidavit, under r 6.18(1)(b).
I note that the third parties made arguments about the timing of the wife’s requests and her March application. They suggest that the application must fail as it was made at the “eleventh hour” without prior notice to either party or to the Court. In particular, they point to the hearing of 25 January 2021, in which senior counsel for the wife made reference to the large quantity of documents they were expecting, or which they relied upon, whilst failing to mention any ongoing issue of disclosure from the wife’s point of view. Even if apt at an earlier point in time, these submissions are now of little or no relevance because they were made at a point in time where the financial proceedings were listed for final hearing on 3 May 2021. That listing was vacated and the final hearing is now listed on 9 May 2022.
A verified list can also be ordered under the Rules and will, in the circumstances of this case, provide clarity in the preparation for final hearing. I will make orders for a verified list from the third parties.
For completeness, I also note that the third parties argued that the wife should have filed an affidavit within seven days of receiving the third parties’ challenge to provide the documents sought, pursuant to 2004 r 13.13. I agree with the wife’s submission that this reliance on former r 13.13 was misconceived. Rule 13.13, and the new r 6.16, relate to a challenge in respect of a claim for privilege or inability to produce by a disclosing party. Here, it is, or likely to be, the third parties making such claims. The obligation to file an affidavit under r 6.16 falls on the disclosing party making a claim to privilege or inability to produce documents. Therefore, it was the third parties on whom there was any obligation to file an affidavit under this rule, not the wife.
The proceedings are listed for final hearing on 9 May 2022. There have already been too many interlocutory applications. The principle of finality of litigation has a role to play in respect of interlocutory applications, as I pointed out in Malloy & Stopford Malloy (2020) 61 Fam LR 449 at [23], relying on my decision in Joubert and Anor & Verhoeven and Anor [2020] FamCA 53 at [30].
I will therefore make orders prohibiting further interlocutory applications without leave of the Court, although I accept there may be further disputes about claims of privilege and production. One consideration here is that there was no dispute that there has already been considerable production to the wife. The Court should not be called upon constantly to adjudicate such interlocutory disputes. After the long and tortured history of this matter, the parties should understand that they are obliged, consistently with the s 67 of the new Act and the duties imposed upon them by the overarching purpose, to seek to resolve any such residual disputes by agreement, and that the Court will not entertain any further interlocutory applications unless it is convinced this is necessary. If the parties cannot agree, the Court will carefully manage any further proposed applications.
For the foregoing reasons, I will make the orders set out at the commencement of this judgment.
I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Dated: 13 October 2021
SCHEDULE OF PARTIES
Respondents
Fourth Respondent:
THE MALLOY GROUP
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