Strahan and Strahan

[2013] FamCA 205

FAMILY COURT OF AUSTRALIA

STRAHAN & STRAHAN [2013] FamCA 205

FAMILY LAW – PRACTICE AND PROCEDURE – where the applicant wife requests the husband execute letters of authority to the Australian Taxation Office and the Hong Kong Internal Revenue Department granting these agencies permission to release certain documentation to the wife – where the wife’s draft letters of authority are drafted extremely broadly – where the wife’s draft letters of authority may result in documentation that has no apparent relevance to the proceedings being produced –  where the husband has a duty of full and frank disclosure – the wife’s application is dismissed.

Family Law Rules 2005 (Cth) r 13.01, 13.04, 13.07, 13.12, 13.13, 13.18

Cook & Cook (No. 2) [2007] FamCA 1426
Hatton v Attorney-General of Australia (2000) 26 Fam LR 570
In The Marriage Of Hickey (2003) 30 Fam LR 355
Papadopoulos & Papadopoulos (No. 2) [2007] FamCA 1683

APPLICANT: Ms Strahan

RESPONDENT: Mr Strahan

FILE NUMBER: ADF 228 of 2005

DATE DELIVERED: 4 April 2013

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Dawe J

HEARING DATE: 26 November 2012 and 21 February 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Holland

SOLICITOR FOR THE APPLICANT: Winter & Co

COUNSEL FOR THE RESPONDENT: Mr Berman SC

SOLICITOR FOR THE RESPONDENT: Kennedy Partners

COUNSEL FOR THE FIRST INTERVENER: N/A

SOLICITOR FOR THE FIRST INTERVENER: Legal Services Branch, Australian Taxation Office,

COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: N/A

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Nelson & Co

Orders

1. Paragraphs 1 and 2 of the wife’s Application in a Case filed on 23 August 2012 are dismissed. 

2. The question of costs is reserved on a date to be fixed if no agreement is reached.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Strahan & Strahan has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADF 228 of 2005

Ms Strahan

Applicant

And

Mr Strahan

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 21 February 2013, I heard submissions on paragraphs 1 and 2 of an Application in a Case filed by the wife on 23 August 2012.  Previously, on 26 November 2012 I heard some submissions on this matter before adjourning the matter to this date. 

The Wife’s Application in a Case

1. For the purposes of this judgment, I am reserved solely on paragraphs 1 and 2 of the wife’s Application in a Case.  These paragraphs provide:

   1.          That the husband does forthwith execute an authority to the Australian Taxation Office in terms of the document annexed hereto.

   2.          That the husband does forthwith execute an authority to the Hong Kong Internal Revenue Department in the terms of the document annexed hereto.

2. Annexures “ES3” and “ES4” to the wife’s affidavit in support of this Application in a Case filed on 23 August 2012 are draft letters of authority to the Australian Taxation Office and the Hong Kong Internal Revenue Department.  They provide:

   Annexure “ES3”

   TO THE AUSTRALIAN TAX OFFICE

   I [Mr Strahan] of [ZZ Street], Hong Kong, who currently has a matter before the Family Court of Australia ADF 228 of 2005 Authorise the Australian Tax Office to release to my wife in those proceedings, [Ms Strahan] the following:

   All documents and communications between the husband, [CX Company], any other [specified type of investment scheme] of which the husband is or has been a shareholder or member and any other person or entity on his or their behalf with the Australian Taxation Office from the period 1 July 1996 to date and all further communications that take place between the said parties.

   Annexure “ES4”

   TO THE HONG KONG INLAND REVENUE DEPARTMENT

   I [Mr Strahan] of [ZZ Street] Hong Kong, who currently has a matter before the Family Court of Australia ADF 228 of 2005 Authorise the Hong Kong Inland Revenue Department  to release to my wife in those proceedings, [Ms Strahan] the following:

   All documents and communications between the husband, [CX Company], any other [specified type of investment scheme] of which the husband is or has been a shareholder or member and any other person or entity on his or their behalf with the Hong Kong Inland Revenue Department from the period 1  July 2005 to date and all further communications that take place between the said parties.

3. The wife filed a further affidavit in support of this Application in a Case on 19 October 2012. 

4. The husband filed a response to this Application in a Case on 24 October 2012 seeking:

   1.        That the Application in a Case filed by the wife on 23 August 2012 be dismissed.

   2.        That the wife pay the husband’s costs of and incidental to this application.

   3.        Such further or other orders as this Honourable Court deems appropriate.

1. The wife attempted to file a response to the affidavit of the husband filed on 24 October 2012 on 26 November 2012 at the first hearing date of this matter.  I declined to receive it then.  It was subsequently filed and as such, I have considered the material therein.

2. The husband filed a response to the affidavit of the wife filed on 26 November 2012 on 07 February 2013. 

The Law

1. The Family Law Rules 2005 (Cth) (“the Rules”) govern the disclosure requirements for proceedings in this Court.  The introductory summary to Chapter 13 provides that the “aim of disclosure is to help parties to focus on genuine issues, reduce cost and encourage settlement of the case.”

2. Rule 13.01(1) provides that “each party to a case has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the case, in a timely manner” (emphasis added).  This rule codifies a well established principle of common law in relation to disclosure in Family Law proceedings (See, eg, In The Marriage Of Hickey (2003) 30 Fam LR 355 at 370 per Nicholson CJ, Ellis and O’Ryan JJ).

3. The onus in establishing the relevance of the documentation sought rests with the wife as the party who is seeking the production of the documents (Papadopoulos & Papadopoulos (No. 2) [2007] FamCA 1683 at [51] per Cronin J).

4. The degree of relevance of the material that is sought to be produced is unclear.  In Cook & Cook (No.  2) [2007] FamCA 1426, Dessau J postulated that the test was one of “apparent relevance” as is required for documentation sought to be obtained via subpoena per the Full Court decision of Hatton v Attorney-General of Australia (2000) 26 Fam LR 570 (per Finn, Kay and Dessau JJ). Dessau J at Paragraph [23] provides:

   It is agreed that in applying the Rules as to the production of documents, the test is that laid out by the Full Court in Hatton v Attorney-General of Commonwealth of Australia, Commonwealth Bank of Australia, and Commonwealth Development Bank of Australia (2000) FLC 93-038. In that case, the husband appealed orders of Rose J setting aside various subpoenae, his Honour having applied the “apparent relevance” test. Although in this case the vehicle for obtaining documents is not by way of subpoena, the parties agree that, as in Hatton, the wife here must establish the “apparent relevance” of the documents sought, and in the absence of pleadings, she must do so by reference to the affidavit material.

5. Conversely, Cronin J in Papadopoulos & Papadopoulos (No. 2) (Supra) appears to apply a test of direct relevance.  Paragraphs [43]-[45] provides:

   Normally, one would expect all parties to strictly comply with the letter of the rules but I do not think that necessarily follows in every case particularly if there is an objection. 

   If there is an objection as here, the applicant needs to show that there is some relevance to the matters in issue.   Does the husband have to disclose this information on the basis that it is, or maybe, relevant to the case? In the explanatory memorandum with the Family Law Rules 2004, this appears:

   This Rule imposes a duty on a party to disclose documents in the party’s possession or control that are “directly” relevant to an issue.   

   …

   The requirement to disclose “directly relevant” documents will introduce a higher standard of assessment in the sifting and examination of a client’s documents.   This will oblige parties and lawyers to focus attention at an early stage upon the real issues in dispute and the documentary evidence that goes directly to those issues.

   Notwithstanding the apparent strictness of the rule, the focus must really be on the relevance at a particular time of the documents or information being pursued.  The same principle of relevance applies in respect of the disclosure and discovery of documents as it does in relation to the pursuit of documents by a party of non-parties under subpoenae.

1. However, at paragraph [51], Cronin J appeared to favour the “apparent relevance” test as outlined in the Full Court decision of Hatton v Attorney-General of Australia (2000) 26 Fam LR 570 (per Finn, Kay and Dessau JJ). Paragraph [51] provides:

   In Hatton the Full Court supported the “apparent relevance” test.   This is the same test referred to above by Byrne J.   That latter case was a commercial one.   It is hard to see how it could be argued that cases in the Family Court of Australia should be conducted on a more strenuous test basis than those as between strangers in a commercial cause.   That is particularly so having regard to the philosophy that this Court has traditionally espoused in relation to disclosure.

2. The Explanatory Statement attached to the Rules provides some guidance as to the level of relevance that is required.  It provides:

   Rule 13.07: Duty of disclosure - documents

   This rule imposes a duty on a party to disclose documents in the party's possession or control that are "directly relevant" to an issue.  Gone are the days where the Court will allow "general discovery" ie "an order that a party produce all documents in the party's possession or control relating to the issues in dispute."

   …

   The requirement to disclose "directly relevant" documents will introduce a higher standard of assessment in the sifting and examination of a client's documents.  This will oblige parties and lawyers to focus attention at an early stage upon the real issues in dispute and the documentary evidence that goes directly to those issues.

3. However, I am reluctant to impose a more onerous standard of “direct relevance” where the rule itself speaks only of relevance, and subsequent case law appears to reduce the threshold lower to mere “apparent relevance”. 

4. As such, I adopt and will apply the test of “apparent relevance” in determining the matter at hand.  As provided by Finn, Kay and Dessau JJ in Hatton v Attorney-General of Australia (Supra) at 587, the apparent relevance of the material is to be established “by reference to the affidavit material filed in [these] proceedings.”

1. Rule 13.04 outlines the full and frank disclosure required of a party to a financial case:

   (1) A party to a financial case must make full and frank disclosure of the party’s financial circumstances, including:

   (a)  the party’s earnings, including income that is paid or assigned to another party, person or legal entity;

   (b)  any vested or contingent interest in property;

   (c)  any vested or contingent interest in property owned by a legal entity that is fully or partially owned or controlled by a party;

   (d)  any income earned by a legal entity fully or partially owned or controlled by a party, including income that is paid or assigned to any other party, person or legal entity;

   (e)  the party’s other financial resources;

   (f)   any trust:

   (i)          of which the party is the appointor or trustee;

   (ii)         of which the party, the party’s child, spouse or de facto spouse is an eligible beneficiary as to capital or income;

   (iii)         of which a corporation is an eligible beneficiary as to capital or income if the party, or the party’s child, spouse or de facto spouse is a shareholder or director of the corporation;

   (iv)         over which the party has any direct or indirect power or control;

   (v)         of which the party has the direct or indirect power to remove or appoint a trustee;

   (vi)         of which the party has the power (whether subject to the concurrence of another person or not) to amend the terms;

   (vii)        of which the party has the power to disapprove
   a proposed amendment of the terms or the appointment or removal of a trustee; or

   (viii)       over which a corporation has a power mentioned in any of subparagraphs (iv) to (vii), if the party, the party’s child, spouse or de facto spouse is a director or shareholder of the corporation;

   (g)  any disposal of property (whether by sale, transfer, assignment or gift) made by the party, a legal entity mentioned in paragraph (c), a corporation or a trust mentioned in paragraph (f) that may affect, defeat or deplete a claim:

   (i)          in the 12 months immediately before the separation of the parties; or

   (ii)       since the final separation of the parties; and

   (h)  liabilities and contingent liabilities.

   (2)  Paragraph (1) (g) does not apply to a disposal of property made with the consent or knowledge of the other party or in the ordinary course of business.

   (3)  In this rule:

   legal entity means a corporation (other than a public company), trust, partnership, joint venture business or other commercial activity.

   Note    The requirements in this rule are in addition to the requirements in rules 12.02 and 12.05 to exchange certain documents before a conference in a property case.

2. Rule 13.07 states that the duty of disclosure applies to documents that are or have been “in the possession, or under the control of, the party disclosing the document” and are “relevant to an issue in the case.”

3. Documents that are the subject of a “claim for privilege from disclosure” or documents that have already been disclosed need not be disclosed (rule 13.12).  Rule 13.13 provides an avenue for a party to challenge a claim of privilege. 

4. Division 13.2.2 of the Rules applies.  As such, and as provided by rule 13.18 (emphasis added):

   A party to an application to which this Division applies may seek only the following orders about disclosure:

   (a)       That another party deliver a copy of a document;

   (b)       That another party produce a document for inspection by another party. 

Submissions of the Parties

Written Submissions of the Parties

1. The wife’s affidavit filed in support of this Application in a Case on 23 August 2012 provides the following:

   AUTHORITY TO THE ATO

   9.        I say that the state of the husband’s taxation affairs and in particular whether or not he is or is likely to be required to pay money by way of tax or penalties or interest to the ATO are relevant matters in the property proceedings.

   10.      It is now clear that the husband and other members of [CX Company] are the subject of an investigation or audit by the ATO, having regard to the husband’s recent tax assessment and the intervention application now lodged by the ATO in this matter.

   11.      I say there is likely to have been communication between the ATO and the husband and there is likely in the future to be communications between the husband and the ATO which will be relevant to our proceedings. 

   12.      I request that the husband sign the authority exhibited hereto and marked with the letters “ES3” to enable me access to all past and future correspondence between the husband and the ATO in his own capacity; and in his capacity as a member of [CX Company]. 

   AUTHORITY TO THE HONG KONG INLAND REVENUE DEPARTMENT

   13.      The husband has permanently resided in Hong Kong since 2005 and I believe that he is subject to paying Hong Kong Tax.

   14.      I say that the state of the husband’s taxation affairs and in particular whether or not he is or is likely to be required to pay money by way of tax or penalties or interest to the Hong Kong Inland Revenue Department (IRD) are relevant matters in the property proceedings.

   15.      I say that there is likely to have been considerable communication between the Hong Kong IRD and the husband and I have in fact seen some email correspondence to this effect.

   16.      I request that the husband sign the authority exhibited hereto and marked with the letters “ES4” to enable me access to all past and future correspondence between the husband and the Hong Kong IRD  in his own capacity; and in his capacity as a member of [CX Company].

1. The wife filed a further affidavit in support of this Application in a Case on 19 October 2012.  It annexes a “Reasons for Decision” from the Australian Taxation Office, subtitled “This paper explains the ATO’s decision in relation to the application of Division 5 of the Income Tax Assessment Act 1936 (ITAA 1936) to the 1 July 2004 to 30 June 2011 income years of [Mr Strahan].”

1. The husband’s affidavit in support of his response to this Application in a Case filed on 24 October 2012 provides the following:

   Authority to the ATO

   8.        I object to the wife’s application, that I execute an authority in favour of the ATO.

   9.        It is evident the wife has already made a number of approaches to the ATO, either by herself personally or through her agents, without my prior knowledge, consent or input.  It appears that appears she has already provided documentation and/or information to the ATO, and may have received information in return.  It appears, according to the affidavit sworn by the wife’s solicitor and filed on 1 March 2012, the most recent approach to the ATO occurred in 2011, and included a meeting with the ATO’s solicitors on 21 September 2011 (referred to in the letter from [BB Law] to the wife’s solicitor dated 29 September 2011 and annexed in that affidavit as “MW1”). 

   10.      The wife’s communications with the ATO have taken place notwithstanding the wife’s assertions, given through her then Counsel, that she would not communicate with the ATO.  On 23 January 2007 the wife’s Senior Counsel, [Mr CC], advised the Court: “… I am to put on the record, on the basis of instructions, the following: (1) the wife has not personally communicated with the Australian Taxation Office, (2) the wife has no present intention to communicate with the Australian Taxation Office or authorize anyone to do so on her behalf and (3) the wife is not presently aware of any information of any wrongdoing by the husband in relation to his taxation affairs.” On the basis of this statement, made in open Court on 23 January 2007, I withdrew my then pending application for injunctive orders, which sought to restrain the wife from approaching the ATO. 

   11.      I am very concerned about the impact of any unauthorised or unfettered communications between the wife and the ATO.  Any such communications might compromise or delay my objection to the taxation assessment, and any negotiations or any litigation with the ATO, to my disadvantage and the ultimate disadvantage of the wife. 

   12.      My dispute with the ATO, and that of the other participants in the former [CX Company], has attracted substantial media attention.  Some of the articles that have been published are one-sided, or have been written from the wife’s perspective, and/or refer to information that must have been sourced from contacts close to the wife.  BY way of example, annexed hereto and marked “DPS-1” is a photocopy of the article published in … on … 2012.  Annexed hereto and marked “DPS-2” is a photocopy of the article published in … on … 2012. 

   13.      I do not know whether the information sourced in these articles, or in other media reports, has been obtained from the wife and/or her family or friends.  However, the ongoing media attention is detrimental to the conduct of the tax objections, and I seek to restrict any further or possible leakage of information to the media. 

   14.      I am concerned to protect the commercial confidentiality of the communication between my tax advisors and the ATO.  On 23 August 2012, orders were made by Her Honour requiring me to provide, by the end of each month, “copies of communications and documents in relation to the husband’s indebtedness to the Australian Taxation Office including any court proceedings.” I have now filed a Notice of Appeal as I am concerned about the broad nature of that order and the potential risk to constructive resolution of the tax issues given the matters set out in paragraphs 9 to 13 above. 

   Authority to the Hong Kong Inland Revenue Department

   15.      I object to the wife’s application that I provide an authority to the Hong Kong Inland Revenue Department (“the IRD”), which would facilitate unfettered communication between the wife and the IRD.  I reiterate and repeat the matters set out in paragraphs 9 to 14 above.

   16.      I have not received any assessment to pay income from the IRD since I became a resident of Hong Kong in 2005.  I have already provided to the wife’s solicitors, pursuant to my obligations to make financial disclosure, copies of all relevant communications between the IRD and me which are not the subject of privilege.  This has included all relevant written communications and documents filed (including my tax return for 2011/12 on 11 September 2012) with the IRD.  I will continue to make full and frank disclosure.

   17.      Accordingly, I request this Honourable Court dismiss the wife’s Application in a Case filed on 23August 2012, and the wife pay my costs of and incidental to this application.

1. The wife filed a response to the affidavit of the husband filed on 24 October 2012 on 26 November 2012.  In relation to the authority sought to the Australian Taxation Office, the affidavit states:

   6.    On 23 July 2012 the Australian Tax Office issued income tax assessments to the Husband in respect of the 2005 to 2011 years of income.  The assessments were based on the view formed by the ATO, (set out in a document dated 23 July 2012 entitled Reasons for Decision) exhibited to my supplementary Affidavit in this application filed on the 19^th October 2012, after comprehensive audits that, the husband is a member of a partnership described as [CX Company] and that his individual interest in the net income of [CX Company] in 2005 was $11.33 million, in 2006 $8.36 million, in 2007 $14.97 million, in 2008 $11.85 million, in 2009 $11.16 million, in 2010 $18.66 million and in 2011 $25.4 million.  This totals over $100 million generated in Australia alone and does not include the other nations that the group have actively been involved in, namely Hong Kong.  The husband has not satisfactorily outlined where this money is or what genuine attempts are being made for its recovery.

   7     The Husband has asserted for some years that he has not received a very substantial part of this income because of a dispute with the other members of [CX Company] the nature of which, and the reasons for withholding of the monies, has never been explained adequately.  The documents supporting the ATO’s assessments are sought in an endeavour by the Wife to establish whether or not the Husband’s representations that he is not able to obtain his full share of his partnership share of income are true, and to provide evidence to the Court in that regard.  The husband still enjoys an ongoing relationship with members of [CX Company] despite his assertion that the relationship has broken down as alleged in several of the husband’s affidavits since 2006. 

   8.    The Husband has also asserted for some years that he had no interest in the companies [EE Pty Ltd], [D Pty Ltd], and [H Pty Ltd].  The ATO Reasons for Decisions paper concludes that there are options over shares in each of these companies held by the Husband.  I seek to examine the relevant documentation in order to be able to provide evidence to the Court not only that the husband holds property not previously disclosed, but also, taken into consideration with the evidence supporting the assessment generally, that the Husband holds a valuable and alienable interest in property being his interest in [CX Company] and its related entities, and not merely a resource. 

   …

   10.  (a)          I refer to paragraph 8 of the husband’s affidavit and say that I have an interest in the outcome of the final assessment or negotiated settlement and believe that I should be privy to not only the income generated by [CX Company] that is assessable for income tax by the ATO but also other income generated that will assist me in determining the size of the “Matrimonial Pool”. 

   (b)          In addition, I am also concerned that the husband has consistently maintained that he has no contact with the ATO over the last five years.  I refer to husband’s Affidavit dated 10^th February 2012 particularly paragraph 26 of that Affidavit which I attach hereto and mark with letters “ES 1”.  His solicitor Mr Ian Kennedy advised us in a letter dated 11^th September 2012 that the husband did in fact have contact with the ATO by way of a letter dated from them dated 4^th February 2009 a copy of which is attached hereto and marked with the letters “ES-2”.

   (c)          I attach hereto and mark with the letters “ES-3” being a copy of an e-mail from [Mr TA] to all the members of [CX Company] addressed as “Dear shareholder,” which refers to negotiations taking place at that time relating to the potential tax liability of all members of [CX Company].  It makes it clear that there were to be ongoing communications and discussions regarding a potential tax liability.  I believe that I am entitled to have access to both this information and all following communications between; firstly, the husband and secondly the correspondence between the Hong Kong Inland Revenue and [CX Company].  I believe that this further supports my application for the husband to sign the authority as I have requested.

   (d)          Due to the nature and complexity of the husband’s dealings the authority has been deliberately drafted widely.  My interests in determining the size of the Matrimonial Pool need to be considered.  If as I suspect, the husband is in receipt of other monies outside the scope of the ATO I believe that I ought to be made aware of it. 

   11.  I refer to paragraphs 9-10 of the husband’s Affidavit and say that I have not breached my undertaking to this honourable Court given by [Mr CC] on the 23^rd January 2007.  My solicitor Mr Michael Winter has sworn on Affidavit that he was approached by the ATO and was requested to meet with them.  He and my brother [Mr MC] attended their offices at their request.  The nature of the meeting was disclosed to the husband and was put in an affidavit filed by my solicitor with this honourable Court. 

   12.  I refer to paragraph 11 of the husband’s Affidavit and say that I wish to be informed of the communications and their content between the husband and the ATO so that I may understand the full extent of my husband’s financial dealings with regard to the “Matrimonial Pool” and that this honourable Court will also then be in possession of all relevant information.

   13. I refer to paragraph 12 of the husband’s Affidavit and object to the interference that either myself or anyone on my behalf was the source of these articles. Upon reading the … newspaper articles referred to, I instructed my solicitors to write to the Australian Federal Police. Annexed hereto and marked with the letters “ES-4” is a copy of that letter. Neither myself nor anyone on my behalf has had any communication with television station Channel [XX] or with the … newspaper or any media outlet, excepting instructing my solicitors to complain to television station Channel [XX] and warn them that they are potentially in breach of s 121 of the Family Law Act (Cth) 1975 (the “Act”).

   14. I refer to paragraph 13 of the husband’s Affidavit and state that I have not been involved in disseminating or causing to be disseminated by my family or friends, any of the information that has been used in the … articles referred to, or indeed any other branch of the media. If that were the case then why would I contact the Australian Federal Police and urge them to investigate these reports on the basis that I believed it was a material breach of s 121 of the Act?

   15.  I refer to paragraph 14 of the husband’s Affidavit and refer to paragraphs 11-14 above and state that I am aware of the sensitive nature of these negotiations.  I have not disseminated any of the information referred to.

2. In relation to the authority sought to the Hong Kong Internal Revenue Department, the affidavit states:

   16.(a)  I refer to paragraphs 15-17 of the husband’s Affidavit and reiterate what I have said above.  The husband has been and is still involved in a very substantial enterprise, the national and the international magnitude of which to date I have been unable to determine due to the jurisdictional limitation of this Court.

   b)    I firmly believe that there has been considerable ongoing correspondence between the IRD and [CX Company] from 2003 to a time unknown regarding the payment of tax on the basis of the following correspondence.  I attach hereto and mark with the letters the following:-

   “ES-5” a copy of a letter dated 5^th July 2003 addressed to the husband from the Hong Kong Inland Revenue Department (IRD).

   “ES-6” a copy of a letter dated 20^th July 2003 addressed to the IRD from the husband.

   “ES-7” a copy of a letter addressed to [Mr FF] from the IRD dated 19^th June 2003 which refers to the husband as one of the “principal participants”.

   “ES-8” a copy of a “Profits Tax Assessment Notice” from the IRD relating to years 1996/1997.

   I believe that the foregoing correspondence is merely indicative of a sustained involvement with the IRD.

   (c)   Exhibited hereto and marked with the letters “ES-9” are a sample of monthly communications between [CX Company] members outlining the distribution up to and including March 2009.  These communications refer to the husband’s share of distributions, including specific reference to the Hong Kong bank roll and its contribution to [CX Company] dividend.  The monthly updates regularly contain a specific directive from [Mr FF] that [Mr TA] pay himself and the husband out of the Hong Kong bankroll.

   17.      (a)      Until such time that we receive full and frank disclosure by the husband I am unable to assess with any certainty the true value of the “Marital asset Pool”.  Such activity may be ongoing and whilst the husband maintains “he personally has not received any assessment to pay income tax since he became a resident of Hong Kong in 2005” [CX Company] of which he is a member is likely to have.

   (b)   [Mr TA] has been approached by [Ms E] of Deloitte (Court appointed valuer) to provide information relating to the group’s activities.  To date; however, [Mr TA] has been unwilling to co-operate.  I exhibit hereto and mark with the letters “ES-10” correspondence between [Mr GG] Hong Kong being [Mr TA’s] representative and the IRD.  I specifically refer to paragraph 4 contained herein and note that [Mr TA] has in his control and possession comprehensive records which include [business records] and the distributions made to its members.  [Mr TA] has been unwilling to provide such information to [Ms E] of Deloitte for the purpose of ascertaining the value of the husband’s interest in [CX Company] in Hong Kong and generally.

   (c)   The husband asserts that since 2006 he has had a communication and relationship breakdown with members of [CX Company] such that he no longer receives distributions.  I refer to [Mr TA’s] Affidavit filed in this Court and sworn on the 29^th June 2007.  To wit paragraph 1 where [Mr TA] swears that he is a friend of the husband and is involved in … activities with him.  I note that the said paragraph is put in the present tense.  I also note that the husband on the … 2012 had his 50^th Birthday in [China] where [Mr TA] was present and was observed leaving the premises at 4.00am the next morning.  The relationship between the husband and [Mr TA] would appear to be stronger than otherwise described by the husband since 2006.  I refer to and exhibit with the letters “ES-11” an article from … 2012.

   (d)   My request for the husband to sign the authority to the IRD is an attempt to, inter alia assess the value of the Matrimonial Pool as far as it relates to activities in Hong Kong.

1. The husband filed a response to the affidavit of the wife filed on 26 November 2012 on 07 February 2013.  Counsel for the wife Mr Holland informed the Court at the hearing on 21 February 2013 that this affidavit was never received by the wife’s solicitors.  Counsel for the husband Mr Berman SC assured the Court that it was sent in a timely fashion to the address of the wife’s solicitor.  Despite this, Mr Berman SC at the hearing on 21 February 2013 submitted that this affidavit would not be relied on for the purposes of this Application in a Case.  I have not referred nor relied upon this affidavit for the purposes of deciding this Application in a Case. 

Oral Submissions of the Parties

1. At the hearing on 26 November 2012, Mr McQuade as counsel for the wife made submissions in regards to the authorities sought by the wife in this Application in a Case.

   a)Mr McQuade highlighted various documents in the ATO’s Reasons for Decision concerning the taxation issues facing the husband and noted that his client had not received these documents through the disclosure process thus far.  Furthermore, he asserted that the documents were relevant to the proceedings at hand and thus ought to have been disclosed.  He conceded that the relevance of any documents to the proceedings at hand would be difficult to assess without engaging with the documents themselves.

   b)Mr McQuade also alleged that the husband has not complied with his general discovery obligations in the family law proceedings thus far and that the wife has a “great level of mistrust” in relation to the husband’s candour throughout the disclosure process.  He specifically referred to my orders of 23 August 2012 (some of which are the subject of appeals and stay applications).  As such, the authorities are sought to combat this alleged dereliction of the husband disclosure obligations. 

2. Mr Berman SC made brief comments in response before the matter was adjourned to 21 February 2013. 

   a)If any of the documents referred to in the ATO’s Reasons for Decisions existed and were in the possession of the husband, they would have been disclosed.

   b)The husband disputes much of the ATO’s Reasons for Decisions, and as such, submitted that I was unable to assume there was a finding of fact propagating any statements in this document. 

3. Ms HH appeared for the ATO at the 26 November 2012 hearing to make submissions in relation to other matters.  Relevant to the authorities sought by the wife were her comments that the ATO would begin disclosing documentation to the wife once the husband’s appeal concerning the ATO’s intervention in the proceedings has been completed. 

4. At the hearing of 21 February 2013, Mr Holland adopted and subsequently expounded upon the submissions of Mr McQuade at the previous hearing date.  Mr Holland submitted:

   a)All of the documents that will fall within the scope of the drafted proposed authorities are relevant to the proceedings as they concern the husband’s taxation affairs.

   b)The issues raised in paragraphs 9 and 10 of the husband’s affidavit filed 24 October 2012 concerning alleged communication between the wife and the ATO are irrelevant to the matter at hand.

   c)The two reasons advanced by the husband in his affidavit opposing the authorities are without merit.  Firstly, as raised in paragraph 11 of the husband’s affidavit filed 24 October 2012, the authorities would not allow communication between the wife and the ATO.  Secondly, as raised in paragraph 14 of the husband’s affidavit filed 24 October 2012, commercial confidentiality has never been a ground for refusing to make proper disclosure in an action. 

   d)The husband has nothing to fear from the authorities if the husband’s assertion that he has made full and frank disclosure is correct. 

5. In response to these submissions, Mr Berman SC advanced the following:

   a)The wife’s mistrust towards the husband is not a proper ground for subverting the standard discovery process.  The husband asserts that he has made full and frank disclosure and continues to do so. 

   b)The draft letter of authorities provided by the wife are disconnected from the purpose to which the authorities were sought pursuant to paragraph 1.2 and paragraph 9 of the wife’s affidavit in support of the Application in a Case filed on 23 August 2012. 

   a.         Paragraph 1.2 refers to the authority to the ATO allowing access to “all past correspondence” and “all future correspondence” between the ATO and the husband.  The draft letter of authority, as outlined at paragraph 3 above, refers to a much broader class of documents.

   b.         There is a similar disconnect between paragraph 9 and the draft authority to the Hong Kong Internal Revenue Department, as outlined at paragraph 3 above, in that the latter refers to a much broader class of documents than the former. 

   c)The wife’s application predates the ATO’S Reason for Decision, yet much of Mr McQuade’s submissions were directed to the seeking of documentation that was referred to in this Reasons for Decision document.  The extensive reference to documents referred to in the Reasons for Decisions document is an attempt to suggest that the documents automatically assume relevance and in some way the husband must have them and should provide them.  It is difficult to determine the purpose and focus of the application as the purpose and focus evidently changed after the filing of the application. 

   d)Mr Berman SC then proceeded to list the documents referred to by Mr McQuade at the earlier hearing date that appear in the Notice of Determination.  Mr Berman SC suggested that none of the documents referred to had been provided by the husband, nor could they possibly have been in the possession of the husband. 

   e)This application for the proposed authorities appears to be a “fishing” exercise.  There are no allegations on behalf of the wife that the husband has not produced any specific document.  Rather, the wife merely alleges a vague “mistrust” of the husband. 

   f)The wife should subpoena specific documents from either the ATO or the Hong Kong Internal Revenue Department or bring an application for discovery of specific documents or classes of documents that she seeks.

6. Mr Holland chose not to make any submissions in reply. 

Consideration

1. This is an unusual case.  I have been unable to find any authority which directly considers letters of authority as they relate to the scheme for disclosure provided by the Rules. 

2. There is no adequate explanation for the wife’s failure to consider using the standard subpoena process.  Certainly a subpoena carries much more force than a mere letter of authority requesting that the ATO or the Hong Kong Internal Revenue Department make available certain documentation.  There remains the prospect of the subpoenas which are too wide or general in terms being struck out for lacking relevance or being unacceptably burdensome in their scope (See, eg, Hatton v Attorney-General of Australia (Supra)).

3. As submitted by Mr Berman SC for the husband, the purpose of the application has morphed since its initial filing date on 23 August 2012.  The initial affidavit filed in support of the Application in a Case speaks of the wife’s belief that an investigation was being undertaken by the ATO and that the documentation produced to that end would be relevant to the proceedings at hand.  The submissions at the hearing dates by the wife’s counsel introduced themes of mistrust and vague assertions of non-disclosure on the husband’s behalf as suggested purposes for the application.

4. The nebulous purpose of the requested authorities is not directly connected to the actual draft authorities and the breadth of documentation which they cover.  The wife’s draft letters of authority are drafted extremely broadly.  The wife admits as much in paragraph 10(d) of her affidavit filed 26 November 2012. 

5. Furthermore, there are no allegations on behalf of the wife directed towards the husband to the effect that he has withheld any particular document or class of document.  The extraction by Mr McQuade of various documents referred to in the Notice of Decision document and his subsequent comments upon their relevance was unhelpful given the fact that the husband asserts that he is not in possession of any of these documents.  The recurrent reference to the wife’s mistrust of the husband (as repeated by her counsel at the hearing of this matter) is not supported by any solid example of non-disclosure of any document on behalf of the husband.

6. As such, I decline to order the husband to sign the wife’s proposed draft letters of authority.  The breadth with which they are drafted may result in documentation that has no apparent relevance to the proceedings at hand being produced by the ATO and the Hong Kong Internal Revenue Department.

Conclusion

1. Paragraphs 1 and 2 of the wife’s Application in a Case are dismissed.  Questions of costs are reserved to a date to be fixed should the parties be unable to reach agreement on such an order.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe delivered on 4 April 2013.

Associate: 

Date:  4 April 2013