Sullivan & Sullivan & Anor

[2011] FamCA 590

FAMILY COURT OF AUSTRALIA

SULLIVAN & SULLIVAN AND ANOR [2011] FamCA 590

FAMILY LAW – PRACTICE AND PROCEDURE – Subpoenas – Husband raised objection to wife looking at documents - Leave granted to wife to inspect material produced by subpoena

Family Law Act 1975 (Cth)

Kennon v Spry (2008) 251 ALR 257

APPLICANT: Mr Sullivan

1st RESPONDENT: Ms Sullivan

2nd RESPONDENT: E Pty Ltd

3rd RESPONDENT: Mr J Sullivan

FILE NUMBER: SYC 291 of 2011

DATE DELIVERED: 26 July 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Justice Fowler

HEARING DATE: Dealt with by written submissions

REPRESENTATION

SOLICITOR SUBMITTING FOR THE APPLICANT:
Mr Todd

SOLICITOR FOR THE APPLICANT: Watts McCray

SOLICITOR SUBMITTING FOR THE 1^ST RESPONDENT:
Ms Joel

SOLICITOR FOR THE 1^ST RESPONDENT: Barkus Doolan Kelly

Orders

1. Leave is granted to all parties to inspect the material produced in compliance with the subpoena to Westpac Banking Corporation dated 20 May 2011, including material in the sealed envelope and marked “Subject to objection”.

IT IS NOTED that publication of this judgment under the pseudonym Sullivan & Sullivan is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 291 of 2011

Mr Sullivan

Applicant

And

Ms Sullivan

1^st Respondent

And

E Pty Ltd
2^nd Respondent

And

Mr J Sullivan
3^rd Respondent

REASONS FOR JUDGMENT

1. The application before the Court is one made by the wife for leave to inspect certain documents produced by the Westpac Banking Corporation (“the Bank”) on Subpoena issued by the wife.  The terms of the Subpoena were for the Bank to produce as follows:

   a)From 1 January 2002 to date – Originals or copies of all applications for loans, manager’s diary notes, reports, application forms, statements of financial circumstances including those in support of loan applications, property and chattel valuations and other documents and writings respecting dealings by Westpac Banking Corporation with:

   i.Mr Sullivan born 10 July 1966 (in his personal capacity); and/or

   ii.        Ms Sullivan born on 15 May 1969.

   b)From 1 January 2002 to date – Originals or copies of documents, statements, records and writings respecting loans made by the Westpac Banking Corporation to Mr Sullivan and/or Ms Sullivan either in his/her individual name or jointly with any other person, firm, trust or corporation, together with documents evidencing the source of funds received to repay capital and/or interest owing in relation to the said loan(s).

2. The documents which have been produced by the Bank have been divided by the husband’s solicitor into two bundles.  One of those bundles comprises documents which the husband does not object to the wife inspecting.  The second bundle is a bundle of documents which the husband objects to the wife inspecting.

3. The Court is informed that the second bundle, the subject of the objection, is a bundle containing the following two documents, namely:

   a)“Security Schedule” for T Pty Ltd dated 24 August 2004

   b)Credit Exposure” document produced internally by Westpac for the following persons and entities:

   i.         T Pty Limited

   ii.       C Pty Limited

   iii.      E Pty Limited

   iv.       O Pty Limited

   v.        Mr J Sullivan (the husband’s father)

   vi.       Ms N Sullivan (the husband’s mother)

   vii.      Mr G Sullivan (the husband’s uncle)

   viii.     R Pty Limited.

4. It is submitted by the solicitor for the husband that:

   When an issue is raised as to the legitimacy of the forensic purpose of the issue of a subpoena, it is the duty of the Court to require of the party calling on (or proposing to call on) the subpoena to identify expressly and precisely the legitimate forensic purpose for which access is sought and refuse access until such identification is made …  The forensic purpose is confined to the issue in the proceedings.

1. With this statement of the law the wife does not demur and says that there is a legitimate forensic purpose entitling her to access to the material produced in answer to the subpoena.  The husband denies that this is so.

2. It is the husband’s assertion that the Court could only have regard to the financial exposure of the entities referred to in the event that the husband had a proprietary interest in them.  The proceedings, he says, are proceedings under

   
   

   s 79 of the Family Law Act and that relates to the alteration of the interests of the parties in property. This submission does not accurately reflect the scope of the inquiry and the relevant matters which are taken into account by the Court in determining what an appropriate order under s 79 is.

3. The Court agrees with the wife’s submission and notes that a Court, in a consideration of matters under s 79 of the Act, has to take into account the income, property, liabilities (both actual and contingent) of parties to the marriage and also their financial resources and their income earning capacity. It is also obliged to take into account in its considerations under s 75(2) any fact or circumstance which the justice of the case requires to be taken into account.

4. It is not necessary for the Court at this stage to finally determine the relevance of the documents, only whether the categories of documents have any possible relevance to the issues which arise in the exercise of the Court’s jurisdiction.  It has to determine whether there is a legitimate forensic purpose.  Is it more probable than not that these documents might possibly assist in the provision of facts which will enable the Court to make a determination taking into account all the matters, which by reason of the Act, it is obliged to take into account?

5. Each of the parties referred the Court to affidavit and other material which they had filed in the proceedings or wished to rely upon:  in the husband’s case an affidavit of 24 May 2011;  and in the wife’s case her affidavit filed 15 March 2011 and the husband’s affidavit filed 14 April 2011 and his Financial Statement filed on the same date.  She also relies on the affidavit of Mr W filed on behalf of E Pty Ltd sworn on 24 May 2011 and, nominated documents provided by the Bank in the bundle permitted already to be inspected by the wife.

6. The documents produced were produced in conjunction with documents relating to a loan application made by the wife to the Bank.  As such they represent matters which to the Bank were relevant in determining whether they would accept the risk involved in permitting the wife to incur the debt which she did incur.  That debt was in part the basis of her acquisition of some property.  The Court has to consider the contributions made by each of the parties to the acquisition of property.  The husband’s guarantee is such a contribution.  The circumstances under which it was accepted may well be relevant to the Court’s determination.  If the contribution was able to be made by the husband from an assessment of his financial position, that is one matter.  If it was, inter alia, because of the financial position of entities and persons related to the husband, but not from his direct financial strength, that may affect the Court’s weighting of the contribution.

7. If the husband is associated with entities which support him in fund raising, that would be a financial resource of the husband.  It seems, on its face, at least that the information about the associated entities and their support, either legally or otherwise, was seen by the Bank as both necessary for it to consider and possibly a reason for them to make the loan to the wife and accept the guarantee of the husband.

8. There are, however, other bases for determining that there is forensic relevance.

9. It is pointed out by the wife that, for example, three of the companies nominated in the documents produced are owned by a company which is the corporate trustee of the Sullivan Family Trust and two other trusts

   
   

   (“the Trusts”).  The Court is informed that the husband and wife are discretionary objects of the Trusts.

10. The husband has identified the Trusts as a source of funds provided to him on loan.  The source of the funds for such loans has been the assets of the Trusts.

11. The husband, it is asserted, is the only shareholder in E Pty Limited and one of the three directors.  That company is the registered proprietor of the property comprising the former matrimonial home.  It is also asserted that it is the corporate trustee of the Commercial Property Trusts.  It is the wife’s assertion that the husband exercises de facto control over that company.

12. It appears that the husband’s relatives were among those persons whose exposure liability was considered.  It is also noted that the husband’s father is an appointer of two of the trusts.  The others have interests as discretionary objects of the trusts.  The right to be considered as an object of benefit in a discretionary trust has been considered as property in the High Court decision in Kennon v Spry (2008) 251 ALR 257. The value of that property may depend on the needs of the objects of the trust which may involve a consideration of their exposure to liability.

13. It is understood that the company, R Pty Limited, was not said to be a part of the Sullivan Group, but in fact is now known as P Pty Limited and C Pty Limited, one of the Sullivan Group entities, was at one stage a shareholder in that company.

14. Many of these matters are in issue and they will be determined upon a hearing after all the evidence is considered.  It may be that, in due course, some or all of the assertions of the wife will fall short of acceptable support in evidence, but at the present time it seems to the Court that a case has been made out that inspection has a legitimate forensic purpose.

15. It is pointed out that the husband is a director of several of the companies but presumably that only makes him an employee and, on that basis, the financial position of those companies would be of insufficient relevance unless the husband had any expectation of variation in his income as a result of their performance.

I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler delivered on 26 July 2011.

Associate: 

Date:  26 July 2011