Tsiang & Wu
[2022] FedCFamC1F 772
Federal Circuit and Family Court of Australia
(DIVISION 1)
Tsiang & Wu [2022] FedCFamC1F 772
File number(s): SYC 1529 of 2016 Judgment of: ALTOBELLI J Date of judgment: 13 October 2022 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Where applicant seeks a signed authority to access documents held by the Australian Taxation Office and Services Australia – Applicability of s 207 of the Social Security (Administration) Act 1999 (Cth) – Order made for authorities to be executed.
FAMILY LAW – PRACTICE AND PROCEDURE – Subpoenas – Where Notice of Objection filed in respect of subpoena issued to the Department of Home Affairs – Relevance – Notice of Objection dismissed.
Legislation: Family Law Act 1975 (Cth) s 106A
Social Security (Administration) Act 1999 (Cth) s 207, s 208
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Part 6.1
Cases cited: Attard v Hore [2002] QSC 437
El-Helou v Smith [2009] NSWSC 741
Garnier & Garnier [2021] FedCFamC1F 186
Haseeb & Haseeb [2022] FedCFamC1F 520
Kehoe & Seden (No 2) [2022] FedCFamC1F 346
Merkuloff v Yalisheff [2003] NSWSC 1183
Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145
Theobald v Delancy (No 3) (2012) 263 FLR 1; [2012] FMCAfam 96
Wray v Wray [2007] NSWSC 164
Division: Division 1 First Instance Number of paragraphs: 39 Date of last submission/s: 15 September 2022 Date of hearing: Heard by way of written submissions Place: In chambers Solicitor for the Applicant: Mills Oakley Lawyers Solicitor for the First Respondent: Broaden Legal Solicitor for the Second and Third Respondents: Juris Cor Legal ORDERS
SYC 1529 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR TSIANG
Applicant
AND: MS WU
First Respondent
MR CAO
Second Respondent
MR WU
Third Respondent
order made by:
ALTOBELLI J
DATE OF ORDER:
13 October 2022
THE COURT ORDERS THAT:
1.Within seven days of the date of these orders, the Second Respondent execute and forward to the Applicant’s solicitors the following:
(a)Authority to the Australian Taxation Office; and
(b)Authority to Services Australia.
2.In the event the Second Respondent fails to comply with Order 1 hereof, a Deputy Registrar of the Federal Circuit and Family Court of Australia be appointed pursuant to s 106A of the Family Law Act 1975 (Cth), to execute the said Authorities on behalf of the Second Respondent.
3.The Notice of Objection filed on 25 July 2022 is dismissed.
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 Tsiang & Wu has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALTOBELLI J:
Introduction
These proceedings involve the applicant, Mr Tsiang (“the husband”), the first respondent, Ms Wu (“the wife”), the second respondent, Mr Wu (“the second respondent”) and the third respondent, Mr Cao (“the third respondent”). The second respondent is the wife’s father, and the third respondent is the wife’s uncle.
On 11 August 2022 I made the following directions in relation to an Application in a Proceeding filed by the husband on 13 July 2022 and a Notice of Objection filed by the second respondent on 25 July 2022:
20.The Notice of Objection filed by the Second Respondent on 25 July 2022 and the Application in a Proceeding filed by the Husband on 13 July 2022 be determined on the papers.
21.Within 14 days of the date of these orders, the Husband file and serve any written submissions upon which he seeks to rely, such submissions not to exceed 2000 words.
22.Within 14 days thereafter, the Second and Third Respondents file and serve any written submissions upon which they seek to rely, such submissions not to exceed 2000 words.
23.Within seven days thereafter, the Husband file and serve any reply upon which he seeks to rely, such reply not to exceed 500 words.
24.Thereafter, judgment is reserved.
These reasons for judgment explain why the Court has dismissed the Notice of Objection and granted the orders sought in the Application in a Proceeding.
Present issues in dispute
Application in a Proceeding
The first issue in dispute relates to the Application in a Proceeding filed by the husband. The Application in a Proceeding seeks a direction that the second respondent execute authorities to the Australian Taxation Office (“ATO”) and Services Australia. In support of his application, the husband relies on his affidavit filed 13 July 2022.
Notice of Objection
The second issue relates to a subpoena filed by the husband on 13 July 2022, directed to the Proper Officer at the Department of Home Affairs, seeking visa, sponsorship, and residency applications of the second respondent for the period from 1 January 1997 to date, and documents recording international travel movements of the second respondent for the period from 1 January 2022 to date. On 25 July 2022, the second respondent filed a Notice of Objection in respect of this subpoena.
The second and third respondents sought orders that the subpoena and Application in a Proceeding be dismissed, and that the husband pay their costs.
The issues in dispute in the substantive proceedings
The substantive proceedings relate to an application by the husband to set aside consent orders made on 23 March 2016 (“the consent orders”). The consent orders effected a settlement between the husband and the wife of their assets which were located both in Australia and China. The Chinese assets included property and a group of companies used by the couple to run an allegedly valuable consulting business in China. Broadly, the orders provided for the wife to have most of the matrimonial assets in Australia and the husband to take most of the business interests and real estate that the couple held in China.
To give effect to this division of assets, the consent orders provided for the wife to transfer to the husband all of her interest in the consulting companies the couple had established. This included an entity described at Notation A.35.5 of the consent orders as the G Partnership. There is a dispute between the parties as to whether the entity described at Notation A.35.5 is in fact an entity previously known as the G Partnership and now known as Q Partnership (“the partnership”).
On 8 April 2016, after the consent orders were made, the wife executed a document in China intended to give effect to some aspects of the consent orders. However, the partnership was not transferred.
The husband seeks in the substantive proceedings to have the partnership, which allegedly was the most valuable and pivotal entity of the various business entities held by the husband and the wife, transferred to him. In the alternative, the husband seeks an order that the wife pay him $8 million by way of adjustment of property interests.
It is uncontroversial that the partnership was legally held in the name of the second respondent (who held 95 per cent of the shares) and DD Company (which held the remaining 5 per cent of the shares).
It seems also common ground that the latter’s shareholding was subsequently transferred to the third respondent. The husband alleges that at all times these shares were held on trust for the husband and the wife. This is denied by the wife. She claims that the partnership was a business owned and operated by the second respondent, and that it was never intended that the consent orders would include this business.
The nature of the dispute is evident from the points of claim and defences filed in this case. At paragraph 25 of his points of claim filed 24 August 2021, the husband alleges that the partnership was operated and managed by him and the wife. At paragraphs 35 and 36, he alleges that the second respondent had no involvement in the partnership or the underlying business management and operation, and did not retain any income or profit from the partnership. This is denied by the wife, who at paragraph 11 of her defence filed 1 October 2021, contends that she and her husband had no involvement in the partnership. At paragraphs 2(d).3.5.3 and 17, the wife contends that the partnership was created at the second respondent’s direction in order “to establish a business to be conducted by the second respondent for his benefit”.
The second respondent has filed a defence dated 16 May 2022, in similar terms. At paragraphs 2(d)(iii) and 2(d)(vii), he denies that the partnership was ever a company of the husband and the wife, or that the husband was ever involved in the partnership (other than consenting to the name for the partnership). He further denies that the partnership is the entity listed at Notation A.35.5 of the consent orders.
Consistent with his case that the second respondent never had any role other than as trustee, the husband alleges at paragraph 36 of his points of claim that the second respondent did not retain any income or profit from the partnership. This is denied by the second respondent at paragraph 36 of his defence. The husband also alleges at paragraph 37 of his points of claim that the second respondent was at all material times a tax resident, where he was collecting social security from the Australian Government. At paragraph 37 of his defence, the second respondent admits that he has been a resident of Australia since 1988, but does not admit that he was a recipient of social security.
The documents sought in the APPLICATION IN A PROCEEDING
The husband seeks a direction in personam that the second respondent sign and forward to the husband’s solicitors an authority to the ATO and Services Australia (which administers Centrelink payments). In the event that the second respondent fails to comply with the direction, the husband seeks an order pursuant to s 106A of the Family Law Act 1975 (Cth), appointing a registrar to execute the authorities.
The husband seeks the signed authority for the purposes of obtaining the following documents:
(1)Each of the second respondent’s Australian Income Tax returns for the period from 30 June 2008 (being the year the partnership was established) to date;
(2)All applications made on behalf of the second respondent to Centrelink for government benefits; and
(3)Records of all benefits paid to the second respondent by Centrelink.
The husband has previously requested the second respondent provide this material. The husband first requested the tax returns at the end of 2018, and then again in 2019.
The husband contends that this material has at least apparent relevance to the issue in dispute of whether the second respondent ran the partnership (as the wife and the second and third respondents contend), or alternatively, whether the second respondent was simply a trustee holding the shares on behalf of the husband and the wife, who at all times operated the business (as the husband contends).
The husband seeks the tax returns to determine whether the second respondent has declared any income or profits from the partnership (or indeed, whether he has declared any income or profits at all). If he has not, this is likely to have relevance to determining whether the partnership was in fact run by the second respondent.
Similarly, the husband submits that the documents sought from Services Australia are also likely to shed light on whether the second respondent was running the partnership, and earning income for doing so. The husband’s contention is that the second respondent was receiving Centrelink benefits during the relevant period. As stated above, this is not admitted by the second respondent. The husband contends that the documents sought will provide evidence relating to these issues. Any application by the second respondent for Centrelink benefits would have also required the second respondent to disclose his sources of income.
The documents sought by the subpoena
The husband’s subpoena to the Department of Home Affairs seeks two categories of documents:
(1)All documents, materials and correspondence related to visa applications, sponsorship applications and residency applications of the second respondent for the period from 1 January 1997 to date; and
(2)Documents recording all international travel movements including but not limited to dates of entry and exit, Border System records, incoming passenger cards and outgoing departure cards of the second respondent for the period from 1 January 2022 to date.
The subpoena seeks material that may have relevance to the same issue as stated above, namely, whether the partnership was operated by the second respondent for his own benefit, or whether he held the shares on trust for the husband and the wife.
The second respondent is a resident, but not a citizen, of Australia. Any visa, sponsorship and residency applications caught by the first category will include his answers to questions about his assets and income. This material is likely to be relevant to whether the second respondent treated the partnership as his asset, and whether he retained income from the partnership.
The second category seeks to update material already obtained by the husband pursuant to an earlier subpoena filed on 21 January 2022 (“earlier subpoena”). The earlier subpoena required the production of documents recording the second respondent’s travel movements up to the date of the earlier subpoena. That subpoena was complied with and material was produced. The second category of the subpoena in dispute seeks the same material for the updated period from 1 January 2022 to date. Evidence of the second respondent’s whereabouts is relevant to the disputed question of the nature of his involvement in the consulting business in China.
Opposition to the subpoena
The second and third respondents contend that the subpoena should be set aside on the following grounds:
a.The Subpoena is an abuse of process, in that the material sought has no genuine forensic purpose or relevance to the matters in dispute. It is unclear on the evidence before the Court, why the Second Respondent’s Visa Applications, or international travel movements, could either establish or disprove the assertion that a trust arises on the facts of the matter. Further, it is unclear on the evidence how those documents would establish or disprove any element of ownership in relation to [the partnership].
b.The Subpoena is an abuse of process, in that the subpoena amounts to a “fishing expedition”, particularly in circumstances where documentation is sought dating back 25 years, to 1997. It is unclear on the evidence before the Court, why the Second Respondent’s records dating back to 1997, could either establish or disprove the assertion of ownership in relation to [the partnership] or that a trust arises on the facts of the matter.
c.The Subpoena is an abuse of process, in that the subpoena is oppressive. The Subpoena seeks a large range of dates (documents over the last 25 years). It is not apparent on the evidence, why it is, that records dating back to 1997 could impact the Court’s decision in relation to the ownership of [the partnership] and whether or not a trust arises on the facts of the matter.
Opposition to the application in a Proceeding
The second and third respondents contend that the husband effectively seeks an order for discovery in relation to whether or not the second respondent has Australian tax residency, whether or not he was receiving income from the partnership (to prove that he was operating same) and/ or whether he was collecting social security from Services Australia. They submit that the Application in a Proceeding is an abuse of process and has been filed to circumvent a statutory prohibition against obtaining such documents. They also contend that, in effect, the making of the order contravenes s 207 of the Social Security (Administration) Act 1999 (Cth).
Discussion and determination
The first issue that arises is whether the material sought by the husband’s Application in a Proceeding and subpoena have relevance to the issues in dispute.
The husband need only show that the documents are “apparently relevant, or capable of providing a legitimate basis for cross-examination, in which case there is a legitimate forensic purpose” (Brereton JA in Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 at [89]). Thus, an issuing party does not need to demonstrate direct relevance, or “that it is likely (or ‘on the cards’) that the documents sought will materially assist its case”. Rather, the issuing party need only show that “it is likely (or ‘on the cards’) that they will add, in some way or another, to the relevant evidence in the case” (Secretary of the Department of Planning, Industry and Environment v Blacktown City Council at [89]). Such an approach has also been adopted in this Court (see, e.g., Kehoe & Seden (No 2) [2022] FedCFamC1F 346 at [16]–[19] and Garnier & Garnier [2021] FedCFamC1F 186 at [8]).
The Court accepts the submissions on behalf of the husband that this is satisfied in the present case.
A key dispute in the present proceedings is the capacity in which the second and third respondents held shares in the partnership. The husband contends that they held the shares as trustees only for the husband and the wife, whereas the wife and the second and third respondents allege that the partnership was established and operated by the second respondent. The material sought by the husband’s Application in a Proceeding and subpoena is likely to shed light on this issue, and assist the Court to determine whether the second respondent did in fact own and operate a consulting business in China, or whether he instead lived in Australia where he collected social security. Indeed, there may be other possible scenarios.
Moreover, and contrary to the second and third respondents’ submissions, there is no conflict between the orders sought by the husband and the requirements of s 207 of the Social Security (Administration) Act 1999 (Cth). Section 207 exempts Services Australia from compulsion to provide material under subpoena issued by any Court. It does not prevent the Court from requiring a party to provide an authority so that material can be disclosed consistently with s 208(1)(b)(ii), which permits disclosure “to a person who is expressly or impliedly authorised by the person to whom the information relates to obtain it”.
The second and third respondents cite decisions concerned with the validity of subpoenas issued to Centrelink but that is not what is being sought by the husband in this case. The validity of orders requiring a party to sign authorities has been upheld in cases such as Haseeb & Haseeb [2022] FedCFamC1F 520, Attard v Hore [2002] QSC 437, Wray v Wray [2007] NSWSC 164, El-Helou v Smith [2009] NSWSC 741 and Theobald v Delancy (No 3) (2012) 263 FLR 1.
It must also be remembered that the second and third respondents are subject to the same general duty of disclosure as the husband and the wife in the proceedings pursuant to Part 6.1 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth). The Court has found that the documents are relevant to the proceedings.
The second and third respondents might also consider the decision of Young CJ in Eq (as he then was) in the Supreme Court of New South Wales in Merkuloff v Yalisheff [2003] NSWSC 1183. After considering case law regarding the duty of rectitude owed by parties to proceedings in the equitable jurisdiction, his Honour made the following comments at [17] and [19]:
[17] When a person does bring proceedings in this Court, he or she is under an obligation to assist the court in coming to a fair conclusion. If a person deliberately says to their opponent and to the court "I will not co-operate" then the usual consequence is that their action is stayed until they do co-operate.
…
[19] I have no doubt that I have power to make an in personam order to the plaintiff to cause Centrelink to produce the documents to him under the Freedom of Information Act. However, as I say, I do not want the parties to waste lots of money on legal costs and, accordingly, the appropriate order to make is that the plaintiff's proceedings be stayed until the plaintiff forwards to the defendant the information required. How the plaintiff gets that information is a matter for him.
Any contemplated non-cooperation with an order that the second respondent sign authorities may well be met by a further application, potentially relating to his involvement in the proceedings.
Complaints about oppressiveness of the subpoena are dismissed in circumstances where the recipient of the subpoena has made no such complaint, and has in fact produced the requested material.
Finally, the subpoena seeks documents going back to 1997 because the husband contends that these documents will support the husband’s contention that the second respondent is a long-term tax resident of Australia, with no assets or experience in running a consulting business.
Orders
Orders will be made as sought by the husband. This matter is next listed before me on 4 November 2022 to consider an application by the wife for security for costs. I will consider brief submissions in relation to the costs of the present application and would be assisted by estimates of costs so that the Court can consider making a lump sum order if the parties prefer.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Altobelli. Associate:
Dated: 13 October 2022
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