Vissell & Vissell
[2021] FamCAFC 76
•18 MAY 2021
FAMILY COURT OF AUSTRALIA
Vissell & Vissell [2021] FamCAFC 76
Appeal from: Vissell & Vissell [2019] FamCA 697 Appeal number(s): EAA 122 of 2019 File number(s): SYC 2224 of 2018 Judgment of: AINSLIE-WALLACE, WATTS & TREE JJ Date of judgment: 18 May 2021 Catchwords: FAMILY LAW – APPEAL – PRACTICE AND PROCEDURE – Subpoena – Appeal against dismissal of objections to subpoenas – Relevance – Legitimate forensic purpose – On the cards – Appeal allowed – Re-exercise of discretion – Leave granted to extend time to review the registrar’s decision to dismiss objections – Where compliance with subpoenas would be oppressive – Subpoenas set aside – Second respondent to pay the appellants’ costs. Legislation: Family Law Amendment (Powers Delegated to Registrars) Rules 2020 (Cth) r 25
Family Law Rules 2004 (Cth) Sch 3, rr 1.04, 1.12, 1.14, 11.02, 18.08
Cases cited: Alister v The Queen (1984) 154 CLR 404; [1984] HCA 85
Attorney-General (NSW) v Stuart (1994) 34 NSWLR 667
Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334; [1999] HCA 9
Colburn & Cleese (2020) FLC 93-995; [2020] FamCAFC 278
Commissioner for Railways v Small (1938) 38 SR (NSW) 564
Hatton v Attorney-General of Commonwealth of Australia & Ors (2000) FLC 93-038; [2000] FamCA 892
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34
National Employers’ Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372
R v Saleam [1999] NSWCCA 86
Sadek and Ors & Hall and Anor (2015) FLC 93-634; [2015] FamCAFC 23
Division: Appeal Division Number of paragraphs: 111 Date of hearing: 17 February 2021 Place: Sydney Counsel for the Appellants: Mr Fernon SC Solicitor for the Appellants: Yates Beaggi Lawyers Solicitor for the First Respondent: Not participating in the appeal Counsel for the Second Respondent: Mr Livingstone Solicitor for the Second Respondent: Marsdens Law Group ORDERS
EAA 122 of 2019
SYC 2224 of 2018APPEAL DIVISION OF THE FAMILY COURT OF AUSTRALIA
BETWEEN: MS R VISSELL
First Appellant
MR Q VISSELL
Second Appellant
L PTY LIMITED
Third Appellant
(and others named in the Schedule)
AND: MR VISSELL
First Respondent
MS VISSELL
Second Respondent
ORDER MADE BY:
AINSLIE-WALLACE, WATTS & TREE JJ
DATE OF ORDER:
18 MAY 2021
THE COURT ORDERS THAT:
1.Leave be granted to appeal from an order of a judge of the Family Court of Australia made on 30 September 2019, the appeal be allowed and that order be set aside.
2.The second respondent is to pay the costs of the first to fifth appellants fixed in the sum of $37,292.54, such costs to be paid within twenty-eight (28) days of the date of this order.
3.Leave is granted to the first to fifth appellants pursuant to r 1.14 and r 18.08 of the Family Law Rules 2004 (Cth) to seek a review of the order made on 4 July 2019 notwithstanding that the time for seeking the review has expired.
4.The Application in an Appeal filed 16 July 2020 is allowed.
5.The following subpoenas issued on 23 May 2019 are set aside:
(a)L Pty Limited;
(b)M Pty Limited;
(c)CC Pty Ltd;
(d)N Pty Ltd; and
(e)J Pty Ltd.
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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Vissell & Vissell has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
AINSLIE-WALLACE, WATTS & TREE JJ:
This appeal concerns objections to subpoenas and an order of a judge of the Family Court that dismissed those objections. The objections were raised by the appellants: Ms R Vissell and Mr Q Vissell (“the husband’s parents”) and L Pty Limited, M Pty Limited and CC Pty Ltd (collectively, “the Vissell companies”), who are all strangers to the litigation between Mr Vissell (“the husband”) and Ms Vissell (“the wife”). The appellants were referred to in the proceedings before the primary judge as “the objectors” and it is convenient for us to refer to them in that way.
It is useful in understanding the issues raised in the appeal, narrow though they be, to give some factual and procedural background to the matter.
The husband and the wife are in the midst of property settlement proceedings in this Court. The husband is the proprietor of T Pty Ltd which conducts a business trading as D Pty Ltd.
In preparation of the proceedings between the husband and wife, in March 2019 the parties jointly engaged a forensic accountant, Mr DD to value D Pty Ltd.
Having conducted an initial review of documents given to him, jointly by the husband and wife, and after meeting with the wife, Mr DD wrote to the solicitors for both parties setting out his initial response to the material and set out additional inquiries required by him to conduct a full valuation.
Arising from Mr DD’s letter and on the wife’s application, eight subpoenas were issued on 23 May 2019 to the following entities:
·L Pty Limited;
·M Pty Limited;
·CC Pty Limited;
·Mr FF of N Pty Ltd;
·J Pty Ltd;
·P Pty Ltd;
·Ms V of S Pty Ltd; and
·K Organisation.
Of those, three subpoenas issued to the Vissell companies relate to companies of which the husband’s parents are the sole directors and shareholders and two subpoenas are addressed to the accountants for the Vissell companies: J Pty Ltd (which ceased work for the Vissell companies in May 2017) and N Pty Ltd (who commenced in May 2017 to date).
On 7 June 2019 the objectors filed a Notice of Objection to the production of documents in response to each of the subpoenas.
Although the subpoenas to P Pty Ltd, S Pty Ltd and K Organisation were initially subject to objection to production by the objectors, there has since been an accommodation between the parties in relation to those subpoenas and they are no longer relevant for the purpose of this appeal.
According to the unchallenged evidence of Ms BB,[1] a solicitor for the objectors, she was told that the objections would be listed for a chambers hearing before a registrar on 2 July 2019. Written submissions of the objectors in support of the objections were filed on 18 June 2019, those on behalf of the wife were filed on 27 June 2019.
[1] Ms BB’s affidavit filed 16 July 2019.
The objections were considered and dismissed by a registrar in chambers on 4 July 2019. Unfortunately, the solicitor for the objectors was not informed of the outcome until 11 July 2019.
Rule 18.08 of the Family Law Rules 2004 (Cth) (“the Rules”) allows for a review of a registrar’s decision and, at the time this decision was made, had to be sought within seven days of the making of the order.[2]
[2] Rule 25 of the Family Law Amendment (Powers Delegated to Registrars) Rules 2020 (Cth) amended r 18.08 of the Family Law Rules 2004 (Cth) extending the time to file an Application to review the registrar’s decision from seven days to 21 days. This came into effect on 26 September 2020.
No formal application for review was filed until 16 July 2019 which was, by then, outside the time prescribed in the Rules. No application to extend the time in which to bring the review was filed.
The application for review came before the primary judge on 30 September 2019. His Honour said:
6.On 16 July 2019 the objectors filed an Application in a Case seeking to review the decision of the registrar. That application was out of time and I have not seen reference to an application, let alone an order, to extend the time within which the application could be filed (r 18.08 Family Law Rules 2004 (Cth)). That is the end of the matter but for the assistance of the parties I will refer to the merits of the application.
Although his Honour considered there was no application to be heard and it was therefore “the end of the matter” he nevertheless, over the next 64 paragraphs, considered the objections to the subpoenas and dismissed each of them.
It is from his Honour’s order that this appeal is brought.
LEAVE TO APPEAL
The objectors seek leave to appeal and if leave is granted, to appeal against the primary judge’s order dismissing their objections to the subpoenas.
The decision of the primary judge being interlocutory requires a grant of leave to appeal. It is accepted that the test for leave is two-fold. First, that the decision in question is attended with sufficient doubt to warrant the grant of leave. The second requirement is that a substantial injustice will result from a refusal of leave to appeal.[3]
[3] Medlow & Medlow (2016) FLC 93-692 at [57].
Here, we are satisfied as to both aspects of the test and we will grant leave to appeal.
THE APPEAL
Five grounds of challenge to his Honour’s order are advanced.[4] Ground 1 contends that the primary judge erred in not extending time in which to bring the application for review and argued that, as a result, his Honour’s discretion miscarried.
[4] Amended Notice of Appeal filed 16 July 2020.
The balance of the grounds contend that his Honour erred in his consideration of the objections.
It is unnecessary for us to consider Grounds 2 to 5 because for the reasons that follow, we are of the view that his Honour erred in failing to dispense with the filing of an application to extend time to review the registrar’s decision by failing to extend time of his own motion and that, as a result, there occurred a miscarriage of justice.
Ground 1
The Primary Judge erred in failing to exercise his powers under Rule 1.12 to dispense with the filing of an Application in a Case seeking an extension of time to review the Registrar’s Decision and/or to exercise his powers under Rule 1.14 to otherwise extend the time to review the Registrar’s Decision to 16 July 2019.
It was, as we have said, uncontroversial that the application to review the registrar’s decision was filed out of time and no application to extend time was filed. Rule 11.02(1) of the Rules provides:
(1)If a step is taken after the time specified for taking the step by these Rules, the Regulations or a procedural order, the step is of no effect.
Therefore, on its face, the primary judge had a basis for concluding that, there was no application to review the registrar’s decision and “[t]hat is the end of the matter”.
We have, however, concluded it was not the end of the matter.
Although the reasons of the primary judge record at [8] that the objectors relied upon an affidavit of Ms BB, his Honour did not otherwise refer to its contents. Relevantly that affidavit sets out the following history:[5]
5.The Objection was listed for hearing in Chambers before the Registrar of the Court on 2 July 2019.
6.Each day after hearing of the Objection the [objectors’] solicitor made contact with the Registry to learn of the outcome of the hearing, and on each occasion the staff were advised that the outcome was not known or published yet.
7.On 11 July 2019, my office made inquiry with [Ms GG] of the Husband’s solicitors… as to any known outcome of the hearing. In response to that inquiry I received a copy of the Orders from [the husband’s solicitors].
8.There are no reasons provided for by the Registrar with respect to the dismissal of the Objection.
9.Whilst the Registrar has not published reasons for the Decision and Orders, and the basis for the Objection is set out in the submissions of the [objectors] to the Objection, given the late notice of the outcome of the Registrar’s decision, the [objectors] seek leave to file an affidavit in support of their Application to have the subpoenas set aside prior to the matter being listed before a Justice of the Court for determination.
10. The [objectors] seek a review of the Registrar’s decision.
[5] Ms BB’s affidavit filed 16 July 2019.
Notwithstanding that between 3 and 11 July 2019 the objectors’ solicitors made enquiries of the Registry as to the fate of the objections, they were not informed that the matter had been considered on 4 July 2019 and their objections had been dismissed.
Turning first to the second limb of Ground 1, the objectors assert that the Court should have inferred from paragraphs 9 and 10 of Ms BB’s affidavit that it amounted to a request for an extension of time in which to seek a review of the registrar’s decision. In this regard, the objectors relied on r 1.14 of the Rules which permits a court to extend time fixed under the Rules, even after that time has passed, upon the application of a party.
Reasonable minds might differ as to whether Ms BB’s evidence at paragraphs 9 and 10 in that affidavit could be considered an application for an extension of time, however, because of our conclusion in relation to the first limb of the ground that asserts his Honour ought to have extended time of his own motion, it is unnecessary for us to form a concluded view.
The argument is based on r 1.12 which is in the following terms:
(1)These Rules apply unless the court, on application or its own initiative, orders otherwise.
(2)The court may dispense with compliance with any of these Rules at any time, before or after the occasion for compliance arises.
(3)In considering whether to make an order under this rule, the court may consider:
(a) the main purpose of these Rules (see rule 1.04);
(b) the administration of justice;
(c) whether the application has been promptly made;
(d) whether non‑compliance was intentional; and
(e)the effect that granting relief would have on each party and parties to other cases in the court.
(Emphasis added)
Rule 1.04 provides:
The main purpose of these Rules is to ensure that each case is resolved in a just and timely manner at a cost to the parties and the court that is reasonable in the circumstances of the case.
…
The objectors contend that the primary judge erred in failing to consider the circumstances referred to in Ms BB’s affidavit and submit that had his Honour done so, he would have dispensed with the objectors’ compliance with r 18.08 and granted an extension of time in which to seek the review, on his own initiative.
We agree. Had his Honour considered Ms BB’s affidavit and the effect of r 1.12, his Honour would have gone on to consider granting an extension of time on the basis that to do so would have ensured that the case was resolved in a just and timely manner at a cost to the parties and the court that was reasonable in the circumstances of the case; aided the administration of justice; and, been appropriate, given that the application had been otherwise properly made and that the non-compliance with the time limit was not intentional.
The primary judge would, no doubt, have first invited submissions from the parties on the extension of time, however the argument for extension of time was in our view compelling and, further, the basis of the objections to the subpoenas, prima facie, had merit and thus it could not be said that to extend time would be futile.
We accept the primary judge erred in failing to consider Ms BB’s affidavit in the context of exercising power on the court’s own initiative pursuant to r 1.12, to dispense with the filing of an application seeking an extension of time to review the registrar’s decision and thus brought about a miscarriage of justice.
As to the nature of the miscarriage of justice said to flow from that error, it was argued that, although his Honour found there was no application before him which was the “end of the matter”, to further consider and rule on the objections to the subpoenas visited injustice on the objectors. At the appeal hearing, senior counsel for the objectors argued that what followed in his Honour’s reasons, while having no legal effect, amounted to a “judicial opinion” which would be powerfully persuasive against the objectors in any future application to review the registrar’s decision.[6]
[6] Transcript 17 February 2021, p.30 lines 19–28.
Courts should not make a determination that does not give “a conclusive or final decision based on a concrete and established or agreed situation which aims to quell a controversy” nor should a court give hypothetical or advisory opinions.[7]
[7] Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at [45] and [47]; Colburn & Cleese (2020) FLC 93-995.
We agree that his Honour in proceeding to express an opinion on the objections to the subpoenas and purporting to determine the issue between the parties, was in error and gave rise to a miscarriage of justice.
The appeal will be allowed and his Honour’s order set aside.
It was agreed that, in the event that the appeal succeeded, the appropriate course was for the Full Court to re-exercise the primary judge’s discretion in relation to the objections to the subpoenas.
THE RE-EXERCISE
Extension of time
First, an extension of time must be granted to allow the objectors to seek the review of the registrar’s decision.
Application to adduce further evidence
On 16 July 2020 the objectors filed an Application in an Appeal to adduce further evidence being an affidavit of the objectors’ solicitor in the event that the appeal succeeded and the Court re-exercised the primary judge’s discretion. The affidavit explains the delay in filing the application to review the registrar’s decision.
We will grant leave for this evidence to be adduced on the re-exercise.
In any event, the wife agreed that should this Court re-exercise the discretion, then there should be an extension of time. Having regard to the circumstances leading to the delay as referred to in the affidavit of Ms BB,[8] we are of the view that there should be an extension of time in which to bring the review of the registrar’s order.
[8] Ms BB’s affidavit filed 16 July 2019.
Before passing to a consideration of the subpoenas, it is useful to set out the law which will frame our consideration.
The law
There can be no doubt that subpoenas to produce documents may be addressed to strangers to the litigation, however their interests are subject to protections which have long been established in the law and the touchstone of which is the relevance of the documents sought to the issues in the cause.
As long ago as 1938 in Commissioner for Railways v Small (1938) 38 SR (NSW) 564 (“Small’s case”), Jordan CJ said at 573:
A writ of subpoena duces tecum may be addressed to a stranger to the cause or to a party. If it be addressed to a stranger, it must specify with reasonable particularity the documents which are require to be produced… It is not legitimate to use a subpoena for the purpose of endeavouring to obtain what would be in effect discovery of documents against a person who, being a stranger, is not liable to make discovery…
His Honour continued and, albeit in the context of discussing subpoenas directed to the parties to the cause, said at 575:
… a party is no more entitled to use a subpoena duces tecum than he is a summons for interrogatories, for the purpose of “fishing”, i.e., endeavouring, not to obtain evidence to support his case, but to discover whether he has a case at all… Even if the documents are specified, a subpoena to a party will be set aside as abusive if great numbers of documents are called for and it appears that they are not sufficiently relevant.
Many years later in National Employers’ Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372 (“Waind”), Moffitt P considered the use of subpoenas to third parties as “discovery” and after referring to Small’s case, said at 382:
… Of course it may be that the terms of a subpoena are so wide that it is oppressive, but this is not because it is used for “discovery” in the sense used in Small’s case and Burchard’s case, but because it imposes an onerous task on a stranger to collect and produce documents many of which can have no relevance to the litigation…
(Footnotes omitted)
In the following paragraphs, Moffitt P sets out the “steps” involved in the process of production and inspection of documents produced under a subpoena and in considering the role of the judge in releasing documents to the parties said at 384:
… It is true that, in the exercise of the power in relation to the subpoena, the invasion of the rights of a third party have been jealously guarded. It is accepted that the documents should not go beyond the judge against objection of the owner, unless there is a valid reason to do so. It is clear that it can only be legitimate to do so, so far as is necessary in the proper conduct of the litigation…
And his Honour further said:
… So far as factual matters are concerned, the proper conduct of the litigation can only be that which fairly leads to the introduction of all such evidence as is material to the issues to be tried, and the testing of that evidence by the accepted procedures of the court. The only legitimate purpose of requiring the production, and permitting the inspection, of a stranger’s documents can be to add, in the end to the relevant evidence in the case…
So too in Hatton v Attorney-General of Commonwealth of Australia & Ors (2000) FLC 93-038, the Full Court there rejected the submission that relevance, per se, did not form a basis for challenging a subpoena but rather recourse must be had to concepts of oppression or abuse of process. The Full Court at [49] concluded that “lack of apparent relevance will be a sufficient ground in itself to set aside a subpoena”.
The legitimate forensic purpose identified
The purpose for which the documents were sought was unambiguously identified on the wife’s behalf.
We have already referred to the letter from the single expert, Mr DD which set out his preliminary findings and what further investigations he would wish to undertake in order to conduct the valuation asked of him. As we have also said, that letter formed the springboard for the issue of the challenged subpoenas. The relevant parts of Mr DD’s letter are as follows:
…
In summary, based on my initial review of the information provided to me to date, it appears to me that the relationship between [L Pty Limited] trading as [U Pty Ltd] and [CC Pty Ltd] may not trading [sic] at arm’s length. On this basis the operations and transactions of [U Pty Ltd] and [CC Pty Ltd] may affect the valuation of [T Pty Ltd trading as D Pty Ltd]. The potential non-arm’s length transactions do affect the costs of operating business and therefore the profits. This is despite the alleged loss of the [P Pty Ltd] contract.
I have outlined my comments and reasons for this opinion below:
1.During my meeting with [the wife’s solicitors], it was evident that [the wife] is concerned that there are related parties (in particular [L Pty Limited] trading as [U Pty Ltd] and [CC Pty Ltd].
2.Both [U Pty Ltd] and [CC Pty Ltd] appear to issue invoices for the use of equipment and other services. For example, I can see invoices for hire of trucks and equipment (such as trailers) from [U Pty Ltd], but on top of this [D Pty Ltd] is then paying for costs relating to that equipment on top of the hire fee such as Tyres, track repairs, infringement notices and registration fees, for items which are allegedly owned by [U Pty Ltd]. Normally, I would not normally expect to see this when a business is hiring equipment.
3. This analysis is an initial review and I have not carried out an in depth review.
4.There is an invoice from [CC Pty Ltd] to [D Pty Ltd] dated 30 June 2017 for the alleged use of additional parking and security requirements of prime movers and trailers, plus the use of home office and Po Box to assist with extra [P Pty Ltd] work. Without further explanation and a full and complete breakdown of this cost and demonstration of the market value of the [sic] all of the services for this amount of $200,000, this transaction has the appearance of shifting profit from [D Pty Ltd] to [U Pty Ltd]. The alleged invoice was raised on 30 June 2017 and claimed as a “sub-contract” cost by [D Pty Ltd]. I have not yet investigated to determine if it was paid. Further, I notice that the invoice was a “Recipient Created Tax Invoice”, which means [D Pty Ltd] raised the invoice not [U Pty Ltd]. For such an amount, I have concern why [U Pty Ltd], if operating at arms length, did not raise the invoice, and further, why was it not invoicing for these costs on a regular basis. There are likely to be many queries I have regarding this transaction.
5.I have seen a cost raised in [D Pty Ltd’s] MYOB accounting data file for the year ended 30 June 2018 of $53,226.64, being the claim for the cost of truck hire. This was a journal entry was [sic] noted as “[N Pty Ltd] 30 June Adjusting Journals”. This implies it is a journal raised by [N Pty Ltd]. However, this corresponding journal was not set out in the final accountants prepared by [N Pty Ltd]. This needs to be further investigated.
6.I have been provided with a number of invoices for costs of hire by [D Pty Ltd], from both [U Pty Ltd] and [CC Pty Ltd] with dates that are repeated with the only difference being handwritten invoice number, which appears to relate to the year and month. Some of these invoices (for dates that I can investigate), do not even appear in the MYOB accounting data files. If they are legitimate invoices then there should be no reason why they are not claimed and paid. This needs to be further investigated.
It appears to me from the documentation that I have seen, that [U Pty Ltd], [CC Pty Ltd] and [D Pty Ltd] are not acting at arm’s length.
…
(As per the original) (Emphasis in original)
Thus the relevant issues were identified by the wife in the submissions to the registrar as follows:[9]
[9] Wife’s written submissions filed 27 June 2019.
6. … The wife’s key questions are:
1. What is [T Pty Ltd] worth?
2. Has [T Pty Ltd] dissipated assets by purporting to lose a $1.3 pa contract in favour of a company owned by his two parents and their business literally down the road?
3.Is [T Pty Ltd] involved in other forms of “profit shifting” from itself to the parents’ company?
4.Why is [T Pty Ltd] raising invoices on behalf of entities associated with the husband’s parents?
5.Who is the registered owner of vehicles admittedly used in both businesses? Who meets the maintenance costs and why?
…
(As per the original) (Emphasis in original)
The legitimate forensic purpose for which the documents were sought was then identified by the wife as:[10]
4.The dealings between the [husband] and his associated entities and his parents and theirs is thus not only a legitimate line of enquiry but is actually critical to the single expert being able to perform his task in assisting the court itself.
[10] Wife’s written submissions filed 27 June 2019.
So was established the metes and bounds of the legitimate forensic purpose to which, it was said, the issued subpoenas were directed.
The contention between the parties in relation to the subpoenas concerned whether the reach of the subpoenas extended beyond that articulated purpose.
The Vissell companies
As we have said, subpoenas were issued to three entities, the Vissell companies, namely L Pty Limited, M Pty Limited and CC Pty Ltd.
There was no dispute that the husband is neither a shareholder nor officer of any of those companies. Neither was it suggested that the husband held a beneficial interest in any of those companies nor that he was the beneficiary of any trust referrable to the Vissell companies.
Further, nowhere in Mr DD’s report is there any mention of M Pty Ltd, neither did Mr DD suggest that further enquiries should be made in relation to that company.
The same objections were taken in relation to each of the subpoenas directed to the Vissell companies save that there are two additional documents sought in the subpoena directed to CC Pty Ltd. It is convenient to deal with the objections to those subpoenas together.
Paragraph 2 in the subpoenas issued to L Pty Limited, and M Pty Limited (and paragraph 4 of the subpoena issued to CC Pty Ltd) seeks:
All company tax returns, notice of assessments, receipts, reports, business transactional receipts and business tax returns, profit and loss statements, balance sheets, financial statements, trust account statements, trust ledgers, journals raised, Trust Deeds and BAS documentation concerning [the particular Vissell company]…
from January 2015 in relation to the first company and from May 2017 in relation to each of the other two companies.
It was submitted that there was no apparent relevance between the expressed purpose and the documents sought in this paragraph because they could not disclose the fact or nature of any business dealings between the Vissell companies and that of the husband or D Pty Ltd. So too, it was argued, profit and loss statements, balance sheets, financial statements, trust deeds and ledgers have no relevance to the identified purpose and are irrelevant to the operations of the husband or his company D Pty Ltd and the Vissell companies.
Equally too, the demand for production of “business transactional receipts” for a period of six years would encompass purchases from the insignificant to a major piece of equipment, and is extremely broad. The breadth of the request for receipts of any kind for any purchase made in the last six years, it was submitted, of itself, speaks to it being unrelated to the identified forensic purpose.
Paragraph 3 in the subpoenas issued to L Pty Limited, and M Pty Limited (and paragraph 5 of the subpoena issued to CC Pty Ltd) seeks:
A copy of all inventory inclusive of motor vehicles, trailers and equipment acquired, disposed of, leased, financed by or on behalf of [the particular Vissell company] for [six years].
Supposing that the request was for inventory lists, it was argued for the objectors that the paragraph seeks no document relating to dealings between the husband, D Pty Ltd and the Vissell companies. More particularly it was argued that as identified in the wife’s submissions that one of the “key questions” asked in relation to the vehicles is: “[w]ho is the registered owner of vehicles admittedly used in both businesses? Who meets the maintenance costs and why?”, yet as senior counsel for the objectors observed, no attempt was made to identify the relevant vehicles or trailers nor was any other attempt made to narrow the scope of the documents sought.
Further, it was contended that by its terms, the request for inventory is so broad as to catch not merely vehicles and trailers but office furniture, equipment and all stock held by the company, which it was contended, far exceeded the purpose identified by the wife.
Paragraph 4 in the subpoena issued to L Pty Limited seeks:
All contracts, memorandums, business transactional receipts, loan agreements tax invoices, cheques payable or received which concern any transactions or payments exchanged between:-
(a)[L Pty Limited] and [Mr Vissell], born in 1979;
(b)[L Pty Limited] and [Mr Q Vissell], born in 1944;
(c)[L Pty Limited] and [Ms R Vissell], born in 1954;
(d)[L Pty Limited] and [T Pty Ltd] trading as [D Pty Ltd];
(e)[L Pty Limited] and [CC Pty Ltd];
(f)[L Pty Limited] and [M Pty Limited];
(g)[L Pty Limited] and [S Pty Ltd];
(h)[L Pty Limited] and [P Pty Ltd];
…
Paragraph 4 of this subpoena was broadly replicated in the subpoenas issued to M Pty Limited (at paragraph 4) and CC Pty Ltd (at paragraph 6).
The objectors do not oppose production of documents to which subparagraphs 4(a), (d) and (h) refer, conceding that they could be said to relate to transactions between the Vissell companies and the husband or D Pty Ltd.
As to the balance of the paragraph it was argued that it seeks documents relating to business conducted as between the Vissell companies and could not have any relevance to the identified purpose and the reach is so broad as to amount to the request for the documents being oppressive.
In addition to the paragraphs to which we have already referred, the subpoena addressed to CC Pty Ltd includes:
2. A copy of the [CC Pty Ltd] Trust Deed.
3. A copy of any Deeds of Variation to the [CC Pty Ltd] Trust Deed.
Senior counsel for the objectors observed that nowhere was it suggested that such deeds existed or, if they did, that the husband had any interest under such a deed and it was argued that there is no identifiable relevance of these documents to the stated purpose.
J Pty Ltd and N Pty Ltd
The subpoenas to each accounting firm is identical, save for the relevant dates. As we have said, J Pty Ltd ceased acting as the accountants for the Vissell companies, the husband and D Pty Ltd in May 2017 and N Pty Ltd took over from that date.
Objection is taken only to paragraphs 4 to 6 of these subpoenas. No objection was taken to the documents sought in paragraphs 2, 3 and 7 as it was conceded that they could squarely relate to the husband and his company. Paragraphs 4 to 6 seek:
4.All company tax returns, notice of assessments, profit and loss statements, balance sheets, financial statements, trust account statements, trust ledgers, journals raised, MYOB accounting data files and BAS documentation concerning [L Pty Limited]…
5.All company tax returns, notice of assessments, receipts, reports, business transactional receipts and business tax returns, profit and loss statements, balance sheets, financial statements, trust account statements, trust ledgers, journals raised, MYOB accounting data files and BAS documentation concerning [M Pty Limited]…
6.All company tax returns, notice of assessments, receipts, reports, business transactional receipts and business tax returns, profit and loss statements, balance sheets, financial statements, trust account statements, trust ledgers, journals raised, Trust Deeds, MYOB accounting data files and BAS documentation concerning [CC Pty Ltd]…
It was argued that documents to which objection is taken have no relevance to the stated purpose and it was said that the request amounted to no more than “fishing”. A finding of “fishing” equates to a finding that the subpoena has no legitimate forensic purpose because the documents are sought not to support the applicant’s case but to discover if the applicant has a case.[11]
[11] See Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 573–575.
Not only did the objectors argue that the documents sought bore no relevance to the identified purpose, but contended that the terms of the subpoenas are so wide as to amount to oppression.
The wife’s submissions
In the Summary of Argument filed on the wife’s behalf,[12] counsel for the wife referred to the submissions made to the registrar in support of the subpoenas, and said that those submissions represented the basis for asserting that the subpoenas issued are relevant to the identified purpose.
[12] Wife’s Summary of Argument filed 13 August 2020.
So as to put the wife’s arguments in proper perspective, we will set out those submissions, omitting paragraphs which do not advance the argument and noting that parts have already been quoted in these reasons:[13]
[13] Wife’s written submissions filed 27 June 2019.
…
2.Each of the subpoenas seeks documents from entities associated with the husband or his company or companies either through doing business (such as repairing equipment [S Pty Ltd]), or selling a service such as transport to [P Pty Ltd] or registration of vehicles – [K Organisation], or keeping books and records for relevant companies – [N Pty Ltd]).
3.Aside from the obvious family connection between the directors of [L Pty Limited] and [T Pty Limited] trading as [D Pty Limited] i.e. [Mr Q Vissell] and [Ms R Vissell] are the parents of the husband there are many other links between the objectors and the Applicant husband including:
a. They are in the same industry …;
b.[L Pty Limited] are, according to the husband lending him money to keep his business afloat;
c.[L Pty Limited] lend vehicles to [T Pty Limited] and thus provide services directly or indirectly to the same clients.
d.The single expert retained in the proceedings has expressed to the spouse parties’ solicitors in an email of 18 March 2019 that [L Pty Ltd] and [D Pty Limited] are not “trading at arm’s length”. The single expert opines “Without further explanation and a full and complete breakdown of this costs and demonstration of all of the services for this amount of $200,000, this transaction has the appearance of shifting profit from [D Pty Ltd] to [U Pty Ltd]”.
e.It appears that [D Pty Limited] is even writing its own invoices from [L Pty Limited].
f. Each entity operates from the same suburb…
g.The Registered office of [L Pty Limited] is [N Pty Ltd] who also prepare accounts for [T Pty Ltd].
4.The dealings between the [husband] and his associated entities and his parents and theirs is thus not only a legitimate line of enquiry but is actually critical to the single expert being able to perform his task in assisting the court itself.
…
6.The husband asserts that he previously owned a company which derived income of $1,300,000.00 from [P Pty Ltd] each year (Affidavit 13/7/18 at 30-35). Initially he asserted this was due to a restructure at [P Pty Ltd]. Later he told the expert under cover of a solicitors’ letter of 12 March 2019 that it was due to a truck rolling over on… December 2017 on [a freeway]. He claims this led to him “laying off” most of the drivers for the company. Given the contents of the expert’s report, the vast amount of income at stake and the close relationship between the entities named in the subpoenas it can be seen that the subpoenas issued by a partner of [the wife’s solicitors] on behalf the [sic] [wife] were an entirely responsible and measured use of the Court’s subpoena power. The subpoenas issued far from being speculative in nature arise from real and pertinent questions being asked not just by the [wife] who as a party is entitled to the benefit of full and frank disclosure but also by a single expert. The wife’s key questions are:
1. What is [T Pty Ltd] worth?
2.Has [T Pty Ltd] dissipated assets by purporting to lose a $1.3 pa contract in favour of a company owned by his two parents and their business literally down the road?
3.Is [T Pty Ltd] involved in other forms of “profit shifting” from itself to the parents’ company?
4.Why is [T Pty Ltd] raising invoices on behalf of entities associated with the husband’s parents?
5.Who is the registered owner of vehicles admittedly used in both businesses? Who meets the maintenance costs and why?
…
(Emphasis in original) (Footnote omitted)
These arguments were augmented in oral submissions on the appeal.
In support of the relevance of the subpoena issued to M Pty Limited, it was argued that while Mr DD had not specifically mentioned that company, it did not mean that there was not some enmeshment between that company and that of the husband. This was said to be so because the expert’s enquiry was only “preliminary” and thus it was “on the cards” that M Pty Limited “may be relevant”.[14]
[14] Transcript 17 February 2021, p.43 lines 33–36.
Counsel continued and argued that in relation to L Pty Limited “a situation [was] developing in which the husband is creating accounts to his company using the parents company”.[15]
[15] Transcript 17 February 2021, p.44 lines 19–20.
As to this particular point, to which counsel for the wife returned on a number of occasions, it seems to us that he has elevated Mr DD’s preliminary view that the husband was creating invoices to his company from L Pty Limited, to an assertion of fact. This argument is, in effect, that if the husband was creating those invoices at L Pty Limited, it is “on the cards” that he is doing it at M Pty Ltd.
That argument needs only to be repeated to be rejected as amounting to nothing more than speculation.
Turning then to the objections taken in relation to paragraphs 4(e), (f) and (g) in the subpoenas directed to the Vissell companies which call for documents concerning the inter-company dealings between L Pty Limited with CC Pty Limited, M Pty Ltd and S Pty Ltd, it was argued that they bore on the identified purpose for the same reasons advanced in relation to M Pty Ltd, namely the apparent creation of invoices as between the husband’s company and M Pty Ltd.
Again, this submission does not grapple with the seminal issue, relevance to the identified purpose for which the documents were sought.
Finally, in relation to the request in paragraph 2 in the subpoenas to the Vissell companies (paragraph 4 in the CC Pty Ltd subpoena) to produce all receipts and statements for six years, counsel for the wife argued its relevance and said:[16]
[COUNSEL FOR THE WIFE]: … Let it be assumed, for example, that the [CC Pty Ltd] interest had produced all of the interoffice memoranda in relation to the particular company. And let it be assumed, for example, that one of those memoranda is in relation to a receptionist being sick that day or, perhaps more relevantly, a driver being sick that day and needing to be replaced. Those inquiries are quite legitimate when we think about the way in which these particular two companies, the husband’s interest on the one hand and his parent’s interest on the other, how they interrelate…
[16] Transcript 17 February 2021, p.52 lines 23–30.
In short, counsel for the wife argued that an interoffice memorandum about a sick receptionist “could be” relevant.[17]
[17] Transcript 17 February 2021, p.52 lines 39–43.
In summation counsel said:[18]
[COUNSEL FOR THE WIFE]: … All I need to establish to be consistent with authorities like Sadek[19] is that it is in the cards, and in my submission, as I’ve demonstrated, it is on the cards to know whether or not the husband was involved or his entities were involved in relation to memoranda, for example, about the sick receptionist or, more relevantly still, the sick truck driver or the truck that was out of operation. And in my submission, I don’t have to show definitively that it is definitely going to be relevant. All I need to show is that it is on the cards. It is quite a wide test…
(Footnote added)
[18] Transcript 17 February 2021, p.53 lines 1–8.
[19] Sadek and Ors & Hall and Anor (2015) FLC 93-634.
This submission must be rejected because merely saying something is “on the cards” is not enough.
The expression “on the cards” was first articulated in Alister v The Queen (1984) 154 CLR 404 (“Alister”) where public interest immunity was raised in objection to production of documents pursuant to a subpoena. Gibbs CJ, while discussing judicial inspection of documents to which objection on the ground of public interest immunity was claimed, said at 414:
… Just as in the balancing process the scales must swing in favour of discovery if the documents are necessary to support the defence of an accused person whose liberty is at stake in a criminal trial, so, in considering whether to inspect documents for the purpose of deciding whether they should be disclosed, the court must attach special weight to the fact that the documents may support the defence of an accused person in criminal proceedings. Although a mere “fishing” expedition can never be allowed, it may be enough that it appears to be “on the cards” that the documents will materially assist the defence…
(Citation omitted) (Footnote omitted)
The test was later applied in cases in which public interest immunity was not raised. In R v Saleam [1999] NSWCCA 86 the Court of Criminal Appeal (Spigelman CJ, Studdert and Simpson JJ) after referring to the application of the “on the cards” test formulated in Alister, said:
11.The principles governing applications of this kind are no different from those governing applications for access to documents produced in answer to a subpoena. Before access is granted (or an order to produce made) the applicant must (i) identify a legitimate forensic purpose for which access is sought; and (ii) establish that it is “on the cards” that the documents will materially assist his case…
Thus, there must first be established a clearly particularised legitimate forensic purpose and then that it is “on the cards” that the documents sought would assist that identified purpose. In Attorney-General (NSW) v Stuart (1994) 34 NSWLR 667, Hunt CJ at CL said at 681:
… The concept of legitimate forensic purpose is not confined to claims of public interest immunity. It arises whenever a party seeks access to documents for which he has issued a subpoena; where objection is taken, a party who is unable to show that it is at least “on the cards” that such documents will assist his case is not entitled to have access to such documents simply to see whether they may do so. He is not entitled to conduct a fishing expedition. The need to show a legitimate forensic purpose… is therefore a prerequisite before the balance required for the claim can be struck.
(Emphasis in original) (Footnote omitted)
We therefore accept the submission made on behalf of the objectors that many of the documents sought by the wife are unconnected to that identified forensic purpose.
Oppression
On 5 August 2019, Ms BB filed an affidavit in which she deposed that compliance with the subpoenas to the Vissell companies, “will result in several pallets of boxes of records having to be extracted, collated and provided”.[20]
[20] Ms BB’s affidavit filed 5 August 2019, paragraph 5.
In the objectors’ Summary of Argument,[21] it was said that compliance with the subpoenas would result in significant expense to the objectors and, that:
53.The broad scope of the subpoenas seeking “all” transactional receipts and other documents that involve pallets of documents is in fact very broad, lacking in connection to the Purpose and very expensive…
[21] Objector’s Summary of Argument filed 16 July 2020.
In response, Ms BB was criticised for not requiring the husband’s mother to give direct evidence as to the volume of documents and it was said that Ms BB’s evidence lacked precision because “she has not apparently even made rudimentary independent enquiries in relation to the whereabouts of the documents or their extent”.[22]
[22] Wife’s Summary of Argument filed 13 August 2020, paragraph 19.
In oral argument, counsel for the wife described Ms BB’s affidavit as being couched in “rather colourful language” which, apparently was intended to cast doubt on her evidence that there is in fact a large quantity of documents involved and to make the point that she is only repeating what her client told her.[23]
[23] Transcript 17 February 2021, p.50 line 42 to p.51 line 45.
This baffling argument seems to us to have no point other than being an attempt to denigrate the veracity of the husband’s mother without any apparent foundation. And, as with many of the arguments advanced by counsel for the wife, it seems more concerned with mounting ad hominem attacks on the husband and his parents than in grappling with the issue to be resolved.
We have no reason not to accept the evidence of Ms BB as conveyed to her by her client that a huge quantity of documents are required to be marshalled in order to comply with the subpoenas to the Vissell companies and to comply would be oppressive.
However, more to the point, we repeat what we have already set out as said by Moffitt P in Waind that where the terms of a subpoena are so wide it is oppressive because it imposes an onerous task on a stranger to collect and produce documents many of which can have no relevance to the litigation.
We conclude then that to comply with production of those subpoenas would be oppressive and on that basis we would set aside the subpoenas to the Vissell companies.
We thus accept that the challenges to the subpoenas are made out and they should each be set aside.
It is not to be overlooked that in the course of the appeal submissions the objectors conceded that some of the documents sought in the subpoenas could be relevant to the identified purpose and, while the orders sought by the objectors on a re-exercise were that all subpoenas be set aside, in the alternative, they sought orders which would hive off from the subpoenas those parts which could be regarded as relevant. However no submission was made by counsel for the wife as to whether, in the event that the appeal was allowed and this Court on a re-exercise, came to the view that the subpoenas were defective in the way submitted, whether orders should be made excising the non-offending parts from the subpoenas.
Perhaps the failure to deal with the orders sought by the objectors on a re-determination springs from submissions made by counsel for the wife during the appeal hearing, in which he said that the objectors were “inviting this court to intrude” into dealing with and settling subpoenas.[24] In the Summary of Argument on the appeal, counsel for the wife wrote:[25]
2.The facts of the present application for leave to appeal highlight the need for restraint in interfering with matters of practice and procedure…
[24] Transcript 17 February 2021, p.47 lines 40–41.
[25] Wife’s Summary of Argument filed 13 August 2020, paragraph 2.
We are unsure what restraint a Full Court must exercise in hearing or indeed granting leave to appeal in a regularly instituted appeal from a decision of a judge, however, at the end of the day, no submissions were made in relation to the concessions.
Thus, we will order that each of the five identified subpoenas be set aside in their entirety.
COSTS
The objectors sought costs in the event that the appeal was allowed. That application was opposed by the wife, it being argued that she was entitled to uphold the decision of the primary judge. That was, of course, the wife’s right, however to take that course can result in costs being ordered against her in the event that her opposition was wholly unsuccessful, and here, it was. It is relevant too, here, that documents filed by the objectors in the appeal indicated that there were parts of the subpoenas to which objection was not taken. It was then open to the wife to reconsider the wisdom of whether pressing home the argument that the entirety of the subpoenas, as drafted, fitted squarely within the identified forensic purpose.
The wife is in a position to meet a costs order because she had immediately before the appeal hearing obtained an interim property settlement order in the sum of $468,000.
The objectors costs in accordance with Sch 3 of the Rules, amount to $37,292.54 and it is appropriate that the wife is ordered to pay costs fixed in that sum.
I certify that the preceding one hundred and eleven (111) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Ainslie-Wallace, Watts & Tree. Associate:
Dated: 18 May 2021
SCHEDULE OF PARTIES
EAA 122 of 2019
SYC 2224 of 2018Appellants
Fourth Appellant:
M PTY LIMITED
Fifth Appellant:
CC PTY LTD
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