Woodcock & Woodcock
[2021] FedCFamC1F 88
•30 September 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISON 1)
Woodcock & Woodcock [2021] FedCFamC1F 88
File number(s): MLC 13421 of 2020 Judgment of: WILSON J Date of judgment: 30 September 2021 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – registrar – review of decision – subpoena objections – where the wife seeks documents by subpoena – where the husband and the second respondent objected to the subpoena – where the registrar made orders setting aside the subpoena.
FAMILY LAW – TRUSTEES & BENEFICIARIES – nature of husband’s interest under trusts –whether “property” for the purposes of s 79 of the Family Law Act – trust power or bare power – whether husband’s interest capable of valuation.
FAMILY LAW – SUBPOENA – setting aside – applicable test for validity of subpoena – apparent relevance of the documents sought to the matters in issue in the proceeding – objections asserted on the grounds of confidentiality, redactions, fishing and abuse of process – no grounds of objection made out – objections dismissed – orders made for production of documents.
Legislation: Family Law Act1975 ss 21(2A), 75(2)(b), 79
Corporations Act 2001 s 187
Federal Circuit and Family Court of Australia Act 2021 s 191
Cases cited: A v Z (2007) 212 FLR 255
Apache Northwest Pty Ltd v Western Power Corp (1998) 19 WAR 350
Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd (1955) 72 WN (NSW) 250
Bacall & Zagar [2020] FamCA 350
Barbarian Motorcycle Club Inc v Roitham (1984) 35 SASR 48
Boase v Axis International Management Pty Ltd [No 3] [2012] WASC 498
Botany Bay Instrumentation and Control Pty Ltd v Stewart [1984] 3 NSWLR 98
Breen v Williams (1996) 186 CLR 1
Chan v Valmorbida Custodians Pty Ltd [2020] VSC 590
Commissioner for Railways v Small (1938) 38 SR (NSW) 720
Commissioner of Stamp Duties (Qld) v Donaldson (1927) 39 CLR 539
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64l
Commonwealth of Australia v Albany Port Authority [2006] WASCA 185
Commonwealth v WMC Resources Ltd (1988) 194 CLR 1
Cypjayne Pty Ltd v Sverre Rodskog [2009] NSWSC 30
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588
Eaby & Speelman [2015] FamCAFC 104
Erceg v Erceg [2017] 1 NZLR 32
Finch v Telstra Super Pty Ltd (2010) 242 CLR 254
Gartside v Inland Revenue Commissioners; sub nom Gartside's Will Trusts, Re (TR) [1968] AC 553
General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125
Gulbenkian's Settlement Trusts, Re; Whishaw v Stephens [1970] AC 508
Hall v Hall (2016) 257 CLR 490
Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405
Hocking v Director-General of the National Archives of Australia (2020) 94 ALJR 569
Honeysett v The Queen (2014) 253 CLR 122
ICAPP Australia Pty Ltd v BGC Parties Australia Pty Ltd [2009] NSWCA 307
Hsiao v Fazarri (2020) 94 ALJR 961
In the Marriage of Bonnici (1991) 105 FLR 102
In Re Prater (1888) 37 Ch D 481, 483
Ingles v Ingles [2019] FamCA 33
Jones v Skinner (1985) 5 LJ Ch 87
Karger v Paul [1984] VR 161
Kennon v Spry (2008) 238 CLR 366
Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Mandie v Memart Nominees Pty Ltd (2020) 62 VR 528
Marvel v Marvel (2010) 43 Fam LR 348
Minister of State for the Army v Dalziel (1944) 68 CLR 261
Mobil Oil Australia Ltd & McDonalds Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34
National Trustees Executors & Agency Co of Australasia Ltd v Commissioner of Taxation (1954) 91 CLR 540
Nestlè Australia Ltd v Federal Commissioner of Taxation (1986) 10 FCR 78
Redmond v Redmond [2014] FamCAFC 155
Owies v JJE Nominees PTY LTD (in its capacity as the trustee for the Owies Family Trust) [2020] VSC 716
Rinehart v Rinehart [2018] NSWSC 1102
Sand v Sand (2012) 48 FamLR 458
Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145
Seldon & Seldon [2020] FamCA 762
Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332
SS v AH [2010] FamCAFC 13
Stanley v Layne Christensen Co [2004] WASCA 50
Summers v Moseley [1834] 149 ER 849
Tabet v Gett (2010) 240 CLR 537
Telstra Corporation Limited v The Commonwealth (2008) 234 CLR 210
Telstra Super Pty Ltd v Flegeltaub [2000] VSCA 180
Tibben v Tibben [2013] FamCAFC 145
Trade Practices Commission v CC (New South Wales) Pty Ltd (No 4) [1955] 58 FCR 426
Wareham v Marsella [2020] VSCA 92
Wheeler v Baldwin (1934) 52 CLR 609
Wright v Stevens [2018] NSWSC 548
Yanner v Eaten (No 2) (1999) 201 CLR 351
Yunghanns v Candoora (No 19) Pty Ltd [1999] VSC 524
Division: Division 1 First Instance Number of paragraphs: 88 Date of hearing: 20 September 2021 Place: Melbourne Senior Counsel for the Applicant: Mr A. J. Myers AC QC Junior Counsel for the Applicant: Mr D. Sweeney Solicitor for the Applicant: Landers & Rogers Senior Counsel for the Respondent: Mr L. Glick QC Junior Counsel for the Respondent: Mr M. N. Wilson Solicitor for the Respondent: Nedovic Lawyers Senior Counsel for the Subpoena Objectors Mr A. Strum QC Junior Counsel for the Subpoena Objectors Mr D. Matta Solicitor for the Subpoena Objectors J Lawyers ORDERS
MLC 13421 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR WOODCOCK
Applicant
AND: MS WOODCOCK
Respondent
ORDER MADE BY:
WILSON J
DATE OF ORDER:
30 SEPTEMBER 2021
THE COURT ORDERS THAT:
(1)The decision of the registrar made on 26 July 2021 setting aside the subpoenae addressed to the proper officer of B Pty Ltd, C Pty Ltd, E Pty Ltd and F Pty Ltd is set aside.
(2)The subpoena objections filed on behalf of the husband on 12 May 2021 and on behalf of the first, second, third and fourth subpoena objectors on 12 May 2021 are dismissed.
(3)All documents identified in each subpoena referred to in paragraph 1 of these orders must be produced by the subpoena objectors and released forthwith for inspection and copying.
(4)Each party is restrained and an injunction is granted restraining each party from providing any information or copies of any documents obtained from the subpoenas to any person other than their legal representatives and any person assisting the legal representatives as experts in this proceeding.
(5)Any submissions as to costs must be filed and served on or before 4:00pm 14 October 2021.
(6)This proceeding is transferred to my judicial docket.
(7)The further hearing of this proceeding is adjourned to 14 October 2021 at 9:30am for directions.
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 pseudonyms Woodcock & Woodcock have been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
INTRODUCTION
By application in a case filed on 5 August 2021, the wife sought orders for the review of a decision made on 26 July 2021 by a registrar of the Family Court of Australia pursuant to which the registrar set aside subpoenae addressed to F Pty Ltd, E Pty Ltd, B Pty Ltd and C Pty Ltd each dated 29 April 2021.
On 20 September 2021 full argument on this application was debated before me. Each party was represented by Queen’s Counsel and junior counsel. On behalf of the wife and husband counsel agreed that this application was something of a test case and that it was a proper vehicle for the determination of complex questions of law of general importance. I acknowledge with gratitude the excellent submissions of all counsel in this case.
SYNOPSIS
For reasons that are developed below, I take the view that the registrar’s decision to set aside the impugned subpoenae must be set aside and that, subject to the safeguards canvassed in paragraph 4 of the orders above, the documents sought in the subpoenae must be produced.
HOW THIS APPLICATION AROSE
By initiating application filed on 7 December 2020 the applicant husband sought against the wife orders for the adjustment of property interests pursuant to s 79 of the Family Law Act. They have one child, a 13 year old, who lives with the wife nine days in a fortnight cycle.
By consent, on 22 February 2021 a registrar of the Family Court of Australia ordered the husband to provide to the wife’s solicitors documents in his possession, power or control “evidencing distributions (whether notional or otherwise) paid (or credited) to him or any other person or entity on his behalf or for his benefit since 1 July 2015” from five identified trusts and any other trust of which he is a beneficiary. The five identified trusts were –
(a)the B Trust;
(b)the F Trust;
(c)the E Trust;
(d)the G Family Trust; and
(e)the Woodcock Family Trust.
Pursuant to those consent orders, the husband was required to produce various documents relating to the Woodcock Family Trust as well as documents of a certain nature evidencing memoranda of wishes from the husband’s grandfather Mr G and the father’s grandmother Ms G.
It was common ground that the husband is a beneficiary of each of the trusts recorded in paragraph 5 above.
The wife’s solicitor has deposed[1] to being unable to properly advise the wife about the justice and equity of any property adjustment unless and until he received full details of the husband’s assets and liabilities, his income and his expenses including details of the husband’s financial resources such as trusts in which the husband was named as a beneficiary or had a power of appointment or control.
[1] Paragraph 5 of the affidavit of [the wife’s solicitor] sworn 30 April 2021 and filed herein together with the exhibits to that affidavit.
In his affidavit, the wife’s solicitor deposed to receiving a letter dated 4 July 2019 from the husband’s solicitors together with a schedule of the parties’ marital assets and liabilities available for division. The list of assets did not include assets held by the G Group. The letter stated that the G Group was established by the husband’s grandparents and continues to be operated for the benefit of the G family. The letter stated that G Group is largely made up of three trusts, namely –
(a)B Trust of which B Pty Ltd is the trustee;
(b)F Trust of which F Pty Ltd is the trustee; and
(c)E Trust of which E Pty Ltd is the trustee.
According to the wife’s solicitor’s affidavit, the letter from the husband’s solicitor dated 4 July 2019 made other observations about those trusts. Those observations included –
(a)the directors of the corporate trustees of the above mentioned three trusts are the husband together with the four daughters of Mr G and Ms G;
(b)the corporate trustee in each instance is required to have a member from each of the five arms of the G family as a director;
(c)the husband is one of the primary beneficiaries of the trusts, although the husband has no enshrined right to capital or income from the G Group;
(d)ordinarily, decision making of significance in relation to distributions is the subject of agreement among family members of the trustee namely, simple majority, special majority, no decision leading to accumulation, or no decision by vesting date when all trust assets are distributed in the manner distributions were made during the life of the trust;
(e)rules govern the distributions aforesaid;
(f)the husband is treated no differently to any other beneficiary save for his remuneration for his role as chief executive officer of the G Group; and
(g)the husband’s interest is at best a financial resource.
So far as the documentation in existence in this proceeding was concerned, the husband’s solicitors’ letter dated 4 July 2019 said it was voluminous, yet it was of “little practical relevance” having regard to the husband’s lack of control over the G Group.
The wife’s solicitor deposed to a statement in the husband’s solicitors’ 4 July 2019 letter to the effect that the husband’s notional share of distributions was “approximately 16%”. The wife’s solicitor stated as follows –
(a)he has not been provided by the husband with any proof that the husband’s notional share of distributions is “approximately 16%”;
(b)he is unaware whether any of the trusts have vested and if not, when they will vest;
(c)the “rules” mentioned in paragraph 11 of the husband’s solicitors’ 4 July 2019 letter have not been produced;
(d)no documentation has been produced to support the assertion made by the husband’s solicitors that “this is wealth which is specifically and deliberately to inure for the benefit of ongoing generations”;
(e)he is unable to carry out his professional obligations if he accepts at face value the assertions made by the husband’s solicitors that the “great many documents which could be made available in this matter such as trust deeds, constitutions, financial accounts and the like” are of little practical relevance given the husband’s lack of control and the manner in which the G Group has been structured for many years; and
(f)The wife’s solicitor cannot be satisfied of the truth of the statements in the 4 July 2019 letter without having copies of all relevant documents.
The wife’s solicitor deposed to sending a letter to the husband’s solicitors on 8 July 2019. In that letter the wife’s solicitor requested a corporate structure diagramme, ASIC searches, financial statements for relevant corporate entities for the past three years and current title searches. A follow up letter was send by the wife’s solicitor on 30 July 2019. A more direct and pointed letter was sent by the wife’s solicitor on 2 October 2019. Among other things, in that letter the wife’s solicitor sought production of documents over the financial years 30 June 2016 to 30 June 2019 in relation to –
(a)P Pty Ltd;
(b)Woodcock Family Trust;
(c)B Pty Ltd;
(d)B Trust;
(e)F Pty Ltd;
(f)F Trust;
(g)E Pty Ltd; and
(h)E Trust.
The husband’s solicitors responded by letter dated 1 November 2019. Attached to that letter were various documents including –
(a)an ASIC search of C Pty Ltd;
(b)an ASIC search of B Pty Ltd;
(c)an ASIC search of F Pty Ltd; and
(d)an ASIC search of E Pty Ltd.
That letter also recorded distributions received by the husband in the 2016, 2017 and 2018 financial years. Taking those financial years chronologically, those distributions were as follows –
(a)in 2016, the husband received $800,000 from the G Family Trust, $1,174,120 from F Pty Ltd and $1,380,881 from E Pty Ltd;
(b)in 2017, the husband received $1,960,000 from the G Family Trust; and
(c)in 2018, the husband received $253,000 from the G Family Trust and $8,287,586 from F Pty Ltd.
With the 1 November 2019 letter, the husband’s solicitors provided a copy of the constitution of one company, certain limited financial accounts and copies of tax returns for the Woodcock Family Trust.
The wife’s solicitor responded by letter dated 9 December 2019. He stated that forensic accountants had been retained to value the asset pool yet those accountants were unable to progress their activities until the documentation recorded in the wife’s solicitor’s 1 November 2019 letter (erroneously described as his 2 November 2019 letter) had been provided. No documents were provided so the wife’s solicitor sent a further letter on 4 February 2020 to the husband’s solicitors seeking the documents enumerated in detail in his 2 October 2019 letter. The wife’s solicitor wrote a follow up letter to the husband’s solicitors on 24 February 2020.
By letter dated 22 June 2020 the husband’s solicitors wrote to the wife’s solicitor informing him that the husband had sold a property at Q Town without the wife’s prior knowledge or agreement. By letter dated 25 June 2020 the wife’s solicitor wrote to the husband’s solicitors objecting to the husband’s unilaterally selling the Q Town property. On 1 July 2020 the wife’s solicitor wrote again to the husband’s solicitors reminding them to provide full financial disclosure as required by the Family Law Rules.
On 14 July 2020 the husband’s solicitor informed the wife’s solicitor that the husband was not at liberty to provide documents requested by the wife in relation to certain corporate entities and trusts without the consent of all other directors of the corporate trustees. The husband’s solicitors’ letter stated “this is simply a matter which is out of our client’s control.”
On 7 September 2020 the husband’s initiating application to commence this litigation was sealed and then served on 8 December 2020.
On 22 February 2021 a case assessment conference in this case was conducted. On that day, a registrar of the court made orders by consent. Pursuant to those orders, by 15 March 2021 the husband agreed to provide the wife’s solicitors with copies of all documents in his possession, power or control evidencing all distributions (whether notional or otherwise) paid (or credited) to him or any other person or entity on his behalf or for his benefit since 1 July 2015 from six nominated trusts. Those trusts were –
(a)the B Trust;
(b)the F Trust;
(c)the E Trust;
(d)the G Family Trust;
(e)the Woodcock Family Trust; and
(f)any other trust of which the husband is a beneficiary.
The consent orders also provided that by 15 March 2021 the husband was to provide to the wife’s solicitors documents in relation to the Woodcock Family Trust. By the same date, the husband agreed to provide the wife’s solicitor with documents relating to money lent to the wife’s parents and sister, and other documents unconnected to trusts.
The wife’s solicitor deposed to issuing various subpoenae on 29 April 2021.
The form of the orders made on 26 July 2021 suggested that without hearing from the parties, a registrar of the court set aside subpoenae addressed to F Pty Ltd, E Pty Ltd, B Pty Ltd and C Pty Ltd. That led to the wife filing an application in a case dated 4 August 2021 for orders setting aside the registrar’s orders and for orders dismissing the husband’s objections made on 12 May 2021. The wife applied for orders for the documents produced by the subpoena objectors to be released.
The subpoena addressed the E Pty Ltd was filed on 29 April 2021. It required production, by 13 May 2021, of the following –
“Copies of :
a)a deed or deeds of trust or other instruments which establish the E Trust, including any deeds or other instruments amending the said trust;
b)the financial statements including balance sheets and profit and loss accounts for E Trust from 1 July 2015 to date; and
c)documents evidencing all distributions from the E Trust 1 July 2015.
Copies of all documents in your possession power or control evidencing all distributions (whether notional or otherwise) paid (or credited) to Mr Woodcock or any other person or entity on behalf of Mr Woodcock or for Mr Woodcock’s benefit since 1 July 2015 from the E Trust.”
By notice of objection filed on 12 May 2021 E Pty Ltd objected to responding to the subpoena addressed to it. That notice was filed by the husband’s solicitors. In it, E Pty Ltd notified its objection to the production of some or all (it did not say which) of the documents for the following reasons –
(a)the documents sought by the subpoena include documents that have no apparent relevance to the proceeding;
(b)the documents sought by the subpoena include documents that capture confidential information of third parties not joined to the proceeding;
(c)the subpoena is an abuse of process being used as an improper substitute for discovery; and
(d)the documents sought by the subpoena constitute fishing.
The subpoena addressed to B Pty Ltd was also filed on 29 April 2021. It was identical to the subpoena addressed to E Pty Ltd but for the substitution of the words B Pty Ltd for E Pty Ltd and the words B Trust for the words E Trust.
The notice of objection to the subpoena addressed to B Pty Ltd was prepared by the husband’s solicitors and was dated 12 May 2021. It identified the applicant as the person objecting. The grounds of objection were the same as were the grounds of objection on which E Pty Ltd relied.
In a separate notice of objection, the person objecting was recorded as B Pty Ltd. That document purported to have been prepared on behalf of B Pty Ltd by Mr J of J Lawyers. In that second notice of objection, five grounds of objection were taken, each of which was expressed differently to the notice of objection that mirrored the notice of objection served on behalf of E Pty Ltd. The second notice of objection was as follows –
1. The subpoena is incompetent in law, as the addressee of (sic) thereof is not named in its proper capacity.
2. The documents described in paragraph 2.a of the subpoena contain commercial in confidence information which is private and confidential to B Pty Ltd as trustee for the B Trust and to the eligible objects of the trust other than the Applicant or entities associated with him.
3. The financial statements, as described in paragraph 2.b of the subpoena, have no apparent relevance to the issues in the proceedings between the Applicant and the Respondent, contain commercial in confidence information which is private and confidential to B Pty Ltd as trustee for the B Trust and to the other eligible objects of the trust and production or inspection of them serves no legitimate forensic purpose.
4. The documents described in paragraph 2.c of the subpoena contain details of distributions made to eligible objects of the trust other than the Applicant which is private and confidential information of those third parties and has no apparent relevance to the issues in the proceedings between the Applicant and the Respondent. There is no legitimate forensic purpose in providing documents evidencing distributions made to such third parties. Further, the requirement to produce and release for inspection such documents constitutes fishing and / or is oppressive.
5. The documents described in paragraph 3 of the subpoena are properly a matter for discovery by the Applicant and not a subpoena to B Pty Ltd as trustee for the B Trust. In the circumstances, the subpoena, insofar as it requires production and the release for inspect of the documents described in paragraph 3 thereof, is an abuse of process and/or oppressive.
6. The subpoena seeks documents which contain private and confidential information of third parties to the proceedings who may wish to be heard on the issue of whether the documents should be released for inspection by or on behalf of the Respondent.
The subpoena addressed to C Pty Ltd was filed on 3 May 2021. It required production of documents by 13 May 2021. In the schedule to that subpoena, the applicant sought production of copies of –
(a)the deed or deeds of trust or other instruments which establish the G Family Trust, including any deeds or other instruments amending the said trust;
(b)the financial statements including balance sheets and profit and loss accounts for the G Family Trust from 1 July 2015 to date; and
(c)documents evidencing all distributions from the G Family Trust since 1 July 2015.
The wife also requested copies of all documents in the possession power or control of C Pty Ltd evidencing all distributions (whether notional or otherwise) paid (or credited) to Mr Woodcock or any person entity on his behalf or for his benefit since 1 July 2015 from the G Family Trust.
Two notices of objection were filed in response to the subpoena addressed to C Pty Ltd. The first was prepared by the husband’s solicitors dated 12 May 2021. In it the same four grounds of objection were called in aid as were recorded in the notice of objection filed by E Pty Ltd, namely, no apparent relevance, confidential information of third parties not joined to the proceeding, abuse of process and fishing. The second notice of objection was prepared by J Lawyers. It was in the following terms –
1. The subpoena is incompetent in law, as the addressee of (sic) thereof is not named in its proper capacity.
2. The documents described in paragraph 2.a of the subpoena contain commercial in confidence information which is private and confidential to C Pty Ltd as trustee for the G Family Trust and to the eligible objects of the trust other than the Applicant or entities associated with him.
3. The financial statements, as described in paragraph 2.b of the subpoena, have no apparent relevance to the issues in the proceedings between the Applicant and the Respondent, contain commercial in confidence information which is private and confidential to C Pty Ltd as trustee for the G Family Trust and to the other eligible objects of the trust and production or inspection of them serves no legitimate forensic purpose.
4. The documents described in paragraph 2.c of the subpoena contain details of distributions made to eligible objects of the trust other than the Applicant which is private and confidential information of those third parties and has no apparent relevance to the issues in the proceedings between the Applicant and the Respondent. There is no legitimate forensic purpose in providing documents evidencing distributions made to such third parties. Further, the requirement to produce and release for inspection such documents constitutes fishing and / or is oppressive.
5. The documents described in paragraph 3 of the subpoena are properly a matter for discovery by the Applicant and not a subpoena to C Pty Ltd as trustee for the G Family Trust. In the circumstances, the subpoena, insofar as it requires production and the release for inspect of the documents described in paragraph 3 thereof, is an abuse of process and / or oppressive.
6. The subpoena seeks documents which contain private and confidential information of third parties to the proceedings who may wish to be heard on the issue of whether the documents should be released for inspection by or on behalf of the Respondent.
The subpoena addressed to F Pty Ltd was filed on 29 April 2021 requiring production of documentation by 13 May 2021. It was in near identical form to the subpoena addressed to E Pty Ltd except that it required production of documentation from F Trust. Two notices of objection were supplied, one from the husband’s solicitors in the usual form, taking objection to the production on four grounds, namely, no apparent relevance, confidential information of third parties not joined to the proceeding, abuse of process and fishing. In the second objection, Mr J relied on the same six grounds as he did in respect of the other notices of objection, those being tailored specifically for the F Trust.
THE AFFIDAVIT OF MR K
The objectors[2] relied on an affidavit made 2 July 2021 by Mr K, a director of F Pty Ltd, E Pty Ltd and B Pty Ltd. Mr K deposed to C Pty Ltd being a wholly owned subsidiary of F Pty Ltd and that he was authorised by C Pty Ltd to make the affidavit on its behalf.
[2] That is to say F Pty Ltd, E Pty Ltd, B Pty Ltd and C Pty Ltd, represented by J Lawyers.
Mr K deposed to holding a economics degree and a Master’s degree. Between 1987 and 1991 Mr K stated he was with the accountancy firm N Company where he deposed to undertaking significant assignments for L Companies, established by Mr G2 and his two brothers in the 1930s and upon the demise of those two brothers, control of the G family enterprise was passed down to the brothers’ seven children and their respective families.
Between 1991 and 1997 Mr K stated that he was employed by L Companies during which time he worked closely with Mr G and Mr G’s wife Ms G on their personal affairs as well as on the restructuring of the G Group.
Mr K deposed to rejoining N Company in 1997, mainly in tax, private enterprise and as a member of the firm’s national executive team. He said he left N Company in 2011 and established a boutique entity providing advisory, representative and capital services.
Mr K did not assert that he was a legally qualified legal practitioner. However, he did state[3] that a significant part of his work over his career involved tax, corporate structuring and advising on intergenerational succession and wealth transfer issues in large private groups. He said that as a consequence of that work, he had become very familiar with the operation of all manner of trusts including discretionary trusts and discretionary trust deeds.
[3] Paragraph 9 of the affidavit of Mr K sworn 2 July 2021.
Mr K deposed to the decision made by the controllers of the L Companies in 1995 to liquidate that entity with each family going its separate ways. He said he was involved in the creation of the G Group. He said that the G Group established an advisory board, also known as the investment committee, in or about 1998 and that he has sat on that committee since then. He said that the G Group in 1998 introduced the family council made up of representatives of the families of each of the four daughters of Mr G and Ms G plus the applicant’s family. Mr K stated that each family may appoint to the family council two representatives who are over 25 years of age with a potential of up to 10 members on the family council. He stated that the family council did not have authority to decide matters although it oversaw the operations and affairs of the G Group.
Mr K did not produce any of the trust deeds in issue in this case. Instead he offered a commentary about their provisions. Mr Glick, One of Her Majesty’s Counsel for the wife who appeared with Mr M. Wilson of counsel, submitted that Mr K was not a legal practitioner and that Mr K may or may not be correct in his construction of the terms and operations of each trust. In any event, Mr Glick submitted that Mr K’s commentary was no substitute for production of the trust instruments if the grounds of objection failed in relation to one or more of those instruments. Mr K did not exhibit a curriculum vitae to his affidavit nor did he depose to the precise activities he had undertaken over the years in relation to working in the specific field of discretionary trusts. It was not possible, therefore, to make any meaningful assessment of his expertise to express opinions in his affidavit about matters of the law of trusts or the construction of trust deeds. In view of the observations about the need for proofs in respect of a witness’s expertise and status as an expert in cases such as Dasreef Pty Ltd v Hawchar,[4] Makita (Aust) Pty Ltd v Sprowles[5] and Honeysett The Queen,[6] in my view Mr K did not lay the requisite evidentiary foundation for his evidence to be received as an expert and so his evidence about the purported operation of the trusts was bereft of a proper forensic basis.
[4] (2012) 246 CLR 182.
[5] (2001) 52 NSWLR 705.
[6] (2014) 253 CLR 122.
Mr K deposed to his offer to meet various representatives so as to explain aspects of the trusts, on a confidentiality-based regime. He said the documentation would be redacted. Mr K frequently stated that certain details were confidential. He seemed to use that term as a colloquialism rather than in a strict legal sense.
At all events, Mr K made various observations about the trusts in this application. Most of those comments were not controversial. Among them were the following –
(a)the F Trust, the E Trust and the B Trust were settled in the early to mid-1990s;
(b)variations have been made to the trust deeds over the years;
(c)each trust is a discretionary trust;
(d)the eligible objects of each trust include the lineal descendants of Mr G and Ms G, companies and trusts associated with them and companies, trusts and entities within the G Group;
(e)each eligible object of the trust has a right to be considered for a distribution of capital or income but no fixed entitlement;
(f)certain decisions of the trustees can only be made by a majority decision;
(g)each trust reserves to the appointor of the trust the power of appointing a new trustee;
(h)each trust has taker in default provisions;
(i)there are 47 current lineal descendants;
(j)the trustees treat distribution details concerning eligible objects as being confidential; and
(k)the husband (according to Mr K) does not have an interest of 16% in the trusts.
CONFIDENTIALITY AGREEMENT BETWEEN LEGAL PRACTITIONERS
During the hearing of this application I did not inspect any version of any of the trust deeds. Mr Strum QC informed me confidentiality undertakings had been signed,[7] Mr Glick QC read the undertaking into the transcript[8] and Mr Myers AC QC submitted[9] that the wife had a redacted version of the deeds. Mr Glick QC submitted that it was ironic that the subpoena objectors did not put the trust deeds into evidence and that the wife was not permitted to disclose the terms of the deed yet Mr K had purported to address the terms of the deeds in detail.[10]
[7] Transcript, 20 September 2021, P6 L7.
[8] Transcript, 20 September 2021, P6 L30.
[9] Transcript, 20 September 2021, P5 L52.
[10] Transcript, 20 September 2021, P7 L25.
THE APPLICATION CONCERNING MR M’S AFFIDAVIT
Mr Glick QC did not press the wife’s application for the introduction into evidence of Mr M’s affidavit filed 16 September 2021.
THIS IS A REVIEW OF A REGISTRAR’S ORDER
It must not be overlooked that despite the many issues debated before me on 20 September 2021, the question for my determination was whether the orders of the registrar made on 26 July 2021 setting aside the four subpoenae should be reviewed.
This was a hearing de novo so the question before the registrar became the same question that I was called upon to answer.
In my view, the subpoenae were valid, the objections were not valid and production must be given of all documents that respond to each subpoena.
THE CORRECT APPROACH TO OBJECTIONS
In written submissions[11] counsel for the wife contended that the modern trend of authorities is to resist confining the grounds on which a subpoena may be set aside.[12] The statement that a non-exhaustive list of the grounds on which a subpoena may be set aside[13] was approved in Blacktown. Ordinarily, a subpoena will be valid and not an abuse of process if it is issued for a legitimate forensic purpose.[14] To have a legitimate forensic purpose, the document sought must be “apparently relevant”,[15] in that it can be seen that the documents sought to be produced by way of subpoena will materially assist on an identified issue or there is a reasonable basis beyond speculation that it is likely the documents subpoenaed will so assist.[16]
[11] The wife’s written submissions dated 13 September 2021, paragraphs 41 et seq.
[12] Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 (at [60]).
[13] Botany Bay Instrumentation and Control Pty Ltd v Stewart [1984] 3 NSWLR 98, 100.
[14] A v Z (2007) 212 FLR 255.
[15] ICAPP Australia Pty Ltd v BGC Parties Australia Pty Ltd [2009] NSWCA 307 and see authorities set out in Seldon & Seldon [2020] FamCA 762.
[16] Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 at [65].
Counsel for the wife contented that the point was not whether the financial documents sought by her will ultimately hinder or advance her case – but rather, the importance is whether the documents will likely help throw light upon one of the core intergers in the wife’s case. Counsel for the wife traced the learning from 1834 and the formulation of the “apparent relevance” test[17] to the July 2021 statement of the Court of Appeal of the Supreme Court of New South Wales.[18] In the latter case, Bell P held as follows –
80. My review of the authorities in relation to the setting aside of subpoenas and/or the refusal to permit access to documents produced leads me to the conclusion that, although a party will generally be able to demonstrate that it had a legitimate forensic purpose in issuing a subpoena where, to quote Simpson J (as her Honour then was, and with whom Spigelman CJ and Studdert J agreed) in Saleam at [11], it can:
“(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”,
at least in civil matters, an inability to demonstrate that it is “on the cards” that the documents sought will materially assist the subpoenaing party’s case will not automatically require either that the subpoena be set aside or that access to the documents produced be refused. It will generally be sufficient and prima facie evidence of a legitimate forensic purpose if the documents sought to be produced on subpoena have an apparent relevance to the issues in the case and or bear upon the cross examination of witnesses expected to be called in the proceedings.[19]
[17] Baron Bayley in Summers v Moseley [1834] 149 ER 849.
[18] Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145.
[19] Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 at [80].
Brereton JA concurred with Bell P yet expressed the relevant criteria in less onerous terms. It was as follows –
89.I agree with Bell P, for the reasons given by his Honour, that an issuing party is not required to show that it is “likely” (or “on the cards”) that the documents sought will materially assist its case, as distinct from that it is “likely” (or “on the cards”) that they will add, in some way or another, to the relevant evidence in the case, and that the essential question is whether the documents called for are apparently relevant, or capable of providing a legitimate basis for cross-examination, in which case there is a legitimate forensic purpose for the issue of the subpoena. In my view, at least in civil proceedings and in the absence of any question of public interest immunity, no more is required to support the issue of a subpoena for production than that there is a reasonable basis for supposing that the material called for will likely add, in the end, in some way or another, to the relevant evidence in the case. This reflects the notions that the documents relate to, throw light on, or are sufficiently relevant to the dispute; that they “appear relevant in the sense that they relate to the subject matter of the proceedings”; or that they could possibly throw light on the issues in the case. Moreover, documents will add “in some way” to the relevant evidence in the case if they are capable of assisting in cross-examination, or go to credit, and notwithstanding that they are inadmissible according to the rules of evidence.[20]
[20] Ibid at [89].
McCallum JA was against formulating any definitive “test” for setting aside a subpoena.
In Blacktown Brereton JA held that no more is required to support the issue of a subpoena for production than that there is a reasonable basis for supposing that the material called for will add, in the end, in some way or another, to the relevant evidence in this case.
It is difficult to imagine how this litigation can be concluded by achieving a just and equitable determination for the purposes of s 79 of the Family Law Act without production of the documentation sought in each of the impugned subpoenae.
THE WAY RELEVANCE WAS ASSERTED
Mr Glick QC asserted that the documents sought were relevant for several reasons. Those reasons included the following –
(a)the threshold issue in the case, namely whether it is just and equitable to make any order adjusting the property of the parties to the marriage, necessarily directs attention to the need to identify at the outset the existing property interests of the parties;[21]
(b)a critical question in this litigation is whether the husband’s interests under one, or more or all of the four trusts is “property” within the meaning of s 79 of the Family Law Act;
(c)another issue in the case is whether the husband’s interests in this litigation under one or more, or all of the four trusts is a “financial resource” within the meaning of s 75(2)(b) of the Family Law Act;
(d)a further issue is whether and if so on what factual, legal and forensic basis is the husband’s interests under one or more of the four trusts to be valued;[22] and
(e)another issue is whether the husband’s right to due consideration and administration is properly construed as a financial resource[23] requiring it to be valued in order to be appropriately taken into account.
[21] Citing Hsiao v Fazarri (2020) 94 ALJR 961 (at [66]).
[22] For example, attributing a value on the basis of a loss of chance, as was done in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64l, Tabet v Gett (2010) 240 CLR 537 and Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL(1994) 179 CLR 332.
[23] Hall v Hall (2016) 257 CLR 490 (at [54]-[55]).
In addressing the question whether the husband’s interests under one or more of the trusts in issue in this case was “property”, the wife relied on the observations distilled from a collection of High Court and other authority[24] to the effect that “property” is not a term of art with one specific and precise meaning.
[24] Counsel for the wife called in aid the decision of Lord Langdale MR in Jones v Skinner (1985) 5 LJ Ch 87, 9; In Re Prater (1888) 37 Ch D 481, 483, 486; Commissioner of Stamp Duties (Qld) v Donaldson (1927) 39 CLR 539, 550; Wheeler v Baldwin (1934) 52 CLR 609; Minister of State for the Army v Dalziel (1944) 68 CLR 261, 285; National Trustees Executors & Agency Co of Australasia Ltd v Commissioner of Taxation (1954) 91 CLR 540; Breen v Williams (1996) 186 CLR 1; Commonwealth v WMC Resources Ltd (1988) 194 CLR 1; Yanner v Eaten (No 2) (1999) 201 CLR 351; Telstra Corporation Limited v The Commonwealth (2008) 234 CLR 210; Kennon v Spry (2008) 238 CLR 366; Hocking v Director-General of the National Archives of Australia (2020) 94 ALJR 569 and Ingles v Ingles [2019] FamCA 33.
Counsel for the wife postulated the relevant question against which the importance or otherwise of the subpoenae is to be measured. It was as follows, so they argued –
“What is the present value of the husband’s property embodied in the husband’s chose of action which property arises out of the husband’s status as a primary beneficiary of the relevant trusts?”
They contended that the answer to that enquiry was likely to throw light on an important issue in this litigation. It was whether a reasonable basis exists to project that the trusts will continue to earn sufficient income and will continue to accrue capital at a sufficient rate so as to allow distributions to be made to the husband in the future. Counsel for the wife argued that the financial documents sought in the subpoenae will throw light on those matters.
Counsel for the wife submitted that the husband was possessed of a collection of rights that constitute a species of property within the meaning of s 79 of the Family Law Act. They submitted as follows –
As a beneficiary of each of the relevant trusts, the Husband has, among other rights, a right to approach the Court, exercising its equitable jurisdiction, for an order to compel the trustee to consider whether to make a distribution to him as an eligible beneficiary, and to ensure that the Trustee adheres to the terms of the Trust Deed. This bundle of rights is sometimes referred to as the beneficiary’s rights to “due consideration and due administration” of the Trust.
Counsel for the wife submitted that by reason of his status as a beneficiary under the relevant trusts, the husband had a right to approach the court in the exercise of its equitable jurisdiction for an order to compel the trustee to consider whether to make a distribution to him as an eligible beneficiary and to ensure that the trustee adheres to the terms of the deed of trust. Counsel for the wife identified that right as “the beneficiary’s right to due consideration and due administration” citing Kennon v Spry,[25] Ingles v Ingles,[26] Karger v Paul,[27] Wareham v Marsella,[28] Finch v Telstra Super Pty Ltd[29] and Telstra Super Pty Ltd v Flegeltaub.[30]
[25] (2008) 238 CLR 366.
[26] [2019] FamCA 33.
[27] [1984] VR 161.
[28] [2020] VSCA 92.
[29] [2010] HCA 36.
[30] [2000] VSCA 180.
Counsel for the wife submitted that the equitable right to due consideration took effect as an equitable chose in action which was capable of valuation. They submitted that pursuant to the terms of each relevant trust, the corporate trustee possessed a discretion as to whether to make a distribution at all and if so, the amount of any such distribution.
Counsel for the wife contended that the husband acquired an equitable interest by reason of his entitlement to due consideration and due administration.[31]
[31] Counsel for the wife called in aid the decision of McGarvie J Karger v Paul [1984] VR 161, the decision of the Court of Appeal of the Supreme Court of Victoria in Wareham v Marsella [2020] VSCAp, in Telstra Super Pty Ltd v Flegeltaub [2000] VSCA 180 and the High Court decision in Finch v Telstra Super Pty Ltd (2010) 242 CLR 254.
So far as specific objections were taken by the subpoena objectors in their notices of objections, counsel for the wife submitted that none of those objections were properly maintainable with the consequence, so they argued, that the objections must be dismissed.
So far as the objection on the ground of relevance was concerned, counsel for the wife contended that the relevant question was the present value of the husband’s property embodied in the husband’s equitable chose in action arising out of the husband’s status as a primary beneficiary of the relevant trusts.[32] They argued that one relevant issue is whether a reasonable basis exists to project that the trusts will continue to earn sufficient income and will continue to accrue capital at a sufficient rate so as to allow distributions to be made to the husband in future. They argued that the financial documents sought in the subpoenae will throw light on those matters.[33]
[32] Paragraph 49 of the wife’s written submissions dated 13 September 2021.
[33] Ibid.
Counsel for the wife contended that satisfying the requirement of apparent relevance was relatively straightforward because the threshold was low.[34]
[34] They called in aid observations in decisions such as Boase v Axis International Management Pty Ltd [No 3] [2012] WASC 498, Apache Northwest Pty Ltd v Western Power Corp (1998) 19 WAR 350, Stanley v Layne Christensen Co [2004] WASCA 50 (at [9]) and Commonwealth of Australia v Albany Port Authority [2006] WASCA 185 (at [18]).
Counsel for the wife addressed the specific grounds of objection advanced by the subpoena objectors.
Taking first the asserted objection of confidentiality, counsel for the wife relied on the observation of the Court of Appeal of the Supreme Court of Victoria in Mobil Oil Australia Ltd & McDonalds Australia Ltd v Guina Developments Pty Ltd,[35] to contend that the asserted objection was not maintainable. They also contended that the asserted claim of confidentiality had not been made out for the simple reason that the documents may be private yet not confidential as that term is understood in law.[36]
[35] [1996] 2 VR 34.
[36] Paragraph 58 of the wife’s written submissions.
Next was objectors’ assertion that the call for documents in the subpoena was an abuse of process. No details of that assertion was given. Counsel for the wife questioned how the husband could maintain the contention that the subpoena was an abuse of process when, concurrently, the husband advanced the proposition that he did not have possession or control of the trust deeds.[37]
[37] Paragraph 68 of the wife’s written submissions.
Next was the objectors’ contention that the subpoenae went “fishing”.[38] Counsel for the wife submitted that the wife was not trawling because, so they argued, the husband conceded having received a distribution from the relevant trusts and that the trusts exist. They said the uncontested facts revealed that in just five years the husband received over $15 million by way of distributions. The wife argued that the documents sought by way of subpoena are relevant to an assessment of the value. The wife’s counsel submitted that the wife’s request for financial statements relating to acknowledged distributions received by the husband was not fishing as that expression is known in the law. They argued that in circumstances where the trustee have made distributions to other beneficiaries and in circumstances where the trustees are required to keep accounts and financial records lest they act in breach of trust, then the wife’s request for financial statements relating to acknowledged distributions receive by the husband is not fishing.
[38] This basis of objection has been the subject of extensive analysis by Lindgren J in Trade Practices Commission v CC (New South Wales) Pty Ltd (No 4) (1995) FRC 426 to include Commissioner for Railways v Small (1938) 38 SR (NSW) 720, Barbarian Motorcycle Club Inc. v Koitham (1984) 35 SASR 481, Nestlè Australia Ltd v Federal Commissioner of Taxation (1986) 10 FCR 78, Rinehart v Rinehart [2018] NSWSC 1102, Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd (1955) 72 WN (NSW) 250 (“Associated Dominions”).
In developing their submissions before me, counsel for the wife emphasised certain matters. They included the following –
(a)the husband is a primary beneficiary in respect of whom the husband’s solicitors assert that the husband has “no enshrined right to capital or income”;[39]
[39] Transcript, 20 September 2021, P10 L28.
(b)on a proper construction of the relevant trust, if the husband decides not to vote in favour of a distribution, he receives 16%;[40]
[40] Transcript, 20 September 2021, P19 L45.
(c)a taker in default has, in circumstances such as those apparent in this case, a vested interest;[41]
[41] Mandie v Memart Nominees Pty Ltd (2020) 62 VR 528.
(d)this case raises the presently unexplored issue of attributing a value to a contingency;[42]
[42] Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64l, Tabet v Gett (2010) 240 CLR 537 and Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332 and Neville's Bus Service Pty Ltd v Pitcher Partners Consulting Pty Ltd [2018] FCA 2098.
(e)to the extent that in respect of one or more of the four trusts in issue in this litigation the husband is the sole decider of a corporate trustee, s 187 of the Corporations Act contained relevant stipulations;[43]
[43] Transcript, 20 September 2021, P14 L4.
(f)it is one thing for Mr K to purport to give evidence about the terms of various trusts but it is another thing for him to deny the wife the opportunity to test what he says;[44]
[44] Transcript, 20 September 2021, P15 L10.
(g)authorities such as General Steel Industries Inc. v Commissioner for Railways[45] teach that where a contested factual issue will determine the outcome, the case should go to trial;[46]
(h)the suggestion that the observations of French CJ in Kennon v Spry should be confined to its own facts will not enable the jurisprudence raised by the issue in this case to develop;[47]
(i)the issues raised in this case fall squarely within the equitable jurisdiction of this court as conferred pursuant to s 21(2A) of the Family Law Act;
(j)the relevant power in issue in this litigation is a trust power;[48]
(k)as such, it is a power to be exercised in a fiduciary capacity;[49]
(l)the husband is no ordinary beneficiary – he is a primary beneficiary who has received, thus far, $15 million;[50]
(m)the objectors’ contentions should be rejected when they say that a beneficiary’s right to due consideration is of no practical or realisable value;[51]
(n)Mr K is a lay person expressing views about a trust never seen;[52]
(o)section 191 of the Federal Circuit and Family Court of Australia Act embeds the overarching purpose pursuant to which family law litigation must be conducted;[53] and
(p)so far as the suggestion of redacting documents was concerned, Wheelahan J in Esso Australia Ltd v Australian Waters Union[54] held that absent consent, the whole unredacted version of the document should be produced.
[45] (1964) 112 CLR 125.
[46] Transcript, 20 September 2021, P15 L33.
[47] Transcript, 20 September 2021, P15 L40 et seq.
[48] Transcript, 20 September 2021, P22 L37.
[49] Transcript, 20 September 2021, P24 L19.
[50] Transcript, 20 September 2021, P25 L7.
[51] Transcript, 20 September 2021, P34 L28.
[52] Transcript, 20 September 2021, P36 L23.
[53] Transcript, 20 September 2021, P38 L8.
[54] [2020] FCA 316.
THE OBJECTOR’S SUBMISSIONS
Counsel for the objectors relied on statements to the effect that the right possessed by a beneficiary under a discretionary trust was a right to be considered as a potential recipient of a benefit by the trustee and a right to have the beneficiary’s interest protected by a court of equity.[55] Counsel for the objectors disputed the wife’s assertion that the husband had any “property” in the trust assets. Counsel for the objectors submitted the only property that a potential beneficiary has is the right of due consideration, which although property in the sense that it is a chose in action, is of no practical realisable value.[56] They emphasised the difference between the existence of the chose in action, as recognised in Kennon v Spry,[57] on the one hand and the difficulty in valuing any such right.
[55] Lord Wilberforce in Gartside v IRC [1968] AC 553 at 617.
[56] Paragraph 11 of the objectors’ written submissions dated 13 September 2021.
[57] Kennon v Spry (2008) 238 CLR 366 (at [75]).
Mr Strum QC verbally developed the submissions of the objectors. The more important matters raised were as set out below –
(a)the decision of the High Court in Kennon v Spry has been the subject of considerable but unwarranted controversy and when properly understood, the decision did not create any new legal principle;[58]
(b)the wife has failed to put before the court a single authority by which the right to due administration and the right to due consideration have been ascribed a value;[59]
(c)the only one of the choses in action which French CJ considered might not be beyond the actuarial arts to value is the right to due consideration;[60]
(d)the analogy of loss of a chance as postulated by the wife is not supported by the case law because the cases concerning loss of a chance involve damages claims, quite different to the claims in this case;[61]
(e)the choses in action – that is to say, the right to due administration and the right to due consideration – do not create rights to the corpus of the trusts, the assets or the outcome of the trusts so even if those choses in action could be valued, no proprietary interest is thereby created;[62]
(f)where one party to a marriage is an eligible object of a discretionary trust and no trust assets exist to divide, even if a value could be ascribed to the right to due consideration and the right to due administration, nothing existed in the corpus against which an order for division was amendable;[63]
(g)the word “beneficiaries” in reference to a discretionary trust is inapt having regard to the fact that those beneficiaries are no more than eligible objects of the trust;[64]
(h)an inheritance may be treated as a financial resource;[65]
(i)confidentiality is not, in and of itself, a basis for objection yet a trust is not a commercial document in which the public may have an interest, and being a private document, a settlor’s privacy should be respected;[66]and
(j)even if a valuation of the husband’s interest were obtained, that interest cannot be transferred, it was incapable of apportionment as between the husband and wife and it could not be enforced against the trust assets.[67]
[58] Transcript, 20 September 2021, P50 L38.
[59] Transcript, 20 September 2021, P52 L40.
[60] Transcript, 20 September 2021, P54 L11.
[61] Transcript, 20 September 2021, P54 L32.
[62] Transcript, 20 September 2021, P54 L37-46.
[63] Transcript, 20 September 2021, P55 L13-26, citing the decision of Coleman J in Sand v Sand (2012) 48 FamLR 458.
[64] Transcript, 20 September 2021, P60 L4-26, citing Tibben v Tibben [2013] FamCAFC 145 (at [21]).
[65] In the Marriage of Bonnici (1991) 105 FLR 102.
[66] Transcript, 20 September 2021, P65 L1, citing Chan v Valmorbida Custodians Pty Ltd [2020] VSC 590 (at [85]), Erceg v Erceg [2017] 1 NZLR 32, Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405.
[67] Transcript, 20 September 2021, P69 L34 et seq.
THE HUSBAND’S SUBMISSIONS
The husband’s written submissions addressed his contention about the inadmissibility of the affidavit evidence of Mr M. Mr Glick QC informed the court that he did not press for the affidavit of Mr M to be advanced in support of this application.
In rebuttal address on 20 September 2021 Mr Myers AC QC, for the husband advanced a collection of submissions in respect of the trusts. The following is a distillation of those submissions –
(a)every beneficiary of the trust has a right of due administration obliging the trustee to invest with due care in investments permitted by the trust deed;[68]
[68] Transcript, 20 September 2021, P77 L30-34.
(b)every beneficiary of the trust has a right against the trustee of the trust in respect of actual or potential misfeasance by the trustee;[69]
[69] Transcript, 20 September 2021, P77 L40.
(c)in Kennon v Spry, French CJ said it was difficult to put a value on either the right to due consideration or the right to due administration;[70]
[70] Transcript, 20 September 2021, P78 L16.
(d)a right to due consideration is not something that carries with it a monetary or pecuniary value to a particular beneficiary because the beneficiary’s right is simply to see that the trust assets are not diminished by a failure to administer the trust;[71]
[71] Transcript, 20 September 2021, P78 L20-25.
(e)so far as the right to due consideration in the context of a discretionary trust is concerned, as with any discretionary trust, a wide range of objects conventionally exists in whose favour a power of appointment may be exercised whether as to capital or income;[72]
[72] Transcript, 20 September 2021, P78 L35 et seq.
(f)there must be a taker in default so as to ensure that someone always exists to hold the property the subject of the trust subject to a valid exercise of the power of appointment;[73]
[73] Transcript, 20 September 2021, P78 L42.
(g)it is important to keep in mind the distinction between a trust power and a bare power;[74]
[74] Transcript, 20 September 2021, P79 L7-8.
(h)in the case of a trust power, the holder of the power is under a duty to exercise the power and the court will exercise the power if the holder of the power fails to do so;[75]
[75] Transcript, 20 September 2021, P79 L10.
(i)in the case of a bare power (also known as a mere power or a collateral power) the court cannot compel the exercise of the power because the trustee is not under any duty to exercise the power;[76]
(j)when exercising a bare power, the trustee must do so in his, her or its capacity as a fiduciary with the consequence that the trustee may not exercise the power for the trustee’s own advantage yet the trustee still does not have a duty to exercise the power;[77]
(k)when considering the nature of the property consisting of a right to due consideration which the object of a bare trust has, the holder of the right may not go to court to insist that the power be exercised in his, her or its favour as might the holder of a right to which a trust power applies;[78]
(l)the holder of a bare power does not acquire any proprietary interest in any of the assets the subject of the trust and generally the object of a mere power does not have a right to go to court to complain about the exercise of the power - only the taker in default can do that;[79]
(m)the object of a mere power has the remedy of complaining that the trustee has not given due consideration;[80]
(n)a right to due consideration is not a right to any property as it merely is a right to be considered rendering the right impossible to evaluate in monetary terms;[81]
(o)the foundational decision on point is Gulbenkian's Settlement Trusts, Re; Whishaw v Stephens;[82]
(p)the 1977 trust in issue in this case is a pure form of the original type of discretionary trust;[83]
(q)so far as Re Gartside[84] was concerned, it was not entirely clear whether the power in issue in that case was a trust power, although two years later Re Gullbercian’s Trust was decided so Lord Wilberforce’s speech prevails in relation to trust powers and mere powers; and
(r)the object of a right to due consideration has rights in equity but those rights do not bring any monetary value to the holder.[85]
[76] Transcript, 20 September 2021, P79 L15.
[77] Transcript, 20 September 2021, P79 L31.
[78] Transcript, 20 September 2021, P79 L35 et seq.
[79] Transcript, 20 September 2021, P79 L42.
[80] Transcript, 20 September 2021, P79 L45.
[81] Transcript, 20 September 2021, P80 L2.
[82] [1970] AC 508.
[83] Transcript, 20 September 2021, P81 L8.
[84] Gartside v Inland Revenue Commissioners; sub nom Gartside's Will Trusts, Re (TR) [1968] AC 553.
[85] Transcript, 20 September 2021, P82 L23.
CONSIDERATION
Lengthy and complex though the above submissions have been, it must not be forgotten that while this court is a court of law and equity taken to have always so been,[86] on the hearing of a contested interlocutory application (as was this) authority binding me cautions against the making of findings of fact otherwise than with great circumspection.[87] In addition to that general warning, in this case I have not been favoured with any of the trust deeds that are in issue, whether in a redacted form or otherwise.
[86] Section 21(2A) of the Family Law Act.
[87] Marvel v Marvel (2010) 43 Fam LR 348, SS v AH [2010] FamCAFC 13, Redmond v Redmond [2014] FamCAFC155 and Eaby & Speelman [2015] FamCAFC 104.
In my view, each of the trust deeds is relevant in this case. Each is relevant to the question of the husband’s entitlement under the trusts. While Mr K has purported to offer his construction of each deed, it must not be forgotten that he is not a legal practitioner. His experience may very well be broad. However, the law of discretionary trusts is complex. Sophisticated evidence will be needed in this case on all aspects of the husband’s entitlements under each deed of trust. The precise characterisation of the husband’s interests must await a determination after trial. The pivotal nature of the differences between trust powers and bare powers and their exercise are likely to be critical in this case.
However, cases such as Marvel, Eaby, Redmond and SS caution me from making any findings about the legal and equitable characterisation of the husband’s interests in each of the trusts in issue in this case, especially at this early interlocutory phase of this litigation where factual and legal issues are fluid.
Mr Glick QC took issue with the fact that the law relating to trust powers and that relating to bare powers has stood still since 1970. Mr Glick cited several decisions[88] revealing how the point has been actively considered since 1970.
[88] Yunghanns v Candoora No 19 Pty Ltd [1999] VSC 524, Wright v Stevens [2018] NSWSC 548, Cypjayne Pty Ltd v Sverre Rodskog [2009] NSWSC 30 and Owies v JJE Nominees PTY LTD (in its capacity as the trustee for the Owies Family Trust) [2020] VSC 716.
One of the main reasons given by the subpoena objectors and by the husband for setting aside the subpoena is the impossibility of valuing the husband’s interests under the trusts. Mr Strum QC in particular placed great store in the observations made in certain decisions in this court about complexities associated with any attribution of value to the husband’s interests. He did not place corresponding store in the observations of French CJ in Kennon v Spry, contending instead that the decision in that case is to be relegated to its own facts. On principles of stare decisis and the doctrine of precedent, I regard a decision of the High Court as binding upon me when sitting as a single judge of a superior court of record. In my view it is neither appropriate nor correct to slough off the Chief Justice’s observations in Kennon v Spry as if unsupportable in doctrine or unmaintainable in principle. The Chief Justice addressed difficulties in valuing the interests there under consideration. The Chief Justice did not decide that any such valuation was impossible nor, if undertaken, amounted to some equitable heresy. To engage Mr Strum’s own injunction, not in reference to a valuer, but in reference to a judge dealing with this contested interlocutory skirmish over subpoenae, it would be very brave or foolhardy[89] of me to find on this application that no value whatsoever could be attributed to the husband’s interests under the trusts.
[89] Transcript, 20 September 2021, P69 L25.
In any event, it is erroneous to fold into one concept the question of the husband’s interest as property together with complications associated with the valuation of any such proprietary interest. The two issues are quite separate.
Turning now to the alleged novelty of Mr Glick’s propositions about the valuation of the husband’s interests under the trusts, I am not willing to state, on this interlocutory application, that any such valuation is unknown to equity, nor am I willing to state that the proposition that any such valuation is akin to a loss of chance has no place in the equity doctrine by reason of it being referable to concepts of breach of contract, a common law concept. If either of those concepts is to hold sway, I take the view that a higher court than me must pronounce definitively upon the matter. For present purposes I take the view that the wife’s proposition about the husband’s interests under the trusts being property is arguable. I also take the view that the valuation of that interests is also arguable.
The relevance of the deeds goes to the question of whether the husband’s interests under them is “property” for the purposes of s 79 of the Family Law Act. To my way of thinking, the wife’s solicitor makes an entirely valid point when he deposed to being unable to properly advise his client without the documentation sought in the subpoenae. Mr Glick QC contended that the proper approach a party should adopt towards disclosure was canvassed in Bacall and Zagar.[90] I agree.
[90] Bacall & Zagar [2020] FamCA 350.
To the specific grounds of objection, let me first address confidentiality. This ground was faintly pressed. In my view, the decision in Mobil Oil Australia Ltd & McDonalds Australia Ltd v Guina Developments Pty Ltd[91] provides an authoritative exposition to determine the ground asserted by objectors, adversely to them. I overrule this ground of objection.
[91] [1996] 2 VR 34.
So far as the ground of objection founded on redaction is concerned, in my view the decision of Wheelahan J in Esso Australia Ltd v Australian Waters Union[92] provides helpful guidance with the consequence that redacted documents may be provided by agreement but not otherwise. I agree. Documents in a form that is not redacted must be provided.
[92] [2020] FCA 316.
Relevance has already been addressed. I take the view that the recent formulation of principle in Blacktown is to be preferred. On that analysis the trust deeds and the documents sought in the subpoenae are relevant.
The objection based on abuse of process in that the subpoena was being used as a substitute for disclosure is without merit. As has already been mentioned, the ambit of a party’s disclosure obligations under the Family Law Act and the Family Law Rules has been the subject of considerable exegesis in Bacall v Zagar. I adhere to my comments in that decision.
So far as the fishing ground objection was concerned, I do not accept that it was made out. The authorities in respect of the fishing ground point to an objection that does not apply to the circumstances of this case. The subpoenae in this case are focused, pointed and are very far from the random, generic trawling of which the authorities speak. This ground of objection is devoid of merit.
CONCLUSION AND ORDERS
The decision of the registrar made on 26 July 2021 setting aside the four subpoenae is itself set aside.
I make orders in accordance with the wife’s application in a case filed 5 August 2021 as follows –
(1)The decision of the registrar made on 26 July 2021 setting aside the subpoenae addressed to the proper officer of B Pty Ltd, C Pty Ltd, E Pty Ltd and F Pty Ltd is set aside.
(2)The subpoena objections filed on behalf of the husband on 12 May 2021 and on behalf of the first, second, third and fourth subpoena objectors on 12 May 2021 are dismissed.
(3)All documents identified in each subpoena referred to in paragraph 1 of these orders must be produced by the subpoena objectors and released forthwith for inspection and copying.
(4)Each party is restrained and an injunction is granted restraining each party from providing any information or copies of any documents obtained from the subpoenas to any person other than their legal representatives and any person assisting the legal representatives as experts in this proceeding.
(5)Any submissions as to costs must be filed and served on or before 4:00pm 14 October 2021.
(6)This proceeding is transferred to my judicial docket.
(7)The further hearing of this proceeding is adjourned to 14 October 2021 at 9:30am for directions.
I certify that the preceding eighty-eight (88) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 30 September 2021
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