X Pty Ltd and Ors & Merhi
[2015] FamCA 622
•30 July 2015
FAMILY COURT OF AUSTRALIA
| X PTY LTD AND ORS & MERHI | [2015] FamCA 622 |
| FAMILY LAW – PRACTICE AND PROCEDURE – SUBPOENA – Where a Registrar dismissed the objections of twelve third party companies to subpoenas issued by the wife – Where the companies and the husband sought a review of the Registrar’s decision – Whether the subpoenas lack relevance to the proceedings – Whether the subpoenas are a fishing expedition – Whether the subpoenas are an abuse of process – Four subpoenas set aside – Seven subpoenas varied – Written submissions to be filed as to costs including costs of compliance. |
| Anton & Malitsa (2009) FamCA 70 Hatton v Attorney General of the Commonwealth of Australia & Ors (2000) FLC 93-038 Macks v Tuck & Ors & QBE Insurance (Australia) (No. 4) [2007] SASC 255 National Employers’ Mutual General Association v Wand and Hill [1978] 1 NSWLR 372 Ryder & Lee [2009] FamCA 531 Unitingcare – Unifam Counselling & Mediation & Harkiss and Anor [2011] FamCAFC 159 |
| Family Law Rules 2004 (Cth) r 15.26 |
| FIRST APPLICANT: | X Pty Ltd (ACN …) |
| SECOND APPLICANT: THIRD APPLICANT: FOURTH APPLICANT: FIFTH APPLICANT: SIXTH APPLICANT: SEVENTH APPLICANT: EIGHTH APPLICANT: NINTH APPLICANT: TENTH APPLICANT: ELEVENTH APPLICANT: TWELFTH APPLICANT: THIRTEENTH APPLICANT: | MerhiCo Finance Pty Ltd (ACN …) A Pty Ltd (ACN …) B Pty Ltd (ACN …) Merhi Brothers Pty Ltd (ACN …) Merhi Brothers Investments Pty Ltd (ACN …) Merhi Group Holding Company Pty Ltd (ACN …) C Pty Ltd(ACN …) D Pty Ltd (ACN …) Mr E Merhi Holdings Pty Ltd (ACN …) Merhi Bros Holding Pty Ltd (ACN …) F Pty Ltd (ACN …) Mr G Merhi |
| RESPONDENT: | Ms Merhi |
| FILE NUMBER: | SYC | 511 | of | 2014 |
| DATE DELIVERED: | 30 July 2015 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | McClelland J |
| HEARING DATE: | 13 July 2015 |
REPRESENTATION
| COUNSEL FOR THE FIRST TO TWELFTH APPLICANTS: | Mr Lethbridge SC |
| SOLICITOR FOR THE FIRST TO TWELFTH APPLICANTS: | HWL Ebsworth |
| COUNSEL FOR THE THIRTEENTH APPLICANT: | Mr Millar |
| SOLICITOR FOR THE THIRTEENTH APPLICANT: | Sexton Family Law |
| COUNSEL FOR THE RESPONDENT: | Ms Spain |
| SOLICITOR FOR THE RESPONDENT: | Neville & Hourn Legal |
Orders
The Court Orders That:
The subpoenas addressed to the following companies are set aside:
a)MerhiCo Finance Pty Ltd (ACN …);
b)Merhi Group Holding Company Pty Ltd (ACN …);
c)C Pty Ltd(ACN …); and
d)Merhi Bros Holdings Pty Ltd (ACN …).
The entirety of the Schedule to the subpoena addressed to X Pty Ltd is varied to read as follows:
1. In respect of X Pty Ltd (ACN …):
1.1 Documents including but not limited to bank statements, credit accounts, EFT transfers, cheques or cheque butts, book keeping records, emails, memoranda relating to or evidencing the provision of financial benefit, by way of Directors fee, dividend, income, or otherwise to Mr G Merhi born … 1965, for the period from 1 January 2009 to 22 December 2014.
The entirety of the Schedule to the subpoena addressed to A Pty Ltd is varied to read as follows:
1. In respect of A Pty Ltd (ACN …):
1.1 Documents including but not limited to bank statements, credit accounts, EFT transfers, cheques or cheque butts, book keeping records, emails, memoranda relating to or evidencing the provision of financial benefit, by way of Directors fee, dividend, income, or otherwise to Mr G Merhi born … 1965, for the period from 1 January 2009 to 22 December 20141.2 Financial statements including balance sheets and profit/loss statements for the period 1 January 2009 until 22 December 2014.
1.3Tax returns for the period 1 January 2009 to 22 December 2014.
1.4A statement of indebtedness as at 22 December 2014.”
The entirety of the Schedule to the subpoena to Merhi Brothers Pty Ltd is varied to read as follows:
1. In respect of Merhi Brothers Pty Ltd (ACN …):
1.1Documents including but not limited to bank statements, credit accounts, EFT transfers, cheques or cheque butts, book keeping records, emails, memoranda relating to or evidencing the provision of financial benefit, by way of Directors fee, dividend, income, or otherwise to Mr G Merhi born … 1965, for the period from 1 January 2009 to 22 December 2014.
The entirety of the Schedule to the subpoena to Merhi Bros Investments Pty Ltd is varied as follows:
1. In respect of Merhi Bros Investments Pty Ltd (ACN …)
1.1Documents including but not limited to bank statements, credit accounts, EFT transfers, cheques or cheque butts, book keeping records, emails, memoranda relating to or evidencing the provision of financial benefit, by way of Directors fee, dividend, income, or otherwise to Mr G Merhi born … 1965, for the period from 1 January 2009 to 22 December 2014.
1.2 Financial statements including balance sheets and profit/loss statements for the period 1 January 2009 until 22 December 2014.
1.3 Tax returns for the period 1 January 2009 to 22 December 2014.
1.4 A statement of indebtedness as at 22 December 2014.”
Paragraph 8 only, of the Schedule to the subpoena addressed to D Pty Ltd (ACN 003 024 628) is varied as follows:
8. Any settlement statement or any other record of the application of funds to, or for the benefit of, Mr G Merhi from the sale of the Properties."
Paragraph 8 only, of the Schedule to the subpoena addressed to B Pty Ltd (ACN 002 628 453) is varied as follows:
8. Any settlement statement or any other record of the application of funds to, or for the benefit of, Mr G Merhi from the sale of the Properties”
Paragraph 5 only, of the Schedule to the subpoena to Mr E Merhi Holdings Pty Ltd (ACN …) is varied as follows:
5. Any expert valuation or any other record of which indicates or records the value of any real property owned by Mr E Merhi Holdings Pty Ltd that has been, or is occupied by, Mr G Merhi and/or Ms Merhi.
The first, third, fifth, sixth, ninth and tenth Applicants are to produce the documents according to the schedules as varied by Orders 1 through to 7 above, by delivering those documents to the Sydney Registry of the Court no later than twenty-one (21) days from the date of this Order.
The wife is granted access to inspect the documents produced upon execution of a confidentiality agreement, to be proposed by the solicitors for the Applicants in terms agreed by the solicitors for the wife
Upon the wife's execution of the agreement referred to in Order 9 above, leave is granted to the parties and their legal representatives to inspect the produced documents.
The Court Directs That:
The parties are to file and serve written submissions on the question of costs, including the cost of complying with the subpoenas, within fourteen (14) days of the date of this Order and for any reply to be filed and served within a further seven (7) days.
IT IS NOTED that publication of this judgment by this Court under the pseudonym X Pty Ltd and Ors & Merhi has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC511 of 2014
| X Pty Ltd |
First Applicant
And
MerhiCo Finance Pty Ltd
Second Applicant
And
A Pty Ltd
Third Applicant
And
B Pty Ltd
Fourth Applicant
And
Merhi Brothers Pty Ltd
Fifth Applicant
And
Merhi Brothers Investments Pty Ltd
Sixth Applicant
And
Merhi Group Holding Company Pty Ltd
Seventh Applicant
And
C Pty Ltd
Eighth Applicant
And
D Pty Ltd
Ninth Applicant
And
Mr E Merhi Holdings Pty Ltd
Tenth Applicant
And
Merhi Bros Holding Pty Ltd
Eleventh Applicant
And
F Pty Ltd
Twelfth Applicant
And
Mr G Merhi
Thirteenth Applicant
And
| Ms Merhi |
Respondent
REASONS FOR JUDGMENT
Background
This matter concerns an application seeking a review of Orders made on 6 March 2015 by Registrar Chayna dismissing objections to subpoenas filed by Ms Merhi (“the wife”). The wife is the applicant in proceedings before this Court seeking property orders, pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”)
The Applicants in the application currently before the Court are twelve companies that have been served with those subpoenas (“the applicant companies”). Eleven of those companies are of the Merhi group of companies and the twelfth is F Pty Ltd which provides accountancy services to the other eleven applicant companies. The applicant companies fall into three categories which are:
e)Companies in which Mr G Merhi (“the husband”) has no interest and has held no office;
f)Companies in respect to which the husband is or was an office holder but has no interest; and
g)Companies in respect to which the husband has an interest and is or was an office holder.
Companies in the first category (that is, companies in which the husband holds no interest and has held no office or employment) are as follows:
a)MerhiCo Finance Pty Ltd;
b)Merhi Group Holding Company Pty Ltd;
c)C Pty Ltd;
d)Mr E Merhi Holdings Pty Ltd;
e)Merhi Bros Holdings Pty Ltd; and
f)F Pty Ltd.
Those companies that are in the second category (that is, companies in which the husband is or was an office holder or an employee but holds no interest) are the following:
a)X Pty Ltd;
b)B Pty Ltd; and
c)Merhi Brothers Pty Ltd.
Companies in the third category (that is companies in which the husband held or holds an interest and was or is an office holder) include the following:
a)Merhi Brothers Investments Pty Ltd;
b)D Pty Ltd; and
c)A Pty Ltd.
Brief Chronology
An important issue for the Court to consider in this matter is the purpose and intent of the wife issuing the relevant subpoenas. In that context it is useful to note the following:
·1965 – the husband was born.
·1965 – the wife was born.
·31 December 1984 – the husband was appointed as a director of Merhi Brothers Investments Pty Ltd.
·30 July 1987 – the husband was appointed as a director B Pty Ltd.
·31 December 1995 – the husband was appointed as a director of Merhi Brothers Pty Ltd.
·1998 – the parties were married.
·25 July 2003 – husband was appointed as a director of A Pty Ltd.
·23 January 2009 – the husband was appointed as a director of X Pty Ltd.
·3 March 2013 – the parties separated.
·31 January 2014 – the wife commenced proceedings for property settlement pursuant to Part VIII of the Act.
·17 June 2014 – divorce order made.
Submissions
Argument of the wife
The wife, as the respondent to the companies’ Application in a Case, argued that each of the subpoenas seek relevant documents relating to the husband’s interest in the relevant companies, the nature of that interest and the value of that interest. The wife submitted that the documentation produced in response to the subpoenas will enable the wife to better ascertain the size of the matrimonial property pool and the extent to which the companies are a financial resource for the husband.
In that context, the wife provided affidavit evidence that the husband had informed her that he could access funds from the Merhi Group of companies for his own benefit. In her affidavits, the wife also asserted that the lifestyle of the parties prior to separation was incapable of being funded from the disclosed income and assets of the husband and wife alone.
The wife further argued that it was necessary for the subpoenas to be issued because the husband has been slow to provide disclosure as required pursuant to the Act and the Family Law Rules 2004 (Cth) (“the Rules”) and the disclosure which had been made was less than adequate. This is in the context where, according to the wife, the husband had control of the family finances during the marriage and did not provide her with information on their financial affairs during the marriage and she is incapable of finding out the full extent of resources available to the husband without the subpoenas being issued.
The wife asserted, for instance, that she had only recently become aware that the husband is a beneficiary of the Mr H Merhi Trust. The wife also asserted that, it was only after instigating these proceedings, she was advised by her solicitors that a discharge of mortgage in respect to the parties Vaucluse home, which the wife believed had been registered in or about June 2009, was not in fact registered.
The wife further contended that relatively little inconvenience will be caused to those companies which will be subpoenaed, because the documents requested are business records and ought be readily accessible.
The wife denied that the subpoenas are “fishing” because the subpoenas seek specific documents or classes of documents for a restricted period of time.
The wife noted that F Pty Ltd has provided documents in answer to the subpoena served on that company and, further, that the husband has provided some documents including documents relating to the Merhi Group of companies. The wife submitted that the husband’s partial compliance is some concession of his role and connection to those companies and demonstrates the incompleteness of the husband’s previous disclosure.
In so far as the subpoenas may require the production of confidential information, the wife argued that such confidentiality is more relevant to confidentiality among competitors and that the wife does not have any business interest that competes with the Merhi Group of companies. The wife therefore argued that issues of confidentiality should not prevent her having access to the documentation in the context of these family law proceedings. Moreover, in so far as the issue of confidentiality may be a concern, the wife offered to provide an undertaking that the documents will be used for the purposes of these proceedings only.
In terms of legal principles, the wife argued that the bar in respect of the question of relevance is not set very high and the fundamental issue is whether the pursuit of the information is genuinely designed to assist in determining the issues in dispute and not for an illicit or harassing type of reason. In that context, the wife referred to Papadopoulos & Papadopoulos(No.2) [2007] FamCA 1683.
The wife further argued that it is sufficient that the documents requested would “possibly throw light” on the issues in the substantive proceedings, or that it appears to be “on the cards” that they will do so. In that respect, the wife referred to Martin & Martin (No.2) [2014] FamCA 232.
Arguments by the applicant companies
The applicant companies argued that, save and except for the following documents and/or categories of documents, the subpoenas served upon each of the applicant companies should be set aside. Those documents are:
·Bank statements of X Pty Ltd (the first applicant);
·Any company accounts of X Pty Ltd that show a financial benefit provided to the husband;
·Any loan agreement between Mr E Merhi Holdings Pty Ltd (the tenth applicant) and/or the husband or the wife;
·Any discharge of mortgage in respect of any property where the husband and/or the wife were mortgagor;
·Financial statements and taxation returns for A Pty Ltd (the third applicant);
·Financial Statements and taxation returns for Merhi Brothers Investments Pty Ltd (the sixth applicant);
·Financials statements and taxation returns for D Pty Ltd (the ninth applicant).
The applicant companies indicated that F Pty Ltd is the accountant for each of the first to eleventh applicants and that, in so far as documents may be held by that company fall into the above categories, they would be produced by that company.
The applicant companies conceded that more precisely worded subpoenas could appropriately be addressed to the first, third, sixth, and ninth applicant companies as they were companies in which the husband held or had held an interest and/or had been an office holder or employee. The applicant subpoenaed companies conceded that a subpoena addressed to the tenth applicant corporation was appropriate in so far as it sought documents concerning a possible loan agreement or discharge of mortgage relevant to the husband.
More broadly, the applicant companies argued that the subpoenas should otherwise be set aside for the following reasons:
a)The categories of documents sought can have no probative value in the proceedings between the husband and the wife because they lack any likelihood that they will in some way add to the relevant evidence in the case. Reference was made to Spencer Motors Pty Ltd v LNC Industries Limited [1982] 2 NSWLR 921 at [927].
b)That the subpoenas are drawn so widely as to be oppressive. This was particularly so, in respect to the subpoenas addressed to the first, fourth and tenth applicants.
c)The subpoenas are “bad” because they seek documents and categories of documents that would, in the normal course of proceedings be available to the wife as a consequence of the normal discovery process.
Argument of the husband
The husband also applied for the subpoenas to be set aside and generally supported the application by the subpoenaed companies. The husband argued that the wife, at whose request the subpoenas were issued by the Court, carried the onus of establishing that the documents sought have apparent relevance to the issues in the proceedings. In that respect, the husband referred to Hatton v Attorney General of the Commonwealth of Australia & Ors (2000) FLC 93-038 87 605 - 87 607. The husband argued that it is not enough for the party issuing the subpoena to raise “a speculative possibly” that the documents sought would assist the resolution of the dispute. Rather, the husband relied on Andrew Garret Wine Resorts v National Australia Bank Ltd (No.6) (2005) 92 SASR 419 at [428] that:
The party supporting the subpoena must demonstrate that the documents sought in the subpoena are of real relevance to the issues in the case. It must be more than an outside chance that something useful might turn up in the documents.
The husband further argued that subpoenas are merely a fishing exercise and should be set aside. In that respect, the husband referred to Ryder v Lee (2009) FamCA 531 where, at [35], the Court referred to Anton & Malitsa (2009) FamCA 70 where at [32] Cronin J said:
It is clear that a subpoena must specify with reasonable particularity the documents which are required to be produced. A subpoena ought not be issued simply requiring the recipient to search for and produce all such documents as he may have in his possession or power relating to a particular matter. That subpoena must be clear, precise and enable the recipient to go direct to the documents.
In defining the concept of “fishing”, the husband further referred to the decision of Cronin J in Anton & Malitsa (supra) where his Honour noted at [41] that:
…‘fishing’ occurs where a person pursues a stranger to the litigation to discover evidence. That question can be answered in this case on the basis of whether or not there is some legitimate forensic purpose involved.
The Law
The power of the Court to issue a subpoena is set out in Part 15.3 of the Rules. Equally, the Court has power to set aside a subpoena so issued: Hatton (supra).
The relevant stages of having a third party bring documents to court were described in Hatton (supra) at [38], by reference to National Employers’ Mutual General Association v Waind and Hill [1978] 1 NSWLR 372, as being a three step process:
The first [step] is obeying the subpoena, by the witness bringing the documents to the court and handing them to the judge. This step involves the determination of any objections of the witness to the subpoena, or to the production of the documents to the court pursuant to the subpoena. The second step is the decision of the judge concerning the preliminary use of the documents, which includes whether or not permission should be given to a party or parties to inspect the documents. The third step is the admission into evidence of the document in whole or in part; or the use of it in the process of evidence being put before the court by cross-examination or otherwise…This application by the applicant companies concerns the first step referred to in Hatton (supra)...
Rule 15.26 relevantly enables a person or corporation named in the subpoena to apply for an order that the subpoena be set aside in whole or in part (Rule 15.26(1)(a)).
Further, Rule 15.26(1)(c) enables such a named person or corporation to seek “to be paid for any loss or expense relating to …the production of a document in compliance with the subpoena.”
A subpoena must only be used for a legitimate forensic purpose. In considering this issue it is unnecessary for the party issuing the subpoena to establish actual relevance.[1] However, it is necessary for the party seeking to rely on the subpoena to establish that the documents sought have “apparent relevance” to the issues in the substantive proceedings before the Court.[2]
[1] See Casley-Smith v The District Counsel of Stirling (1989) 51 SASR 447 at [445-7].
[2] See Dupont & Chief Commission of Police and Anor [2015] FamCAFC 64 at [40] applying National Employers Mutual General Association Limited v Waind & Hill [1978] 1 NSWLR 372 and Hatton v Attorney General of the Commonwealth of Australia & Ors (2000) FLC 93-038.
In that context, it is not enough for a party seeking to uphold a subpoena to show that the documents might lead to “a train of inquiry” which might assist his or her case.[3] This is to be distinguished from the process of discovery where such a motive may be permissible.[4]
[3] See McMillan Incorporated v Bishopgate Investment Trust (1993) 4 All ER 998.
[4] See Mulley v Manifold (1959) 103 CLR 341 per Menzies J at 345 referred to in T & D [2006] FamCA 1560 at [22].
While it is the case that the bar for establishing relevance is not high[5] the party seeking to rely upon the subpoena must non-the-less establish that it is “on the cards” that the documents would bear upon and have relevance to the issues in the substantive case.[6]
[5] See Burchell v Hill [2010] VSC 96 and Hall & Hall and Anor (Objection to Subpoena) [2014] FamCA 407.
[6] See Alister v R (1984) 154 CLR 404 and discussion in Martin & Martin and Anor (No. 2) [2014] FamCA 232 at [28].
Expressed in the reverse, it is not legitimate to issue a subpoena on the basis of “an outside chance” that something useful might turn up in the documents.[7]
[7] See R v Ridgeway (1998) 72 SASR 73 at 10.
A subpoena is also at risk of being set aside if its terms are so wide that “…it imposes an onerous task on a stranger [to the litigation] to collect and produce documents many of which have no relevance to the litigation.”[8]
[8] See National Employers Mutual General Association Limited v Waind & Hill [1978] 1 NSWLR 372 at 382.
In terms of “fishing”, it is not legitimate for a party to issue a subpoena with a view to determining whether the issuing party has a case at all.[9]
[9] See Unitingcare – Unifam Counselling & Mediation & Harkiss and Anor [2011] FamCAFC 159 where Coleman J refers to the decision of Jordan CJ in Commissioner for Railways v Small (1938) 38 SR(NSW) 564 at 574-5.
In deciding that a subpoena to a third party should be set aside in the context of revealing confidential counselling pursuant to section 10E of the Act, Coleman J in Unitingcare – Unifam Counselling & Mediation & Harkiss and Anor [2011] FamCAFC 159 undertook a useful analysis of the general law and, at [72], summarised the position as follows:
There is a material distinction between seeking production of documents which, if they exist, can be readily identified and produced in circumstances where such documents may be admissible in evidence, and seeking the production of unspecified documents in the hope that, when produced, they may reveal something capable of being admissible in evidence. The former course is permissible according to general law, and s 10E of the Act. The latter offends both. Given the terms of s 10E, the subpoena to Unifam, drawn in the terms in which it was, can be seen as oppressive.
In that same context, in Ryder & Lee [2009] FamCA 531, Burr J adopted the following passage from the decision of Gray J in Andrew Garrett Wine Resorts (supra) where his Honour said at 428:
It is not enough for the party issuing the subpoena to raise a speculative possibility that the documents sought would assist the resolution of the dispute. The party supporting the subpoena must demonstrate that the documents sought in the subpoena are of real relevance to the issues in the case. It must be more than an outside chance that something useful might turn up in the documents.
In summary, it is not enough for a party issuing the subpoena to raise a speculative possibility that the documents sought would assist the resolution of the dispute. The party supporting the subpoena must demonstrate that the document(s) sought in the subpoena are of real relevance to the issues in the case. It must be more than an outside chance that something useful might turn up in the documents.
To avoid being set aside as merely “fishing”, or as being oppressive, a subpoena must specify with reasonable particularity the documents which are required to be produced.[10]
[10] See Hatton v Attorney General of the Commonwealth of Australia & Ors (2000) FLC 93-038 at 87 603.
As has been noted, a subpoena that is tantamount to discovery is likely to be set aside as an abuse of process. As an extension of that principle, it is impermissible for a subpoena to be used to rectify inadequate discovery by a party to the proceeding. In Macks v Tuck & Ors & QBE Insurance (Australia) Ltd(No.4)[2007] SASC 255, Bleby J said at [49] that in such a case:
It seems to me that the more appropriate course for the defendants to follow is to seek an order for further and better discovery from the plaintiffs, if they have a genuine concern about the adequacy of the plaintiff’s discovery and if they can point to reasons why that appears to be inadequate.[11]
[11] See also Ryder & Lee (2009) FamCA 531 at [42].
As an alternative to setting aside a subpoena, the court may vary its terms.[12]
[12] See Lucas Industries Ltd v Hewitt (1978) 18 ALR 555 at [577].
Discussion
There is a strict obligation of full and frank disclosure imposed on parties to property proceedings in the Family Court.[13] The primary reason that the wife has issued the subpoenas to the applicant companies is her concern regarding the inadequacy and slowness of the husband’s compliance with his obligation as a party to these proceedings pursuant to those Rules.
[13] See Rules 13.01 and 13.07 of the Family Law Rules.
The concerns of the applicant wife are summarised in her affidavit sworn on 5 March 2015 where she attests:[14]
15. I am concerned that [Mr G Merhi] has not made full and frank disclosure in these proceedings including that [Mr G Merhi’s] financial statement filed 4 April 2014 does not declare all [Mr G Merhi’s] assets and financial resources.
16. I have formed this this view where;
(a) Our lifestyle could [not] have been funded from [Mr G Merhi’s] and my income alone…
(b) I dispute that the money borrowed from [Mr E Merhi Holdings Pty Ltd] is a genuine debt…
(c) I believe that his family business paid for some of our personal expenses during our marriage…
(d) [Mr G Merhi] worked for his family business and arranged to receive a lower salary than he would achieve elsewhere because of entitlements or expectations to property that [Mr G Merhi] now disputes he has in interest in or about which he will not give disclosure…
17. There are a number of assertions made by [Mr G Merhi] about our financial position that I cannot test from the documents I have been provided…
18. I am concerned that I will be prejudiced in these proceedings if I am not able to access the appropriate documents to test the husband’s assertions about our marital assets and resources. Also, I say that the cost to me, as well as the necessity for protracted litigation is much greater if I am not provided with these documents.
[14] At paragraphs 15 – 18.
While the applicant may well have a legitimate concern regarding the adequacy and timeliness of the husband’s disclosure in this matter, that concern does not justify issuing subpoenas to third parties to the litigation that are in the nature of “fishing” or which are oppressively broad in their terms.
I have formed the view that, other than in respect to those companies where the husband either had an interest, held office and/or was an employee, the subpoenas are inappropriate. Essentially, they are speculative in the sense that they are “a train of inquiry” that might assist the wife’s case rather than it being “on the cards” that they will result in the production of documents that will be relevant to the issues in the case. To that extent the subpoenas to those companies amount to “fishing” and should be set aside.
I therefore set aside those subpoenas addressed to:
a)MerhiCo Finance Pty Ltd (the second applicant);
b)Merhi Group Holding Company Pty Ltd (the seventh applicant);
c)C Pty Ltd (the eighth applicant); and
d)Merhi Bros Holdings Pty Ltd (the eleventh applicant).
The subpoena to the first, third, fifth, sixth, ninth and tenth applicant companies are for a legitimate purpose in that they are addressed to companies where the husband either has or held an interest and/or was or is an office holder or employee. Subject to appropriate variation those subpoenas are upheld. In that respect, as will be identified below, those subpoenas are too broad in terms of the volume of documentation that they are seeking non-parties to this litigation to produce and for that reason should be varied.
The subpoena to the first applicant company (X Pty Ltd) requires the production of documentation in respect to forty properties for the period from 1 January 2009 to 22 December 2014 and is, for that reason, oppressive. I therefore propose to vary the Schedule to the subpoena to the first applicant to read:
1.Documents including but not limited to bank statements, credit accounts, EFT transfers, cheques or cheque butts, book keeping records, emails, memoranda relating to or evidencing the provision of financial benefit, by way of Directors fee, dividend, income, or otherwise to [Mr G Merhi] born … 1965, in respect to the period from 1 January 2009 to 22 December 2014.
I consider that the subpoena to the third applicant company (A Pty Ltd) is oppressive to the extent that it requires the production of documents relating to applications for finance, business plans and cash flow forecasts. I therefore propose to vary the Schedule to the subpoena to A Pty Ltd (the third applicant) as follows:
1.Documents including but not limited to bank statements, credit accounts, EFT transfers, cheques or cheque butts, book keeping records, emails, memoranda relating to or evidencing the provision of financial benefit, by way of Directors fee, dividend, income, or otherwise to Mr G Merhi born … 1965, in respect to the period from 1 January 2009 to 22 December 2014
2.Financial statements including balance sheets and profit/loss statements in respect to the period 1 January 2009 until 22 December 2014.
3.Tax returns in respect to the period 1 January 2009 to 22 December 2014.
4.A statement of indebtedness as at 22 December 2014.
The Schedule to the subpoena to the fourth applicant company (B Pty Ltd) is far more specific in so far as it is limited to four properties. I therefore uphold that subpoena, subject to varying paragraph 8 of the Schedule to the subpoena to read:
8. Any settlement statement or any other record of the application of funds to or for the benefit of Mr G Merhi from the sale of the properties.
The subpoena to the fifth applicant company (Merhi Brothers Pty Ltd) is too broad for reasons similar to that addressed to the first applicant. In particular, the subpoena to the fifth applicant requires the production of documentation in respect to fifteen properties for the period from 1 January 2009 to 22 December 2014 and is, for that reason, oppressive. I therefore propose to vary the Schedule to the subpoena to the fifth applicant to read:
1.Documents including but not limited to bank statements, credit accounts, EFT transfers, cheques or cheque butts, book keeping records, emails, memoranda relating to or evidencing the provision of financial benefit, by way of Directors fee, dividend, income, or otherwise to Mr G Merhi born … 1965, in respect to the period from 1 January 2009 to 22 December 2014.
I similarly find the subpoena addressed to the sixth applicant company (Merhi Brothers Investments Pty Ltd ) to be similarly oppressive and propose to vary the Schedule to that subpoena as follows:
1.Documents including but not limited to bank statements, credit accounts, EFT transfers, cheques or cheque butts, book keeping records, emails, memoranda relating to or evidencing the provision of financial benefit, by way of Directors fee, dividend, income, or otherwise to Mr G Merhi born … 1965, in respect to the period from 1 January 2009 to 22 December 2014
2.Financial statements including balance sheets and profit/loss statements in respect to the period 1 January 2009 until 22 December 2014.
3.Tax returns in respect to the period 1 January 2009 to 22 December 2014.
4.A statement of indebtedness as at 22 December 2014
The Schedule to the subpoena to the ninth applicant company (D Pty Ltd) is similar to that issued to the fourth applicant and is far more specific in so far as it is limited to two properties. I therefore uphold that subpoena, subject to varying paragraph 8 of the Schedule, to the subpoena to read:
8. Any settlement statement or any other record of the application of funds to or for the benefit of Mr G Merhi from the sale of the properties.
The subpoena addressed to the tenth applicant company (Mr E Merhi Holdings Pty Ltd) is also far more specific in its wording and, subject to narrowing paragraph 5, I propose to allow that subpoena. I propose to vary paragraph 5 of the Schedule to read:
5. Any expert valuation or any other record of which indicates or records the value of any real property owned by Mr E Merhi Holdings Pty Ltd that has been or is occupied by Mr G Merhi and/or Ms Merhi.
In respect to the subpoena to F Pty Ltd (the twelfth applicant) which, as noted, is the accountant for the eleven other applicants, I note that counsel for the applicant companies indicated that in so far as the twelfth applicant has documents in its possession that fall within the terms of the subpoenas to the first, third, fifth, sixth, ninth and tenth applicants that such documents would be produced to the wife.
I therefore propose deferring consideration of the subpoena to the twelfth applicant until such time as the wife has the opportunity to inspect documents produced by the first, third, fourth, fifth, sixth, ninth and tenth applicants pursuant to the subpoenas as varied by these orders.
In that respect I will also make orders that, subject to the wife executing a confidentiality agreement, the wife be granted access to inspect the documents so produced pursuant to the varied subpoenas.
I further propose that, upon the execution of such a confidentiality agreement, that leave be granted to the parties and their legal representatives to inspect the documents so produced by these varied subpoenas.
I will also invite the parties to file and serve brief written submissions in respect to the issues of costs including the costs of complying with the subpoenas in accordance with the timetable set out in the orders I have made.
I certify that the preceding fifty-six (57) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 30 July 2015.
Associate:
Date: 30.07.2015
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