Disclosure in Family Law Cases Getting It Right

Transcription

1 Page 1 Disclosure in Family Law Cases Getting It Right Family Law Residential 2013 Alison Ross Partner HopgoodGanim Sydney Williams Barrister-at-Law INTRODUCTION [1] Lying at the heart of the administration of justice, and the determination by the Family Law Courts of cases to achieve an outcome which is just and equitable (or, in parenting matters, an outcome which is in a child s best interests), is a party s compliance with a duty of disclosure. [2] There is nothing new in that statement; nor have there been any radical alterations to the Family Law Rules 2004 (Cth) (the Rules). Rather, it is too often the case that in emotionally charged matrimonial proceedings a party s duty to make full and frank disclosure can become blurred or lost. As this paper will attempt to demonstrate, the duty is onerous in its terms, has its temporal limits (particularly with third parties or cases involving wills and trusts or overseas elements), and provokes ethical considerations for the lawyers acting for a party who is not so frank in the discharge of that duty. LAWYERS RESPONSIBILITIES [3] Various obligations are cast upon a lawyer acting for a party to proceedings in the family law jurisdiction. This paper does not attempt to define all of those duties, but emphasises the responsibility a lawyer assumes in a party s compliance with their disclosure obligations. That responsibility is made plain by rule 1.08 of the Rules where it is specified that a party has a responsibility to promote and

2 Page 2 achieve the main purpose of the Rules by, inter alia, complying with the duty of disclosure (rule 1.08(1)(b)), and a responsibility is burdened upon a lawyer for a party to comply, as far as possible, with the party s responsibilities to promote and achieve the main purpose of the Rules: see rule 1.08(2). [4] Consequently, a legal practitioner s ethical duties necessarily come into focus in the discharge of that responsibility. [5] It remains long established that a legal practitioner s primary duty is to the Court, and which is paramount to the duty owed to a client: see Giannarelli v Wraith (1988) 165 CLR 543; also, Rondell v Worsley [1969] 1 AC 191 at 227. The rules of professional conduct in Queensland (and each other Australian State and Territory) now entrench that principle: see Australian Solicitors Conduct Rules 2012; Barristers Rules 2007 (Qld). [6] At times, the discharge of that duty may take some courage on the lawyer s part, insofar as the performance of that duty may be to the disadvantage of the client, or require the legal practitioner to act in a manner contrary to the client s instructions: see Giannarelli v Wraith (supra) per Mason CJ. [7] A long-standing or warm relationship to a particular client, or a desire to see that client succeed in litigation, cannot, under any circumstance, erode that duty to the Court. Occasions arise where legal practitioners have, for whatever reason, arguably lost sight of that principle: see, for example, Lambert v Jackson & Anor [2010] FamCA 357 per Watts J at [189] [201] and [2011] FamCA 275 (costs judgment). [8] As that authority under reference demonstrates, such conduct will not be tolerated and will promptly result in a practitioner being referred for disciplinary proceedings: see, also, Kyle v Legal Practitioner s Complaints Committee [1999] WASCA 115 per Ipp J. [9] It is necessary that a legal practitioner acting for a party to proceedings advise the party of the duty to make full and frank disclosure, the ongoing nature of that duty, and the possible consequences of any breach of same. Occasions may arise where a client refuses to accept that advice and, if desirous of not disclosing a fact or document that is relevant to the case, or which is otherwise required to be disclosed

3 Page 3 by the Rules, the legal practitioner is obliged to take appropriate action, and which may include the cessation of their continuing to act for that party. THE DUTY OF FULL AND FRANK DISCLOSURE [10] Chapter 13 of the Rules governs a party s disclosure obligations in the Family Court of Australia and includes, inter alia, the mechanisms for disclosure, the class of documents which are exempt from disclosure (rule 13.12) as well as service of specific questions (Part 13.3). [11] Hence, Chapter 13 effectively categorises three classes of disclosure, namely: a duty of disclosure with respect to financial cases (Division ); a duty of disclosure of documents in all cases (Division ) and the ability in certain cases to serve a request to answer specific questions (Part 13.3). [12] Similar provisions are contained in the Federal Circuit Court Rules 2001 in relation to proceedings in that Court. Overarching Duty [13] Whilst some distinction is drawn between the disclosure obligations accruing in a financial case as opposed to a parenting case, as we have addressed below, there is an overarching duty of disclosure in all cases that disclosure be made of each document that is or has been in the possession, or under the control, of the party disclosing the document and is relevant to an issue in the case: see rule [14] In Oriolo and Oriolo (1985) FLC , the Full Court confirmed the clear obligation on parties to make full and frank disclosure of all relevant financial circumstances, citing with approval the judgment of Smithers J in Briese and Briese (1986) FLC as follows: in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. full and frank disclosure was required as a matter of principle in light of the fact that it was the duty of the Court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of discretion. This is quite different from common law litigation between strangers, in which such a general duty does not exist, and obligations would only exist in so far as statute or Court rules required.

4 Page 4 In my view it is fundamental to the whole operation of the Family Law Act in financial cases, that there is an obligation of the nature to which I have referred. [15] There are, however, limited class of documents which are exempt from the breadth of that disclosure obligation, as specified in rule and which include: a document for which there is a claim for privilege from disclosure; or a document a copy of which is already disclosed, if the copy contains no change, obliteration or other mark or feature that is likely to affect the outcome of the case. [16] It is plain that rule preserves a party s common law right to exempt from disclosure documents which are the subject to a valid claim for privilege. [17] The duty to make disclosure starts with the pre-action procedure for a case and continues until the case is finalised, whether by a judgment or compromise: see rule 13.01(2). It is important that parties to litigation, who are likely to be unfamiliar with their duty to disclose, be reminded that the duty to make full and frank disclosure is a continuing obligation. [18] The obligation of disclosure under the Rules (or the Federal Circuit Court Rules as the case may be) is quite unique. The administration of justice in those Courts depends upon the making of full and frank disclosure between spouses of their financial affairs. The duty is unique in the sense that it may be contrasted to common law or civil litigation between strangers and where the obligation to make disclosure only arises by the relevant Rules of Court or statute. [19] Regardless of whether the proceedings concern property or parenting matters, a party is obliged by rule to declare their awareness of the duty to the court, and to each other party, to give full and frank disclosure of all information relevant to the issues in a case, in a timely manner, and to proffer an undertaking that, to the best of that party s knowledge and ability, compliance has, and will be, achieved of that duty: see rule That undertaking must be filed at least 28 days before the first day before the Judge: see rule

5 Page 5 Financial Cases [20] Division of the Rules regulates the duty of disclosure required by parties to a financial case in the Family Court of Australia. The term full and frank disclosure is defined by rule 13.04(1) as: Full and frank disclosure (1) A party to a financial case must make full and frank disclosure of the party's financial circumstances, including: (a) (b) (c) (d) (e) (f) the party's earnings, including income that is paid or assigned to another party, person or legal entity; any vested or contingent interest in property; any vested or contingent interest in property owned by a legal entity that is fully or partially owned or controlled by a party; any income earned by a legal entity fully or partially owned or controlled by a party, including income that is paid or assigned to any other party, person or legal entity; the party's other financial resources; any trust: (i) (ii) (iii) (iv) (v) (vi) of which the party is the appointor or trustee; of which the party, the party's child, spouse or de facto spouse is an eligible beneficiary as to capital or income; of which a corporation is an eligible beneficiary as to capital or income if the party, or the party's child, spouse or de facto spouse is a shareholder or director of the corporation; over which the party has any direct or indirect power or control; of which the party has the direct or indirect power to remove or appoint a trustee; of which the party has the power (whether subject to the concurrence of another person or not) to amend the terms; (vii) of which the party has the power to disapprove a proposed amendment of the terms or the appointment or removal of a trustee; or (viii) over which a corporation has a power mentioned in any of subparagraphs (iv) to (vii), if the party, the party's child, spouse or de facto spouse is a director or shareholder of the corporation; (g) any disposal of property (whether by sale, transfer, assignment or gift) made by the party, a legal entity mentioned in paragraph (c), a corporation or a trust mentioned in paragraph (f) that may affect, defeat or deplete a claim:

6 Page 6 (i) (ii) in the 12 months immediately before the separation of the parties; or since the final separation of the parties; and (h) liabilities and contingent liabilities. (2) Paragraph (1) (g) does not apply to a disposal of property made with the consent or knowledge of the other party or in the ordinary course of business. (3) In this rule: "legal entity" means a corporation (other than a public company), trust, partnership, joint venture business or other commercial activity. [21] In the Federal Circuit Court of Australia, the relevant provision is contained in rule of the Federal Circuit Court Rules, which is in substantially similar terms. [22] A party starting, or filing a response or reply to, a financial case must file a Financial Statement at the same time and, if that does not fully meet the duty of disclosure, the party is obliged by rule 13.5(2) to file an affidavit providing further particulars. [23] A Financial Statement (or affidavit if particulars are provided therein) is required to be amended within 21 days after a significant change of circumstances from the information originally set out therein: see rule Hence, the continuing nature of the duty. [24] There are additional obligations cast upon parties to a property case, and in particular requiring the exchange of specified documents at least 2 days before the first court date (see rule 12.02) and facilitating the exchange of certain documents (as ordered) in addition to other documents mentioned in rule which have not been exchanged, within 28 days after a case assessment conference (see rule 12.05). [25] There is an intimate connection between the operation of rules (full and frank disclosure) and (property case exchange of documents before first court date). In particular, rule provides the broad obligation to make full and frank disclosure of that party s financial circumstances. Rule thereafter mandates the specific documents which fall under the umbrella of the disclosure required by rule

7 Page 7 [26] The Rules in the Federal Circuit Court of Australia reflect similar obligations upon a party s obligation to make full and frank disclosure. While there are rules for disclosure, however, the Federal Circuit Court is intended to operate as informally as possible and there are therefore limitations on a party s right to seek disclosure and, for example, issue interrogatories in proceedings before that Court. [27] Section 45(1) of the Federal Circuit Court of Australia Act 1999 (Cth) provides that: Interrogatories and discovery are not allowed in relation to proceedings in the Federal Circuit Court of Australia unless the Federal Circuit Court of Australia or a Judge declares that it is appropriate, in the interests of the administration of justice, to allow the interrogatories or discovery. [28] Section 45(2) then provides that, in determining whether or not to make such a declaration, the Court must have regard to: Whether allowing the interrogatories or discovery would be likely to contribute to the fair and expeditious conduct of the proceedings; and Such other matters as the Court may consider relevant. [29] It has been held that section 45 of the Federal Circuit Court of Australia Act creates a rebuttable presumption that discovery and interrogatories will not be permitted in the Federal Circuit Court, consistent with Parliament s direction that the Court should act informally and use streamlined procedures (see, for example, NAQR and Ors v. Minister for Immigration (No.1) [2002] FMCA 271). It has further been held that, if a declaration is made to permit discovery or interrogatories, reference should be made to the relevant rules on discovery or interrogatories in the Family Court, or the Federal Court, as the case may be. [30] In the later decision of Abrahams v. Qantas Airways Ltd (No.2) [2007] FMCA 639, Lucev FM (as his Honour then was) set out a range of factors that the Court should consider on an application for an order for discovery in the Federal Circuit Court. His Honour said that: In summary, it appears that in order to obtain an order for discovery in this Court the Court must determine on the available evidence that it is in the interests of the administration of justice to do so,

8 Page 8 and in making that determination must have regard to whether allowing discovery would be likely to contribute to the fair and expeditious conduct of the proceedings, and such other matters as the Court considers relevant. These other matters might include: (a) The relevance of any documents sought to be discovered; (b) The volume of documents sought to be discovered; (c) Whether there is a Court book containing relevant documents and the extent to which relevant documents are included in the book; (d) Whether discovery would narrow the issues; (e) Whether both parties seek discovery; (f) Whether there is consent to discovery; (g) Whether discovery is of benefit in the litigation; and (h) The effect of discovery on litigants, especially, vulnerable litigants. [31] His Honour further held in a later decision of Sherwood Overseas Co Pty Ltd v. Jaymac International Pty Ltd (No.2) [2008] FMCA 690 that: Discovery is confined to what is in issue on the pleadings; The documents sought must relate to the issue/s and may be relevant if they advance a party s case or damage the other party s case. Alternatively, if they can lead to a course of inquiry having that effect (that is, it throws light on the case); A document deemed relevant is one which helps explain the controversy between the parties. [32] Rule 14.02(1) of the Federal Circuit Court Rules confirms that a declaration may be made under section 45(1) of the correspondence Act to allow discovery, either on the application of a party or on the Court s own motion. The Federal Circuit Court Rules further provide, at rule 14.02(2), that, if such a

9 Page 9 declaration is made, the Court may make an order for disclosure generally, in relation to particular classes of documents or particular issues or by a specified date. In that instance, disclosure is generally by way of an affidavit of documents filed in accordance with rule [33] In practice, it is common in family law proceedings for at least some level of discovery to be ordered in Federal Circuit Court proceedings, particularly insofar as they pertain to financial issues. Family law practitioners would be well acquainted with directions issuing from Judges of the Federal Circuit Court requiring the exchange of Annexure A or Annexure 1 documents, comprising items such as bank statements, income tax returns and financial statements and orders for disclosure are often the subject of agreement between the parties with a view to identifying or narrowing the issues before the Court. [34] Further, there are a range of other provisions contained in the Federal Circuit Court of Australia which bear consideration including: Rule enables the Court to make an order requiring a party to file an affidavit about whether a particular document has been in the possession of a party or what has become of such a document if it is no longer in the possession, power or control of that party. Rule provides that, if a document or affidavit filed by a party refers to another document, another party may request the party in writing for a copy of that document or to produce it for inspection. If such a request is made, the party requested must, within 4 days of the request: (a) provide a copy of the document or appoint a time within 7 days where it is available for inspection; (b) make a claim for privilege, identifying the grounds for that claim; or (c) state that the document is not in that person s possession, custody or power and provide any knowledge about the whereabouts of the document. In relation to family law proceedings, Chapter 2 of the Rules provides additional Rules for disclosure in Federal Circuit Court proceedings, including:

10 Page 10 (a) Rule requires the filing and service of a financial statement in proceedings in relation to financial matters, including a requirement that it include a superannuation information form if the party filing the financial statement has a superannuation interest; (b) Rule provides that, unless the Court otherwise orders, a party required to file a financial statement must serve on each other party who has an address for service in the proceedings a range of documents including the party s 3 most recent taxation returns and assessments, a completed superannuation information form, copies of the last 4 business activity statements lodged if the person has an ABN and, if there is a partnership, trust or company in which the party holds an interest, copies of the 3 most recent financial statements and the last 4 business activity statements lodged by the partnership, trust or company. Those documents must be served within 14 days after the first court date. A similar provision for proceedings for maintenance is contained at rule of the Federal Circuit Court Rules. (c) If there is a change in the circumstances of a party who has filed a financial statement, the party must amend the statement or affidavit as soon as practicable by filing an affidavit setting out the amendment (if it can be set out clearly in 3 pages or less) or, otherwise filing an amended financial statement. [35] In circumstances where, in proceedings in either the Family Court of Australia or the Federal Circuit Court of Australia, it is a common requirement that parties to proceedings disclose information pertaining to companies or trusts in which they hold an interest, considerations arise when dealing with, inter alia, cases involving trusts, corporations or overseas elements, as we will deal with below. SANCTIONS [36] Rule of the Rules provides: Rule If a party does not disclose a document as required under these Rules: (a) the party: (i) must not offer the document, or present evidence of its contents, at a hearing or trial without the other party s consent or the court s permission;

11 Page 11 (ii) (iii) may be guilty of contempt for not disclosing the document; and may be ordered to pay costs; and (b) the court may stay or dismiss all or part of the party s case. [37] Rule of the Federal Circuit Court Rules similarly provides that: Documents not disclosed or produced Unless the Court gives leave, a party is not entitled to put a document or a copy of a document in evidence or give, or cause to be given, evidence of the contents of a document: (a) if: (i) (ii) (iii) the party has filed an affidavit of documents; and the document was, when the party made the affidavit, in the possession, custody or control of the party or had been, in the possession, custody or control of the party; and the document was not referred to in the affidavit or in any other affidavit of documents filed by the party under an order of the Court; or (b) if the party has been served with a subpoena to produce and does not produce the document. [38] Rule of the Rules is concerned, by its terms, with the failure to disclosure a document. What happens, however, when a party deliberately engages in non-disclosure, not of a document, but of a property or similar interest and, by extension, fails to make full and frank disclosure as required by rule 13.04? [39] It is often recited that cases involving deliberate non-disclosure by a party present considerable difficulty for the other party to the litigation to establish the fact of deliberate non-disclosure, let alone establishing the quantum thereof: see Weir v Weir [1992] FamCA 69 at [32]; Black and Kellner (1992) FLC ; Chang and Su (2002) FLC ; Kannis and Kannis (2003) FLC [40] Once a finding of deliberate non-disclosure is made, the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature : Weir and Weir (supra) at para [33]. [41] On such a finding being made, the Court has jurisdiction to make an order going beyond the identified property: ibid, para [35].

12 Page 12 [42] Once that finding is made: the court can, if the evidence permits, ascribe a value for that non-disclosed interest or asset; or make an adjustment in favour of the other party taking into account the effect of the non-disclosure, under section 75(2)(o) of the Family Law Act 1975 (Cth). [43] A trial judge has a discretion as to the approach to be adopted in cases involving findings of nondisclosure and may include the adding back to the pool of a sum representative of the value ascribed to the non-disclosed interest or asset, in which case it may not warrant an additional adjustment in the other party s favour under section 75(2)(o) of the Act: see the approach of Forrest J in Romano & June, unreported, [2013] FamCA (on appeal). [44] Alternatively, it is open to a trial judge to add back a sum representative of that non-disclosed interest or asset, and to also make an adjustment in the other party s favour under section 75(2)(o) in consequence thereof: see Lambert v Jackson [2010] FamCA 357 per Watts J. [45] In either case, it is plain that a court will make necessary findings to ensure that, despite the nondisclosure, the outcome to the other party remains just and equitable. [46] Further, it must be noted that the consequences for a party engaging in deliberate non-disclosure is not confined solely to the assessment of the property pool, or to the assessment of contributions. That conduct is a relevant consideration to any application for costs pursuant to section 117 of the Act. DISCLOSURE OF TRUST DOCUMENTS [47] Questions of disclosure against a party who is a beneficiary of a discretionary trust, or a director of a corporate trustee, necessarily forces analysis of the terms of rule being the duty of disclosure documents. Rule states: The duty of disclosure applies to each document that:

13 Page 13 (a) (b) is or has been in the possession, or under the control, of the party disclosing the document; and is relevant to an issue in the case. [48] The question of disclosure of trust documents arose for consideration by O Reilly J in Schweitzer & Schweitzer [2012] FamCA 445. [49] In Schweitzer & Schweitzer (supra) the wife sought orders for the husband to disclose documents in relation to two trusts, namely: copies of financial statements and tax returns for the Schweitzer Investment Trust and the Schweitzer Family Trust for the most recent financial years, including balance sheets, profit and loss accounts and depreciation schedules; bank statements for the Schweitzer Investment Trust and the Schweitzer Family Trust for the previous two years; and copies of minutes or resolutions of the corporate trustees of the Schweitzer Investment Trust and the Schweitzer Family Trust relating to trust distributions for the preceding three financial years. [50] Each trust was a discretionary trust of which the husband was a beneficiary. The appointor of each trust was the husband s father, and the husband was a director of the corporate trustee of each trust. The wife s application for disclosure was premised on the fact that as a director of the corporate trustees, the husband was entitled to the financial records of the companies (section 290 of the Corporations Act 2001 (Cth)), and as a beneficiary of the trust he was entitled to access of the financial documents in order to ascertain whether the trusts were being properly administered. For the purposes of determining the application, O Reilly J assumed that the documents were relevant to an issue in the case. [51] Her Honour determined (at paragraph [15] of her judgment) that, for the purpose of rule 13.07(a) of the Rules, the documents sought by the wife were not, and could not be, in the possession of nor under the control of the husband in his personal capacity, and were not in the possession of nor under the control of the husband in his capacity as a director of the corporate entities who are the trustees of the two trusts and neither in his capacity as a beneficiary.

14 Page 14 [52] Relevantly, the finding was made that the fiduciary relationship which exists between the director of a corporation and the corporation, or the trustee and the beneficiaries of the trust, is such that whilst there is a right of access to documents by the trustee or director of a corporation (see section 290(1) of the Corporations Act 2001 (Cth)), access to and the use of such documents can only be exercised for trust or corporate purposes (see para [20] of the judgment). The right to inspection or access only arose in consequence of that fiduciary relationship, and her Honour held that it is not legally correct to assert that the enforceable right to inspect or obtain copies of documents arose in a personal capacity. [53] After a careful analysis of authorities and the relevant rules of Court or legislation under which those authorities were decided, O Reilly J determined that within the meaning of rule 13.07(a) of the Rules, possession means not mere physical possession (custody) but possession within the accepted meaning of the legal right to possession : ibid, at para [45]. Her Honour determined that the fiduciary obligation which pertains to directors of corporations and trustees is such that there is no right to possession, or control, in any personal capacity, and the right of access only arose to documents strictly for the purposes of the corporation or the trust: ibid, at para [47]. Again, insofar as the standpoint of a beneficiary who has the right to require the due administration of the trust, the beneficiary is entitled to access of the financial documents of the trustee but only for the purpose of obtaining that there is due administration: para [50]. [54] Her Honour concluded (at para [58]): Any documents of the corporate trustees to which the husband has access, he has access as a fiduciary such that, relevantly, such documents are not in his possession or under his control. The disclosure sought, thus, could be sought only against the two corporate trustees, either by way of their joinder, for declaratory or other relief, if the wife be so advised, or short of that, for non-party disclosure relief. [55] O Reilly J refused the disclosure relief the wife had sought. [56] From an evidentiary perspective, it is therefore the case that careful consideration needs to be given when acting for a party from whom disclosure is sought as to the category of document liable to be disclosed and, when acting for a party seeking such disclosure, the appropriate method to achieve that outcome or whether the joinder of other third parties is warranted.

15 Page 15 CASES INVOLVING OVERSEAS LAW [57] Certain evidentiary preparations are required in cases involving overseas law when that overseas law prevents the disclosure of documents to which a party, in proceedings under the Family Law Act and Rules, is obliged to disclose in Australian Court proceedings. [58] Necessarily, the evidence to be adduced to support a party s contentions on matters of foreign law, and the extent to which such foreign law may restrain a party discharging the duty of disclosure under the Rules, will have to be assessed on a case by case basis. There is, however, a general principle of law in Australia that the party who seeks to assert that foreign law differs from domestic law carries a burden of proof. It would therefore be necessary for that party to lead evidence with respect to the laws in that foreign country which preclude those disclosures being lawfully made or, alternatively, the sanction in that overseas country to which a party might be exposed if that disclosure was made. [59] In Cross on Evidence (8th Australian ed) the author expresses the proposition in the following terms (at [41005]): The existence, the nature and the scope of the rules and principles of the law of a foreign jurisdiction are issues of fact to be decided by the Judge on which evidence is receivable; on the other hand, the effect of the application of those rules and principles, as so ascertained, to the particular facts and circumstances of the case before the court is a question of law for the court of the forum, on which evidence is not receivable. Where the relevant rules and principles of foreign law are so framed as to confer discretions on the courts which administer them, the evidence is receivable as to the manner in which those discretions are exercised, with reference to any pattern or course of decision. The general rule is that foreign law must be proved by an expert witness who will, in a disputed or complicated case, give evidence on oath in the ordinary way. In simple routine cases it is not uncommon for the evidence to by affidavit. [60] Whilst sections 174, 175 and 176 of the Evidence Act 1995 (Cth) provide a mechanism by which a statute, proclamation, treaty or act of state of a foreign country may be adduced in a proceeding, there are limitations on the utility of that mechanism and it would likely require, in any event, the calling of evidence to prove the document in a manner specified in those provisions. It is likely, therefore, to be the safest course with respect to the proof of a foreign law that a duly qualified expert be engaged. That person might sensibly be a lawyer practising in the relevant jurisdiction. Necessarily, that person will

16 Page 16 be required to depose to their qualifications and to the relevant law, and it is desirable that the relevant foreign code or statute be produced so that the Australian court may itself consider the proper meaning to be given to the legislation, particularly in the event there are competing views of experts on the interpretation of that foreign law. [61] The potential implications when dealing with a case involving foreign law when that law restricts the disclosure of particular matters, extends not only to the production of documents which might offend that law, but also to a witness giving of oral evidence of those matters and which might then expose the witness to sanction in a foreign court. Questions will arise whether that or a particular witness can be compelled to give that evidence if objection is taken: see section 128 of the Evidence Act 1995 (Cth). This paper does not deal with those implications, which will vary from case to case, but we make that observation as a reminder of the implications of potential breaches of foreign law. [62] Where a party stands behind a foreign law as preventing that party from fulfilling their disclosure obligations in matrimonial proceedings in an Australian court, it is necessary for the party to demonstrate to the Court s satisfaction that the party has provided to the Court all of the information that they may lawfully provide as permitted by that foreign country. [63] When dealing with foreign law which precludes the disclosure of documents which are otherwise liable to disclosure in Australian proceedings, careful preparations are necessary. For instance, if a shareholder register of an overseas country is unable to be obtained because foreign law precludes its production to the public, or precludes its disclosure generally, then when acting for a party against whom it is asserted that they have a beneficial interest in or the control of such an entity, if access can be obtained of a public record which establishes the identity of its shareholding or control, it should be produced; if it is unable to be produced by reason of foreign law, expert opinion should be led on that preclusion, and it should be demonstrated that attempts have been made, albeit unsuccessfully, for the production of that document. [64] By way of emphasis, however, it must be said that careful preparations will be required in each case to attempt to persuade the Court of a party s discharge, to the extent possible if constrained by foreign law, to make the full and frank disclosure demanded by rule of the Rules. Necessarily, those

17 Page 17 evidentiary preparations and investigations will vary from one case to the next, and we do not advance the above considerations as anything more than matters to be considered at an early stage in the preparation for trial. [65] Remember, brief early and brief often. WILLS AND OTHER TESTAMENTARY DOCUMENTS [66] In circumstances where one party perceives that the other party to litigation is likely to receive an inheritance in the future, it is not an uncommon scenario that a request is made (or a subpoena issued) by one party for the production of any wills of, for example, parents of the other party. [67] Such requests are often received, or subpoenas issued sought to be set aside, and it must be remembered that the circumstances within which the Court may be prepared to consider a prospective inheritance are limited and, therefore, the obligation to disclose information about a prospective inheritance must also be limited by a consideration as to whether or not the information can have any relevance to the determination of the proceedings. [68] There have been a number of cases dealing with such scenarios, which have included a consideration of the circumstances in which a parent, for example, or other relative may be required to produce copies of wills or other testamentary documents noting that it will be in rare circumstances that a will of a party s parent is likely to be seen as within that party s power, possession or control. Accordingly, while not strictly related to a party s disclosure obligations (unless the document is in that party s power, possession or control), the question of production of wills commonly arises in conjunction with other issues of disclosure. [69] One of the first decisions dealing with such a scenario was that of White and Tulloch (1995) FLC In that case, the husband served a subpoena directed to the wife s mother requesting production and inspection of her current will, copies of prior wills which contained any benefit to the wife and

18 Page 18 information pertaining to the financial circumstances of the wife s mother including certificates of title of her interests in real estate and information such as details of bank accounts. [70] At first instance, the trial Judge dismissed an application by the wife s mother that she be excused from production of the documents specified in the subpoena and an order was made that the parties have leave to inspect the documents so produced by the wife s mother. [71] On appeal, however, the wife s mother was successful in seeking orders that she be excused from producing some of the documents required under the subpoena. The effect of the orders was such that the wife s mother was only required to produce copies of her current will. [72] The wife and her mother argued that any expectation that the wife may have under the mother s will was irrelevant, whereas the husband submitted that it was relevant as a financial resource or under section 75(2)(o) of the Act. While, on appeal, the Full Court accepted that an expectancy of receipt of an inheritance could not be regarded as a financial resource, there was a basis for admissibility under section 75(2)(o) of the Act. [73] In relation to the question of the disclosure of the wills, the Full Court held that the initial relevance in the particular case needs to be established however once it is it becomes a question of weight and degree. In determining whether or not there was an obligation to disclose, the Full Court held that: There is no absolute rule the ultimate criterion is whether the evidence is or may be relevant; An expectancy of inheritance will not be relevant in many section 79 proceedings relevance must depend upon the nature of the claims being put forward and the facts of the particular case; While the mother was required to produce not only her current will but her revoked wills, it would ordinarily be very difficult to understand the relevance of a revoked will but the suggestion here was that the mother may have changed her will in light of the proceedings and that may need to be investigated;

19 Page 19 It is ultimately a question of fact and degree in a case where the testator had already made a will favourable to the party but no longer had testamentary capacity and there was evidence of his or her likely impending death where there may be a significant estate, and where there was a connection to section 75(2) factors, it would be shutting one s eyes to treat the will as irrelevant; on the other hand, the bald assertion that one of the parties has an elderly relative who has property that may benefit a party is so speculative that it would be inappropriate to contemplate it as relevant in a section 79 determination, it being too remote to affect the justice and equity of the case in any worthwhile way. [74] In this case, the Full Court was not persuaded that production of the mother s revoked wills could have a sufficient connection to the proceedings to justify their production. Further, the detailed information sought by the husband in relation to the mother s financial position could not be shown to be sufficiently relevant to justify the mother, a third party, to produce them for inspection. [75] A similar approach was taken by the Court in a later decision of Scott and Scott (2003) FLC In that case, the husband issued a subpoena to the wife s parents seeking copies of all current and past wills, codicils, testamentary dispositions and other documents evidencing dispositions made by the parents. Prior to the issue of this subpoena, the husband had issued an earlier subpoena in identical terms and an order was made removing the words and past in relation to any past wills or testamentary documents. Despite that, the husband issued a further subpoena to the wife s parents who then made an oral application to set aside the requirement to produce past wills and other documents. [76] The husband submitted that a trust controlled by the wife s parents had only been disclosed after the terms of the first subpoena had been considered. He therefore sought to distinguish the earlier subpoena from the subpoena in question on the basis of the existence of the trust. The Court found that this was not an issue as it was clear that the trust was controlled by the wife s parents and therefore it is the current will that is relevant so far as that matter is concerned unless it is contended that that will is invalid. [77] More recently, the Court considered these issues in the context of the issue of a subpoena by the husband for production of a wide range of documents pertaining to a trust in which the wife held an interest in the case of Read & Chang and Anor [2010] FamCA 876. The evidence was that the trust was

20 Page 20 valued at in excess of $630 million and was to be distributed amongst seven beneficiaries of which the wife was one. The husband sought production from the trustees of the trust for documents including memorandum of wishes or preference and letters of wishes or similar documents. The wife had already received significant distributions from the trust which were being paid annually in increasing amounts. [78] The trial Judge summarised the issues as follows: The husband wishes to be able to better appreciate and therefore better inform the Court what the future is likely to hold for the wife in respect of discretionary distributions and on winding up. The wife knows no more than he does. However, the Trustees admit to holding a document or documents provided by the instigator and source of capital of the trust [the wife s grandfather] for the Trustee s guidance in administration of the trust. Such documents, each known as a memorandum of wishes or wish letter, said to not be binding on the Trustees, may have influenced and may in future influence them in making distributions and in deciding what part of the fund is preserved until winding up of the trust. As I shall demonstrate later, there is at least a tendency to lean toward the view that this type of expression of wishes is to some extent binding on the Trustees. The Trustees acknowledge that they should consider it and have in the past admitted they have been influenced by it, but argue they are not bound by it. [79] The trustees sought to set aside the paragraphs of the subpoena on the basis that: (a) the memorandum of wishes was a confidential document; (b) the subpoena constitutes a fishing expedition and casts its net too wide because the potential for relevance of any memorandum of wishes could only be speculative. The trustees argued that, for the same reasons other courts have refused to permit trust beneficiaries to gain access to a memorandum of wishes, the Family Court in the section 79 proceedings should refuse access to the husband. [80] The trial Judge considered the terms of White and Tulloch (supra) and considered, further, that: If a memorandum of wishes is a document which gives the wife rights to ensure the Trustees exercise their discretion in accordance with it, it is so relevantly similar to the trust deed itself and so similar in a

21 Page 21 relevant way to an unrevoked will of a deceased testator it would be relevant in these proceedings. One would expect to discern from it, if it is disclosed, whether the Trustees are likely to continue to make distributions to the wife before final distribution, whether there are likely to be funds available for distribution on its winding up and whether some of these will pass to the wife. [81] The trial Judge also considered the trustees argument that the document was confidential. His Honour considered that there are exceptions to confidentiality and that the circumstances of this case were such that production should be required. His Honour required, however, that the husband provide an undertaking to maintain the contents of the documents confidential prior to him being granted leave to inspect the documents produced by the trustees. [82] A further consideration of the requirement to produce documents pertaining to a party s parents financial affairs was undertaken by Kent J in MacDowell and Williams and Others [2012] FamCA 479. By way of subpoena, the husband sought certain documents from the wife s parents, both in their personal capacity and in their capacity as the directors of various corporate entities. The subpoena sought both the wife s parents current and any revoked wills and any relevant testamentary documents as well as a range of financial documents from entities of which the wife s parents were directors or shareholders. [83] The wife s parents objected to production of the documents on two main grounds: That the documents sought from them in their personal capacity were not relevant given that both of them still retained testamentary capacity; That the documents sought from them as directors of the entities subpoenaed were not relevant because neither the husband nor the wife had any interest in the entity and because the wife s only link to the companies was a beneficiary of a discretionary trust of which one of the entities was the corporate trustee and the financial statements of that trust had already been disclosed. [84] In relation to the documents sought pertaining to a trust of which the wife was a beneficiary, as referred to above, various documents had already been disclosed by agreement however further documents were sought by the husband. There was no objection to the production of those documents. However, with

22 Page 22 respect to the balance of the documents sought under subpoena from various entities, the husband also submitted that those documents were necessary for the husband to understand the pattern of past distributions, the understanding between the wife, her parents and her siblings and the management and ownership of the various entities. It was submitted that those were matters relevant to the composition of the pool, and the ascertainment of the wife s financial resources. [85] The wife s parents submitted that the documents sought (other than as agreed to be produced) were not relevant including because, in respect of the trust of which the wife was a beneficiary, she was a discretionary beneficiary only and the parents had already decided to use part of the funds for their own purposes. It was further submitted that neither the husband nor the wife had ever been involved in the wife s parents investment business, nor had they ever discussed the business with the parties. [86] His Honour held that the evidence was that the wife did not control any of the entities from which documents were sought by the husband. The husband s position was summarised by the Court as an invitation to the Court to infer that, because the companies bore the wife s name or a version of the wife s name, that the parents intended that she would take control of the companies in the near future. His Honour was not prepared to accept that submission. [87] Kent J found that the wife had no interest in any of the corporate entities attempted to be subpoenaed, had no control over any of the entities and there was no evidence that there had been a pattern of distributions from the trust in favour of the wife (she had only received $28, over a 10 year period). Accordingly, his Honour concluded that there was no satisfactory justification for the husband s attempt to subpoena the documents sought from the corporate entities, except for those which the wife s parents conceded that they would provide. [88] In relation to the testamentary documents sought from the wife s parents, the husband submitted that the wife was likely to benefit from her parents estate which the husband asserted was in excess of $20 million. It was conceded by the husband that the wife s parents continued to have testamentary capacity. His Honour concluded that there was no reason to suppose that the wife was likely to receive any inheritances in the near future, or that any present testamentary directions made by her parents

23 Page 23 would not change prior to their death. Accordingly, there was no basis why the wife s parents should be required to produce the documents to the Court. DISCLOSURE IN PARENTING CASES [89] The question of disclosure in parenting proceedings is one that is commonly overlooked. However, it must be remembered that Part 13.2 of the Family Law Rules relates to all cases determined by the Family Court of Australia, including parenting proceedings. [90] Part 13.2 includes, at its heart, rule which confirms that the duty of disclosure applies to each document that is, or has been, in the possession, or under the control, of the party disclosing the document and which is relevant to an issue in the case. Despite this general duty of disclosure, disclosure still seems to be the exception rather than the norm in parenting matters with many parties overlooking any obligation on the parties to disclose documents relevant to the proceedings. [91] In circumstances where the enquiry of the Court is a consideration of what is in the best interests of the child or children of the parties relationship, the question of disclosure must, it is submitted, be considered even more carefully to ensure that the Court is apprised of all relevant documents in relation to the matter. Practitioners should, therefore, be even more vigilant to ensure that all relevant documents are disclosed and that clients are requested to make disclosure of documents falling within rule of the Rules. [92] The necessity for practitioners to be vigilant is reinforced by rule of the Rules. While contained in the provisions of the Rules dealing with expert reports rather than being contained in Chapter 13 of the Rules, the rule still deals with the question of disclosure. [93] In particular, rule provides that: 15.55(1) A party who has obtained an expert s report for a parenting case, whether before or after the start of the case, must give each other party a copy of the report: