Solicitors:
Clyde & Co (Plaintiff/Applicant)
WMD Law (Second Defendant/Respondent)
File Number(s): SC 2016/176014
[2]
Judgment
The plaintiff, Mr Mark Gasnier, and the second defendant, Mr Dean Gasnier, are brothers.
The third and fourth defendants, Mr John Gasnier and Mrs Janene Gasnier, are their parents.
For convenience, and without intending any disrespect or over familiarity, I will refer to these family members by their given names.
Mark and Dean are the sole directors and shareholders of the first defendant, Gasnier Pty Ltd, the trustee of the Gasnier Family Trust.
Mark, Dean, John and Janene are beneficiaries of that trust.
Mark and Dean have fallen out and there is now a deadlock within Gasnier Pty Ltd.
The disputes between Mark and Dean are many and various. The matter is fixed for hearing for 10 days commencing 21 October 2019.
On 16 April 2019 Dean issued a large number of subpoenas.
On 26 April 2019 Mark filed a notice of motion seeking to have those subpoenas set aside.
Four subpoenas remain in dispute, namely those addressed to:
1. David Mackay Real Estate Pty Limited;
2. HSBC Australia Holdings Pty Ltd;
3. St George Illawarra Dragons Rugby League Football Club Pty Ltd; and
4. a solicitor, Mr Wayne Lodge.
Each of the subpoenaed parties has, without objection, produced documents in response to the subpoenas.
The question now is whether Dean has demonstrated that there is a legitimate forensic purpose for the production of the documents sought.
To have a legitimate forensic purpose it must be shown that it is likely the documentation sought will materially assist on an identified issue or there is a reasonable basis beyond speculation that it is likely the documentation will so assist: Rinehart v Rinehart [2018] NSWSC 1102 at [43] (Ward CJ in Eq); ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307 at [9], [21]-[22].
The parties agree with this summary of the background contained in an affidavit sworn by Mark's solicitor, Mr Edward Burrell:
"These proceedings concern a family trust established in 2006, the governance and management of the trust (and its trustee - [Gasnier Pty Ltd]), and a property development undertaken by the trustee.
In 2015 and 2016 the board of the trustee (then, and still, comprising [Mark] and [Dean], who were also, and remain, the sole and equal shareholders of the trustee) fell into dispute and became deadlocked. Consequently, these proceedings were commenced in June 2016, with [Mark] seeking, by way of relief, orders for inter alia [Dean's] production of materials; the replacement of the trustee; and [Dean's] repayments to the trust of authorised payments from the trustee.
Shortly after, in August 2016, [Dean] filed and served a cross-summons seeking numerous declarations about the trust, trustee and property development.
…
On 19 August 2016, the Court made orders…for the appointment of a referee, accountant Fiona Bateman…to determine a number of questions (set out in the schedule to the orders) relating to contributions to the trust.
Between around September 2016 and May 2017, [Mark] and [Dean] engaged in extensive correspondence with the Referee, which included the provision, by [Mark] and [Deane], of substantial materials and submissions to the Referee.
On 10 May 2017, the Referee provided a draft of her report (addressing the questions referred to in the schedule to the Orders…) to [Mark] and [Dean] and invited any further comment. Accordingly, between around May 2017 and March 2018, [Mark] and [Dean] engaged in further correspondence with the Referee, providing additional materials and submissions.
On about 28 March 2018, the Referee handed down, and provided to the Court, her final report".
An issue between Mark and Dean is whether their contributions to the development by Gasnier Pty Ltd of a property in Woolooware were equal.
Gasnier Pty Ltd purchased the Woolooware property in 2008 primarily with funds of Mark. Mark and Dean entered into an agreement pursuant to which, on various terms, Dean would be responsible for the costs of developing the property, with the intended outcome that, at the completion of the development, the contributions of Mark and Dean to Gasnier Pty Ltd would be equal. The Woolooware property was redeveloped. The construction works were completed during 2011.
One of the Referee's conclusions was that Mark and Dean did not make equal contributions to the Woolooware development, as had been intended by their agreement. The Referee concluded that Dean contributed $191,942 less than Mark.
The Referee's report has not yet been adopted. Both Mark and Dean seek various adjustments to the Referee's conclusions. The Court has ordered that those matters be determined at the final hearing.
[3]
Procedural history of this motion
Mark's motion of 26 April 2019 was referred to me from the Technology & Construction motions List on 7 June 2019.
As neither counsel had prepared written submissions, and because of the evident complexity of the matter and the multiplicity of documentary categories in the four subpoenas, I directed each party to serve and provide to my Associate written submissions setting out, in relation to each category in each subpoena:
1. the legitimate forensic purpose sought to be achieved by the documents sought in each category of the subpoenas; and
2. the issue or issues in the proceedings, identified by reference to paragraphs in the pleadings and any evidence adduced by the parties, to which the documents sought are said to be relevant.
I noted the agreement of the parties that I could determine the matters in dispute on the papers, unless either party sought an oral hearing.
I received submissions from Mr Meyerowitz-Katz for Dean on 14 June 2019 and from Mr Byrne for Mark on 23 June 2019.
In his submissions Mr Byrne submitted that Mr Meyerowitz-Katz had, in his submissions, referred to documents and made submissions not justified by the evidence adduced by Dean on the motion. To answer that submission, Mr Meyerowitz-Katz caused the matter to be listed for oral hearing so he could tender a bundle of documents. On 3 July 2019, I received that bundle of documents, but only as evidence justifying the factual matters contended in Mr Meyerowitz-Katz's submissions.
As it turns out, my decision on the motion does not depend on acceptance or rejection of those matters.
[4]
The subpoenas
In his submissions, Mr Meyerowitz-Katz did not, in terms, address the particular paragraphs of the four subpoenas. Rather he summarised 13 issues which are said to arise in the proceedings and, in passing, made reference to one or other of the subpoenas. Mr Meyerowitz-Katz augmented his submissions with a schedule cross referencing the four subpoenas to the paragraphs in his submissions.
However, Mr Meyerowitz-Katz did not explain, precisely, how the various categories of documents related to the representations. Rather he used words such as "it is likely that the documents will materially assist Dean on this issue".
The adoption of that technique made it difficult for me to understand how Mr Meyerowitz-Katz said that each category in each subpoena might "materially assist" Dean in relation to the issues in question.
I shall deal with each of the subpoenas in turn.
[5]
Subpoena addressed to David Mackay Real Estate Pty Limited
This subpoena seeks the following documents:
1. all documents relating to the sale of 33 Tasman Road, Avalon for the period January 2014 to December 2015 including but not limited to file notes, correspondence, records, listings, offers, file notes and memoranda;
2. all documents in respect of the sale of 14 Tasman Road, Avalon to Mark including documents evidencing deposits made to Mark's St George Bank account for rental income;
3. all lease agreements and rental statements for Mark in respect of 14 and 33 Tasman Road, Avalon including deposits into his St George Bank account; and
4. all documents evidencing offers to purchase 33 Tasman Road, Avalon from Mark between late 2014 to mid-2015.
In relation to the documents in categories (1) and (2), Mr Meyerowitz-Katz submitted that Mark had purchased a property at 33 Tasman Road, Avalon using funds from an ANZ bank loan in the name of Gasnier Pty Ltd without Dean's knowledge, secured it against the Woolooware property, and at the same time settled the sale of a property at 14 Tasman Road, Avalon.
Mr Meyerowitz-Katz then simply submitted that the documents in categories (1) and (2) "go to the allegations regarding the appropriation of the ANZ monies by Mark without Dean's knowledge or consent, and is likely that the documents will materially assist Dean on this issue".
This is simply an ipse dixit to the effect that the documents will materially assist in a relevant way. It is not sufficient to justify the subpoena.
In relation to category (3) Mr Meyerowitz-Katz referred to an assertion by Mark that a financial adviser, Mr George Kolovos, did not have "visibility" over Mark's personal bank account. Mr Meyerowitz-Katz also referred to the fact that Mr Kolovos prepared accounts which included income received from David Mackay Real Estate in respect of rent from the Tasman Road properties.
Mr Meyerowitz-Katz then submitted that "it is likely that the documents will materially assist Dean on the issue of whether Mr Kolovos had visibility over that account".
Again this assertion is not sufficient to justify the paragraph in question.
Mr Meyerowitz-Katz made no submissions in respect of category (4) of the subpoena.
A legitimate forensic purpose for this subpoena has not been established and it should be set aside.
[6]
Subpoena addressed to HSBC Australia Holdings Pty Ltd
This subpoena seeks the following documents:
1. for the financial years 2006 to 2012 (inclusive):
1. all bank statements for a particular account in the name of Mark; and
2. all bank statements for any other account in the name of Mark;
1. all bank statement records provided to Mark or Mr Kolovos of Alexander and Partners during the period 1 January 2009 to 31 December 2012; and
2. for the financial years 2006 to 2012 all bank statements for any company or trust that Mark or Claudine Gasnier (Mark's wife) or John or Janene was a director or signatory of or in the name of Claudine, Mark, John or Janene.
To justify this subpoena Mr Meyerowitz-Katz submitted that:
1. Mark had structured his finances using a complex web of companies and trusts associated with himself, Claudine, and with John and Janene;
2. Mark made some payments to John and Janene in respect of their tax liabilities; and
3. unbeknownst to Dean, funds from Mark's HSBC accounts were deposited into the bank accounts of Gasnier Pty Ltd.
Mr Meyerowitz-Katz then submitted that:
"[I]t is likely that the bank statements will materially assist Dean on the issue of, first, whether the disputed deposits were made with cash provided to Mark by Dean, or whether they were made by Mark from his own funds and, second, the extent to which Mark was effecting transactions through the [Gasnier Family Trust] without Dean's involvement".
I do not find these matters to be sufficient justification for the subpoena. The subpoena calls for a very significant volume of documents falling within a period of six years, including all bank records provided to Mark or Mr Kolovos over a period of four years.
These matters are not sufficient to justify this subpoena. It should be set aside.
[7]
Subpoena addressed to St George Illawarra Dragons Rugby League Football Club Pty Ltd
This subpoena seeks the following documents:
1. in relation to Mark and the 2010 Rugby League season (including documents that fall outside of the 2010 season that relate to Mark's remuneration for the 2010 season):
1. all documents evidencing amounts paid to Mark or to any other entity on behalf of Mark;
2. all documents evidencing payments to Mark's agent SFX for Mark;
3. all documents, agreements and correspondence with sponsors and third parties about third party payments and the provision of other financial or non-financial benefits to Mark; and
4. all documents including correspondence and emails to Globe Project Group Pty Ltd about financial or non-financial benefits to Mark;
1. for the period 2006 to 2011 all documents in respect of Mark's unpaid third party payments;
2. all documents evidencing rental assistance provided to Mark by St George Illawarra Dragons, Globe Project Group or any other entity for the period 2006 to 2012;
3. documents evidencing payments by St George Illawarra Dragons or its sponsors being deposited to Mark's bank account;
4. documents evidencing payments from SFX or St George Illawarra to Mark as non-recourse loans;
5. all payments made to John's St George bank account between 2006 and 2013;
6. all documents or any agreement between Mark, John and Janene in respect of Mark's rugby league playing income being distributed to John and Janene from 2006 to 2013; and
7. all payments made to John for works at Peter Doust's home in Bonnet Bay.
Mark was a professional rugby league player and was employed by the St George Illawarra Dragons Rugby League Football Club during the period referred to in the categories of documents sought from the club.
To justify this subpoena Mr Meyerowitz-Katz pointed to allegations made by Dean that between July 2011 and June 2012 that Mark had deposited amounts "in respect of third party sponsorship deals" into the Gasnier Family Trust account, that those amounts were not declared as income of the Trust and there is "some evidence" that Mark did this in accordance with a strategy devised by Mr Kolovos.
Mr Meyerowitz-Katz submitted that:
"[I]t is likely that the documents [sought] will materially assist Dean in relation to the issue of the alleged 'Unauthorised Loan', the issue of the extent to which Dean was exclusively responsible for the conduct of [Gasnier Pty Ltd's] affairs, and the issue of whether the disputed deposits were made with funds belonging to Mark or Dean".
Again, this broad assertion is insufficient, in my view, to justify the subpoena. It should be set aside.
[8]
Subpoena addressed to Wayne Lodge
This subpoena seeks the following documents:
1. all documents in respect of the purchase and sale of 14 Tasman Road, Avalon by Mark including but not limited to any transfers of funds from Mark's St George bank account;
2. all documents in respect of the purchase and sale of 33 Tasman Road, Avalon by Mark including but not limited to transfers of funds from Mark's St George Bank account;
3. all documents in respect of security for finance that assisted the sale of 14 Tasman Road, Avalon by Mark and the purchase of 33 Tasman Road, Avalon by Mark including but not limited to any directions or instructions/transfers to or from Mark's St George account including any offset accounts;
4. all documents including cheques drawn or cheque directions that assisted the sale of 14 Tasman Road, Avalon and the purchase of 33 Tasman Road, Avalon by Mark and Claudine including but not limited to any correspondence to George Kolovos, George Massourites, Theo Pambris or any other party and payment from Mark's St George bank account including any offset account;
5. all documents including drafts and file notes for wills prepared from 2006 to date by John, Janene and Mark;
6. all documents in respect of Hillsdale and Alexandria properties owned by Mark including any correspondence or notes indicating the use of Dean's name on St George Bank mortgages held by Mark;
7. documents relating to any loan agreement between Claudine and Ashlee Warren;
8. all documents in respect of the resignation of John and Janene as directors of Gasnier Pty Ltd; and
9. all correspondence and leases sent to or from Mr Kolovos for 55 Wills Road, Woolooware.
This subpoena sought one further category of documents, which is not pressed.
By this subpoena, Dean seeks a wide variety of documents from Mr Wayne Lodge, who is a solicitor who has provided advice to Mark and members of Mark's family.
As to categories (1) to (4), the documents concerning the purchase and sale by Mark of 14 Tasman Road, Avalon are said to go to an issue concerning "disputed deposits" into the Gasnier Family Trust account. The "dispute" in relation to these deposits is evidently as to whether Dean or Mark provided the funds.
However, as Mr Byrne who appeared for Mark pointed out, the question of whether Mark or Dean made the "disputed deposits" was a focus, if not the focus, of Ms Bateman's report of 28 March 2018. Ms Bateman has made precise findings about the "disputed deposits".
An issue for the final hearing will be whether adjustment should be made to Ms Bateman's report to reflect those sought by Mark in his Amended Summons and by Dean in a Notice of Motion he filed on 17 May 2018.
However, it is not appropriate for Dean to now issue subpoenas seeking to challenge Ms Bateman's findings. Generally it is not appropriate to re-agitate factual findings made by a referee at the hearing: Seven Sydney Pty Ltd v Fuji Xerox Australia Pty Ltd [2004] NSWSC 902 at [12] (McDougall J). The general rule is that a reference should not "be treated as some kind of warm up for the real contest": Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 at 563 (Gleeson CJ); Seven Sydney at [12].
In any event, Mr Meyerowitz-Katz did no more than submit that the documents in categories (1) to (4) were likely to materially assist Dean in relation to the question of who made some of the disputed deposits and that, like the subpoena addressed to David Mackay Real Estate, "the documents go to the allegations regarding the appropriation of the ANZ loan monies by Mark without Dean's knowledge or consent, and it is likely that the documents will materially assist Dean on this issue".
Again, I do not find these submissions sufficient to justify these paragraphs of the subpoena.
As to category (5), which relates to wills prepared for Mark, John and Janene because, for reasons unexplained in Mr Meyerowitz-Katz's submissions, these are said to be likely to assist Dean in relation to the issue of whether Mark, John and Janene knew of an alleged "Rent Reduction Arrangement" concerning the Woolooware property.
In the absence of any submissions as to how the documents called for are "likely to materially assist" Dean in relation to these matters, I am not satisfied that this category of the subpoena is justified.
Category (6) calls for documents in relation to properties owned by Mark in Hillsdale and Alexandria.
These documents are said to "go to Mark's ability to invest in" the Gasnier Family Trust in September 2007, and to establish whether Mark used a particular real estate agent and whether Mark used Dean's name to discharge loans over these properties.
Mr Meyerowitz-Katz's submissions do not identify any basis upon which Dean could think that Mr Lodge would have documents dealing with these matters.
This paragraph is truly "fishing" and has not been justified.
Category (7) calls for documents relating to any loan agreement between Claudine and a Ms Ashlee Warren.
Mr Meyerowitz-Katz pointed to evidence said to show that Mark and Claudine met with Mr Lodge regarding such a loan agreement and that "Dean says that this is relevant because the loan would have been made by Mark during the period in which the disputed deposits were made, and therefore goes to Mark's capacity to make contributions to the [Gasnier Family Trust] over that period".
It appears to me to be a matter of speculation as to whether the documents called for could cast light on that question which, in any event, as it relates to "disputed deposits", has now been determined by Ms Bateman.
Category (8) calls for documents concerning the resignation of John and Janene as directors of Gasnier Pty Ltd.
There is a dispute between Mark and Dean as to who instructed Mr Lodge to effect the removal of John and Janene as directors of Gasnier Pty Ltd.
Mr Meyerowitz-Katz submitted that "Dean seeks the instructions given to Mr Lodge in order to establish who gave the instructions and resolve this evidentiary issue".
But the documents called for range far wider than documents relevant to whether it was Mark or Dean who gave the relevant instructions. Mr Meyerowitz-Katz did not seek to justify the breadth of the category that appears in the subpoena.
Finally, in category (9) documents are sought in respect of correspondence and leases sent to or from Mr Kolovos concerning the Woolooware property.
Again, Mr Meyerowitz-Katz submitted, without elaboration, that these documents are likely to cast light on the alleged "Rent Reduction Arrangement" and that explanation does not justify this category of documents.
This subpoena should also be set aside.
[9]
Conclusion
Each of the subpoenas should be set aside.
Dean must pay Mark's costs of this application.
The parties should bring in short minutes to give effect to these reasons.
[10]
Amendments
08 July 2019 - [38(3)] Typographical error corrected
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 08 July 2019