Plaintiff v Defendant

1 On 23 December 2020, the plaintiff issued a subpoena pursuant to order 42A of the Rules[1] directed to Nicole Jane Bauld in her capacity as Trustee for the Gail Margaret Harrison Trust (the Trust). The subpoena was not served until 7 January 2021. It specified the date by which the document sought to be produced as 18 January 2021.

2 The documents sought by the subpoena were the Trust Deed of the Trust and, for the period from 1 July 2015 to 'date', the following documents:

(a) all Financial records, including profit and loss statements, balance sheets, depreciation schedules, asset register, loan accounts and bank statement;

(b) minutes of meetings of trustees;

(c) all and any Loan agreements; and

(d) beneficiary statements showing amounts paid to beneficiaries whether by way of loan, distribution or howsoever otherwise.

3 By letter to the Prothonotary dated 15 January 2021, the Solicitor acting for the defendant in this proceeding, John Bennison, objected on behalf of the defendant to 'production' of the subpoenaed documents. Rule 42A.07 entitles an addressee of a subpoena or a person having a sufficient interest, other than a party, to object to production or to the inspection of subpoenaed document. By r 42A.08 a party is entitled to object to the inspection of the documents and must state the grounds of that objection before the day specified in the subpoena.

4 As it turns out, the subpoenaed person has not produced any documents to the Prothonotary in response to the subpoena. A practical and non-pedantic approach should be taken to the interpretation of the Order.[2] For this reason I propose to treat the objection to the subpoena as an objection by the subpoenaed person, who is the defendant in a different capacity from her capacity as the executor of the deceased estate, to the production of the documents.

5 The grounds stated in the letter to the Prothonotary are that:

(a) discovery is not ordered in Part IV proceedings unless the applicant can establish that the discovery sought relates to a question in the proceeding and that special circumstances exist which justify the making of the order sought;[3]

(b) the principle applies with equal force to informal requests for information as it does to formal applications to discovery; and

(c) the defendant contends that issuing a subpoena is an attempt to go behind the limited basis of discovery in Part IV matters and would be a clear abuse of the Court's process. A subpoena should not be used for the purposes of obtaining discovery and, more particularly, should not be used to go behind the rule which limits discovery. Moreover, there is no interlocutory or other application on foot that would satisfy the requirements of r 42A.01(l)(a) of the Rules.

6 The procedure under O 42A is directed to obtaining the production of documents for evidence before the hearing of an interlocutory or other application in a proceeding, or the trial of a proceeding. Seeking production to assist a party to plead its case is not within O 42A.[4] By parity of reasoning, it is not available to formulate a case in a proceeding commenced by originating motion.

7 The requirement that the document is required for evidence:

(a) conveys an intention that the r 42A procedure should not be used as a substitute for non-party discovery;[5] and

(b) means that a document may potentially be required for evidence, either in‑chief or in cross‑examination.[6]

8 The dominant consideration is the test for relevance, that is, whether there is a legitimate forensic purpose in seeking the document_.__[7]_ It is the duty of the court, where the issue is raised, to require the party calling on a subpoena to produce documents to identify expressly and precisely the legitimate forensic purpose for which access to the documents is sought and to refuse access unless such an identification is made.[8]

9 The relevance of a document to the proceeding alone will not substantiate an assertion of legitimate forensic purpose.[9] There is no legitimate forensic purpose if the party is seeking to obtain documents to see whether they may be of relevance or of assistance in his or her case.[10] Where a party fails to demonstrate a legitimate forensic purpose, the Court should refuse access to the documents and set aside the subpoena.[11]

10 In proceedings commenced by Originating Motion, discovery of documents may only be had by order of the Court.[12] In discovery applications in Part IV proceedings it is established law that discovery will not be ordered unless the discovery relates to an issue in the proceeding and some special circumstance justifying the making of the order is demonstrated.[13]

11 The plaintiff was the husband of the deceased. Under the Will of the deceased he was left the use for life of the half of the matrimonial home, 22 Marshall Road, Metung, Victoria (the House), not owned by him (until he no longer lives in the house or cohabits with another person) and was given absolutely the deceased's half interest in a property at 50 Metung Road, Metung, Victoria. The house and the residue are then left to the deceased's children (by her earlier marriage) Peter James Bauld, Anthony Justin Bauld and the defendant. By her Will the deceased also appointed Anthony Justin Bauld as a trustee of the Trust pursuant to the power of Appointment in the Trust Deed, replacing the deceased. The defendant is the continuing trustee of the Trust.

12 The inventory of assets and liabilities filed by the executor discloses real estate valued at $500,000, being the half interest in the House, cash of about $20,500, a boat valued at $120,000, a motor car valued at $15,000 and personal chattels valued at $3000 (total assets of about $658,500) and liabilities of credit card debt of about $13,400 and a loan owed to the Trust of $546,788, (total liabilities of about $560,188).

13 The plaintiff seeks an order for a greater contribution from the estate comprising the transfer to him of the entirety of the estate, namely the House, the boat and the car.

14 According to the evidence given by the plaintiff in his affidavits:[14]

(a) in 2018 the deceased's father died and left a significant legacy to her. A separate trust was established for her and these funds are held in that Trust;[15]

(b) trust funds were used to purchase a property at 21/62 Wattletree Road, Armadale (Wattletree property). It was registered in the joint names of the deceased and the defendant. All of the funds that were used to pay for the purchase of the Wattletree property were provided by the deceased;

(c) he produces a copy of a loan agreement between the Trustees of the Trust and the deceased dated 12 October 2017 pursuant to which the Trust lent the deceased $260,000 secured by a charge over the Wattletree property. This loan agreement was provided by the defendant's solicitor;

(d) the deceased told him that she had distributed funds from the Trust to each of her children, thought to be $200,000 each, by way of loan. Otherwise, he does not know the extent to which she had taken funds from the Trust and benefited her children; and

(e) he seeks access to the accounts of the Trust so as to ascertain the extent to which the other beneficiaries of the estate have had benefits conferred upon them outside of the estate. He also wishes to make an enquiry as to what other assets might in fact comprise a part of the estate. He seeks access to her trust documents and financial statements so as to ascertain what is a fair value for his claim made in this proceedings.

15 Although it is clear that the application is not one for discovery, nor is it strictly a substitute for discovery, as the subpoenaed person is subpoenaed in her capacity as trustee of the Trust, the plaintiff proceeds on the basis that for the subpoena to stand he must establish that:

(a) the relevant documents relate to a question in the preceding as presently framed; and

(b) special circumstances exist that justify the production of the documents.

16 The plaintiff's affidavits squarely put the following matters in issue:

(a) the proper identification of estate assets;

(b) the value of the estate assets; and

(c) the extent to which the deceased's children had benefits conferred upon them during her lifetime.

17 The answers to these issues forms the basis and extent to which the plaintiff has a claim against the assets of the Estate.

18 The following circumstances comprise 'special circumstances' for the purposes of this application:

(a) the defendant's conflict of interest arising from her position as the proving executor and trustee of the Trust. She has an irreconcilable conflict. On the one hand, she has an obligation in her capacity as executor of the Will of the deceased to maximise the assets available in the Estate. On the other hand, she has a duty in her capacity as trustee of the Trust to maximise the trust assets for the benefit of the beneficiaries of it;

(b) the discrepancy between the inventory of assets and liabilities and the Trust loan agreement. The inventory of assets and liabilities of the Estate provides that there is a liability owed to the Trust in the sum of $546,788. The loan agreement provided by the Estate's solicitors provides for the Loan Amount of $260,000. There is nothing contained in the loan agreement to found a liability of that amount;

(c) at least a portion of the plaintiff's superannuation was, in effect, absorbed by the Trust. All of the plaintiff's superannuation was used to purchase business assets through a corporate trustee; and

(d) the extent to which the plaintiff would be prejudiced if the material were not made available for the proceeding. The Trust was established by the deceased upon receipt of a significant sum of money inherited from her late father, in the sum of approximately $5 million. There is dispute about the extent to which the Trust was used to benefit the deceased's children. There is further dispute as to what might be the proper ownership of various assets, including the House and the Wattletree property.

19 If the documents identified in the subpoena are not made available to the plaintiff, then there is a considerable risk that the identification and value of Estate assets will be unable to be disputed by the plaintiff, and the extent to which other eligible persons have benefitted will remain unknown.

20 I put it to the plaintiff's Counsel, Mr Alexander Campbell, and he agreed, that it was his contention that the documents are relevant to some of the factors to be considered in making family provision order pursuant to s 91A of the Administration and probate Act 1958 (Vic) (A & P Act), in particular those specified in s 91A(2)(d) and (h) as factors the Court may take into account, namely:

(a) the financial resources, including earning capacity, and the financial needs at the time of the hearing and for the foreseeable future of any other eligible person or beneficiary of the estate (s 91A(2)(d)); and

(b) any benefits previously given by the deceased to any eligible person or beneficiary (91A(2)(h)).

21 It was also submitted that in some way there may have been a severance of the joint tenancy pursuant to which the deceased and the defendant held the Wattletree property, so that the interest of the deceased fell into the estate. I confess I did not understand how this was said to, or could, arise from the facts set out in the affidavits filed by the plaintiff.

22 Counsel for Ms Bauld, as trustee of the Trust, Mr Peter Pascoe, submitted, in summary:

(a) there is no legitimate forensic purpose for the subpoena. It is impossible before the issues are defined by the affidavit material to know whether the factors identified in s 91A(2)(d) and (h) are issues in the proceeding. If the defendants do not profess to have financial need or a financial competing claim, so that the plaintiff is competing with the deceased's freedom of testation rather than with the other beneficiaries, then the financial position of the beneficiaries and any benefits they received from the deceased during her lifetime will be irrelevant;

(b) it is thus impossible at this stage to establish or know the relevance of the documents sought by the subpoena to the issues in the proceeding. For this reason the subpoena is premature and should be set aside;

(c) there is no interlocutory or other application on foot that would satisfy the requirements of r 42A.01(l)(a) of the Rules. That is, there is no suggestion that the documents are required for evidence as required by the Rule. The trial is remote and the usual orders for subpoenas usually await the making of trial orders;

(d) there is no available inference from the provision by the solicitors for the defendant (who are also the solicitors for the trustees of the Trust) of the loan agreement that there is a discrepancy between the loan of $260,000, the subject of that agreement, and the liabilities to the Trust, disclosed in the inventory of assets and liabilities, of $546,788. There is no evidence for example that the loan of $260,000 was the only loan made to the deceased by the Trust;

(e) the submission that the subpoena is necessary to determine whether the assets or liabilities of the estate are correctly recorded in the inventory, or necessary to establish what are the assets of the estate, is unfounded; and

(f) the subpoena is for these reasons, at this stage, an abuse of process and should be set aside.

23 In so far as the subpoena may be considered as directed to the defendant as executor of the estate, it is plainly open to the objection that it is being used a substitute for discovery and that will not be allowed. But that is not the basis of the subpoena because it is clearly addressed to the trustee of the Trust. The question arises whether there is a legitimate forensic purpose in seeking the documents and that involves identifying the relevance of the subpoenaed documents to the issues in the proceeding and whether they are required for evidence.

24 It is well established that the fact that the subpoenaed documents relate to one or more of the specific matters in s 91A(2) of the A & P Act does not demonstrate that the documents sought relate to an issue in the proceeding. The answer to that question is to be determined by reference, in this kind of proceeding, to the issues disclosed by the pleadings (if there are any, and that is unusual in Part IV proceedings) or the affidavit material filed by the parties in the proceeding_._[16]

25 No substantive affidavits have been filed by or on behalf of the defendant or the other beneficiaries of the estate. For the documents sought to be relevant, and for there to be a legitimate forensic purpose for the documents to be subpoenaed, there needs to be evidence filed by or on behalf of the defendant as to whether there are competing claims by other beneficiaries, whether those beneficiaries are in need and whether their interests in the estate may be affected by benefits they received from the deceased during her lifetime.

26 Despite the factors identified in s 91A(2) of the A & P Act, it remains a matter for the parties to determine the issues and the scope of the Court's inquiry.[17] Knowledge of the defendant's and other beneficiaries' financial resources and needs will not assist the plaintiff in discharging his burden of proof with respect to the jurisdictional questions_._[18]

27 It has been accepted over many years that, if a beneficiary says nothing as to their financial position or other claims on the testator's bounty, then the Court is fairly entitled to assume that the beneficiary has no special claim other than relationship and that, in particular, they have adequate resources upon which to live: Anderson v Teboneras.[19]

28 I note, however, the comment made by Redlich J in Harris v Bennett (No 3) that:

If a beneficiary is not intending to make a claim against the estate based upon financial need it is desirable that such a position should be adumbrated, either in the affidavits filed or in a pleading. Given the amended form of the statute and matters to which a court must have regard it is undesirable that a court should be left to make assumptions or draw inferences from the absence of material filed....[20]

29 In my view this is matter that ought to be taken up by defendants in the conduct proceedings under Part IV of the A & P Act. I would expect that the defendant's affidavits in response to the plaintiff's affidavits should make clear whether the three children of the deceased who are beneficiaries of the estate, who are all eligible persons under the A& P Act, themselves have a financial need in competition with the plaintiff.

30 The commencement of proceedings under Part IV does not carry with it a general and unrestricted licence (including the use of the power to subpoena documents) to delve into the affairs of actual or potential claimants or beneficiaries.[21] In Blair v Blair_[22]_ Harper J was dealing with a costs issue arising from subpoenas directed to two companies which were said to be relevant to the financial resources of the defendant. Harper J said:

It cannot follow, however, that in every case the Court must examine to the last minute detail the financial resources of every beneficiary of every estate upon which a claim is made under Part IV of the Act. On the contrary, the Court should in my opinion make it clear to both the parties and their legal representatives that the mere commencement of proceedings under the Part does not carry with it a general and unrestricted licence (including the use of discovery and the power to subpoena documents) to delve into the affairs of actual or potential claimants or beneficiaries.

Unless this is made clear, a potential danger may become real. It is that, given the relatively recent amendments to the provisions of Part IV, courts will be swamped with evidence merely because that evidence concerned matters to which (following those amendments) the courts must have regard. But "having regard" to a matter does not necessarily mean examining it under a microscope. It is vitally important that a sense of proportion be retained. Otherwise, cases under Part IV will become a travesty of wasted time, money and other resources. Justice cannot be administered by such means.[23]

31 Insofar as the plaintiff seeks the documents to 'make an enquiry as to what other assets might in fact comprise a part of the estate', this is entirely fishing and not a proper purpose of a subpoena. It is not a legitimate forensic purpose and will not be permitted.[24]

32 Whether there are grounds to conclude that any of the documents sought from the Trust are relevant to issues in the proceeding must await the filing of the defendant's affidavit or affidavits. The subpoena is premature.

33 The defendant's objections to the subpoena are good objections. The subpoena should be set aside, without prejudice to the plaintiff's right to issue a fresh subpoena if the affidavits filed by or on behalf of the defendant show that there is a legitimate forensic purpose for production of the documents sought by it.

34 The defendant submitted that the costs of the objection should follow the event. In light of the success Ms Bauld has had, I consider that her costs should be paid by the plaintiff.

[1] Supreme Court (General Civil Procedure) Rules 2015 (Vic).

[2] Pico Holdings Inc v Voss [2002] VSC 269 (Gillard J) at [26]; op cit Liberty Financial Pty Ltd v Scott [2004] VSC 382 (Smith J) at [21].

[3] Dinakis & Zurkas v Zurkas & Ors [2013] VSC 79.

[4] Kenneth Taylor (Vic) Pty Ltd v Grocon Pty Ltd [1999] VSC 242.

[5] Burchell v Hill [2010] VSC 96, [15]; See generally Commissioner of the Australian Federal Police v Magistrates' Court of Victoria, [2011] VSC 3; followed by Kyrou J in DPP v Debono [2012] VSC 350 [197]; Woolworths Ltd v Svajcer, [2013] VSCA 270 (Nettle, Ashley and Neave JJA) at [40]-[47]; HRF v MAN Civil Constructions Pty Ltd & Others (No.2) [2014] VSC 613, [23] - [30] (HRF); Webb v Wheatley [2015] VSC 153 [55(e)] (Webb v Wheatley).

[8] Ali Tastan (1994) 75 A Crim R 498, 504; R v Saleam (1989) 16 NSWLR 14, 18 (Hunt J); Webb v Wheatley [56].

[9] Attorney-General (New South Wales) v Chidgey 2008] NSWCCA 65 , [59]; Webb v Wheatley [55(e)].

[10] Carroll v Attorney-General (NSW) (1993) 70 A Crim R 162, 181.

[11] R v Saleam (1989) 16 NSWLR 14, 18. See also R v Sergi [1998] 1 Qd R 536; R v Saleam [1999] NSWCCA 86, [11]; Webb v Wheatley [55(g)].

[12] Rule 29.07 of the Rules.

[13] Harris v Bennett [2004] VSC 171, [11] - [14]; reported as Harris v Bennett (No 3) [2004] VSC 171; (2004) 8 VR 425; Dinakis & Zurkas v Zurkas & Ors [2013] VSC 79; Re Fitzgerald; Voss-Lassetter v Piacun [2020] VSC 784.

[14] Plaintiff's affidavits sworn 16 December 2020 and 27 January 2021.

[15] Counsel for the defendant stated that it was a Will Trust.

[16] Harris v Bennett [2004] VSC 171, [14]; reported as Harris v Bennett (No 3) [2004] VSC 171; (2004) 8 VR 425.

[17] Harris v Bennett [2004] VSC 171, [36].

[19] [1990] VicRp 47; [1990] VR 527, 535. See also Harris v Bennett (supra), [18] and [27]-[32].

[20] Harris v Bennett [2004] VSC 171, [43].

[21] Blair v Blair [2002] VSC 131, [2]-[3]; Harris v Bennett (supra) [50].

[22] [2002] VSC 131.

[24] Alister v The Queen [1984] HCA 85; (1984) 154 CLR 404; R v Saleam (1989) 16 NSWLR 14, 17, 414; Commissioner for Railways v Small [1938] NSWStRp 29; (1938) 38 SR (NSW) 564, 575; Re Don [2006] NSWSC 1125, [26].