This was a review of decision made by a Registrar to set aside various subpoenas addressed to a range of entities for documents and information. Those entities were, primarily, corporate trustees for trusts in which the Husband was a beneficiary and the subpoenas sought information about same.
The Husband, the Wife and third-party objectors to the subpoenas disputed whether the:
- Registrar’s decision to set the subpoenas aside was correct (and, thus, whether it should be upheld or set aside); and
- information relating to the trusts was relevant to the property settlement proceeding to be determined between the parties, warranting compliance with the subpoenas issued.
The Court set aside the Registrar’s decision and dismissed the objections to the subpoenas relating to the arguments of the relevance (and other grounds). The Court in doing so required the information regarding the trusts to be produced.
The facts
The parties entered into court orders by consent that the Husband would disclose documents relating to five identified trusts, and any other trusts of which he was a beneficiary. The Wife’s solicitors deposed that they could not properly advise the Wife about the justice and equity of property settlement without full details of the Husband’s assets and liabilities and his financial resources (including trusts in which the Husband was a beneficiary or had a power of appointment or control).
The Husband’s solicitors in a letter to the Wife’s solicitors indicated that:
- G Group was made up of three trusts (B Trust, F Trust and E Trust) and indicated that the Husband was one of five Directors of the corporate trustees of those trusts.
- The Husband was one of the primary beneficiaries but has not enshrined right to capital or income from the G Group.
- The Husband’s interests were, at best, a financial resource.
- The documents relating to the G Group were voluminous but had little practical relevance having regard to the Husband’s lack of control over the G Group.
- The Husband’s notional share of distributions was approximately 16%.
There was further correspondence between the Husband and Wife’s solicitors with limited information about the G Group and the other trusts in which the Husband had an interest. Following the exchange of correspondence, the Husband entered into further court orders by consent to provide disclosure about six nominated trusts.
The Wife issued the subpoenas to obtain documents in relation to the trusts approximately two months after the foregoing court orders were made by the Court. There were various objections to those subpoenas relating to contentions of lack of relevance, containing details of private and confidential information (i.e., about third parties) and commercial confidence.
As part of the objections, an affidavit was produced by 'Mr K' a Director of B Pty Ltd, E Pty Ltd and F Pty Ltd (the corporate trustees of the G Group Trusts). The affidavit set out significant information about the G Group Trusts.
The Wife contended that the documents sought pursuant to the subpoenas were necessary to assist in determining the justice and equity of any property settlement. She also contended that the information from Mr K could be incorrect in circumstances where he is not a lawyer.
It was further contended by the Wife that the documents sought pursuant to the subpoenas would assist to determine whether the Husbands interests in the trusts:
- should form property available for division between the parties;
- are financial resources if they are not property;
- should be valued.
The objectors argued that the subpoenas should be set aside due to the impossibility of valuing the Husband’s interest in the trusts (in addition to the grounds of relevance etc summarised above).
What was the outcome?
The Court determined that the decision of the Registrar to set aside the subpoenas should be overturned so that the subpoenas remained in force.
In reaching its decision, the Court concluded that
- The trust deeds had not been provided and each trust deed was relevant to the case in being relevant to the Husband’s entitlement under the Trusts.
- The law of discretionary trusts is complex. Mr K had offered his construction of each trust deed, but he was not a legal practitioner. The precise nature of the Husband’s entitlement under each trust deed must await a trial.
- It was erroneous to fold one concept of the Husband’s interest as property together with complications about whether they can be valued. They are two separate issues.
- The Wife’s solicitor made an entirely valid point when he deposed to being unable to properly advise the Wife client without the documentation sought in the subpoenas.
What happened next?
There was a further interim decision provided in this matter the following year, being Woodcock & Woodcock (No 2) [2022] FedCFamC1F 173. This involved a dispute between the parties about whether the Husband’s interests in various trusts were capable of valuation.
The Court ultimately determined that the interests were capable of valuation. Keep any eye out for future BN Bulletin’s for more details and information about this second instalment of the Woodcock matter and the implications for parties’ where an interest in a Trust is involved. It remains ongoing.
Issues to note
- The information regarding the construction of the trusts is a matter that is relevant to property settlement disputes between the parties.
- The foregoing information will be subject to each parties’ general obligations to provide disclosure in some cases (depending upon the parties’ interest and roles within the trust) and subject to being subpoenaed as occurred in this case.
- The issue of disclosure in relation to an entity or a trust is not the same as a determination about value of the entity or trust. Parties must ensure they comply with their disclosure obligations and not conflate the issues.
- A failure to comply with disclosure obligations can result in unnecessary and costly legal arguments. They should be avoided.
