Vacietis v Kempf [2003] ACTSC 108 (12 December 2003)

Last Updated: 22 January 2004

MICHAEL ALEXANDER VACIETIS AND NATALIE ANNE VACIETIS AND EDMUND MARTIN VACIETIS v HEATHER ELLEN KEMPF

[2003] ACTSC 108 (12 December 2003)

PROCEDURE - non-party discovery - objection to inspection by other party - relevance

FAMILY PROVISION - non-party discovery - objection to inspection by other party - relevance

Wills Act 1968, s. 20(1)

Administration and Probate Act 1929, s. 49, schedule 6

Family Provision Act 1969, s. 7, 8

Lebon v Lake Placid Pty Ltd [1995] 1 Qd R 24 at 35-36

Uthmann v Ipswich City Council [1998] 1 Qd R 435 at 450

Botany Bay Instrumentation and Control Pty Ltd v Stewart [1984] 3 NSWLR 98 at 100

Re Excel Finance Corporation Limited (Receiver and Manager Appointed); Worthley v ASC (1993) 113 ALR 543 at 559

Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201

Burt v Agius [2003] NSWSC 461

Crossman v Estate of Crossman [2003] ACTSC 45

No SC 300 of 2003

Coram: Master Harper

Supreme Court of the ACT

Date: 12 December 2003

IN THE SUPREME COURT OF THE )

) No SC 300 of 2003

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: MICHAEL ALEXANDER VACIETIS AND NATALIE ANNE VACIETIS AND EDMUND MARTIN VACIETIS

Plaintiff

AND: HEATHER ELLEN KEMPF

Defendant

ORDER

Coram: Master Harper

Date: 12 December 2003

Place: Canberra

THE COURT ORDERS THAT:

1. The solicitors for the defendant within seven days deliver the documents produced by Hill and Rummery and by Comsuper in response to the notices for non-party production dated 12 September 2003 to the solicitors for the plaintiff.

2. The application be otherwise adjourned to 6 February 2004 for submissions as to costs.

1. Ojars Vacietis died on 5 September 2001, aged 58. He had been married twice. He was first married in 1967: he and his first wife had three children, who are the plaintiffs in this action. He left his first wife in 1997, and took up residence with the defendant. The first marriage was dissolved on 4 March 1998. As part of the divorce proceedings, the deceased agreed, in April 1998, to transfer to his first wife his interest in the former matrimonial home at Chapman, and presumably the transfer took place shortly afterwards.

2. On 9 October 1998, the deceased made a will in which he recited that he had not made provision for his former wife because of the divorce. The will appointed the first plaintiff executor and left the estate to the three plaintiffs equally.

3. The deceased retired from the Public Service in August 1998, having reached the aged of 55. In late September 1998, the deceased and the defendant purchased a house at Wanniassa as tenants in common, the deceased having a one-third interest. In February 2001, the plaintiff was diagnosed as suffering from lung cancer and a related brain tumour, which were the cause of his death seven months later.

4. On 2 August 2001, about five weeks before his death, the deceased married the defendant. The 1998 will was revoked by the marriage: Wills Act 1968, s. 20(1). On 4 August 2001, the deceased sent an email to the first plaintiff informing him that the marriage had taken place. In a further email of 6 August, the deceased said, inter alia "I will have to do a new will. Essentially the disposition of assets will remain the same, although the amount in the rollover fund will be reduced because of my expenses on the trip! I hope you have no problems being one of the executors of the will. Let me know if you have problems. Love, Dad." The first plaintiff responded by email that he had no problems. Notwithstanding this and perhaps understandably having regard to his declining health, the deceased did not make another will before he died.

5. On 6 May 2003, letters of administration were granted to the defendant. The estate has an estimated value, in the opinion of the defendant, at 3 September 2003, of some $250,000, including $100,000 being the value of the one-third share in the Wanniassa house and $134,000 representing the proceeds of the deceased's superannuation.

6. The principal action was commenced by originating application on 6 June 2003, describing the nature of the action as "Family Provision Act" and the relief claimed as "Orders as to distribution in respect of the estate of the late Ojars Vacietis". No pleadings have been filed. Affidavits have been sworn by each of the three plaintiffs and by the defendant.

7. On 12 September 2003, the solicitors for the plaintiff filed copies of notices for non-party production addressed to Hill and Rummery Solicitors, and to Comsuper, seeking production of documents as follows:

Hill and Rummery

To produce your file in respect of the purchase of Ojars Vacietis and Heather Ellen Kempf of the property at 9 Cuthbert Street Wanniassa with the purchase said to have been completed on the 24 September 1998, including a print of trust and office account records.

Comsuper

To produce your file in respect of Ojars Vacietis who died the 5^th day of September 2001 and the file in respect of Heather Ellen Kempf/Vacietis of 9 Cuthbert Circuit Wanniassa.

8. Provision for the production of documents by non-parties is made in Order 34B, which was inserted in the Supreme Court Rules in 1997. A form of notice for non-party production is prescribed.

9. Order 34B Rule 7 relevantly provides as follows:

7(1) If the respondent to a notice for non-party production or any other party to the action -

(a) claims that a document specified in the notice is privileged from production; or

(b) otherwise objects to its production;

the respondent need not produce the document and the applicant for the notice, the respondent or that other party may apply to the Court for a determination in relation to the claim or objection.

...

(3) On an application under sub-rule (1)..., the Court may make such orders as the Court thinks fit.

10. The notices were served on 16 September. They required production of the documents to the solicitors for the defendant. The respondents to both notices produced documents to the defendant's solicitors within the 28-day period stipulated by the notice.

11. There is no suggestion that either of the respondents to the notices has any objection to the documents being inspected by the solicitors for the plaintiff. The objection is by the defendant herself. The plaintiffs, the applicants for the notices, have applied to the Court for a determination under Order 34 B Rule 7.

12. On 2 May 2000, the Court issued Practice Direction Number 2 of 2000, governing production of documents pursuant to Order 34B. The practice direction was designed in particular to deal with the production of documents by medical practitioners, but it applies to all notices under Order 34B. It requires the solicitor issuing a notice to request the respondent to produce documents to the solicitor for the other party in the action, or the solicitor for whichever party in the action may have a claim for privilege. The purpose is to enable that solicitor to examine the documents produced first, and determine whether objection should be taken to their production on the grounds of privilege (my emphasis). The practice direction continues by stating that after inspection, the documents may then be copied by the solicitor first receiving them, and forwarded to the solicitor for the applicant, thus avoiding the need for attendance of solicitors at the premises of the respondent. The practice direction makes clear that the documents may be used only for the proper purposes of the proceeding, and may not be disclosed to others unless necessary for the purpose of the proceeding, or used in any other proceeding. There is a warning that any improper use of the documents may constitute a contempt of court.

13. The defendant objects to the plaintiffs and their solicitors being permitted to inspect the documents. The objection is not based upon privilege. The objection is based upon relevance, breach of the defendant's confidentiality, and the fact that the plaintiffs, it is said, seek the documents for an indirect and improper reason.

14. Generally, as will be seen from the wording of the practice direction, an objection to production of documents to a party for inspection will be based upon privilege. There may, however, be other valid grounds for objection, such as that the documents do not or could not possibly relate to a matter in issue in the action: Lebon v Lake Placid Pty Ltd [1995] 1 Qd R 24 at 35-36 (writ for non-party discovery addressed to insurer and directed to question of whether defendant in personal injury action had policy which might respond to claim set aside); Uthmann v Ipswich City Council [1998] 1 Qd R 435 at 450 (writ of non-party discovery addressed to bank requiring production of documents relating to bank account of wife of plaintiff in personal injury action set aside). Another available ground is that the notice was not served bona fide for the purpose of the pending litigation: Botany Bay Instrumentation and Control Pty Ltd v Stewart [1984] 3 NSWLR 98 at 100 (other party as well as respondent has standing to apply for order setting aside); Re Excel Finance Corporation Limited (Receiver and Manager Appointed; Worthley v ASC (1993) 113 ALR 543 at 559.) (subpoenas issued as part of a strategy to delay examination under the Corporations Law set aside).

15. In relation to relevance, it is necessary to focus on the issues in the principal action. This is not as easy as it might be, because at this stage there are no pleadings. As mentioned above, letters of administration were granted to the defendant on 6 May 2003. The value of the estate was sworn at just on $208,000, though the defendant acknowledges that by 3 September 2003, its value had increased to a little over $250,000.

16. The distribution of an intestate estate is governed by section 49 of the Administration and Probate Act 1929 and by Schedule 6 to that Act. Relevantly for present purposes, where the deceased is survived by a spouse and issue, and the value of the estate exceeds $150,000, the spouse is entitled to $150,000 plus interest from the date of death to the date of payment, plus one-third of the balance. The rest of the balance is payable to the issue of the deceased in equal shares. The evidence and submissions do not go into detail as to the dollar amounts to which each of the plaintiffs is entitled under the schedule.

17. The principal action is brought under the Family Provision Act 1969, section 8 of which empowers the Court to make an order that such provision as the Court thinks fit be made out of an estate for a person entitled to apply. Spouses and children of a deceased are persons entitled under section 7 of that Act.

18. The Court may not make an order unless satisfied that at the date of the order, adequate provision for the proper maintenance, education or advancement in life of the applicant is not available from the estate (s 8)). The Court is to make its decision in consideration of criteria set out in s8(3) in relation to the deceased and applicant, which are as follows:

(a) the character and conduct of the applicant;

(b) the nature and duration of the relationship between the applicant and the deceased;

(c) any financial and non-financial contributions made directly or indirectly by or on behalf of either or both the applicant and the deceased to the acquisition, conservation or improvement of any of the property or financial resources of either or both persons;

(d) any contributions (including any in the capacity of homemaker or parent) by either the applicant or the deceased to the welfare of the other, or of any child of either person;

(e) the income, property and financial resources of the applicant and the deceased;

(f) the physical and mental capacity of the applicant, and the deceased (during his or her life), for appropriate gainful employment;

(g) the financial needs and obligations of the applicant and the deceased (during the life of the deceased);

(h) the responsibilities of either the applicant or the deceased (during his or her life) to support any other person;

(i) the terms of any order made under the Domestic Relationships Act 1994, section 15, with respect to the property of the applicant or the deceased;

(j) any payments made to either the applicant or the deceased by the other, under an order of the Court or otherwise, in respect of the maintenance of the other person or any child of the other person;

(k) any other matter the court considers relevant.

19. It will be noted that as a spouse, the defendant would herself be eligible to make an application. She has not done so. The criteria do not include in specific terms her income, property or financial resources, or the other matters in, for example, criteria (c), (d), (f) or (g) insofar as they relate to her. Such matters could nevertheless be taken into account under criterion (k) if the Court considered them relevant.

20. The principal authority in relation to family provision applications is Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201, in which Mason CJ, Deane and McHugh JJ in the majority judgment said at 208:

It is clear that, under these provisions, the court is required to carry out a two-stage process. The first stage calls for a determination of whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life. The second stage, which only arises if that determination be made in favour of the applicant, requires the court to decide what provision ought to be made out of the deceased's estate for the applicant.

21. At 209, their Honours went on:

The determination of the first stage of the two-stage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance etc. appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.

The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant.

22. The defendant also relies upon a decision on Master McLaughlin in Burt v Agius [2003] NSWSC 461, in which the Master said at paragraph 60:

An applicant for provision under the Family Provision Act must establish his or her claim upon its own merits. An applicant cannot attempt to establish an entitlement to an order for provision by establishing... that the person who receives benefits as a result of the death of the deceased... is in more affluent financial circumstances than the applicant.

23. The plaintiffs also rely on my decision in Crossman v Estate of Crossman [2003] ACTSC 45, where I said (at para 13):

The criteria to be taken into account in an application under the Family Provision Act include the income, property and financial resources of the applicant and the deceased during her life; the financial needs and obligations of the applicant; and the responsibilities of either the applicant or the deceased during her life to support any other person... They do not include the income, property or financial resources, or the financial needs and obligations, or the responsibility to support any other person, of a beneficiary under the will who is not an applicant.

But as I went on to say in the same paragraph:

However, the criteria also include any other matter the court considers relevant..., and ... I am not in a position to say that the information as to those matters... may not ultimately be considered relevant by the court on the hearing of the principal action.

I took the view on that application that it was appropriate for the plaintiffs to issue a notice for non-party production addressed to a family member who was not an applicant.

24. It seems to me that similar considerations apply in this case. The fact that the applicants will need to establish their claims upon their own merits does not mean that the documents produced do not or could not possibly relate to a matter in issue in the action.

25. There is no basis upon which I could be satisfied that the notices were issued for an ulterior motive. It seems to me that the notices were issued because the solicitors for the plaintiffs believed that inspection of the documents might assist them in the preparation of the cases of their clients. The test for relevance is far broader than that of admissibility. As I said in Crossman, I am not in a position to say that the information which may emerge from inspection of the documents might not ultimately be considered relevant by the Court on the hearing of the principal action.

26. The defendant also seeks to avoid production of the documents on the basis that production would reveal to the plaintiffs confidential matters as to her financial affairs. Counsel for the defendants submits that she is involved in the administration of the estate only in her representative capacity. I find this submission somewhat disingenuous. True it is that she is the administrator, but under the rules governing the distribution of intestate estates, she is also, in her personal capacity, the principal beneficiary of the estate. Any order in favour of the plaintiffs will be at her expense. If there is no other basis made out for the setting aside of the notices, the fact that inspection of the documents will reveal details of her financial affairs which the plaintiff would prefer to keep private is not of itself a sufficient basis for setting the notices aside. As is made clear by Practice Direction No. 2 of 2000, the documents, and the information contained in them, may not be used other than for the purposes of the action, any unauthorised use amounting to contempt of court.

27. For these reasons, I order that the solicitors for the defendant within seven days deliver the documents produced by Hill and Rummery and by Comsuper in response to the notices to non-party production dated 12 September 2003 to the solicitors for the plaintiff.

28. In passing I make the point that this is a relatively small estate. Under the rules as to distribution of intestate estates, each of the plaintiffs and the defendant already have an entitlement. I am aware from letters which were in evidence on the hearing of the application that both sides have put forward proposals as to settlement. If the parties are unable to achieve a settlement by agreement between themselves before further legal costs of substance are incurred, I make a strong recommendation that the parties consider an attempt at resolving the dispute by mediation. Otherwise the legal costs on both sides are likely to be out of proportion to the size of the estate.

29. I will hear the parties as to the costs of this application, and for that purpose will list the matter for submissions on the first motion day in the New Year, 6 February 2004.

I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Decision herein of Master Harper.

Associate:

Date: 12 December 2003

Counsel for the plaintiff Mr B A Meagher

Solicitor for the plaintiff Worth and Co

Counsel for the defendant Mr A G Freer

Solicitor for the defendant Ken Johnston Bedford and Co

Date of hearing 14 November 2003

Date of decision 12 December 2003