Sharman v Paul Schwartz t/as Orion Tax and Accounting Services

By notice of motion filed 2 March 2022, the applicant, acting in her personal capacity, sought the following orders:

However, by the end of submissions, the applicant only sought orders restraining the use by the parties of the documents produced by St George Bank pursuant to the first defendant's subpoena dated 14 December 2021.

The plaintiff's claim arises out of services provided by the first defendant, a chartered accountant, to the plaintiffs in relation to tax obligations, and the remittal of certain moneys to the Australia Tax Office.

Mr Peter Springall, an employee of the first defendant, was tasked with carrying out certain services. The plaintiffs allege they paid moneys into accounts nominated by Mr Springall, and that those moneys were never remitted to the ATO. Mr Springall subsequently passed away in August 2020.

The plaintiffs commenced proceedings on 19 March 2020 alleging, inter alia, breaches of contract and trust against the first defendant and Mr Springall. Ms Susan Springall, the deceased's wife, was joined as the third defendant to the plaintiffs' claim, in her capacity as the administrator of the deceased's estate, by an amended statement of claim filed on 10 March 2021.

On 22 February 2022, the first defendant was granted leave to file a cross‑claim against the estate, as administered by Ms Springall, and Ms Springall in her personal capacity, in relation to receipt of money from the plaintiffs into various bank accounts.

On 14 December 2021, the first defendant, in its capacity as the first defendant rather than cross-claimant, issued a subpoena to St George Bank, seeking various bank statements and documents concerning bank accounts held in various names with various identification numbers.

It is convenient here to set out the Subpoena in full:

The return date for the subpoena was 4 February 2022. On that day, the senior deputy registrar adjourned the subpoena until 25 February 2022. In the intervening period, in circumstances that do not need to be detailed here, the first defendant's lawyers were able to access the documents. On 25 February 2022, the senior deputy registrar made an order preventing any use of the documents, pending the determination of any notice of motion by the applicant seeking to set aside the subpoena or restrict access or use of the documents.

The applicant submits access and use ought to be restricted because, primarily, first, the documents are not relevant to the pleadings, and secondly, the documents are sought prematurely. As to the relevance of the documents, it is said that the amended statement of claim only refers to payment of money, by the plaintiffs, into bank accounts held by ANZ and Bendigo Bank and not St George Bank, and therefore they are not relevant.

I do not accept that submission. The amended statement of claim seeks relief for an alleged brief of trust by the second defendant, the deceased, in the form of equitable compensation or an account of profits. Therefore, it is apparent that the plaintiff seeks to trace the funds, it says, were misapplied by the second defendant into any income-generating asset. While this is not pleaded specifically, I consider it open on the pleading, to both the plaintiff and the first defendant, to seek documentation that is relevant to that claim, against the deceased, rather than the applicant in her personal capacity.

I do not put particular reliance on the existence of the first defendant's cross‑claim, which has now been filed, in which the cross‑claimant seeks equitable relief, in similar terms, against the applicant, in her dual capacities as administrator of the deceased's estate, and in her personal capacity. However, it is not possible to ignore that pleading in concluding the St George Bank documents have some possible relevance to that claim, which is now on foot.

As a mediation has been ordered, I do not consider it, in accordance with the requirements of the Civil Procedure Act 2005 (NSW), to require further pleadings and evidence before access to the documents is granted. While I'm cognisant of Practice Note 11 SC EQ 11 requiring exceptional circumstances before disclosure will be ordered at a time before evidence is complete, that does not operate in the context of the amended statement of claim.

I therefore make the following orders: