Where a party has not provided full and frank disclosure of their financial affairs in family law proceedings, a way to obtain these financial documents is for a party to serve a subpoena, and it is common for accountants to be the recipient of such requests.
In Family Law matters, parties have a duty of ongoing financial disclosure. However, it is not uncommon for a party to refuse to provide their personal tax documents or adequate disclosure in relation to their associated entities. If a client's former spouse/partner fails to provide financial disclosure, then solicitors will frequently look at issuing a subpoena on the accountant for their former spouse/partner and any entities that they may have an interest in, to obtain the documents required which are relevant to the proceedings.
What is a subpoena and are there different types?
A subpoena is a legal document that a party can file with the Court.
There are three types of subpoenas that may be served upon an accountant, they are as follows:
A subpoena can be issued for an accountant to produce documents, relevant to the matter in dispute, especially in circumstances where one party has failed to provide full and frank disclosure. The accountant will be required to produce the documents to the Court, as requested in the schedule of the subpoena by the date of production;
An accountant can be subpoenaed to attend Court to give evidence. The accountant will be required to attend Court to give evidence on the date that is stated in the subpoena. This will normally occur when the matter has been listed for a final hearing and one or both of the parties require the accountant to attend court to provide evidence with such evidence generally being provided as a result of cross-examination. This is common when a party has questions relating to an entity which requires a response from the entities' accountant. An example may be for an accountant to be asked questions regarding the categorisation of certain transactions made by a company or issues surrounding Division 7A loans; or,
Accountants can be served with a subpoena to produce documents and to attend Court to give evidence.
Do accountants need to comply with subpoenas?
If an accountant is served with a subpoena they are compelled to comply, however there are circumstances when an accountant does not need to comply with the subpoena for example, if the accountant was not served with the subpoena within the service period provided for and/or if conduct money was not provided to the subpoena recipient in accordance with the rules of the Court. The party issuing the subpoena may also excuse the accountant from their obligations to comply with the subpoena.
In accordance with the Family Law Rules 2004, if the subpoena is for the Production of Documents then the accountant may be served by ordinary service or in a manner that has been agreed between the accountant and the issuing party. If the subpoena is for the accountant to Give Evidence, or to Give Evidence and Produce Documents, then the subpoena needs to be served on the accountant by hand. The subpoena must also be served by the date of service stated on the subpoena.
Can accountants object to the subpoenas?
Accountants can object to the production of subpoenaed documents; however, the grounds of objection need to be carefully considered and particularised. We commonly see accountants attempt to object on the grounds of relevance and/or privilege. Unless an accountant is a party to the proceedings, it is difficult for them to sustain an objection that the documents requested are irrelevant to the case. It is more appropriate for the non-issuing party to the proceedings to file the objection and to argue the grounds of relevance.
Most documents that are retained by the accountant are not subject to solicitor/client confidentiality and are therefore not privileged documents. Accountants are able, however, to file an objection if the terms of the subpoena are too broad.
An objection can also be filed by an accountant if the conduct money provided or expense incurred in complying with the subpoena is not sufficient. If an accountant is served with a subpoena to attend Court, they must be given conduct money sufficient for return travel from the accountant's place of employment to the Court. The current minimum amount of conduct money is $25.
If an accountant is not a party to the proceedings and they will incur substantial loss or expenses if they were compelled to comply with the subpoena, an accountant can request that an order be made by the Court for the issuing party to pay additional funds to cover the loss or expense. The accountant must write to the issuing party setting out the additional funds required to cover the loss or expenses. If the issuing party refuses to pay the additional costs, then the accountant can apply to the Court in writing seeking payment by the issuing party prior to the date of production.
What happens if an accountant does not comply with a subpoena?
In certain circumstances, if an accountant does not comply with a subpoena, the Court has the power to issue a warrant for the arrest of the accountant or order the accountant to pay any costs caused by their non-compliance. Further, the Court can make an order finding an accountant guilty of contempt of Court.
It is important for accountants to obtain legal advice from a family lawyer if they wish to object to a subpoena or request additional funds for compliance due to loss and expense. If an objection is not granted by the Court, then the accountant may be ordered to pay a party's costs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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This article has been republished by Divorce Resource with the kind permission of the authors.