Aitken & Aitken
[2022] FedCFamC1F 70
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Aitken & Aitken [2022] FedCFamC1F 70
File number(s): SYC 5021 of 2019 Judgment of: WILSON J Date of judgment: 2 February 2022 Catchwords: FAMILY LAW – MAJOR COMPLEX FINANCIAL PROCEEDINGS LIST – husband’s proposal for the appointment of a broker to assist with the selling process and facilitate the marketing and selling of “the parties’ major asset” (a company) – wife not wanting to sell the company – whether such an order should be made on an interlocutory basis so close to a trial stating on 8 March 2022 – held, husband’s proposal dismissed. Legislation: Federal Circuit and Family Court of Australia (Family Law) Rules 2021 rules 1.05, 7.03 and 7.04 Cases cited: Dasreef Pty Limited & Hawchar (2011) 243 CLR 588
Honeysett & The Queen (2014) 253 CLR 122
Makita (Australia) Pty Limited & Sprowles (2001) 52 NSWLR 705
Division: Division 1 First Instance Number of paragraphs: 23 Date of hearing: 2 February 2022 Place: Melbourne Solicitor for the Applicant: Nolan Lawyers Solicitor for the Respondent: Avondale Lawyers ORDERS
SYC 5021 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS AITKEN
Applicant
AND: MR AITKEN
Respondent
ORDER MADE BY:
WILSON J
DATE OF ORDER:
2 FEBRUARY 2022
THE COURT ORDERS THAT:
1.I direct that a minute reflecting paragraphs 3 and 4 of the wife’s application be submitted to my chambers by 4:00pm today.
2.All questions of costs are reserved.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Aitken & Aitken has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
WILSON J
INTRODUCTION
In this section 79 litigation, one of the major assets is the company D Pty Ltd. The trial of this proceeding is to commence on 8 March 2022. Trial directions were ordered by consent on 24 November 2021.
On 3 December 2021, the husband filed his response to the wife’s amended application for final orders, also dated 3 December 2021. On 17 January 2022, the wife filed an application in a proceeding, taking issue with aspects of the final orders sought by the husband in his 3 December 2021 response.
Yesterday, this proceeding came before me as a compliance hearing. It also came before me on the return of the wife’s application in a proceeding filed 17 January 2022. Neither party raised any issues of concern in relation to compliance.
In her application in a proceeding, the wife challenged the husband’s entitlement to rely on the matters raised in paragraphs 1, 2 and 3 of his response to the wife’s amended initiating application.
In this litigation, the parties remain in dispute over whether D Pty Ltd should be sold. In paragraphs 1, 2 and 3 of his final orders in his response filed 3 December 2021 the husband has proposed orders giving effect to the sale of D Pty Ltd. Paragraphs 1, 2 and 3 of the husband’s response to the wife’s application in a proceeding postulate different, although largely consistent, mechanics by which the husband sought orders ahead of trial for the sale of D Pty Ltd. Those paragraphs were as follows –
1.That Mr LL of MM Business be appointed as the business agent for the sale of the business known as D Pty Ltd ACN … (“business”).
2.That the parties provide Mr LL with a joint letter of instructions setting out the terms of the engagement, including but not limited to the price, the aspects of the business required to be sold, the manner in which the business should be sold, and any preliminary matters or steps the parties should take to have the business ready for sale.
3.In the event that the business is sold prior to the final hearing, the nett (sic) proceeds are to be held in trust pending final orders.
The wife opposed the making of those orders. In essence, she contended –
(a)no evidence was before the court about Mr LL, his business or the expertise of either within the contemplation of such authorities such as Dasreef Pty Limited & Hawchar,[1] Makita (Australia) Pty Limited & Sprowles[2] or Honeysett & The Queen;[3]
(b)Mr LL’s role “to assist the sale process” of D Pty Ltd was unexplained;
(c)the wife does not wish to sell D Pty Ltd so she should not be compelled to assist facilitating Mr LL in the marketing and selling of D Pty Ltd; and
(d)the orders sought by the husband (whether in the form of paragraphs 1, 2 and 3 of his response to the wife’s application in a proceeding, or in paragraphs 1, 2 and 3 of his response to the wife’s amended initiating application) were appropriately made, if at all, after the trial of this proceeding but not on an interlocutory basis.
[1] (2011) 243 CLR 588.
[2] (2001) 52 NSWLR 705.
[3] (2014) 253 CLR 122.
On behalf of the husband, Mr Gutierrez argued that the market will determine whether D Pty Ltd should be sold and, if so, on what terms. Mr Gutierrez argued that the sale of D Pty Ltd prior to the trial of this proceeding obviated the delays associated a marketing campaign that may take between six to eight weeks to unfold.
These reasons explain why, in my view, paragraphs 1, 2 and 3 of the respondent’s response dated 1 February 2022 to the wife’s application in a proceeding must be dismissed.
RELEVANT FACTUAL SETTING
The husband made an affidavit in support of the three orders he sought. Relevantly paraphrased, the husband swore to the following –
(a)he had run D Pty Ltd for 30 years or thereabouts;
(b)the equipment manufacturing process is physically demanding, rigorous and strenuous, all of which must be done while the husband concurrently performs various work duties and attends to staffing issues;
(c)the husband has been solely involved in managing D Pty Ltd since its creation;
(d)until his departure from D Pty Ltd, the parties’ son assisted with D Pty Ltd’s production activities;
(e)the husband works from 6:00am to 5:00pm, thereafter on administration tasks, often returning home at or about 9:00pm;
(f)the impact of COVID-19 has adversely affected the business;
(g)the husband is unable to manage the ongoing activities of D Pty Ltd;
(h)in early 2021, the husband raised the concept of selling D Pty Ltd and in November 2021 proposed three brokers to sell the business to which he said he has not received a response from the wife;
(i)he takes the view that it is a waste of time to have the business valued because the market will determine the value of the business;
(j)to date, a stocktake of the business has not been completed;
(k)the husband suffers from health complications relating to his shoulder and eye; and
(l)he is no longer prepared to keep the business running under the current conditions facing it and in view of his health issues.
The wife swore an affidavit in support of her application on 17 January 2022. Relevantly paraphrased, she deposed to the following –
(a)she is a director of D Pty Ltd and also a shareholder in it as to one ordinary share;
(b)the husband is also a director of D Pty Ltd and a shareholder in it as to one share;
(c)D Pty Ltd is the largest equipment manufacturer in New South Wales;
(d)one particular expert has valued D Pty Ltd at over $39 million as at 30 June 2019;
(e)in early November 2021, the husband notified his requirement for D Pty Ltd to be sold prior to the trial of this proceeding in March 2022;
(f)later that month, the husband notified his intention not to sell the factory site together with the company;
(g)paragraph 19 of the trial directions in this proceeding require the articulation of final orders sought “with precision”;
(h)seven single experts have been appointed in this proceeding to date; and
(i)the proposal by the husband is for the appointment of a “broker to assist with the sale process and facilitate the marketing and selling” of D Pty Ltd.
More akin to a submission rather than a statement of fact as an affidavit is required to do, in paragraph 66 of her affidavit, the wife advanced 10 reasons why the husband’s proposals in paragraphs 1, 2 and 3 of his response to the wife’s application in a proceeding were to be rejected. She stated that the proposed business agent, Mr LL, will be required to give evidence about –
(a)the form that the sale that D Pty Ltd should take;
(b)whether the sale should include the real estate on which D Pty Ltd’s operations are conducted;
(c)whether plant and equipment should form part of the sale;
(d)the inventory to form part of the sale;
(e)who should be appointed to conduct the sale;
(f)the recommended sale price;
(g)options, along with competing advantages and disadvantages associated therewith;
(h)recommended terms and conditions;
(i)any consequences for not following any such recommendations; and
(j)any other matter thought relevant.
The wife also swore that she has nominated three alternative experts, one of whom is Mr NN of WW Company, the subject of paragraph 3 in the wife’s application in a proceeding.
CONSIDERATION – MR LL
It is most convenient to address first the husband’s application for orders appointing Mr LL of MM Business “as the business agent for the sale of the business” known as D Pty Ltd.
For reasons that follow, I dismissed that application.
No details were given by which it was possible to conclude that Mr LL was an “expert”, as defined in rule 1.05 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”). The parties were not agreed about the appointment of Mr LL, so rule 7.03(1) was not applicable. That then led to a consideration of rule 7.04. So far as I could ascertain, none of the elements of rule 7.04(2)(a) to (e) had been made out, especially whether evidence of the matter proposed by Mr LL was necessary or whether the issue about which Mr LL was to be retained fell within a substantially established area of knowledge.
Of course, and while not argued in terms on this application, the husband’s application in paragraphs 1, 2 and 3 of his response may not have amounted to an application for the appointment of Mr LL as a single expert, properly so called, within the contemplation of rule 7.04. That much may flow from the nature of the order sought in paragraph 1 of the husband’s response to the wife’s application in a proceeding. In paragraph 1 of his response, the husband sought an order for the appointment of Mr LL “as business agent for the sale of the business” known as D Pty Ltd. That application did not equate to the husband seeking the appointment of Mr LL as a single expert under the rules. Further, even if I were to accede to the husband’s application, the order to be made was one appointing Mr LL to sell “the business”, rather than selling the shareholding in D Pty Ltd as an incorporated entity. For that matter, precisely what made up “the business” of D Pty Ltd was not given in evidence, a matter to which the wife adverted in paragraph 66 of her affidavit sworn 17 January 2022. Further, even if the assets and undertaking of D Pty Ltd were sold (those assets constituting “the business” of D Pty Ltd), nevertheless there remained the shares in D Pty Ltd, which presumably were denuded of any value consequent upon a sale of the assets and undertaking of D Pty Ltd.
In addition, a draft letter of instructions, recording the proposed terms of engagement of Mr LL, was not subject to the agreement.
While I understand that the husband may have reached the point where the day-to-day management of D Pty Ltd is arduous, physically gruelling and otherwise onerous, the husband’s proposal to appoint a nominated person whose expertise is not given beyond being “a business agent” for the sale of the undefined concept of D Pty Ltd’s business, was not one to which I willing to accede. Mr LL has not been shown to be an “expert” within the contemplation of rule 1.05.
It must not be overlooked that the sale of D Pty Ltd is a hotly contested issue in this proceeding. The fact that the husband finds it arduous to operate D Pty Ltd on a day-to-day basis is not, in and of itself, a reason for making an order for the sale of D Pty Ltd on an interlocutory basis ahead of the trial especially where the sale of D Pty Ltd is contested.
In those circumstances, I dismiss paragraphs 1, 2 and 3 of the husband’s response to the wife’s application in a proceeding.
CONSIDERATION – MR NN
Pursuant to paragraph 3 of the wife’s application in a proceeding, she sought orders for the appointment of Mr NN as a single expert. The husband opposed the application, arguing that any such order represented the escalation of unnecessary costs. Conversely, the wife contended that expert opinion evidence is required so as to place before the court an opinion about the essential components of any sale of D Pty Ltd. In written submissions, it was put as follows on the wife’s behalf –
No prospective purchaser at arm’s length and for valuable consideration would be expected to take on the acquisition of D Pty Ltd (as opposed to the purchase of the business, any real estate, stock and plant and equipment), due to the obvious commercial risks associated with the historical conduct of Company. One need only point to the Division 7A issues, which have been the subject of an order for a single expert to demonstrate why it is reasonably necessary for an opinion on these questions to be placed before your Honour, including the terms of any commercial restraint of trade.
15. In the alternative, the wife proposes to treat her application for the appointment of an expert as an application under rules 7.10 and 7.11 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) for permission to appoint an expert witness. In terms of the considerations in rule 7.11(3), the wife relies upon the complexity of the subject matter of the proposed expert report and the witnesses’ specialised knowledge based on the person’s training, study or experience as set out the expert’s CV.
There is considerable force in those contentions. I agree with the submissions. I direct that a minute reflecting paragraphs 3 and 4 of the wife’s application be submitted to my chamber by 4 pm today.
All questions of costs are reserved.
I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 2 February 2022
0
3
0