Andreevich & Andreevich

Case [2022] FedCFamC1F 608

Federal Circuit and Family Court of Australia

(DIVISION 1)

Andreevich & Andreevich [2022] FedCFamC1F 608   

File number(s): MLC 8101 of 2020
Judgment of: MCNAB J
Date of judgment: 24 August 2022
Catchwords: FAMILY LAW – PROPERTY – Evidence – Expert Opinion - Application in a Proceeding – To adduce evidence of a further expert witness – Value to Owner valuation compared to Market Value where the applicant’s expert adopted a completely different methodology – whether the single expert provided a valuation of the business – whether failure to permit further evidence may lead to an evidentiary vacuum – leave granted to the applicant to adduce evidence from the other expert
Legislation:

Family Law Act 1975 (Cth) s 97 (3)

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 1.04, 1.31, 7.02, 7.08, 7.11, 7.26, 7.31
Cases cited:

Keevers & Keevers [2021] FedCFamC1F 338

Moretto & Cosola [2022] FedCFamC1F 433

Neals & Neals [2022] FedCFamC1A 41

Salmon and Ors & Salmon [2020] FamCAFC 134

Tsoutsouvas & Tsoutsouvas & Ors [2012] FamCA 521

Wender & Wender [2017] FamCAFC 48

Division: Division 1 First Instance
Number of paragraphs: 37
Date of last submission/s: 11 August 2022
Date of hearing: 11 August 2022
Place: Melbourne
Counsel for the Applicant Mr D Whitchurch
Solicitor for the Applicant Garland Hawthorn Brahe
Counsel for the Respondent Mr L Marchetti
Solicitor for the Respondent KHQ Lawyers

ORDERS

MLC 8101 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR ANDREEVICH
Applicant
AND: MS ANDREEVICH
Respondent

order made by:

MCNAB J

DATE OF ORDER:

24 August 2022

THE COURT ORDERS THAT:

1.Pursuant to Rule 7.11 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, the husband have leave to adduce and rely on evidence from Mr B as an expert in the proceedings in relation to the value of the business known as C Company.

2.Within 14 days, Mr D of E Accountants be provided with a copy of the report of Mr B dated 31 May 2022 and the letter from F Accountants (Mr B) to Ms H dated 10 June 2022.

3.Pursuant to Rule 7.31, the parties arrange a conference of expert witnesses, namely Mr B and Mr D as follows:

(a)The conference occur at a time and place to be agreed between the experts;

(b)The conference occur by no later than 15 December 2022;

(c)Prior to the conference, the parties shall provide the experts with a copy of the Divisions Experts’ Conference – Guidelines for expert witnesses and those instructing them in proceedings in the Federal Circuit and Family Court of Australia;

(d)At that conference, the experts must:

(i)Identify the issues that are agreed and not agreed in relation to their respective valuations of C Company;

(ii)If practical, reach agreement on any outstanding issues;

(iii)Identify the reason for disagreement on any issue;

(iv)Identify what action (if any) may be taken to resolve any outstanding issues; and

(v)Prepare a joint statement specifying the matters mentioned in…

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AGLC
Andreevich & Andreevich [2022] FedCFamC1F 608
Case
[2022] FedCFamC1F 608
Decision Date

CaseChat Overview and Summary

In the case of Andreevich & Andreevich, the dispute before the court involved the admissibility of expert evidence in family law proceedings, specifically regarding the valuation of assets. The primary legal issue was whether the husband was entitled to present evidence from an expert other than the single expert previously appointed by the parties, given the significant difference in the valuations provided by the two experts. The respondent argued that permitting additional expert evidence would undermine the purpose of appointing a single expert, which is to avoid a "battle of the experts" and to ensure that cases are resolved in a just and timely manner.

The court carefully considered the statutory objective of ensuring just and timely resolution of cases at reasonable cost, as outlined in s 97(3) of the Family Law Act, and the relevant rules under the Federal Circuit and Family Court of Australia. It referenced prior cases such as Keevers & Keevers and Tsoutsouvas & Tsoutsouvas, which highlighted the potential imbalance and unfairness that could arise if one party is allowed to introduce additional expert evidence contrary to that of the single expert. However, the court also noted cases where courts permitted additional expert evidence due to significant differences in valuations, such as Pitt & Pitt, Verdon & Verdon, Jess & Garvey, and Carolan & Lawler.

Ultimately, the court held that the interests of justice required allowing the husband to present evidence from his own expert, despite the existence of a single expert, because the two experts had approached the valuation task in fundamentally different ways, leading to a substantial difference in their conclusions. This decision aligns with the principle that if a contrary opinion is based on an identified and accepted methodology different from that of the single expert, it may be necessary to adduce for determining the issue. Therefore, the court found it necessary to allow the additional expert evidence to avoid a potential vacuum in the evidence and to ensure a just resolution of the case.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

She refers to the recent decision of Wilson J in Keevers & Keevers [2021] FedCFamC1F 338 at [37]:The phrase “interests of justice” is used twice in rule 7.02. The first rule in 7.02(c) in reference to the imperative of not compromising the interests of justice by restricting, if practicable, expert evidence or an issue to the evidence of a single expert. The second is the permissive provision in rule 7.02(e) to enabling a party to seek the court’s permission to adduce evidence from an expert other than a single expert if that is necessary in the interests of justice. In other words, by no means is it to be taken as granted that a witness who is not a single expert will be permitted to adduce evidence. Application must first be made for that witness to do so. The grant of permission is predicated on the evidence of the proposed witness who is not a single expert being “necessary in the interests of justice”. Emphasis added. Further, she submits referring to Salmon and Ors & Salmon [2020] FamCAFC 134 that the underlying purpose of the Rule is the statutory requirement of s 97 (3) of the Family Law Act is to endeavour that:…each case is resolved in a just and timely manner at a cost to the parties and the court that is reasonable in the circumstances of the case… Reference was also made to r 1.04 which provides “is to ensure that each case is resolved in a just and timely manner at a cost to the parties and the court that is reasonable in the circumstances of the case”. The respondent submits that per Keevers & Keevers [2021] FedCFamC1F 338:[34] Various observations have been made in the authorities in relation to rule 15.49 especially about the potential for imbalance that inures when parties agree on the appointment of a single expert then one party, despite the appointment of the single expert, later attempts to adduce evidence contrary to that given by the single expert. In Tsoutsouvas & Tsoutsouvas and Ors the following was said of that situation - A number of cases highlighted the need to address questions to a single expert or to take the steps provided for in the Rules (such as a conference) to clarify a single expert report before embarking upon an application to be allowed to adduce evidence other tan from another expert witness. …[36] It must not be overlooked that one of the purposes of Part 7.1 of the FCFCOA (FL) Rules, as reposed in rule 7.02(c), is to ensure that if practicable and without compromising the interests of justice, expert evidence is given on an issue by a single expert… Accordingly, having an agreed single expert on an issue then having an adversarial witness on the same issue creates an imbalance, undermining the original purpose of appointing a single expert, as was observed in Tsoutsouvas. In relation to the differential in the two reports, the respondent refers to Neales & Neales [2022] FedCFamC1A 41 at [24] where it was held that there was no merit in the argument that “the difference of approximately $11 million in value between the single expert and the husband’s expert, justified in part, the appointment of another expert”. Reference was also made to Tsoutsouvas & Tsoutsouvas& Ors [2012] FamCA 521 at [26]:In any case where a single expert has been appointed, allowing another party to tender evidence from another expert on the same issues creates an imbalance. That is, only one party may have what may be described as an adversarial expert, whilst the other party has only the evidence of the single expert who has acted within the constraints, in terms of instructions, as provided for in the Rules. The further possibility is the other party seeking to have their own expert to redress that perceived imbalance, undermining the original purpose of appointing a single expert; that is, to avoid a “battle of the experts”.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The respondent submits that although the court has the power to exercise its discretion to dispense with compliance with the rules pursuant to r 1.31 if it is "in the interests of justice", it is not in the interests of justice to do so in these circumstances. She submits that the interests of justice should preclude the husband from “undermining the original purpose of appointing a single expert and avoid a ‘battle of the experts’”.Consideration In this proceeding, the difference between the expert opinion of Mr D and Mr B represent a substantial difference when regard is had to the total asset pool. The husband contends that a substantial injustice would follow if the court restricted the evidence to the valuation of Mr D. Whilst the purpose of the rules is directed at avoiding a "battle of experts" and the often disproportionate costs that may follow if evidence from multiple experts is admitted (see Tsoutsouvas & Ors [2012] FamCA 521 at [26]), it does not follow that the Rules contained in r 7.08 can be engaged in a manner that would compromise the interests of justice. As was noted by Reithmuller J in Moretto & Cosola [2022] FedCFamC1F 433 at [10]:Concerns as to potential injustice if parties are confined to a single expert witness, where there were considerable differences in the amounts in relevant valuations, were the basis of decisions permitting evidence from another expert in Pitt & Pitt [2009] FamCA 620, Verdon & Verdon (2020) 62 Fam LR 573, Jess & Garvey [2021] FedCFamC1F 189, and Carolan & Lawler [2021] FedCFamC1F 239. Although, in other decisions, even large differences in the valuation amounts have not been sufficient, on their own, to persuade the court to permit evidence from another expert: see, for example, Keevers & Keevers [2021] FedCFamC1F 338; and Padnall & Padnall (No 3) [2014] FamCA 904. However, as the Full Court noted in Neales & Neales [2022] FedCFamC1A 41 that it is erroneous to refuse leave when focusing only upon the difference in values: at [42]. Whilst these cases appear to indicate a diversity of judicial opinion, they may be better explained by reference to the reasons of Watts J in HRBH & IABH [2009] FamCA 1131, where his Honour noted the potential practical difficulty that may arise where the single expert’s evidence on an important factor is so undermined by cross-examination that there would then be “a vacuum in the evidence”: at [8]. Turning to the operation of r 7.08 (2) in this case, the fact that each expert has approached the task of valuation in a fundamentally different way is such as to constitute the expression of an opinion contrary to any opinion given by the single expert and that contrary opinion is or may be necessary to be adduced for the purposes of determining the issue. This is not a case where two valuers adopting the same methodology have reached different conclusions, nor is it a case where a single expert has fully explored and revealed the results of using different methodologies and then decided a particular result. The experts have approached the task in a fundamentally different way leading to a substantially different result. In Salmon and Ors & Salmon [2020] FamCAFC 134 at [35] the Full Court noted:if a contrary opinion is founded upon identified and accepted methodology recognised it within the field, or some identified and recognised field of expertise different to that founding the single expert opinion, then the requirement of "a substantial body of opinion" will be fulfilled.