Artinos & Artinos (No 6)
[2023] FedCFamC1F 652
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Artinos & Artinos (No 6) [2023] FedCFamC1F 652
File number(s): MLC 4132 of 2020 Judgment of: STRUM J Date of judgment: 8 August 2023 Catchwords: FAMILY LAW – EXPERT EVIDENCE – Where the first respondent husband seeks to adduce adversarial evidence as to the value of real estate – Where the single expert and the proposed adversarial expert have conferred and prepared a joint statement of the matters the subject of agreement and disagreement – Where the husband relies only on r 7.08(c) of the Federal Circuit and Family Court of Australia (Family Law Rules) 2021 – Discussion of ‘special reason’ for allowing adversarial evidence – Where cross-examination of the single expert at trial can be informed by the report of the proposed adversarial expert – Where there is no special reason for allowing adversarial evidence in addition to the evidence of the jointly appointed single expert – Where discretion to allow adversarial evidence would not be exercised even if a special reason was established due to defects in the report of the proposed adversarial expert. Legislation: Evidence Act 1995 (Cth) ss 76(1), 79(1)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 7.02, 7.08
Federal Circuit and Family Court of Australia, Central Practice Direction – Family Law Case Management, 1 September 2021, updated 28 November 2022 paras 3.14(d), 5.12(b)
Cases cited: Bass & Bass (2008) FLC 93-366; [2008] FamCAFC 67
Dasreef Pty Ltd v Hawchar (2011) CLR 588; [2011] HCA 21
Lambard & Lambard (No. 4) [2021] FamCA 47
Macvean & Manton [2022] FedCFamC1F 376
Moretto & Cosola [2022] FedCFamC1F 433
Neales & Neales (2022) FLC 94-079; [2022] FedCFamC1A 41
Salmon and Ors & Salmon [2020] FamCAFC 134
Simonsen & Simonsen [2009] FamCA 698
Tsoutsouvas & Tsoutsouvas and Ors [2012] FamCA 521
Division: Division 1 First Instance Number of paragraphs: 56 Date of hearing: 26 July 2023 Place: Melbourne Counsel for the Applicant: Mr Puckey KC with Mr Newland Solicitor for the Applicant: Blackwood Family Lawyers Counsel for the First Respondent: Mr Fary KC with Ms Borger Solicitor for the First Respondent: Belleli King and Associates The Second to Fourth Respondents The Second to Fourth Respondents did not appear ORDERS
MLC 4132 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ARTINOS
Applicant
AND: MR ARTINOS
First Respondent
C PTY LTD
Second Respondent
B PTY LTD (and another named in the Schedule)
Third Respondent
ORDER MADE BY:
STRUM J
DATE OF ORDER:
8 AUGUST 2023
THE COURT ORDERS THAT:
1.Paragraph 3 of the First Respondent’s Application in a Proceeding filed 19 December 2022 (“Application”) be dismissed.
2.Paragraph 2 of the Application be adjourned to trial.
3.The Application be otherwise dismissed.
AND THE COURT NOTES THAT:
A.The final hearing commencing 16 October 2023 with an estimated duration of 10 days remains listed.
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 Artinos & Artinos has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
STRUM J:
By Application in a Proceeding filed on 19 December 2022 (“application”), the First Respondent husband seeks, inter alia, leave to adduce adversarial evidence from Mr EE, a certified practising valuer and licensed estate agent (“other expert”), as to the market value of the former matrimonial home situate at J Street, Suburb Q in the State of Victoria (“property”) pursuant to r 7.08 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“Rules”).
By Response to Application in a Proceeding filed on 27 January 2023, the Applicant wife seeks the dismissal of the husband’s application.
The property has been valued by Ms AA, a certified practising valuer, who is the jointly appointed single expert (“single expert”). She has most recently valued the property in the sum of $4.25 million as at 26 April 2023. Her valuation report is annexed to her affidavit filed on 9 June 2023.
The property has been valued by the other expert in the sum of $4.95 million as at 8 June 2023. His report was tendered in the course of the hearing of the husband’s application and marked Exhibit H-1.
Pursuant to orders made by me by consent on 2 May 2023, the two experts conferred on 13 July 2023 and a joint statement dated 14 July 2023 and signed by them was tendered and marked Exhibit H-2.
The experts agree that their assessments are “quite far apart”. They discussed the matters considered by the other expert in assessing value at Part 14.0 of his report, namely, “Reconciliation of Value”, which the single expert considered most relevant. The experts agree in respect of a number of those matters, including that the property “is a tricky one to provide a valuation for”. They also agree that the purchase price of $4.3 million for the property in late 2016, by off-market sale to the parties, was a record price for the suburb at the time. The single expert recalls contemporaneous conversations with other experts who opined that the sale price was “perhaps above market expectations at the time”.
Whilst the other expert considers “the land is arguably the best block on [Suburb OO] with the best views towards the City Skyline”, the single expert disagrees. She opines that, whilst the property is in a good location, it is not the best block on Suburb OO. She considers other streets and/or positions on Suburb OO to be superior.
The other expert, in reaching his valuation, took into account “an agent’s appraisal from the original selling agent [Mr QQ], indicating a realistic sale price range of the property to be between $4,900,000 and $5,200,000”. The single expert does not agree with that appraisal by Mr QQ. I will address the issue of the appraisal below.
The experts discussed two recent sales in the same street as the property; one, at 2J Street, Suburb Q, for $3 million, and the other, at 3J Street, Suburb Q, for $4.4 million, which resold seven months later (but still in 2022) for $5.5 million. They agree that those latter sales were effectively for land value. In respect of 2J Street, the experts agree that it is comparable but does not enjoy the same elevation/view/aspect as the property. In respect of 3J Street, they agree that, as this was a parcel of development land, the sale is difficult to apply to the valuation of the property. They state:
Based upon these two sales considered to be land only, reflected [sic] sales rates of between $2,817 p/sqm (the initial sale of [2J Street]) and $3,745 p/sqm, for land areas of between 801.0 and 1,562.0 sqm. So after taking into account the land area of the subject and its location, elevation and City Skyline aspect, [Ms AA] had adopted $4,250 on a per sqm for her land assessment of $2,425,000 (+$1,827,000 improvements), whereas [Mr EE] had adopted $6,100 on a per sqm for his land assessment of $3,450,000 (+S1,500,000 improvements).
We both differed in opinion on the value of the underlying land.
Further, the experts, in their joint statement, state that the other expert, in his first report (annexed to his affidavit filed on 19 December 2022, which valued the property in the sum of $4.93 million as at 8 December 2022), for the purpose of comparison, in addition to sales from Suburb Q, also included sales from surrounding quality suburbs, namely Suburb RR, Suburb SS and Suburb TT, which enjoy city skyline views. The other expert, in his second report (Exhibit H-1), for the purpose of comparison, in addition to sales from Suburb Q, also included sales from Suburb UU and Suburb TT, both period style properties with modern extensions, but not including city views, which sold for sums in excess of $4 million. The single expert disagrees with the use of these other sales.
The experts, in their joint statement, conclude:
… we could not reach agreement as to the (notional) value of the land, nor our assessment [sic] the value of the property at this time, therefore no movement on our respective assessed values could be agreed upon.
Rule 7.02 of the Rules provides that the purpose of Pt 7.1 thereof, dealing with experts, is as follows:
(a)to ensure that parties obtain expert evidence only in relation to a significant issue in dispute;
(b)to restrict expert evidence to that which is necessary to resolve or determine a proceeding;
(c)to ensure that, if practicable and without compromising the interests of justice, expert evidence is given on an issue by a single expert witness;
(d)to avoid unnecessary costs arising from the appointment of more than one expert witness;
(e)to enable a party to apply for permission to tender a report or adduce evidence from an expert witness appointed by that party, if that is necessary in the interests of justice.
See also paragraphs 3.14(d) and 5.12(b) of the Court’s Family Law Case Management Central Practice Direction.
In Tsoutsouvas & Tsoutsouvas and Ors [2012] FamCA 521 (“Tsoutsouvas”) at [26], Kent J described the purpose of the single expert rule being to avoid a “battle of the experts”.
Rule 7.08 of the Rules provides:
(1)If a single expert witness has been appointed to prepare a report or give evidence in relation to an issue, a party must not tender a report or adduce evidence from another expert witness on the same issue without the court’s permission.
(2)The court may allow a party to tender a report or adduce evidence from another expert witness on the same issue if it is satisfied that:
(a)there is a substantial body of opinion contrary to any opinion given by the single expert witness and the contrary opinion is or may be necessary for determining the issue; or
(b)another expert witness knows of matters, not known to the single expert witness, that may be necessary for determining the issue; or
(c)there is another special reason for adducing evidence from another expert witness.
As in Simonsen & Simonsen [2009] FamCA 698 (“Simonsen”), Senior Counsel for the husband expressly disavowed reliance upon r 7.08 (a) or (b). He based his application, and his arguments in support thereof, solely on r 7.08(2)(c) of the Rules, namely, that there is a special reason for adducing evidence from the other expert.
I turn therefore to r 7.08(2)(c); is there a special reason for adducing evidence from the other expert? In Simonsen at [12], Murphy J referred to the decision of the Full Court in Bass & Bass (2008) FLC 93-366 and said:
The general thrust of the Rules has been referred to by the Full Court in Bass & Bass (2008) FLC 93-366. As the court in that case made clear, the adducing of evidence from an additional expert, is not something which ought occur in the usual course, or simply by application made by a party. In simple terms, the word “special” as used in rule 15.49 has real meaning.
Relevantly to the present case, Murphy J said in relation to the predecessor to Part 7.1 in the former Family Law Rules 2004:
13.It is important to understand that Part 15.5 of the Rules does not preclude a party from obtaining on their own behalf expert evidence, nor does it preclude a party from obtaining such expert evidence, (including from more than one expert, should they so choose), in respect of all matters relevant to the proceedings before a court, and all matters relevant to a report and/or evidence produced by a single expert.
14.Thus, expert evidence obtained by a party on their own account can be used, for example, to significantly inform the cross-examination of a single expert witness at a trial. The restriction inherent in the rules is a restriction related to the adducing of evidence from the expert or experts retained by a party.
That issue was further considered by McClelland DCJ in Lambard & Lambard (No. 4) [2021] FamCA 47 (“Lambard (No. 4)”) at [14]. Having set out the equivalent provisions in the former Family Law Rules 2004, his Honour said:
It is necessary to pay attention to the actual words used in 15.49(2)(c) being that “there is another special reason”. I have not been referred to any definition of “special reason”, however, I construe the word “special” as requiring a reason which is more than “the ordinary”: see Gyselman and Gyselman (1992) FLC 92-279 at 79,064.
I am also cognisant of what the Full Court said in Salmon and Ors & Salmon [2020] FamCAFC 134 (“Salmon”) at [41], namely:
… the submissions assume that a trial judge is bound to accept expert evidence of valuation, or expert evidence upon the identified issues, and that in the event that the trial judge does not accept the single expert’s evidence in some respect, there will be “no evidence” to enable those issues to be justly determined.
At [42], the Full Court continued:
This contention ignores well settled principles as to the means by which a trial judge determines questions of valuation, as expressed by the High Court in Commonwealth v Milledge (“Milledge”) as “a commonsense endeavour, after consideration of all the material before the court, to fix a sum satisfactory to the mind of the court as representing the value” Milledge has often been applied by the Full Court of this Court in emphasis of the principle that a court must arrive at its own conclusion as to value by application of established principles of valuation.
(Footnotes omitted)
In Neales & Neales (2022) FLC 94-079 (“Neales”), the Full Court said:
30Ground 1.2 as expanded through the Summary of Argument asserted that the primary judge failed to give reasons as to how the husband would be able to challenge the expert evidence other than through cross-examination, and failed to deal with the procedural difficulties the husband would face in the absence of an adversarial expert.
31This contention presupposes that a trial judge accepts without question, in the absence of other expert evidence, the opinion of a single expert. As the Full Court in Georgeson and Georgeson (1995) FLC 92-618 reminds at 82,218–82,219:
Expert evidence may be adduced as to the proper method to be adopted, in the circumstances of a particular case, to assist the Court in forming an independent judgment on the issue of valuation by the application of the appropriate principles. Whilst an expert may thus suggest an approach as being appropriate in a particular case, before accepting it, the Court must come to its own conclusions as to whether that approach is appropriate in the circumstances.
32The Court informs its conclusion as a consequence in part of the testing of the evidence. Such is the art of advocacy.
Senior Counsel for the husband referred to and relied upon the decision of Riethmuller J at first instance in Moretto & Cosola [2022] FedCFamC1F 433 (“Moretto & Cosola”).
His Honour said at [7]:
The rules contained in r 7.08 of the Rules cannot be applied in a way that results in a significant valuation issue being largely foreclosed (at least on a practical level) from effective challenge in the litigation, as that would compromise the interests of justice and therefore go beyond the purpose of the rules: see r 7.02(c) of the Rules and the poignant example of a terrible injustice caused by the reliance upon a single expert discussed in Penelope Kari, “Opinion: ‘Single experts’ – Guns for hire?” (2007) 29 Bulletin (Law Society of South Australia) 6. Similarly, r 7.08 of the Rules is not to simply relieve judges of the burden of making findings as between competing experts where there is a real issue as to valuation. Rather, it is to ensure that judicial time (and thus public resources) are not wasted on protected hearings involving multiple experts where the nature of the dispute is disproportionate to the costs involved.
However, it is necessary to consider whether, in this case, a significant valuation issue would be largely foreclosed from effective challenge in this case if the husband’s application were refused.
Riethmuller J further said:
10Concerns 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].
11An evidential “vacuum” is to be avoided, if possible, particularly in valuation cases where the effective alternative of forcing a sale, even if it is open to the court, is a far from desirable option if one party wishes to retain a property. …
(Emphasis added)
In the present case, it is the wife who wishes to retain the property; the husband contends that she will not be able to do so and that it should be sold. That is a matter for trial. If there were to be an evidential vacuum at trial, which I do not accept would necessarily be the case if the husband’s application were refused, it is the wife who will bear the risk of a sale. She opposes that application, in circumstances where she is legally represented, including by Senior Counsel, and is presumably aware of, and prepared to take, that risk.
Riethmuller J continued:
14Ultimately, a trial judge is not bound to accept the evidence of a single expert (Salmon at [41]), nor even any particular expert where there is more than one expert who gives evidence: see Borriello & Borriello (1989) FLC 92-049 at 77,558 and Goodwin and Goodwin Alpe (1991) FLC 92-192 at 78,275. Whilst a judge cannot simply average the values of differing experts (Commonwealth v Milledge (1953) 90 CLR 157 at 160–161; and Borriello at 77,558), a judge can nonetheless come to a figure that is different from that put forward by the experts, if the evidence is properly approached: see also Arcus Shopfitters Pty Ltd v Western Australian Planning Commission (2002) 125 LGERA 180 at [76]. However, the judge cannot become a third valuer: Players Pty Ltd v Corporation of City of Adelaide [2001] SASC 369 at [81]. In this context, the discussion of Kent J in Salmon (at [43]–[46]) as to the findings that may be open with respect to capitalisation rates and discounts for minority shareholdings is instructive.
15In cases where the valuation is based upon the comparable sales method this distinction can be a fine one, however it must be recalled that the expertise of the valuer (which goes beyond a non-expert or real estate agent providing an appraisal) is in making a nuanced assessment of which sales are truly comparable and then forming a view as to a valuation after weighing the different comparable sale prices. Where the values for which each of the parties contend fall within the ambit of a broad range that the single expert identifies, cross-examination would ordinarily be a sufficient tool to avoid injustice. Where the value contended by the party challenging the single expert is outside of the range identified by the single expert (after making use of the right to send questions to the expert and a conference between experts) the interests of justice would tend to weigh in favour of allowing evidence from the other expert, provided that such evidence is not obviously flawed and the difference involved is not out of proportion to the likely additional costs of permitting the evidence to be adduced.
Insofar as Riethmuller J expressed the view that, where the value contended by the party challenging the single expert is outside of the range identified by the single expert, as in the present case, “the interests of justice would tend to weigh in favour of allowing evidence from the other expert”, I respectfully do not agree with that formulation. So formulated, the test postulated by his Honour might be said to fetter the breadth of the discretion under r 7.08(2). Rather, in my view, where there is such a disparity in values, the interests of justice may (rather than would) tend to weigh in favour of allowing evidence from the other expert.
In relation to r 7.08(2)(c), namely, whether there is a “special reason” for permitting evidence from another expert to be adduced, Riethmuller J said at [26]:
… In reading this sub rule it is important to have regard to the purpose of the relevant rules (as identified above in r 7.08 of the Rules). It is also helpful to note that the use of the word “another” in this sub rule indicates that the drafters considered the matters in sub rules (a) and (b) to be “special reasons”: see Bowen & Williams [2015] FamCA 545 at [19]–[22]. Both sub rules (a) and (b) identify matters upon which the court could not make findings without evidence, and where such evidence is not likely to come from cross-examination of the single expert alone.
His Honour at [27] recognised that the underlying reason why one party wishes to rely on evidence from another expert, in applications concerning valuations of real estate, is because of a dispute as to the opinion of the single expert when applying an accepted methodology as to whether other properties (the sale prices of which may form the basis of the valuation) are comparable to the property being valued. His Honour then said at [28]:
The starting position must be as outlined in Bowen that the rules require “something more than merely the existence of a different or contrary opinion advanced by the other expert”: at [20]. In Bowen, Tree J found that “to the extent that there is divergence between the two opinions, that is not sufficient to establish ‘another special reason for adducing evidence from’” the adversarial expert: at [31]. In the context of valuation evidence, Harper J said in Dovgan & Dovgan [2021] FamCA 306 at [175], “competing valuations of real property are frequent, if not routine” and that a “different or contrary opinion based on the same methodology would not constitute ‘another special reason’”. However, in cases concerning valuations where the amounts involved are significant (in the present case a difference of $750,000) this naturally gives rise to the question of whether the amount of the difference between the expert opinions can be “another special reason” within the meaning of the rule, however a more nuanced approach is required than merely identifying a difference in opinions, or the rule would be denied efficacy.
Counsel for the husband placed great reliance on [29] – [31], in which Riethmuller J said:
29In the present proceedings the differences in the expert opinions flows not only from differences in opinion as to which of a number of properties in the area that have recently sold are properties comparable to the property in question, but the weight to be placed upon that sales information. Whether other properties are capable of being ‘comparable’ to the subject property is ultimately a question which the court may have to determine. This difference may be adequately dealt with in cross-examination of the single expert, who has already had the list of additional sales that are alleged to be comparable drawn to his attention. However, if the single expert’s list of comparable sales is not accepted by the court as a result of the cross-examination and the single expert denies that the alternative sales are comparable or that weight may be placed upon those sales, the question remains as to how the court is to strike a value for the property. Striking a value by reference to comparable sales is not so simple as making a finding that can be mathematically factored into the methodology of the expert, such as adopting a multiplier or minority shareholding discount rate in a business valuation case (see, for example, the discussion in Salmon), or making a finding of fact as to the actual revenue of a business, etcetera (see [15] above).
30Whether cross-examination may be a sufficient tool to avoid injustice in this case depends upon whether it would be open to the court to make a finding as to the value of the property as contended for by the respondent if the single expert is successfully cross-examined to sufficiently weaken his evidence. As the value contented by the respondent is well outside the range ascribed by the single expert, after relevant information sharing and questions, it is difficult to avoid the conclusion that there is a real risk of an evidentiary “vacuum” arising in this case if the respondent’s contentions as to value are correct. Notably, this is not a case where the evidence of the respondent’s expert could be said to be obviously unrealistic or unpersuasive, rather a case where there appears to be a genuine dispute between the experts.
31I am persuaded that the respondent has established a “special reason” in the context of this case, namely that there is a real risk that she will be unable to effectively put her case as to the value of the applicant’s property if she is limited to cross-examination of the single expert, in circumstances where the respondent’s case on this point is reasonably arguable and involves an amount so great that the additional litigation costs are not disproportionate.
Counsel for the husband submitted that those observations, albeit at first instance, are apposite to this case. However, I am acutely conscious of the dicta of Kent J in Tsoutsouvas that the purpose of the single expert rule is to avoid a battle of experts and that of Murphy J in Simonsen that the adducing of evidence from an additional expert is not something which would occur in the usual course or simply by application made by a party, in this case, the husband. Rather, as McClelland DCJ said in Lambard (No. 4), the word ‘special’ in r 7.08(2)(c), requires a reason that is more than the ordinary.
I do not accept that, if leave is not granted to the husband to adduce evidence from the other expert, there will be an evidential vacuum, against which Riethmuller J cautioned in Moretto & Cosola, or that a valuation issue (even if significant) will be effectively foreclosed from challenge at trial. As was the case in Salmon, the submissions of Senior Counsel for the husband assume that, at trial, the Court is bound to accept expert evidence of valuation. That is not so. Rather, as the High Court and, in turn, the Full Court of this Court have held, trial judges determine questions of valuation by a common-sense endeavour, after consideration of all the material before the Court, to fix a sum satisfactory to the mind of the Court as representing the value. In other words, it is for the Court to arrive at its own conclusion as to value, by application of established principles of valuation. As the Full Court observed in Neales, the Court informs its conclusion as a consequence, in part, of the testing of the evidence of the single expert.
In the present case, the areas where the experts differ can be the subject of cross-examination of the single expert by Senior Counsel for the husband at trial, informed by the other expert’s report, as Murphy J observed in Simonsen. Indeed, as the Full Court observed in Neales, such is the art of advocacy.
In Salmon at [14], in dismissing an application for leave to appeal from a refusal to allow adversarial expert to be adduced, the Full Court observed that the reasons for the difference between the experts (as found by the primary judge) were threefold:
Firstly, [Mr W] adopts a different rate of commercial remuneration for the husband than [Mr F]. Secondly, [Mr W] adopts a different capitalisation rate. Thirdly, [Mr F] applies a discount to the husband’s interest in the company of 30% because of his minority interest.
Similarly, in the present case, insofar as the single expert and the other expert disagree upon:
(a)whether or not the property is the best block on Suburb OO, with the best views towards the city skyline;
(b)the value of the underlying land and of the improvement;
(c)whether properties in other suburbs, such as Suburb RR, Suburb SS, Suburb TT and Suburb UU are comparable to the property –
these are all matters upon which Senior Counsel for the husband, informed by the valuation of the other expert, can cross-examine the single expert, without that other valuation needing to be in evidence. By way of example only, whilst the single expert disagrees that the properties in suburbs other than Suburb Q are comparable, she could be asked to opine on the value of the property if the Court were to disagree with her opinion and to find those properties (or any of them) to be, in fact, comparable.
In all the circumstances, I am not satisfied that, as required by r 7.08(2)(c), there is a special reason for adducing evidence from the other expert.
However, even if I found that there was a special reason for adducing evidence from the other expert, that would merely enliven my discretion to allow the husband to adduce evidence from him.
It will be recalled that in Moretto & Cosola at [15], Riethmuller J referred to the proposed adversarial evidence not being “obviously flawed”.
In Macvean & Manton [2022] FedCFamC1F 376 at [19], in the context of an application under the Rules to adduce adversarial evidence, Berman J said:
Heydon JA in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 provided an analysis of the authorities in respect of expert evidence as follows:
85.In short, if evidence tendered as expert opinion evidence is to be admissible, it must be agreed or demonstrated that there is a field of “specialised knowledge”; there must be an identified aspect of that field in which the witness demonstrates that by reason of specified training, study or experience, the witness has become an expert; the opinion proffered must be “wholly or substantially based on the witness’s expert knowledge”; so far as the opinion is based on facts “observed” by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on “assumed” or “accepted” facts, they must be identified and proved in some other way; it must be established that the facts on which the opinion is based form a proper foundation for it; and the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached: that is, the expert’s evidence must explain how the field of “specialised knowledge” in which the witness is expert by reason of “training, study or experience”, and on which the opinion is “wholly or substantially based”, applies to the facts assumed or observed so as to produce the opinion propounded. …
(Emphasis added)
The other expert’s report (Exhibit H-1) is dated 8 June 2023. As referred to above, at Part 14.0 thereof, namely, “Reconciliation of Value”, after acknowledging that the property “is a tricky one to value”, he continues:
… to our way of thinking we have reconciled the value of the property, taking into account the following elements.
He then specifies those elements, which total 17 in number. He does not identify whether those elements were considered by him all to be of equal weight or whether some (and, if so, which) were given greater or lesser weight by him in valuing the property. One of those elements is that –
We have an agents [sic] appraisal from the original selling agent, indicating a realistic sale price range of the property to be between $4,900,000 and $5,200,000,
That appraisal is reproduced at Part 11.0 of the other expert’s report. Inexplicably, it is dated 9 June 2023, the day after the date of the report. There is no evidence, nor was it even suggested by Senior Counsel for the husband, that there might be an error in the date of the appraisal or the report. There is, therefore, a wholly unexplained inconsistency between the two; the report purports to be based, in part, upon the appraisal which post-dates it.
As I have noted above, the appraisal is by Mr QQ, of VV Real Estate in Suburb Q, who sold the property to the husband and the wife in 2016. He describes himself as a principal of, and auctioneer for, that firm. In contrast, the other expert, who purported to rely upon Mr QQ’s appraisal, in his affidavit filed 19 December 2022, annexes thereto, marked EE-1, his curriculum vitae, which states (inter alia) that he is a Certified Practising Valuer and a Licensed Estate Agent who is:
… a senior consultant with over [several] years [sic] experience in the property industry, having worked right across the whole gamut of valuation and consultancy services. He regularly undertakes valuations of all forms of Real Estate throughout Victoria and interstate and has been involved in providing Valuation, Investment and Market based advice to numerous Private, Corporate and Government Clients with experience in the Prestige Residential, Development and Subdivisional Sites, Local and Neighbourhood Shopping Centres, Commercial Office, and Institutional Level Industrial Investment Properties.
His current experience specialises [FF Valuations] and Corporate Real Estate consultancy and includes:
•Expert witness on valuation matters for Family Law and Retail Tenancy Disputes;
•Valuation of Commercial, Industrial and Retail properties;
•Valuation of Residential property across all areas of Victoria
•Specialist Retail Valuer (SRV).
•Certificate in giving Expert Evidence (API)
His affiliations include:
•Member-Australian Valuers Institute-AV!
•Member - Real Estate Institute of Victoria-AREi
•Licensed Estate Agent - Business Licensing Authority
Previous experience included a role at [WW Company], [a government department], [XX Company], [YY Company] and [ZZ Company], which involved valuation work in the areas of rating and taxing, mortgage, transaction advisory and portfolio advice to a range of Corporate Clients and Developers.
The relevance of the appraisal from the agent who last sold the property, some years ago, is entirely unexplained. Unlike the other expert, whose expertise was not challenged, Mr QQ appears merely to be a principal of, and auctioneer for, VV Real Estate; he is not, on the evidence, a certified practising valuer. It is not apparent why a certified practising valuer, such as the other expert, would require an appraisal from a less qualified estate agent or auctioneer.
Senior Counsel for the husband submitted that this issue might only be relevant to the admissibility of the other expert’s evidence at trial and not to the present question of whether or not to allow his client to tender a report or adduce evidence from the other expert. I disagree. The determination of the question presently before the Court must proceed upon the evidence to hand at this juncture in the proceedings; if it is defective, to my mind, that must be relevant to the determination of the issue at hand.
Section 76(1) of the Evidence Act 1995 (Cth) provides that:
Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed.
However, s 79(1) provides an exception, namely, that:
If a person has specialised knowledge based on the person’s training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge.
In Dasreef Pty Ltd v Hawchar (2011) CLR 588 at [31] – [32], the plurality of the High Court said:
31Section 76(1) expresses the opinion rule in a way which assumes that evidence of an opinion is tendered “to prove the existence of a fact”. That manner of casting the rule does not, as might be supposed, elide whatever distinction can be drawn between “opinion” and “fact” or invoke the very difficult distinction which sometimes is drawn between questions of law and questions of fact. It does not confine an expert witness to expressing opinions about matters of “fact”. Rather, the opinion rule is expressed as it is in order to direct attention to why the party tendering the evidence says it is relevant. More particularly, it directs attention to the finding which the tendering party will ask the tribunal of fact to make. In considering the operation of s 79(1) it is thus necessary to identify why the evidence is relevant: why it is “evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding”. That requires identification of the fact in issue that the party tendering the evidence asserts the opinion proves or assists in proving.
32To be admissible under s 79(1) the evidence that is tendered must satisfy two criteria. The first is that the witness who gives the evidence “has specialised knowledge based on the person’s training, study or experience”; the second is that the opinion expressed in evidence by the witness “is wholly or substantially based on that knowledge”. …
(Footnotes omitted)
The plurality continued at [35] – [37]:
35In order for Dr Basden to proffer an admissible opinion about the numerical or quantitative level of Mr Hawchar’s exposure to silica dust it would have been necessary for the party tendering his evidence to demonstrate first that Dr Basden had specialised knowledge based on his training, study or experience that permitted him to measure or estimate the amount of respirable silica to which a worker undertaking the relevant work would be exposed in the conditions in which the worker was undertaking the work. Secondly, it would have been necessary for the party tendering the evidence to demonstrate that the opinion which Dr Basden expressed about Mr Hawchar’s exposure was wholly or substantially based on that knowledge.
36In this case, demonstration of those matters could come only from evidence given by Dr Basden. That is why, in HG v The Queen, Gleeson CJ pointed out that, “[b]y directing attention to whether an opinion is wholly or substantially based on specialised knowledge based on training, study or experience, [s 79] requires that the opinion is presented in a form which makes it possible to answer that question”.
37It should be unnecessary, but it is nonetheless important, to emphasise that what was said by Gleeson CJ in HG (and later by Heydon JA in the Court of Appeal in Makita (Australia) Pty Ltd v Sprowles) is to be read with one basic proposition at the forefront of consideration. The admissibility of opinion evidence is to be determined by application of the requirements of the Evidence Act rather than by any attempt to parse and analyse particular statements in decided cases divorced from the context in which those statements were made. Accepting that to be so, it remains useful to record that it is ordinarily the case, as Heydon JA said in Makita, that “the expert’s evidence must explain how the field of ‘specialised knowledge’ in which the witness is expert by reason of ‘training, study or experience’, and on which the opinion is ‘wholly or substantially based’, applies to the facts assumed or observed so as to produce the opinion propounded”. The way in which s 79(1) is drafted necessarily makes the description of these requirements very long. But that is not to say that the requirements cannot be met in many, perhaps most, cases very quickly and easily. That a specialist medical practitioner expressing a diagnostic opinion in his or her relevant field of specialisation is applying “specialised knowledge” based on his or her “training, study or experience”, being an opinion “wholly or substantially based” on that “specialised knowledge”, will require little explicit articulation or amplification once the witness has described his or her qualifications and experience, and has identified the subject matter about which the opinion is proffered.
(Footnotes omitted)
Further, at [42], the plurality said that a “failure to demonstrate that an opinion expressed by a witness is based on the witness’s specialised knowledge based on training, study or experience is a matter that goes to the admissibility of the evidence, not its weight”.
In the present case, Mr QQ’s appraisal has manifestly been taken into account by the other expert. However, there is no evidence of the weight it has been given by the other expert and whether the opinion proffered by that expert is wholly or substantially based on his expert knowledge, as opposed to Mr QQ’s appraisal. The Court simply does not know what weight the other expert placed upon that appraisal.
Further, I am troubled by the lack of any explanation whatsoever for the discrepancy between the date of the other expert’s report, namely, 8 June 2023, which purports somehow takes into account the appraisal which post-dates it by a day. There may well be an explanation for this discrepancy; however, it was not put before the Court. Indeed, there was not even any endeavour by Senior Counsel for the husband to address this issue.
In the circumstances, even if I were satisfied that there was a special reason for adducing evidence from the other expert, I would not exercise my discretion in favour of the husband. Accordingly, I shall dismiss paragraph 3 of the husband’s application.
By paragraph 2 of his application, the husband also seeks leave to adduce adversarial expert evidence in relation to the value of the parties’ interest in C2 Pty Ltd. The jointly appointed single expert and the husband’s adversarial expert have not yet conferred in respect thereof. It is agreed that aspect of his application be adjourned to the trial and I shall order accordingly.
I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Strum. Associate:
Dated: 8 August 2023
SCHEDULE OF PARTIES
MLC 4132 of 2020 Respondents
Fourth Respondent:
D PTY LTD
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