Carros & Carros
[2023] FedCFamC2F 181
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Carros & Carros [2023] FedCFamC2F 181
File number(s): MLC 3767 of 2021 Judgment of: JUDGE O'SHANNESSY Date of judgment: 7 February 2023 Catchwords: FAMILY LAW – interim defended hearing – application for adversarial witness – questions not asked of single expert witness – application refused – leave not required to depose a treating doctor – order for costs made. Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 7.02, 7.08, 7.25, 7.26, 7.27
Cases cited: Neales & Neales (2022) FLC 94-079 Division: Division 2 Family Law Number of paragraphs: 38 Date of hearing: 7 February 2023 Place: Melbourne Solicitor for the Applicant: Lampe Family Lawyers Solicitor for the Respondent: Greg Murphy Legal ORDERS
MLC 3767 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR CARROS
Applicant
AND: MS CARROS
Respondent
order made by:
JUDGE O'SHANNESSY
DATE OF ORDER:
7 FEBRUARY 2023
THE COURT ORDERS THAT:
1.The Wife’s application for the appointment of an adversarial witness concerning the business known as Company B be and is dismissed.
2.The time for the Wife to deliver written questions to the single expert witness, Mr D, concerning the value of Company B as provided in rule 7.26(b) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (‘the Rules’) be and is extended to 4:00pm on 14 February 2023.
3.The single expert witness, Mr D, is requested to provide short answers to the questions posed by the Wife pursuant to the previous order on or before 4:00pm on 7 March 2023.
4.The fees of Mr D in dealing with and answering the questions be and are at the expense of the Wife in the first instance subject to any further order.
5.The Wife’s application for a single expert witness in regard to her medical condition be and is dismissed.
6.On or before 4:00pm on 24 February 2023 the Wife make, file and serve any report to be relied upon at final hearing from a treating medical practitioner in accordance with rule 7.01(1(a)) of the Rules.
7.The issue of whether any report from a treating medical practitioner can be relied upon at final hearing, having been filed and served, will be determined at final hearing.
8.The Wife pay the Husband’s costs for this hearing fixed in the sum of $2000 on or before 4:00pm on 14 March 2023.
AND THE COURT NOTES THAT:
A.The Husband complains of prejudice due to the lateness of the treating medical practitioner report.
B.If in any proceedings there are allegations of family violence and the provisions of section 102NA of the Family Law Act 1975 apply (see attached Family Violence Information Sheet), any unrepresented party will not be permitted to personally cross-examine the other party/parties.
C.Affected unrepresented parties may apply to the court and then to the Commonwealth Family Violence and Cross-Examination of Parties Scheme (“the Scheme”) for representation but any such application must be made at least 12 weeks prior to the final hearing.
D.Further information about the legislation and the Scheme can be found at Part 4 of the attached Family Violence Information Sheet.
E.If s102NA applies and a party becomes unrepresented after trial directions have been made, that party is required to promptly advise the Court.
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 a pseudonym Carros & Carros has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
JUDGE O’SHANNESSY
These are the settled reasons of a judgment delivered ex tempore. These reasons were delivered orally. These settled reasons have been corrected from the transcript to correct grammatical errors, to add citations and to attempt to make the orally delivered reasons easier to read. The substance is unchanged.
The questions I must decide today are:
·whether to permit a party to lead adversarial evidence concerning an alternative expert opinion as to the value of a business known as Company B (‘the Business’) or not;
·whether a party has leave to file an “expert report” in respect of their physical health; and
·whether any costs orders should be made today.
The Applicant Wife is 61 years and a hospitality worker (‘the Wife’) and the Respondent Husband is 51 years and is self-described as a tradesman (‘the Husband’). The parties commenced co-habitation in about mid-1998 and married in 2001. Separation occurred in 2019. The parties were divorced on 23 August 2021 and these proceedings were issued on 7 April 2021.
On 15 December 2021, more than a year ago, Judicial Registrar C set the matter down for final hearing on 9 March 2023. On 30 January 2023, with the trial looming, the Wife filed an application in a proceeding seeking that this application be heard on an urgent basis. She sought leave to file an adversarial expert report in respect of the existing valuation of the Business (completed by the E Group) and that she have leave to file “an expert report” in respect of her physical health. I listed the matter urgently today, 7 February 2022.
The adversarial expert in regards to the Business valuation
The history of the existing single expert witness report is more or less as follows; as long ago as 2 December 2021, the parties jointly retained Mr D of the E Group to prepare a single expert witness valuation of the Business. At the time of providing the instructions to Mr D, he was advised that the parties had a conciliation conference listed on 9 January 2021 and he was requested to have a report available in that short time. On 7 December 2021 it is alleged that the Husband provided the relevant bank statements to the expert and that the draft report was provided the following day, on 8 December 2021. I infer, and the parties have confirmed, that the speed with which the report was prepared was because of the parties’ request to have the report available for 9 January. In February 2022 the Wife’s solicitor raised with the single expert witness the issue of non-business expenditure from the business accounts or proceeds. On 27 July 2022 Mr D requested further information from the parties and was provided with further information, including ledgers. Mr D then, and I infer at a time proximate to the request for further information, advised the parties that the personal drawings did not affect his opinion of the value of the Business. I infer that further information was provided to Mr D and he ultimately provided his final report on 9 January 2023.
Where a party is dissatisfied, is unhappy, seeks clarification or seeks reinforcement of the contents of a report, the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (‘the Rules’) provide for a procedure. Rule 7.25 provides that the parties may confer with the expert witness, and I refer to that rule as follows:
7.25 Conference
(1)Within 21 days after receiving the report of a single expert witness, the parties may enter into a written agreement about conferring with the expert witness for the purpose of clarifying the report.
(2)The agreement may provide for the parties, or for one or more of them, to confer with the expert witness.
(3) Without limiting the scope of the conference, the parties must agree on arrangements for the conference.
(4)It is intended that the parties should be free to make any arrangements for the conference that are consistent with this Division.
Note:For example, arrangements for a conference might include the attendance of another expert, or the provision of a supplementary report.
(5)Before participating in the conference, the expert witness must be informed of arrangements for the conference.
(6)In seeking to clarify the report of the expert witness, the parties must not interrogate the expert witness.
(7)If the parties do not agree about conferring with a single expert witness, the court, on application by a party, may order that a conference be held in accordance with any conditions the court determines.
Independent of the rule 7.25, there is the procedure for a party, for whatever reason, to ask questions or to seek to clarify the report by rule 7.26, which reads as follows:
7.26 Questions to single expert witness
(1)A party seeking to clarify the report of a single expert witness may ask questions of the single expert witness under this rule:
(a)within 7 days after a conference (if any) is held under rule 7.25; or
(b)if no conference is held under that rule—within 21 days after the party received the single expert witness’s report.
(2) The questions must:
(a)be in writing and be put once only; and
(b)be only for the purpose of clarifying the single expert witness’s report; and
(c) not be vexatious or oppressive, or require the single expert witness to undertake an unreasonable amount of work to answer.
(3) The party must give a copy of any questions to each other party.
Where questions are asked, the expert is under the burden to provide the answers within 21 days as provided in rule 7.27. Rule 7.27 provides as follows:
7.27 Single expert witness’s answers
(1)A single expert witness must answer a question received under rule 7.26 within 21 days after the later of the following:
(a)the date the expert witness received the question;
(b)the date the fees and expenses for answering the question are paid or secured.
(2) An answer to a question:
(a) must be in writing; and
(b) must specifically refer to the question; and
(c) must:
(i) answer the substance of the question; or
(ii) object to answering the question.
(3)If the single expert witness objects to answering a question or is unable to answer a question, the single expert witness must state the reason for the objection or inability in the document containing the answers.
(4) The single expert witness’s answers:
(a) must be:
(i)attached to the affidavit under subrule 7.21(2); and
(ii)sent by the single expert witness to all parties at the same time; and
(iii)filed by the party asking the questions; and
(b) are taken to be part of the expert’s report.
In this case, the procedure available pursuant to the Rules was not undertaken. Instead, as referred to, an application for adversarial evidence was made and sought to be listed urgently.
The Rules provide a mechanism or provisions for when the point of the single expert rules can be departed from. The purpose for the single expert rules are set out in rule 7.02, which reads as follows:
7.02 Purpose of Part 7.1
The purpose of this Part 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.
Where a party seeks to appoint another witness, commonly known as an adversarial witness, reference must be made to the applicable rules. The Rules provide for the circumstances where that could or should be permitted, at rule 7.08, which reads as follows:
7.08 Appointing another expert witness
(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.
In addition to the Rules, there are authorities of the Court that assist the parties and practitioners and the Court as to the application of the Rules. The relatively recent decision of the Full Court in Neales & Neales (2022) FLC 94-079 (‘Neales’)provides assistance and I refer to and recite the following parts:
24 The husband also contended 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, and that the husband’s expert was in possession of a substantial body of opinion contrary to that of the single expert. The primary judge identified the relevant Rules (as they were at the time) and made reference to Kent J’s decision in Tsoutsouvas & Tsoutsouvas and Ors [2012] FamCA 521 at [26], where his Honour observed:
44. ... 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”.
(Footnote omitted)
25 The primary judge concluded that contrary to the submissions of the husband, there was not a substantial body of contrary opinion, but rather an alternate opinion. The primary judge identified:
49. Here what is presented is an alternate opinion, by a person holding a relevant expertise, Mr D. In relation to the controversial area, being the significance of the leases to which the properties are subject, Mr D opines that the approach to those matters offered by him is preferable.
50. ... What he proffered was an alternate approach that he opined was superior. That is insufficient to meet the requirement of r 15.49(2)(a). What has been offered is a merely contrary opinion. Under that circumstance, despite the significantly different outcome reached by the experts, the rule does not authorise the reception of the additional expert evidence.
…
40 Ground 2.2 contended error by the primary judge in applying r 15.49(2)(c) of the old Rules in not considering in aggregate, each of the husband’s contentions, but rather adopting a “tick-and-flick” approach. In form, the ground, being as gracious as we can, should have been drafted with more care. It was both inappropriate and incorrect to describe the primary judge’s approach as a “tick-and-flick”. There is, however, force to the argument that in considering “another special reason”, the primary judge did not consider overall the thrust of the husband’s case for the appointment of another expert. As much is made plain in the husband’s Summary of Argument:
24. As set out in the case outline document it was the cumulative aspect of the complaints together with the differences between the two valuers that was sought to underpin the argument that there was a special reason for being able to rely on the reports of [Mr D].
25. In the judgement his Honour dealt with each matter raised singularly, but did not deal with the issues cumulatively when determining the application for [Mr D] to be an adversarial expert pursuant to rule 15.49(2)(c). When discussing rule 15.49(2)(c) his Honour only referred to the difference in valuation, a reference to the quantum, and not to the other complaints raised by the Appellant...
(Husband’s Summary of Argument filed 16 November 2021, paragraphs 24–25)
…
42 We agree with the husband’s submission in relation to Ground 2.2. We are satisfied that the primary judge did not consider these matters in aggregate in addressing r 15.49(2)(c) of the old Rules, but rather confined his consideration to the issue of differences in value. In doing so, the primary judge fell into error.
…
46 As Kent J observed in Salmon and Ors & Salmon [2020] FamCAFC 134 (“Salmon”) at [35]:
35. ... the words “substantial body of opinion” in r 15.49(2) are to be given real meaning, as was the approach taken by the primary judge. The approach that the words have meaning of substance has been adopted, correctly in my view, in other decisions at first instance in this Court. The mere expression of an opinion as to value by another expert, no matter how substantially contrary it is to that of the single expert, does not in and of itself constitute “a substantial body of opinion” within the meaning of the rule. If such a contrary opinion is founded upon identified and accepted methodology recognised 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...
…
53 We agree with his Honour’s observation as far as the first limb of Ground 3.4 is concerned. A difference of opinion, even of this magnitude, does not simpliciter establish a basis for an adversarial expert.
Hence, it is necessary that I not only consider the matters said to justify departure from the ordinary course of the rules of another expert witness individually, but also collectively.
The matters upon which the Wife’s solicitor, Mr Murphy, relied upon were in part set out in the Wife’s affidavit accompanying the application. The relevant parts include:
17. I heard my solicitor on the phone speaking to the expert and he raised the personal spending of Applicant through his business account.
18. I was told by my solicitor that the personal spending was not a factor that would change his opinion in respect of the report.
19. I have since discovered that there is over $200,000.00 in personal spending over 2.5 years, from the Applicants business account.
20. I have also discovered further anomalies in his disclosure which has been ad hoc throughout these proceedings.
21. Further I have concerns that the Applicant is not disclosing the true value of the business.
22. I ask the Court to make the orders I seek so all the information required to proceed to final hearing can be given to the honorable Court.
In address to me, the Husband’s solicitor asserted that there was significant non-disclosure by the Husband of the true state of the affairs of the business. He also asserted that the information relied upon relied upon the self-report of the Husband and that was itself a defect in the report. He asserted that there were contradictions in the report including the reference to the visa account later adjusted in the sum of $218,396. He asserted that there were significant errors or apparent errors in the financial records relied upon by the expert. However, the primary ground relied upon was the issue of the $200,000 in drawings said to be over 2 ½ years. Upon inquiry from me it was indicated that the period of the drawings was from 2019 to 2022. It was also put that there was a “barrage” of information missing.
It was put that, in substance, the aggregation of these matters justified the appointing of the single expert witness and I infer under rule 7.08(2). In this case, the opinion comes from the Wife, not another expert. However, for the purpose of ruling on this matter in this interim hearing I will assume that there is a proper basis for those assertions to be made by the Wife and I am told that the Wife’s solicitor has spoken to another expert. Nonetheless, I do not have evidence of a substantial body contrary opinion from another expert before me.
The real issue for me is whether the aggregation or combination of those matters is “another special reason for adducing evidence from another expert witness”. The circumstances are that the Rules have not been utilised by the asking of questions or the seeking of a conference and the expert opinion relied upon at this stage is the Wife’s opinion of the information provided to her from the apparent discussions that her lawyer has had with another expert. I am not satisfied that there is another special reason for adducing additional evidence, that another expert, whoever that may be, knows matters not known to the single expert witness or that there is a substantial body of opinion contrary to that opinion.
The point, or one of the points, of Neales must also be referred to and that is that under the Rules, the existing single expert can be cross-examined. The art of advocacy is the exposition of facts by the conduct of the trial.
I also indicated in discussion that I would consider extending the date for questions to be asked provided that the expert was available to answer them. I also raised in discussions with the solicitors appearing that I intended to limit the answers to short answers in the circumstances of the alleged asset pool, which essentially includes some motor cars, the former matrimonial home said to be worth in excess of $2,500,000 and the Business opined by the expert to be worth somewhere around about $30,000. I seek some proportionality in regard to the expense of the matter and the evidence sought to be provided.
In those circumstances, I am satisfied that I should extend the time for the answering of questions because I have been advised that the expert will be able to answer the questions within a further 21 days and that can occur in a timely manner for the trial. I say timely but, in fact, it is quite tight but possible.
Adversarial expert in regards to the Wife’s health
I now turn to the issue of the expert witness in regards to the Wife’s health. An adversarial witness is required where expert evidence is to be given, however, there are exceptions to that. It turns out that the expert witness that the Wife seeks leave from is from a Dr F, who has treated the Wife. Rule 7.01(1)(a) provides as follows:
7.01 Application of Part 7.1
(1) This Part (other than rule 7.14) does not apply to any of the following:
(a)evidence from a medical practitioner or other person who has provided, or is providing, treatment for a party or child if the evidence relates only to any or all of the following:
(i)the results of an examination, investigation or observation made;
(ii)a description of any treatment carried out or recommended;
(iii)expressions of opinion limited to the reasons for carrying out or recommending treatment and the consequences of the treatment, including a prognosis;
Hence, leave is not required to provide evidence from a treating doctor. The treating doctor can provide the report, I am told, by 24 February 2023, which is shortly after the existing time for filing and I am prepared to extend that time for filing until that report will be available.
I add that I was able to deal with the matter as an interim hearing this morning because the two trials listed for a three day hearing both resolved on the first day.
Costs
The final question I must determine is whether I order costs in respect of the proceedings before me this day.
The matter commenced at 9:30am and it is now 12:05. The provision of costs governed by section 117 of the Act, which reads as follows:
117 Costs
(1)Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
[Notations omitted]
The starting point is that each party to proceedings under the Act shall bear his or her own costs. However, that is subject to section 117(2) and (2A).
In considering what order should be made, I must consider the financial circumstances of the parties. At the moment, the Wife’s income is benefits and the property pool to be divided between the parties will consist of a business and a property said to be worth some $2,500,000, albeit subject to a mortgage of some $200,000. Hence the parties have for division between them, if it is just and equitable, to make an order something in excess of $2,000,000.
No party is in receipt of Legal Aid.
The major issue raised by Mr Lampe is the conduct of the parties to the proceedings and, that is, that the application was misconceived or entirely unnecessary because of the available provisions under the Rules instead of the application for an adversarial witness. There is substance in that ground.
The proceedings have not been necessitated by the failure of anyone to comply with an order.
The Wife’s application has been not wholly unsuccessful in the sense that orders were made but it has been largely unsuccessful.
There is no evidence of the issue of any offer in writing.
Costs are compensatory and not for the purpose of punishing a party.
Mr Lampe, on behalf of the Husband, estimates that it is likely that his client will be charged something in the order of six hours, being the three hours roughly for today and three hours preparation. His charge out rate is $450 an hour. Hence, it is likely the charges will be in the order of $2700.
Mr Lampe seeks costs on the scale and relies on item 3 of schedule 1 of the Act which is initiating or opposing an application for interlocutory orders including an interim hearing. The item 3 fee is $1964 plus the daily hearing fee of $1178 or, alternatively, could be characterised as item 2, except that that is a larger amount but it is prior to the completion of the first court date. Hence, the costs that Mr Lampe seeks of $2000 are less than the combination of item 3 and item 13, the daily hearing fee of $1178. I take that into account in the exercise of my discretion.
It is put by Mr Murphy, on behalf of the Wife, that the Wife has been partly successful and that she has difficult financial circumstances at the moment because she is not working and, at the same time, she is servicing the considerable mortgage on the property. That is true, but she has the benefit of the accommodation of the former matrimonial home.
I will order the Wife to pay the Husband’s costs for this hearing fixed in the sum of $2000.
Those are my reasons.
I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment of Judge O'Shannessy. Associate:
Dated: 22 February 2023
0
2
0