Cross & Cross (No. 3)

[2007] FamCA 1096

FAMILY COURT OF AUSTRALIA

CROSS & CROSS (NO. 3) [2007] FamCA 1096

FAMILY LAW – PROPERTY – Value of Property – Conflicting evidence

Family Law Act 1975 (Cth)

APPLICANT: Mr Cross

RESPONDENT: Mrs Cross

FILE NUMBER: MLF 1136 of 2006

DATE DELIVERED: 11 September 2007

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Young J

HEARING DATE: 12 September 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Bartfeld QC with Ms Johns of Counsel

SOLICITOR FOR THE APPLICANT: Kennedy Wisewoulds

COUNSEL FOR THE RESPONDENT: Mr North SC with Mr Sweeney of Counsel

SOLICITOR FOR THE RESPONDENT: Glezer Lanteri & Associates PTY LTD

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 1136 of 2006

MR CROSS  

Applicant

And

MRS CROSS  

Respondent

REASONS FOR JUDGMENT

1. These extempore reasons continue on various aspects of the matter of Cross which was before me yesterday and now this morning.  Counsel and instructing solicitors are as appeared yesterday and I deal with two particular issues in these brief reasons.  Both of these matters are and have been considered by the court in the context of further orders required and case management requirements.

2. Yesterday it emerged that the parties each seek orders to retain the whole or part of the property at T.  The husband seeks the whole of the property.  The wife seeks the property on which the former matrimonial home was constructed but the accompanying lot upon which exists the tennis court and swimming pool is not part of her orders sought before the court.  She would have the husband retain, as part of the division of property, that particular allotment.  It was revealed yesterday that the husband's solicitors have engaged the advice of Mr Pitt SC described as a very experienced solicitor in local government and real property law.  That advice has been disclosed to the wife's solicitors but not to the court.  The advice was obtained primarily to the impact, if any, that the covenant on the title to the property would have upon future value, ability to sell, or generally as to the use or subdivision of the allotment containing the swimming pool and tennis court.

3. It has now emerged that the wife's solicitors are seeking advice from Mr Wikramanayake of Senior Counsel, likewise a very experienced author and authority in land law.  His advice is yet to be received.  In due course it may be that there will be a conference of Senior Counsel on matters which are legally in dispute but I will not order any such conference.  The effect however of the advice from each of them may well have an impact upon valuation and issues that go to the use, enjoyment and development of that recreational allotment.  I understand that as a result of the advice from Mr Pitt, the valuer currently engaged by the husband has reduced the stand alone valuation for that leisure allotment from $3 million to $1.8 million, a reduction of $1.2 million.  The wife's valuer currently retains his prior valuation and may be awaiting the further advice from senior counsel.  In any event I do not speculate as to whether such advices will have any financial impact, or otherwise, on his valuation.

4. Mr North in developing his submission on this issue, highlighted to the court that Mr Wikramanayake's brief encompasses not only an advice on the validity and impact of the existing covenant, but also, and predicated on the basis that the covenant is valid, then what steps can be taken to limit or exclude the liability or restriction thereof and at what cost and presumably on what timeframe.  The answer to those questions may involve the engagement of a town planning expert or other experts, but again that is a matter which is not in evidence before the court and will largely depend upon future legal advice and opinion.  Mr Bartfeld addresses the reality of the advice that they have obtained, the impact that is has had upon their valuer's professional opinion and any other submissions that he would make will be dictated by instructions from his client and no doubt the further evidence and development of legal issues on this restricted covenant and enjoyment of the pleasure allotment. 

5. Again, I try not to look into the future I do not have a crystal ball.  What I do note is that these issues are wholly unresolved.  I observe that the court is entitled to hold a degree of disappointment on the preparation of this matter given that the covenant and its existence and impact has always been known to, most likely, both clients.  In any event it is on title and would have been known to practitioners and certainly to the valuers.  Its impact should have been originally incorporated into valuation, assuming that it would have a financial impact which remains a matter for evidence, and upon which I express no concluded view.

6. The restricted covenant and any impact and or costs and timing issues associated therewith, will have a marked impact upon the court timetable for hearing this defended matter, and upon the costs to the parties and, as is in issue, upon valuation.  What I propose to do is to require junior counsel to draft orders by way of procedure and case management ensuring that there is a meaningful disclosure and dialogue of issues that affect this property and its use and value, and thereafter to require the valuers, if they have already not done so, to reconsider any impact on their valuation of the legal advices now sought, with the position that there will need to be updated valuations or at least a further conference of valuers, as experts, on this issue.

7. I turn briefly to the issue that was raised yesterday as to the possibility of sale of the T property.  I make no orders in this regard, the matters being raised with Senior Counsel.  They may or may not have out of court discussions, that cannot be a priority of the court, but it would certainly simplify the orders sought, costs and disputes, however I emphasise that is not a matter within the domain of the court which must determine an outcome upon the basis of what orders are sought by each of the parties and what evidence is presented to the court.

8. The final preliminary matter that I touch upon in these extempore reasons relates to financial issues and disclosure as between accountants and solicitors.  One of the issues that significantly is in dispute is the quantum and impact of any Division 7A loans and tax payable thereupon.  The initial joint statement of experts prepared on or after 24 July 2007 indicated that the difference in the accountant's assessments was $688,535.  Yesterday I was advised that the further discussions had reduced that quantum to $534,339.  I am further informed by Mr Bartfeld today that continuing work on this issue and a reassessment of the issue has further reduced the likely impact of that Division 7A loan. 

9. The quantum now representing the difference between each of the parties I do not know and it is not currently in evidence.  The original complaint of the wife's legal practitioners was that they had insufficient or inadequate documents and disclosure was not yet available.  They then requested a period of two days to receive documents, and a further two days for their accountants to collate, investigate and advise thereupon.  In response, Mr Bartfeld highlighted a statement of the experts and in particular paragraph 2.18.5.  Whatever differences or documents, it does seem that there are further issues of disclosure.

10. What continuing discussions occurred between accountants post-24 July I do not know and it is not in evidence.  What I have been told from the bar table is that a letter dated 3 September 2007 was sent by facsimile transmission from the wife's solicitor to the husband's solicitor.  That letter is not in evidence but Mr Bartfeld has briefly referred to a paragraph therein in his submissions.  What occurred in the six week period or thereabouts from late July to early September I am uncertain.  What however I do know is there is further documents to be made available and therefore incomplete discovery and disclosure.  I do not propose to in any way determine culpability on that issue.  I record a complaint on behalf of the husband which is that the wife is effectively instructing her solicitors and accountants to undertake an audit and to thereby investigate all documents and every dollar.  Again, that is merely recording a submission and I make no finding.

11. The real issue for the court is this matter was not ready for trial when his Honour Cronin J set the matter for hearing.  His Honour was not informed of the continuing issues with evidence, documents and valuations.  Quite apart from the fact that this matter is not a four day hearing, and certainly not a three day hearing as it is contemplated, the matter is not ready to proceed on any number of issues including financial advice, disclosure and an assessment of the current circumstances of both parties, and more particularly the various corporate and property development entities.

12. What I envisage is that within seven days there must be a disclosure of all required documents by or on behalf of the husband and his practitioners to the wife and her practitioners.  Thereafter the wife within 14 days will ensure that her financial advisers complete a thorough investigation of all such documents up to 31 March 2007 and there at least needs to be interim reports and a conference of experts to sign off as at 31 March 2007.  The real issue looking forward is what further disclosure of documents, what further financial investigation and opinions need be concluded and what other conference of financial experts needs to be conducted before this matter can in any way be ready for trial.

13. I am conscious now, from disclosures made from the bar table that the taxation and financial returns for the parties individually but more particularly for all entities are of course not yet prepared for 2006 - 2007.  They will be prepared and filed over the next six months.  There must be then have an understanding of the content and accuracy of the documents, of the loan accounts of all entities up to and including the last day of the previous financial year and how that might impact upon Division 7A issues.  There are ongoing financial developments, and therefore it is perhaps difficult to draw a line in the sand at any particular day and value all of the entities and businesses as at that day and properly account for liabilities as at that same day.  However, that needs to occur.  The reality may be that day will be 31 December 2007 because all documents for the prior financial year must then be filed and it would fit into a general timetable of the court to find an appropriate number of days to hear and determine the dispute between the parties.

14. Again, I will ask junior counsel to carefully prepare a meaningful order that encompasses appropriate case management directions and timetable that I propose to lock in and make the parties comply with.  I repeat my disappointment with the previous indications to the court, and the lack of any realistic finality of matters before the court, though I direct that not personally to anyone, it just seems to be an ongoing issue in this case. 

I certify that the preceding twenty four (14) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Young 

IT IS NOTED that publication of this judgment under the pseudonym Cross & Cross is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)