Darby & Fullarton
[2022] FedCFamC1F 59
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Darby & Fullarton [2022] FedCFamC1F 59
File number(s): SYC4444 of 2021 Judgment of: BAUMANN J Date of judgment: 14 February 2022 Catchwords: FAMILY LAW – REVIEW – Review of Registrar’s decision to appoint single expert valuers Division: Division 1 First Instance Number of paragraphs: 19 Date of hearing: 9 February 2022 Place: Brisbane Solicitor for the Applicant: Walsh & Blair Counsel for the Respondent: Mr P Fowler Solicitor for the Respondent: Broun Abrahams Burreket ORDERS
SYC4444 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR DARBY
Applicant
AND: MS FULLARTON
Respondent
ORDER MADE BY:
BAUMANN J
DATE OF ORDER:
14 February 2022
THE COURT ORDERS UNTIL FURTHER ORDER:
1.That pursuant to Order 4.1 of Orders dated 19 July 2021, Mr E of C Valuers be appointed as the single expert valuer to value the parcels of real estate identified at Schedule 2 of the Orders dated 19 July 2021.
2.That pursuant to Order 4.2 of Orders dated 19 July 2021, Mr B of D Valuers be appointed as the single expert valuer to value the plant and equipment owned by the Trusts and Entities of the parties identified at Schedule 1 of the Orders dated 19 July 2021.
3.That the parties’ costs of the Application for Review filed 28 January 2022 be reserved.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Fullarton & Darby has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
After commencement of substantive proceedings by Ms Fullarton (“Ms Fullarton”) on 16 June 2021, on 19 July 2021 a Registrar made interim consent orders which inter alia provided for Ms Fullarton to receive some payments totalling $50,000; for some restraints as to use of income in respect of the F Company partnership; and relevantly in respect of the Review Application before me, the following orders were made:
Single Expert Valuations
4.In the absence of agreement as to their value within 21 days from the date of the making of this order, pursuant to Rule 15.44 of the Rules a Single Expert be appointed to provide a report assessing the value of:
4.1.the interest of the Applicant and the Respondent (either individually or through the various entities and trusts they control) in the parcels of real estate identified at Schedule 2:
4.2. the plant and equipment owned by G Unit Trust.
4.3. the interest held by the Applicant and the Respondent in:
4.3.1. The partnership known as F Company;
4.3.2. The self-managed superannuation fund known as Darby Super Fund;
4.3.3. G Unit Trust; and
4.3.4. H Trust, including the interest held by this trust in G1 Pty Limited and G2 Pty Limited.
4.4.Any other expert required by the expert appointed for the purpose of Clause 4.3.
5.The parties share equally in the costs of the single experts, with the Respondent to pay the costs in the first instance and the Applicant to reimburse the Respondent for her 50% contribution out of her property entitlement agreed by consent or determined at the conclusion of the final hearing.
Schedule 2 to that order identifies thirteen different parcels of real estate. For context, the Respondent to the substantive proceedings, Mr Darby (“Mr Darby”), gives an estimate of the properties being worth around $18,000,000 whereas Ms Fullarton believes that may be an underestimate.
At the time of the making of these interim consent orders, Ms Fullarton was represented by Senior Counsel, and Mr Darby was represented by experienced Counsel.
Subsequently, on 17 August 2021, a different Registrar, by consent, ordered the parties to attend private mediation and I was informed on 9 February 2022, that the parties wish to participate in that mediation but sensibly agree that the issue of valuations needs to be resolved before attempting mediation.
It seems that on 27 September 2021, a different Registrar to the one who made the mediation order, heard submissions and reserved judgment on the identity of the single experts. On 10 December 2021, without apparently any reasons being published, an order was made in these terms:
1.That pursuant to Chapter 7 of Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth):
a.Mr B of D Valuers be appointed as the single expert valuer to value the plant and equipment owned by the Trusts and Entities of the parties identified at Schedule 1 and pursuant to Order 4.2 of the Orders dated 19 July 2021.
b.Mr J of K Valuers be appointed as the single expert valuer to value
c.[sic] the parcels of real estate identified at Schedule 2 and pursuant to Order 4.1 of the Orders dated 19 July 2021,
d.A single expert be provided to prepare a report assessing the parties’ interests in the Trusts and Entities of the parties identified at Schedule 1 and pursuant to Order 4.3 of the Orders dated 19 July 2021 and for this purpose the Husband will select one of the following nominated experts within 7 days:
i. Mr L, N Accountants;
ii. Mr M, P Accountants
iii. Ms O, Q Valuers
On 28 January 2022, Mr Darby (hereafter called “the Applicant”) filed an Application for Review. The Application (at paragraph 6) suggests that he was seeking to “review all the orders made by the Registrar”; however at paragraph 7, only identified the orders sought as being:
1.That within seven (7) days the parties engage C Valuers to value the real property identified in and in accordance with Order 4 of the Orders made by the Family Court of Australia on 19 July 2021.
2.That within seven (7) days the parties engage R Estate Agents to value the plant and equipment in accordance with Order 4.2 of the Orders made by the Family Court of Australia on 19 July 2021.
During the course of oral submissions, I indicated that the Applicant would need leave to amend the Application for Review, if, as the Applicant contended, he wished to now seek to discharge Order 1(d) of Orders made 10 December 2021. Oral leave to amend was made and opposed by Counsel for the Respondent to the Review, Ms Fullarton (hereafter called “the Respondent”).
As the hearing before me was conducted as a hearing de novo, the parties relied upon earlier material filed and their considered written arguments in case outlines filed 7 February 2022 and oral submissions. My reasons for the Orders now made are as follows.
REAL PROPERTY VALUATIONS
The Applicant contends for the appointment of Mr E of C Valuers, who is a licensed property valuer located in the S Region; is based in T Town and whose curriculum vitae is attached to the affidavit of the Applicant which confirms he is suitably qualified. Some criticisms of his areas of “expertise” was raised by the Respondent, being that he has spent significant time working in a family business rather than being involved full time in valuation of property. His fee estimate is $12,000 “plus GST and disbursements” and with him being locally situated, I infer travel costs would be modest.
The Respondent contends for the appointment of a recognised national firm, K Valuers, and in particular, Mr J. Mr J’s curriculum vitae is attached to affidavit of the Respondent. He holds similar professional qualifications to that of Mr E, and claims experience in valuing rural property. His office is situated in U Town New South Wales.
In circumstances where both nominated experts claims experience in rural valuations in broadly the area where the properties are situated, and where no challenge to their expertise is raised, the Court is entitled to assume that each qualified expert would adopt the same industry and professional methodology, namely to inspect the subject land and to determine an opinion of market value found on that inspection and available comparable sales data.
The only distinguishing feature that is obvious between the two nominated experts, is the cost of their report, and although with a possible valuation in the region of $18,000,000, the difference in fees is perhaps insignificant (and likely already to pale into insignificance compared to legal expenses already incurred). In the exercise of my discretion, I will appoint Mr E of C Valuers as the single expert for the real property valuations because of the cheaper quotation.
PLANT AND EQUIPMENT
Apparently, 62 items have been identified and agreed to be the subject of valuation, and these items span from large machinery (possibly worth $700,000) to smaller items. The respective primary nominations for an expert are:
(a)The Applicant says that Mr V of R Estate Agents should be appointed, at a fee quoted of “$25 per item and $220 including GST for travel”. In his email to the solicitor for the Applicant dated 24 August 2021, he refers to “the appraisal of machinery” and the need to “see the condition of the machinery to accurately appraise it”. Mr Naumann for the Applicant conceded that Mr V had no “formal valuation” qualifications but pointed to Mr V’s wide experience as an industry expert, and involvement in many recent sales. No real clarification was offered to explain to the Court why a fee of $25 for a piece of machinery worth hundreds of thousands of dollars could be the same as the fee for an item of significantly lesser value; and
(b)The Respondent nominates Mr B of D Valuers as a single expert and his curriculum vitae is attached to the Respondent’s affidavit which reveals that he has tertiary qualifications in valuation and in 2014 he “started out as a Trainee Plant and Equipment Valuer” and has, he claims, “valuation experience all around Australia”. Perhaps unsurprisingly, when one sees the differences in qualifications and expertise, the fee quoted by D Valuers is $25,000 (excluding GST).
Although I accept that a qualified valuer in an assignment like this may make enquiries from local people (in the relevant industry) as to prevailing conditions, considering the market value of the total items could exceed $3,000,000, the single expert should be a valuer not an “appraiser”. As a result, Mr B shall be appointed.
I record that when Mr Naumann got a sense, after exchanges with the Bench, that his primary nomination might not find favour with the Court, he referred to other quotations set out in his client’s affidavit at paragraph 9. However, it not being the order he sought and where Counsel for the Respondent had no warning of this alternate position (nor did the Court have any details of their qualifications, experience or methodology to be adopted), it would not have been fair to go down that path.
BUSINESS VALUATION
The gravamen of the concern the Applicant has about the valuation of the business interest, appears to be expressed at paragraph 14 of his affidavit, succinctly expressed as:
I have never agreed to the appointment of a valuer of the family business and I think it is completely unnecessary to do so.
The consent orders made 19 July 2021 at Order 4.3 demonstrates an agreement to the appointment of a single expert to provide a report, on at least four separate entities, not just “the businesses”.
The order under Review, namely at Order 1(d) of Orders dated 10 December 2021, provided a list of experts who the Applicant could consider and then select one to do the report. He should do so. I do not, in the circumstances, propose to disturb the order by the Registrar at Order 1(d).
This matter remains in the list of active cases in the Sydney Registry. However, I propose to bring the proceedings to the attention of the Case Management Judge, the Honourable Justice Altobelli, so that consideration may be given at the appropriate time to the applications being including in the Court’s Complex Financial Proceedings list, for case management in accordance with those protocols.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 14 February 2022
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