Demetriou and Demetriou - [2019] FamCA 625

FAMILY COURT OF AUSTRALIA

DEMETRIOU & DEMETRIOU

[2019] FamCA 625

FAMILY LAW – PRACTICE AND PROCEDURE – where the parties consented to the appointment of a single expert under the Family Law Rules 2004 (Cth) for the purpose of a joint valuation in respect of real property – where the husband obtained an adversarial expert report a few days before trial– where the husband filed an application two days before the commencement of the trial – where the husband pressed for a conference to take place between the single expert witness and the adversarial witness pursuant to Rule 15.69B of the Family Law Rules 2004 (Cth) – where the husband argued that pursuant to Rule 15.49(2)(a) and (c) of the Family Law Rules 2004 (Cth) the adversarial report would likely be tendered and evidence from the expert could be adduced – facts distinguished from Lister & Lister (2015) 52 FamLR 174 – alternative procedure available to submit questions to the single expert under Rule 15.65 the Family Law Rules 2004 (Cth) – husband’s application was dismissed.

Family Law Rules 2004 (Cth) rr. 1.12, 15.49, 15.64A, 15.64B, 15.65, 15.68

Lister & Lister (2015) 52 Fam LR 174
Padnall & Padnall (No. 3) [2014] FamCA 904

APPLICANT:

Mr Demetriou

RESPONDENT:

Ms Demetriou

INDEPENDENT CHILDREN’S LAWYER:

Tiyce & Lawyers

FILE NUMBER:

SYC

2580

2017

DATE DELIVERED:

4 September 2019

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Harper J

HEARING DATE:

2 September 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Campton SC

SOLICITOR FOR THE APPLICANT:

Mills Oakley

COUNSEL FOR THE RESPONDENT:

Mr Lethbridge SC

SOLICITOR FOR THE RESPONDENT:

Rowlandson & Co Solicitors

COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER:

Mr Scarlett

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER:

Tiyce Lawyers

Orders

The Applicant Husband’s Application in a Case, filed 29 August 2019, be hereby dismissed.
Leave be granted to the Applicant Husband, pursuant to Rule 15.65 of the Family Law Rules 2004 (Cth) to submit questions to the single expert witness, N Group, in accordance with that rule, NOTING that the time limit of 21 days in under Rule 15.65(1)(b) is hereby dispensed with.
I DIRECT that any such questions be submitted by 4:00pm on 5 September 2019.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Demetriou & Demetriou has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2580 of 2017

Mr Demetriou

Applicant

And

Ms Demetriou

Respondent

REASONS FOR JUDGMENT

This judgment is being delivered orally. When settled, additional references to factual matters, and the law may be included.
These are parenting and property proceedings between, Mr Demetriou (“the applicant husband”), and, Ms Demetriou (“the respondent wife”). They involve a number of complicated issues.
In the property aspect of the proceedings, there is a significant issue over the value of the property owned by the wife at D Street, Suburb E NSW (“the D Street Property”).
On 11 April 2019, the proceedings were listed for final hearing commencing on 2 September 2019, with an estimate of seven days. A number of orders were made for the preparation of final hearing, including an order that if the parties were unable to agree on property valuations they were directed to agree upon a single joint expert devout to value any property value, which remained in dispute, twenty-one days from 11 April 2019.
Pursuant to those orders, N Group Valuers were appointed as single expert valuers, and a valuation report was issued on 12 September 2018. That report valued the D Street Property at $1.75 million. On 29 August 2019 the applicant husband filed an application in a case, made returnable on 2 September 2019, pursuant to which he sought the following orders:
1. That pursuant to Rule 15.69B of the Family Law Rules 2004 (Cth) a conference between Mr U or Mr V of N Group and the adversarial expert, being Mr W of Y Group, be arranged forthwith and they are to thereafter produce a memorandum.
2. That in the absence of the memorandum prepared in accordance with Order 1 hereof identifying agreement as to the value of the property situated at D Street, Suburb E in the State of New South Wales being all of the land comprised in Folio Identifier … (“the D Street Property”) then pursuant to Rule 15.49 of the Family Law Rules 2004 (Cth) the Husband be granted leave to adduce evidence of an adversarial expert as contained in the valuation report dated 26 August 2019 by Y Group in relation to the value of the D Street Property.
In support of his application the husband also filed and served an affidavit sworn 28 August 2019, and an affidavit of Mr W, affirmed 29 August 2019. Mr W is a valuer. He annexed to his affidavit a valuation report of the D Street Property, in which he valued the property, as at 26 August 2019, at $2 million.
These reasons for judgment relate only to the husband’s Application in a Case.
The husband relied upon the material referred to above, together with some correspondence and a copy of the single expert valuation. The wife made submissions but did not tender any documents.
The hearing of the husband’s application took place on the first day of the final hearing, after the parties had been given an opportunity to attempt to resolve at least some of the parenting issues.
The husband foreshadowed in submissions that ultimately he may seek to read the affidavit of Mr W in the substantive proceedings. Proposed Order 2 in his application in a case seeks leave for this. However in the first instance the husband presses only for an order that pursuant to rule 15.64B of the Family Law Rules 2004 (Cth) (“the Rules”) that a conference take place between N Group and Mr W for the purpose of preparing either an agreed statement, or a statement specifying those matters upon which the single expert and Mr W disagree. The wife resists any order to that effect.
Rule 15.64B is in the following terms:
15.64B Conference
(1) Within 21 days after receipt of the report of a single expert witness, the parties may enter into an 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 advised 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.
Rule 15.64B of the Rules prescribes two avenues whereby a conference of experts may take place. One is by agreement between the parties. There is no agreement here. The other is court order, under sub-rule (7).
Senior Counsel for the husband relied upon sub-rule (7). He argued that the Court may order a conference in the absence of agreement. The Court has a wide discretion to impose conditions. Thus as a matter of construction the terms of the rule are wide enough to allow a party, at such conference, to present their own partisan expert witness. He argued that if the single expert and Mr W conferred it may obviate the need for the husband to seek to read the affidavit of Mr W. The experts may agree and the court would be assisted by an agreed value for the D Street Property, with no time taken cross-examining the single expert.
Rule 15.64B falls within Division 15.5.6 of the rules. Rule 15.64A provides that the purpose of the division is to provide ways of clarifying a report prepared by a single expert witness. Rule 15.64A(2) of the rules provides “clarification about a report may be obtained at a conference under rule 15.64B or by means of questions under rule 15.65.”
Rules 15.64B and 15.65 of the Rules prescribe a period 21 days within which to seek the relevant clarification. There was no dispute that the husband had not submitted any questions to the single expert. The present application for a conference also comes well past the 21 day period. The wife took no point in relation to these time limits. The Court may dispense with this requirement under Rule 1.12 of the Rules.
Rule 15.64B of the Rules does not prescribe or limit who may be present at any conference. The parties, in an agreement made pursuant to the rule, may agree for a party to include their own expert. The discretion to order “a conference be held in accordance with any conditions the court determines” is sufficiently broad to support an order for a conference to be held between the single expert and Mr W.
Division 15.5.7 makes provision for competing experts to confer. Rule 15.68 of the rules provides that Division 15.5.7 applies to a case “in which 2 or more parties intend to tender an expert's report or adduce evidence from different expert witnesses about the same, or a similar, question.” That is not the situation here. In this case orders were made, by consent, for the appointment of the single expert, and pursuant to consent orders, he has prepared a valuation report.
However, the husband argued, as I understood it, that in exercising its discretion under Rule 15.64B(7) of the Rules, the Court could take into account the extent to which it was arguable the report of Mr W would be permitted under Rule 15.49 of the Rules.
Rule 15.49 is in the following terms:
Rule 15.49 - 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 that the contrary opinion is or may be necessary for determining the issue;
(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.
The husband relied upon sub-paragraphs (2)(a) and (c), and argued the Court should conclude that although he only pressed for an order for a conference of experts, the report of Mr W raised sufficient differences of view and methodology to plausibly fall within those subparagraphs. If so, this would support the order for a conference under Rule 15.64B of the Rules. I do not accept this argument.
The existence of his report does not demonstrate the existence of “a substantial body of opinion” contrary to the opinion given by the single expert. There is no other evidence supporting such a conclusion.
Generally speaking it is hard to see how the competing expert’s report could provide an evidentiary basis for finding “a substantial body of opinion” contrary to the opinion given by the single expert. Such a conclusion would be based on evidence outside the report. However, in this matter a brief consideration of Mr W’s report points away from any substantial contrary opinion. Both experts relied upon comparative sales. Although the husband argued that Mr W’s report analysed 10 comparative sales whereas N Group relied on 6, as pointed out by the wife, Mr W’s comparative sales range in date from September 2016 to February 2018. The most recent sale relied upon by N Group was dated May 2018. All Mr W’s comparative sales took place well before the N Group report issued. It is hard to see in what way they are different or superior to those of N Group. Mr W does not rely upon any comparative sales which are recent in time, and could be said to reflect a change in market conditions since the N Group report issued.
The husband argued that Mr W updated his valuation to reflect the state of the real estate market as at the date of the trial. It is true, Mr W appears to address this issue at paragraph 6.2 of his report. He expresses the view that the best guide to the state of the property market is “articles produced by recognized financial journalists working for respected publications.” He then cites from articles on the ABC website. The thrust of those articles is generally about declines in the real estate market, although the most recent, dated 14 January 2019, referred to increases in several areas, but not Suburb E. Mr W then states “Statistics show that the Sydney region property market…retreated slightly until the end of the second quarter of 2019, from which it began to improve. Values today are equivalent to where they were in the last half of 2017, and this is considered to apply for areas around Suburb X, including Suburb E.” Unfortunately, it is unclear what statistics Mr W refers to, or what basis there is for his opinion that “Values today are equivalent to where they were in the last half of 2017” if applied to the Sydney region generally or the region around Suburb E.
The husband also argued that, unlike N Group, Mr W undertook a “summation analysis”, which was said to support the reliability of his value of $2,000,000. A “summation analysis” arrives at a land value per square metre to which is then added a value for the improvements. Mr W came to a land value of $1,000,000 and a value for improvements of $1,010,980.
The use of a “summation analysis” may theoretically be a different methodology but goes no distance to establishing “a substantial body of opinion” and is not convincing in establishing any contrary opinion in this matter. I note that, in reaching his value for improvements, Mr W applied “a replacement cost for each noted improvement, an assessed depreciation rate and the current depreciated value” of each improvement. Since Mr W states he made no internal inspection of the D Street Property, he accepted he was neither a builder or an engineer, and noted the observations of N Group about the poor state of repair of the premises, his expertise to reach the stated values for improvements was not self-evident.
The husband made reference to the decision of his Honour Justice Watts in Lister v Lister (2015) 52 Fam LR 174. In that case, Watts J permitted a husband to rely upon an adversarial expert pursuant to Rule 15.49 of the Rules. However, the circumstances of that case were very different to the present proceedings. The application to rely upon an adversarial expert was not made at the start of the trial. There were significant and complex differences of methodology and assumptions used by the single expert and adversarial expert, concerning the valuation of shares in a company. Watts J was satisfied the adversarial expert may have known matters not known to the single expert, and that there was a special reason arising from a number of identified issues.
I express no concluded view about the force of Mr W’s opinions. However, even the somewhat superficial examination of his report in the preceding paragraphs shows features, or similar ones, such as those identified in Lister & Lister (supra) are not present here, in my view. The examination of Mr W’s report raises questions about the basis for some of his ultimate conclusions. I am therefore unable to conclude Mr W may have known matters not known to the single expert, or to conclude the methodology of Mr W is so significantly different or manifestly more compelling than the single expert to suggest Rule 15.49(2)(a) would be engaged.
Nor does the existence of Mr W’s report constitute, without more, a “special reason”. In Padnall & Padnall (No. 3) [2014] FamCA 904 Berman J said: “It is often the case that a party does not like the valuation of the single expert, and has obtained a valuation which is different in its outcome. If that alone establishes a special reason then it would make the actual provisions of Rule 15.49 meaningless in relation to real estate and other valuations.”
Consequently, I am not satisfied that I should conclude that prima facie, Mr W’s report, is likely to be permitted under Rule 15.49 of the Rules.
I accept that the Court should have the best evidence of value. But the rules concerning expert evidence are also designed to address problems associated with partisan experts. I adopt, with respect, the following passage from Lister & Lister (supra) at [41]:
It is axiomatic that findings as to values should be made upon the best evidence available. Partisanship gets in the way of a court having that best evidence. The single expert rule and the permission rule, if they neutralise partisanship, are rules which buttress the likelihood of a more accurate finding about the values of assets and promote the likelihood of a court achieving a just and equitable alteration of property. There, of course, needs to be safeguards against a single expert getting something wrong. The expert evidence rules provide a range of protective measures. They include the pre-trial ability of a party to ask written questions of a single expert witness and to have a conference with a single expert witness. They also relevantly allow a party to ask a court for permission to call an adversarial expert if the facts of the case warrant it. Significantly, as rule 15.42(e) makes clear, one of the purposes of the rules is to enable a party to apply for permission to tender a report or adduce evidence from an expert witness appointed by that party, if necessary in the interests of justice.
This passage implicitly affirms the role of the Rules in providing the framework within which to manage expert evidence and the limitations upon the use of partisan expert evidence. I am not satisfied the facts of the present matter warrant the Court ordering a conference of experts, nor do the interests of justice.
Case management questions also bear upon the resolution of the husband’s application. I have taken account of the likely effect the evidence of Mr W would have, if accepted, on the value of the D Street Property. I am conscious that refusing the husband’s application may result in extended cross-examination of the single expert. However, the husband is not denied the opportunity to put questions in cross-examination to the single expert by reference to the approach of Mr W. It is also true that if a conference of experts was ordered, there may be no agreement, and there would then arise the real possibility that, if Mr W’s evidence was permitted to be read, there would be, possibly lengthy, cross-examination of him as well as the single expert. This may extend the trial beyond the allocated hearing time.
I bear in mind that time has already been taken over parenting issues which affect four children, and the proceedings were expedited.
I also take account of the fact that when these proceedings came before me for a compliance check on 16 August 2019, orders were made by consent releasing the then second and third respondents from the proceedings, and confirming the hearing dates. However, no mention was made of the possibility of an adversarial expert report. The existence of Mr W’s report was only notified to the wife on 26 August 2019. The husband filed his application in a case on 29 August 2019, the last business day before the trial. No explanation is given by the husband for this extremely late application. The wife argued the husband was conducting trial by ambush and the intent of the rules was to prevent this very sort of application at the eleventh hour. The wife has had very limited opportunity to consider Mr W’s report. There is force in this submission.

Finally, I am not satisfied the time and expense of a conference of experts is necessary. The simple proposition for the single expert is whether there is any reason to increase the value of the D Street Property as at the date of trial by reason of changes in the real estate market since 12 September 2018. This can be dealt with in cross-examination.
For these reasons, I dismiss the husband’s application.
After delivering my reasons orally, asked the parties for submissions on the use of the procedure of submitting questions to the single expert under Rule 15.65, with an order dispensing with the time limits set forth in that Rule. Both parties agreed this was an appropriate course and consistent with my reasons. I will make orders accordingly.

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Harper delivered on 4 September 2019.

Associate:

Date: 06/09/2019