Ding and Ding (No 2)

[2017] FamCA 439

FAMILY COURT OF AUSTRALIA

DING & DING (NO 2) [2017] FamCA 439

FAMILY LAW – RULING - SINGLE EXPERT - Where towards the end of the final hearing and at the conclusion of the respondent husband’s evidence, the wife seeks an order for the appointment of a single expert witness relating to the value of a business at a date 7 years before when the shares held by the husband were part of a company share reconstruction that reduced the shareholding of the husband from 50 per cent to 1 per cent. Application refused.

FAMILY LAW – RULING - ADVERSARIAL EXPERT - Where the wife then seeks permission to adduce evidence from an expert relating to the value of the business- Application refused.

FAMILY LAW – RULING – ADJOURNMENT Having lost the right to rely upon further expert evidence, the wife seeks an adjournment of the trial. Application refused.

Family Law Act 1975 (Cth)

Aon Risk Services Australia Limited v Australian National University [2009] HCA 27

APPLICANT: Ms Ding

RESPONDENT: Mr Ding

FILE NUMBER: ADC 4389 of 2012

DATE DELIVERED: 21 June 2017

PLACE DELIVERED: Melbourne

PLACE HEARD: Adelaide

JUDGMENT OF: Cronin J

HEARING DATE: 15 June 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr McQuade

SOLICITOR FOR THE APPLICANT: Harry Alevizos

COUNSEL FOR THE RESPONDENT: Ms Pyke QC

SOLICITOR FOR THE RESPONDENT: Jaak Oks Lawyers

Orders

1. The application for the appointment of a single expert witness is refused.

2. The application for permission to adduce expert evidence is refused.

3. The application for an adjournment of the trial is refused.

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 Ding & Ding (No 2) 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 MELBOURNE

FILE NUMBER: ADC 4389  of 2012

Ms Ding

Applicant

And

Mr Ding

Respondent

REASONS FOR JUDGMENT

1. On the last day of the final hearing between Ms Ding (“the wife”) and Mr Ding (“the husband”) three applications were made by counsel for the wife which are addressed in these reasons. Those applications were all refused.

2. Whilst I gave some reasons at the time, I indicated that more substantive reasons would be given later.  These are those reasons.

3. The trial had reached the seventh day and cross-examination of the respondent husband had concluded. At that point, the applications were ventilated and there were still two witnesses of the husband to go.  As became apparent, their evidence was modestly short.

4. There were (and are) other parties to these proceedings but they have not participated as such and these reasons are of no relevance to them.

5. Each of the applications made by counsel on behalf of the wife was rejected and I propose to deal with them sequentially.  Those applications were:

   (a)for the appointment of a single expert witness for the valuation of an entity known as Ding Pty Ltd (or perhaps more correctly put, the valuation of the shareholdings) as at 20 March 2010;

   (b)failing (a), the permission to adduce evidence of an adversarial witness in respect of the same matter; and

   (c)failing that, an adjournment of the proceeding to enable a report to be obtained from an adversarial witness who has provided a report to the court as to the value of the shares in the entity as at the current date.

Background

1. The background of these proceedings puts the respective applications in some context.  The parties were married to each other and separated in June 2012 and shortly thereafter, the wife issued the application.  The commencement of the trial of the proceedings was delayed by an action against the wife in the District Court of South Australia brought by Ding Pty Ltd.  That company features in these proceedings because at one stage prior to separation, the husband was a shareholder with his sister.  That is not what the proceedings in the District Court were about. 

2. The claim in the District Court related to theft by the wife. The headnote of the judgment in the case shows that there was an allegation against the wife that between 2007 and 2010 she misappropriated cash in the sum of $600,000.  In a comprehensive judgment with a number of credit findings, his Honour made an order for judgment in favour of the company against the wife for $243,000 which included interest of $73,000. His Honour also ordered that the wife pay the plaintiff’s costs as taxed. 

3. The proceedings in this court have been tortuous being finally set down by Austin J on 6 February 2017.  I then became the trial judge.

4. Along the tortuous path, applications made by the wife for the appointment of a single expert witness were refused by the Court and orders were also made (September 2016) for discovery.  That latter order required compliance by 14 October 2016 and inspection and copying of any disclosed documents was to be completed by 4 November 2016.  The wife was also granted leave to issue a subpoena to Ding Pty Ltd.

5. In November 2016 before Austin J, various interlocutory issues were sought.  One of them concerned the appointment of a single expert witness to value the business to ascertain its present value. Mr McQuade of counsel for the wife complained he had been unsuccessful in seeking that appointment but ultimately as this trial began, the exercise was undertaken and I permitted the filing of an affidavit by the wife’s solicitor to which was attached the report of a valuer, Mr T. Apparently, and no issue was taken with this, that was a convenient way of getting the “report”, as distinct from the evidence, before the Court.

6. With some reservation, senior counsel for the husband conceded that the evidence could be admitted. 

7. It is important to immediately observe that the previous applications for the appointment of a single expert witness had entirely focussed on the present day value of Ding Pty Ltd. The new application is entirely different. It seeks a value at the time when the husband relinquished his equal entitlement in the company by a re-structuring of the shares.

8. In April 2017 as the trial was about to begin, the wife sought specific orders relating to the shares in Ding Pty Ltd.  In respect of Ding Pty Ltd, the wife at [56] said that the value of the husband’s one per cent share was said by the husband to be worth $21,106.95.  She said:

   The value of this entity therefore is substantial and consequently, a forensic valuation by a suitably qualified forensic accountant is entirely necessary.  In that regard, my solicitor instructs and I verily believe that he has engaged a forensic account ([Mr T]) to provide a valuation of that business but as discovery was not made by the husband until 27 March 2017, [Mr T] will require at least four weeks in which to prepare such a valuation.

9. Whatever has occurred here in this long and drawn out litigation, years have gone by since it started and lack of discovery has been the wife’s complaint. Why that obligation was not enforced, I am unable to ascertain. True it is that the husband (as with all litigants) has an obligation to make full and frank disclosure of all documents relevant to the matters in issue but it was only in cross-examination on 13 June 2017 that the husband was asked about the financial statements of Ding Pty Ltd relating to the period around the time that he was involved in the share restructure.  Why that question had never been asked before was never explained other than that counsel for the wife maintained that the husband had the obligation to produce the documents rather than the wife having to pursue them. That depends upon their relevance but it is again puzzling why this issue waited until virtually the end of the trial.

10. The evidence of the wife was that her focus was on the present value of the asset but her substantive relief seeks an order under s 106B of the Family Law Act 1975 (Cth) (“the Act”) to set aside the transaction that gave rise to the share restructuring.

11. It must follow therefore that the wife was cognisant of what the husband gave away (if that is what he did). However, there can be no doubt that whilst the husband had the obligation to produce the documents, no enforcement action was taken at a time when it is asserted by the wife that the husband had not fulfilled his obligations under the Family Law Rules 2004. No explanation was given to the court as to why that exercise had not been undertaken when indeed, the focus had been on getting Mr T to value (as he did) Ding Pty Ltd as at 2016 or 2017.

12. In my view, a complaint about the husband’s lack of compliance with obligations is a hollow one where the wife’s solicitor well knew what the problem was and did nothing about it for a number of years.  That is particularly and unusually so here because the proceedings in the District Court related to Ding Pty Ltd and the wife’s solicitor (as distinct from her counsel) appeared on behalf of the wife when she was the defendant.

13. When one considers the nature of the application for substantive relief and leaving aside the lack of evidence by the wife as to why all these transactions occurred, her case was conducted on the basis of the husband’s explanations being implausible.  The issue of the truthfulness of each of the parties is a matter yet to be determined but, no doubt, the court is entitled to consider just how this litigation has been conducted over the years and how important this specific issue would have been.  To raise it at the point where the husband’s cross-examination was concluded long after the wife’s case had closed (save for the production of evidence from Mr T in relation to the value of Ding Pty Ltd now) is very odd.

The application for a single expert

1. Rule 15.41 of the rules of court sets out the things to which expert evidence from a single expert does not apply.  Clearly, what is being proposed is an expert to value the interests of the husband that he “gave away” in March 2010.

2. Rule 15.42 sets out the purpose of having a single expert and 15.42(c) provides:

   To ensure that, if practicable and without compromising the interests of justice, expert evidence is given on an issue by a single expert witness.

3. The husband does not agree to the proposed order.  The trial is in its concluding stages.  Pursuing such an issue would require the parties to contemplate joint instructions and no doubt, the pursuit of more documents and more argument. 

4. Rule 15.46 sets out what orders the court may make but in the circumstances where this issue was left so late, it is hard to see why the husband, who has given an explanation as to why the share restructure occurred, should have his entitlement to a conclusion delayed. That is specifically so where, having regard to the issue the proposed evidence would address, would be entirely dependent upon the Court rejecting the husband’s evidence as being implausible. The wife’s evidence is that she did not know what occurred other than through historic searches. In my view with those uncertainties and the fact that the wife’s lawyers have known about this problem all along, it would be unjust and unreasonable to require the husband to participate in the further appointment.

5. Thus, having regard to the time that this case has taken including the Court’s resources, a further delay is unjustified.  The wife has had ample opportunity to pursue this issue (as distinct from the value of Ding Pty Ltd now) and no plausible explanation has been given as to why the trial should be stopped. 

6. Delay affects more than just the husband.  The absence of a plausible explanation as to why this exercise was not undertaken is a good reason to refuse the application.  Adjournment of the proceedings, which would be inevitable by virtue of an appointment of a single expert witness, affects other litigants as more judicial time is taken away from other cases.  In my view, there was no justification for the appointment of a single expert witness on that specific topic having regard to the stage that the trial had reached.

An adversarial witness

1. Chapter 15.52 of the rules provides that a party may seek permission to tender a report or adduce evidence from an expert witness by filing an application in a case.  As I observed at the time, the absence of a formal application can easily be overcome by an oral application.  What cannot be overlooked however is rule 15.52 which requires that there be some affidavit that supports such an application.  The intention of Chapter 15 of the rules is that a court should use a single expert witness but another expert may be appointed in the circumstances set out in the rules.  There is no evidence in this case that would satisfy the need for such an expert but even if there was, it could only be on the basis that there is some forensic point.  Counsel for the wife submitted the court needs to know the value in 2010 because people normally do not give away assets. That is not a presumption, nor is it of much evidentiary principle, where the evidence is quite specific from the husband. The wife is unable to say what happened other than by inference.  

2. Chapter 15.52(3) of the rules provides that when considering whether to permit a party to tender or adduce evidence from an expert witness, the court may take into account the purpose of the part (namely the single expert witness concept), the impact of the appointment of an expert witness on the costs of the case; the likelihood of the appointment expediting or delaying the case; the complexity of the issues in the case; and, the use of a single expert witness rather than the proposed expert witness.  That is leaving aside the question of whether or not the proposed expert has the requisite specialised knowledge.

3. The rules say that for such an expert to be appointed, the court needs to contemplate whether this would expedite or delay the trial.  In my view, there can be little argument here that it will delay the trial because I am from the Melbourne Registry and cannot justify the allocation of the time that would be needed.

4. Another consideration is the complexity of the issues.  How that expert is able to determine the value other than by using the net equity of the company as shown in the balance sheet, counsel did not say.  In my view the absence of any indication as to how an expert would assist the court, remains unsaid particularly where the wife had the relevant balance sheets but did not say why they did not reflect the true share value.  In my view therefore there was no basis for the court to allow the wife to adduce evidence from an expert without the rules being carefully addressed.  I also rely on the earlier comments in relation to the denial of justice to the husband and other litigants by the ongoing delay. 

The adjournment

1. Finally, counsel for the wife having failed in respect of the two matters above, applied for an adjournment of the proceedings.  That was opposed by counsel for the husband.

2. The same basis upon which the application for the experts to be appointed underpinned this application save that counsel submitted that it was important for the court to have the evidence because it was relevant.  Relevance here relates to the fact that the wife claims that the husband’s sister held her interests or shares on trust for him.  Even so, the whole case was conducted on that basis from the outset, and it had never been suggested that this evidence was missing or would be sought. 

3. As I earlier observed, there had been previous applications in respect of a single expert witness and a previous adjournment when the trial began but at no stage had it been suggested that the specific evidence to be sought related to the values in 2009/2010.  The evidence of value could only arise as a relevant issue if the inference could be drawn that a significant asset was given away for the purposes of defeating an order or that some arrangement had been made between the husband and his sister that gave rise to a trust.  The husband denies any such inference is open and importantly, the wife conceded that there were no problems in the marriage relationship at that time. It is still conceivable that the evidence might be relevant if ultimately, a finding is made on one of those two bases because the court would be required then to undertake an accounting exercise as well as determine the justice and equity for the person who might be required to disgorge the assets.  The court is not at that point where such orders could be made.

4. In contemplating whether to adjourn a case which is at the point of trial as it is here, justice to the wife is a serious consideration but so it is to the husband as well. In Aon Risk Services Australia Limited v Australian National University [2009] HCA 27, French CJ (reflecting the attitude of the plurality) said of the argument that justice should be the primary focus:

   [30]…Also to be considered is the potential for loss of public confidence in the legal system which arises where a court is seen to accede to applications made without adequate explanation or justification, whether they be for adjournment, for amendments giving rise to adjournment, or for vacation of fixed trial dates resulting in the resetting of interlocutory processes.

5. French CJ went on to say about the waste of court resources:

   [35]It might be said that the adjournment effected by the primary judge's decision to entertain the amendment application and to allow written submissions to be filed and evidence to be put on, and the subsequent delay in his decision, rendered academic any concern about further waste of court resources or inefficiencies flowing from the amendment ultimately being allowed. It might be said that, in those circumstances, to refuse the amendment would be punitive. It is true that a punitive response to the substance of a late amendment application is not appropriate. But neither is a party to be rewarded by weighing in its favour the disruptive consequences of its own application.  …The further delay, in the circumstances of this case, would be such as to undermine confidence in the administration of civil justice… (my emphasis in bold)

6. The consideration of the court and the public purse is relevant here. Acknowledging what French CJ said in AON (supra), there is inconvenience to the court because other matters need to be dealt with and there is limited resources. The Court is entitled to expect litigation under the control of legal practitioners to be conducted expeditiously and with an eye on chapter 1 of the Court’s rules with a specific reference to rule 1.08. No explanation was given about why this issue was not previously raised. No explanation was given why the trial path was followed without this issue being dealt with along the way.

7. Thus, a delay of this trial is not warranted and, having regard to the period of time that has elapsed since the wife began the proceedings, the husband and the other parties to this litigation are entitled to move on with their lives.  A further delay in those circumstances is not justified when this material could have been pursued much earlier.  An application to bring that material at this point of the trial is therefore unfair to the husband and would waste court resources.

8. For those reasons, the application was rejected.

I certify that the preceding Thirty Six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 21 June 2017.

Associate: 

Date:  21 June 2017