Evert & Pascal (No 2)

Case [2022] FedCFamC1F 788

Federal Circuit and Family Court of Australia

(DIVISION 1)

Evert & Pascal (No 2) [2022] FedCFamC1F 788

File number(s): ADC 5265 of 2020
Judgment of: BERMAN J
Date of judgment: 18 October 2022
Catchwords:

 FAMILY LAW – PRACTICE AND PROCEDURE – Discovery - Where the wife seeks a wide range of documents from the husband – Where the husband asserts that he has already provided relevant disclosure – Where orders have previously been made in relation to disclosure – Where both parties have filed an Affidavit of Discovery –Consideration of the “directly relevant” test – Orders made.

FAMILY LAW – PROPERTY – Valuation – Where the wife places a value on the husband’s business of approximately $...– Where the husband asserts that his business has nominal value and no goodwill – Where the husband has a debit loan account with the business –Foda & Foda – Where the wife contends that she must consider a wide range of documents before the husband’s business can be valued by a single expert – Consideration of Rule 7.02 – Application of Rule 7.04(1) – Orders made.

Legislation:

Family Law Act 1975 (Cth)

Federal Circuit and Family Court of Australia(Family Law) Rules 2021 (Cth) rr 6, 6.06, 7.04(1)

Federal Court Rules 2011 (Cth)
Cases cited:

Alanco Australia Pty Ltd v Higgins (No 2) [2011] FCA 1063

Briese and Briese (1986) FLC 91-713

Dennis v Chambers Investment Planners Pty Ltd [2012] FCR 321

Foda & Foda (1997) FLC 92-753

Hatton & Attorney-General of the Commonwealth of Australia & Ors (2000) 158 FLR 31

Lucas Industries Ltd v Hewitt (1978) 18 ALR 555

Martin & Martin and Anor(No 2) [2014] Fam LR 492

Woley & Humboldt (No 3) [2009] FamCA 546
Division: Division 1 First Instance
Number of paragraphs: 87
Date of hearing: 30 September 2022
Place: Adelaide
Counsel for the Applicant: Ms James
Solicitor for the Applicant: Wadlow Solicitors
Counsel for the Respondent: Mr Anderson
Solicitor for the Respondent: Belperio Clark

ORDERS

ADC 5265 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS PASCAL

Applicant
AND:

MR EVERT

Respondent

order made by:

BERMAN J

DATE OF ORDER:

18 October 2022

THE COURT ORDERS:

1.That on or before sixty (60) days of this order, the parties do jointly instruct a single expert to undertake a valuation of the husband’s interest in LL Company and NN Company, unless the parties reach prior agreement as to the value of the husband’s business interests.

2.That unless the parties agree otherwise, they are equally liable to pay the single experts reasonable fees and expenses in preparing a report, provided that the single expert is not required to undertake any work in relation to the said appointment until the fees and expenses are paid or secured.

3.That the husband and the wife do all things and sign all documents as may be required to cause the net proceeds of sale of the former matrimonial home, currently in the separate account of the husband and the…

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Details
AGLC
Evert & Pascal (No 2) [2022] FedCFamC1F 788
Case
[2022] FedCFamC1F 788
Decision Date

CaseChat Overview and Summary

The parties in this case, Evert & Pascal (No 2), are engaged in a family law dispute in Australia, specifically concerning property valuation and discovery of documents. The husband asserts that his business, which he operates through two entities, has a nominal value, while the wife places a significant value on it, potentially influenced by his debit loan account. The wife sought extensive discovery to support her valuation, but the husband argued he had already provided the necessary information. The court had to determine the extent of discovery required and whether a single expert should be jointly instructed to value the husband’s business interests.

The legal issues the court addressed included the application of the “directly relevant” test for discovery, the valuation of the husband’s business, and the interpretation of relevant family law rules. The court examined whether further discovery was warranted beyond the requirements of Rule 6.06 of the Family Law Rules and whether the wife needed to review a broad array of documents before a single expert could value the husband’s business. The court also considered the implications of the husband's debit loan account on the business valuation.

In its reasoning, the court found that no further discovery was necessary beyond what was stipulated by Rule 6.06, unless required by a jointly instructed single expert. The court determined that the wife’s valuation was speculative and that a single expert should be jointly instructed to provide a fair valuation of the husband’s business interests. The court also ruled on specific documents the husband must disclose and directed the parties to jointly instruct a single expert for the valuation. Additionally, the court ordered the transfer of proceeds from the sale of the former matrimonial home into the trust accounts of the parties' Australian solicitors and restrained the parties from disbursing those proceeds.

The final orders included the joint instruction of a single expert to value the husband's business, equal liability for the expert's fees, transfer of the net proceeds of the former matrimonial home into the solicitors' trust accounts, and specific disclosure requirements for the husband. The court also dismissed the wife's application regarding the funds retained separately by the parties in Country H.

Orders

Orders of the court

THE COURT ORDERS:

1. That on or before sixty (60) days of this order, the parties do jointly instruct a single expert to undertake a valuation of the husband’s interest in LL Company and NN Company, unless the parties reach prior agreement as to the value of the husband’s business interests.

2. That unless the parties agree otherwise, they are equally liable to pay the single experts reasonable fees and expenses in preparing a report, provided that the single expert is not required to undertake any work in relation to the said appointment until the fees and expenses are paid or secured.

3. That the husband and the wife do all things and sign all documents as may be required to cause the net proceeds of sale of the former matrimonial home, currently in the separate account of the husband and the wife’s Country H solicitors, to forthwith be transferred into the trust accounts of the Australian solicitors for the husband and the wife, provided that unless the parties agree otherwise, the parties and each of them are restrained and an injunction is granted restraining them from withdrawing, disbursing or encumbering those proceeds.

4. That within fourteen (14) days of this order, the husband do authorise Mr OO and Ms PP, accountant, to provide such information as may be requested by the wife and/or her legal representatives, providing that the requests are reasonable and not onerous in either frequency or scope and that in any event, the provision of any service upon the request of the wife or her legal representatives, will be at her sole cost.

5. That within twenty one (21) days, the husband shall disclose to the wife and produce copies of the following documents, at her sole expense:

(a) A copy of the applicant husband’s Tax Clearance Certificate and Capital Gains Tax Assessment (when received) for Foreign Investment;

(b) A ledger setting out the husband’s loan account transactions with LL Company for the period 1 March 2019 to 4 June 2022;

(c) Documents detailing the husband’s policies with QQ Insurance;

(d) Documents relating to the recurring payment by the husband of health insurance premiums for his mother being transaction number …86 from the husband’s Bank FF Account;

(e) General Ledger entries or records of LL Company, NN Company;

(f) Invoices relating to “expenses” as referred to in the Annual Statements for financial year 2020/2021 for NN Company;

(g) Business Activity Statements (BAS) for NN Company to be provided by either the husband or from the accountant;

(h) Documents in respect of the husband’s Retirement Annuity Fund with RR Company;

(i) The registration document and photographs or pictures of the husband’s Motor Vehicle 2.

6. That the Application in a Proceeding filed 26 September 2022 be dismissed.

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.

Background

Background to the litigation

Even though the Application was dismissed, the status of the funds retained separately by the parties in Country H is outstanding and requires a resolution.background The parties are citizens of Country H but migrated to Australia in 2019. The parties are not agreed as to the date of separation although it is either October 2019 or April 2020. The husband is self-employed and trades via two principle entities namely, LL Company (a Country H registered company) (“LL Company”) and NN Company (“NN Company”). As previously discussed, the parties have a deep mistrust of each other which appears to have been taken up by their legal representatives. Whilst not agreed, by reference to the wife’s balance sheet as set out in paragraph 7 of her affidavit filed 26 September 2022, she places a value on the husband’s business in Country H currency of about AUD $534,502. The husband contends that he is self-employed and has no other employees and few, if any, hard assets associated with the business either in Country H or in Australia. It appears that the value adopted by the wife may well be based upon the extent of the husband’s debit loan account. By necessary implication, the husband asserts that the existence of his debit loan account, namely the amount recorded in the financial statements of the company which represent the amount owed by the husband, is of no practical consequence in circumstances where there are no assets of the company separate to the debit loan account. In any event, it is argued that the debit loan account should be ignored given that it is only the asset of the parties that could be utilised to discharge the amount owed by the husband. See Foda & Foda (1997) FLC 92-753. The wife does not accept the husband’s description of his business and how it operates. She considers that it is only after an exhaustive consideration of a wide range of documents, that a valuation of the husband’s business interests can be properly considered. It is that the financial pool, as considered by the wife, is modest but without the purported value of the husband’s business being included, the legal costs of the parties are likely to overwhelm the proceedings.Orders made for discovery On 27 January 2022, Judge Kelly made the following orders in preparation for a conciliation conference to be convened on 9 May 2022:-1.The husband file and serve an Affidavit in relation to financial matters and a Financial Statement within 28 days.2.Each party make discovery of all financial records in accordance with Rule 6.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 by 11 March 2022.3.Each party endeavour to comply with any requests for discovery of specific records that may be made by the other party, noting the request for disclosure of statements for specific bank statements included in the wife’s Outline of Case filed 27 January 2022. The wife sought to file an affidavit of disclosure comprising 407 pages of annexures. On 22 March 2022, Judge Kelly made an order in chambers refusing to grant leave to do so.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

I do not propose that there should be further discovery (other than as provided for in Rule 6.06 of the Family Law Rules) unless as may be required by the jointly instructed single expert.Conclusion I make orders as appear at the commencement of these reasons.

Ratio Decidendi

Legal Principle Established

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