Gandega and Fulmali and Anor
[2019] FamCA 423
•3 July 2019
FAMILY COURT OF AUSTRALIA
| GANDEGA & FULMALI AND ANOR | [2019] FamCA 423 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Application to discharge Single Expert – Where allegation of bias on part of Single Expert – Where Single Expert report not yet received – Where discussion of applicable principles – Where application premature – Where application dismissed – Where order for any costs application be by way of written submission. |
| Family Law Rules 2004 (Cth) rr. 15.54, 15.59, 15.65 |
| Bass & Bass [2008] FamCAFC 67 Gandega & Fulmali [2018] FamCA 491 |
| APPLICANT: | Ms Gandega |
| FIRST RESPONDENT: | Mr Fulmali |
| SECOND RESPONDENT: | Mr Akbar |
| FILE NUMBER: | PAC | 4811 | of | 2016 |
| DATE DELIVERED: | 3 July 2019 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 1 February 2019 and 22 March 2019 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Marsden Law Group |
| SOLICITOR FOR THE FIRST RESPONDENT: | Hall Partners |
| COUNSEL FOR THE SECOND RESPONDENT: | Mr Othen |
| SOLICITOR FOR THE SECOND RESPONDENT: | KPL Lawyers |
Orders
That the Second Respondent’s Application in a Case filed 12 November 2018 as amended seeking discharge of the Single Expert be dismissed.
That any application for costs be by way of written submission filed and served within 28 days from this date with any submissions in response being filed and served within a further 14 days and upon completion of written submissions judgment will be reserved to chambers.
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 Gandega & Fulmali and Anor 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 PARRAMATTA |
FILE NUMBER: PAC 4811 of 2016
| Ms Gandega |
Applicant
And
| Mr Fulmali |
First Respondent
And
| Mr Akbar |
Second Respondent
REASONS FOR JUDGMENT
In the context of ongoing property proceedings the present discrete application for determination is an application by the second respondent to the proceedings to discharge the appointed single expert valuer.
On 9 November 2017 the Single Expert was appointed by reason of the following orders:
(1)That pursuant to division 15.5.2 of the Family Law Rules 2004, Mr K is appointed to value the Respondent Husband’s interest as of 16 September 2016 in the following business entities:
(1.1)B Pty Ltd, ACN: …; and
(1.2)C Pty Ltd, ACN: ….
(2)That within seven (7) days of the date of these orders, the Applicant shall provide the Respondents with a draft Joint Letter of Instruction.
(3)That within seven (7) days of receiving the Joint Letter of Instruction, the Respondents shall respond with any required amendments to the Joint Letter of Instruction prepared by the Applicant
(4)That within seven (7) days of receiving the amended Joint Letter of Instruction prepared by the Applicant, the parties shall sign the Joint Letter of Instruction and sign all other documents and do all things necessary to facilitate the valuations.
(5)That the costs of the valuation shall be paid from the controlled monies account held by Q Lawyers.
(6)…
The somewhat convoluted background to these proceedings was set out in reasons for judgment delivered 29 June 2018 as to earlier interlocutory issues (Gandega & Fulmali [2018] FamCA 491) as follows:
22. The husband is presently 52 years of age.
23.He asserts that he met the second respondent in about 2008 subsequent to which they began to work together.
24.On 31 March 2010 the company B Pty Ltd (ACN…) (“[B Pty Ltd]”) was registered.
25.The husband asserts that the company by special resolution on 13 September 2016 resolved that:
a) the husband be entitled to wages up to 19 August 2016;
b)that the husband be entitled to profits according to his then shareholding of 50% up to the end of “currently running projects;
c)that any contingent liabilities will be deducted before profit distribution; and
d)that all profits and remaining assets and net shareholding equity would be distributed to the shareholders after all accounts are prepared and finalised by L Pty Ltd.
26.As at the date of the purported special resolution the husband was in Asia.
27.The husband further asserts that cash funds in the company were removed by way of cash withdrawals and that as at August 2016 the assets of the company were in the order of $2.7 million.
28.The husband further asserts that on 5 October 2016 he was removed as a director of the company. He denies that at any time has he assigned or transferred his shareholding in the company and further denies that he has been paid any money in consideration for such shareholding.
29.The wife seeks an order that the disposition of the husbands interest to the second respondent be set aside under s106B. It is common ground that such relief can only be properly determined at final hearing.
30.The husband says that as at December 2016 the company D Pty Ltd (“[D Pty Ltd]”) had a value of about $1.3 million. He says the company had purchased a parcel of land that he asserts has now been disposed of but he has no knowledge as to the whereabouts of any funds realised.
31.The husband further says that he was a director and equal shareholder of the company C Pty Ltd (“[C Pty Ltd]”) which he says was “used for import and export”. The husbands says that that company owned a motor vehicle having a value of about $30,000 with the car later being sold. He is unaware as to where the proceeds of sale were paid.
32.On 18 August 2016 the husband went to Asia and shortly thereafter he was arrested and charged with various offences.
33.The husband otherwise relies upon the affidavit of his solicitor filed 8 October 2017. The solicitor deposes that as at the date of the affidavit being sworn the husband remained in custody in Asia.
34.The solicitor refers to the husband’s Financial Statement filed 12 September 2017 in which the husband deposes that his assets comprise his interest in the former matrimonial home at Suburb M and his interest in the companies referred to above.
35.The solicitor asserts that the husband’s shareholding and interest in the companies were transferred to the second respondent pursuant to a power of attorney purportedly given by the husband. It appears that the intention of the second respondent, in circumstances where the husband was in custody in Asia in respect to certain criminal charges, was for the second respondent to facilitate the husband’s exit from the various companies and any associated entities as provided for in the “special resolution” of the company [B Pty Ltd] on 13 September 2016.
36.The solicitor asserts that in breach of “arrangements” between the husband and the second respondent the second respondent terminated the retainer of the company’s accountants and has failed to account to the husband for profits and other monies received.
37.The solicitor asserts income received by [B Pty Ltd] from various projects has been about $2.3 million, that [C Pty Ltd] has not accounted for the sale of the vehicle referred to and that [D Pty Ltd] has failed to account for sums totalling about $950,000 paid to it following the termination of a proposed contract for purchase of land.
38.The solicitor asserts that the husband is in need of funds for his legal fees, to pursue his claims against the second respondent, to obtain valuations and to obtain expert forensic evidence.
39.On 19 September 2017 the solicitor wrote to the second respondent’s solicitors seeking an itemised statement in relation to their costs invoice dated 25 August 2017 for acting in relation to the proposed sale of the property at E Street, Suburb F by D Pty Ltd. No response has been received.
The second respondent’s evidence
40.The second respondent acknowledged his relationship with the husband and that they created and operated the three companies referred to above.
41.The second respondent asserts that on 22 September 2016 his accountant, a Mr P, informed him that the husband had appointed him as his power of attorney pursuant to a General Power of Attorney signed by the husband in Asia on 21 September 2016.
42.The general power of attorney provides, inter alia, that Mr P as the husband’s attorney must keep reasonable accounts and records of the husband’s money and property, always act in the husband’s best interests and always act honestly in all matters concerning the husband’s legal and financial affairs. Whether Mr P has so acted in divesting the husband of his interest in B Pty Ltd will be a matter for determination in due course.
43.The second respondent asserts that at the wife’s requested that he transferred to her various sums totalling $8,000 in late 2016. Otherwise he asserts that he has transferred various funds at the request of the husband totalling about $24,000 in late 2016.
[B Pty Ltd]
44.He says that the company [B Pty Ltd] had advanced to him and the husband various funds by way of director’s loans. He says that as at 30 June 2015 the company had advanced to the husband $576,778 and to him $210,000. Some of the funds advanced by the company to the husband were paid to the mortgage secured over the husband and wife’ matrimonial home. It must be inferred that the funds advanced to the husband and second respondent as directors were derived from cash resources available to the company by way of retained profits or otherwise.
45.The second respondent complains that the circumstances of the company were adversely affected by the husband being charged with certain criminal offences and being incarcerated in Asia pending trial.
46.The second respondent asserts that his accountant exercising the power of attorney given to him by the husband transferred to the second respondent the husband’s shares in the company on 5 October 2016 and the husband was then removed as a director. The business of [B Pty Ltd] was providing product installation and services. As at about the time the husband was divested of his interest in the company it had 38 full-time employees, over 29 subcontractors for regular clients and about 40 to 50 credit account facilities with suppliers. It appears that the company was of some substance and with significant turnover. Yet the second respondent asserts that by September 2017 he was the only person in the employ of the company with the company having no credit accounts with suppliers.
47.In December 2016 the company changed accountants to G Pty Ltd.
48.The second respondent asserts that in difficult circumstances he attempted to keep the company operating and advanced funds to the company from his own funds and from his business N Pty Ltd that has a trading relationship with B Pty Ltd.
49.Otherwise it appears that the second respondent in 2016 caused the company W Pty Ltd to be incorporated. It is the husband’s contention that this company is simply a new entity conducting the business formerly operated by the husband and the second respondent as [B Pty Ltd]. A determination of this issue will await consideration by the appointed single expert. Otherwise Exhibit C is indicative of the second respondent representing to a third party his intention to assume the business of [B Pty Ltd] into a new organisation, [N Pty Ltd], having “the same staff/customers and suppliers as [B Pty Ltd]”.
50.The second respondent’s actions, conduct and evidence must be considered with some circumspection.
[D Pty Ltd]
51.This company was incorporated by the husband and the second respondent in late 2000 for the purposes of acquiring a property at E Street, Suburb F (“the Suburb F property”) for the sum of $6 million. A deposit of $600,000 was paid and later released to the vendors.
52.The second respondent asserts that the deposit funds comprised funds from the husband of $280,000, himself of $291,000 and funds drawn from [B Pty Ltd] of $31,000.
53.Subsequent to exchange of contracts the purchaser company paid stamp duty of $360,150. The second respondent asserts that funds for the stamp duty were provided by his self-managed super fund as to $115,400, from his own funds as to $25,510 and from [B Pty Ltd] in the sum of $219,246.10. Subsequently [B Pty Ltd] provided a further sum of $15,000 in relation to the purchase. The funds asserted to have been advanced by [B Pty Ltd] are at odds with that company’s balance sheet as at 30 June 2016.
54.The second respondent asserts that an agreement was reached to extend settlement of the purchase by [D Pty Ltd] to 11 July 2016 in consideration of the payment of a sum of $102,000. The second respondent asserts that these funds were provided to firstly [B Pty Ltd] by him and were then on lent to [D Pty Ltd] by the company. Settlement was not able to be completed by 11 July 2016 and a further agreement for an extension to 24 February 2017 was negotiated in consideration of the payment of $203,000. The second respondent asserts that these funds were advanced to [D Pty Ltd] by [B Pty Ltd].
55.Otherwise the second respondent asserts that he has provided various sums to [D Pty Ltd] for outgoings and other expenses totalling about $91,000 in the period from December 2015 to June 2017.
56.In January 2017 [D Pty Ltd] and the vendors of the Suburb F property agreed to rescind the contract for purchase with the deposit paid of $600,000 to be returned to [D Pty Ltd] following the sale of the subject property by the vendor to a new purchaser. The new purchaser entered into an agreement with [D Pty Ltd] to pay to [D Pty Ltd] $344,510 on settlement of its purchase of the property. Stamp duty as referred to above of $360,510 was refunded to [D Pty Ltd]. In all [D Pty Ltd] received funds totalling $1,305,020.
57.The second respondent controls this company presumably in the absence of the husband. In such circumstance, orders can be made against the second respondent to cause the company to do such things as are required.
58.Illustrative of the second respondent’s control the second respondent says that the funds variously received by [D Pty Ltd] were disbursed by him as follows:
a)$138,480 in repayment of the sum advanced by his self-managed super fund including interest;
b) $11,000 in payment of accounting fees for the company;
c)$354,200 in repayment to [B Pty Ltd] relating to funds advanced by it to [D Pty Ltd]; and
d)$92,154.20 in repayment to the second respondent of monies he asserts were paid by him on behalf of [D Pty Ltd];
these payments totalling $595,834.20.
59. Other payments have been made from the [D Pty Ltd] funds as follows:
a) $15,620 to H Pty Ltd pursuant to orders made 5 May 2017; and
b)$127,790 to O Real Estate as commission in respect of the transaction.
60.The second respondent asserts that there are outstanding legal fees payable to his solicitors in the sum of $40,754 for legal fees relating to the [D Pty Ltd] transactions. The husband disputes the quantum of this amount and has sought an itemised invoice which as yet has not been provided. There is only a lump sum bill from the solicitors without particularisation.
61.Subject to the issue of the solicitor’s outstanding costs, and if they are ultimately paid in the sum sought, an amount of about $520,475 would remain in the controlled monies account.
62.No tax returns or financial statements for [D Pty Ltd] for the year ended 30 June 2016 and 2017 were in evidence before the court. It is to be expected that those accounts when prepared will accurately reflect the various transactions asserted by the second respondent. The various transactions will also be the subject of consideration by the agreed single expert valuer in ascertaining the interest of the husband in [D Pty Ltd] by way of loan account or otherwise.
[C Pty Ltd]
63.The second respondent asserts that this company owned a motor vehicle used by [B Pty Ltd]. That vehicle, was the subject of a finance obligation. The second respondent asserts that he and the husband’s attorney agreed to sell the vehicle with the whole of the funds being applied to discharge the financed debt.
64.Otherwise the second respondent complains that he has incurred legal fees in and about the conduct of the family law proceedings between the husband and wife.
65.The second respondent further asserts that in order to keep [B Pty Ltd] operating he has advanced from his own funds or his companies about $760,000 to [B Pty Ltd]. Of these funds $275,401 have been paid to the Australian Taxation Office for taxation liabilities arising since 1 March 2017 by way of company tax, outstanding GST and penalties for failure to lodge returns and general interest charges all accruing since the company has been operated solely by the second respondent. There has been no accounting for income otherwise generated by the company over the same period or for monies the second respondent asserts has been repaid to the company by [D Pty Ltd].
66.No taxation returns or financial statements for [B Pty Ltd] are in evidence before the court for the financial years ended June 2016 and June 2017 where the trading revenue of the company for the financial year to June 2017 was $2.859m (Exh B) and an analysis of the company’s general ledger raises more issues than it solves as to the second respondent’s application and use of company funds. Such concerns can, as was submitted by the wife, be the subject of questions to the single expert when the report is to hand.
The present Application
The second respondent filed an Application in a Case on 12 November 2018 seeking interim orders relevantly, in summary, as follows:
a) that the single expert Mr K be dismissed;
b)that the parties do all things necessary to recuse Mr K from having any further involvement in these proceedings whatsoever;
c)that orders one to five made 9 November 2017 be discharged;
d)that within 14 days the second respondent provide to the applicant and first respondent a list of three proposed expert witnesses and that within 21 days thereafter in default of agreement as to the appointment of one of the nominated experts the second respondent be at liberty to nominate the expert;
e)that the applicant wife and first respondent husband be restrained from causing or permitting any one from communicating with the said expert without the written consent of all parties.
The Application in a Case is supported by the second respondent’s affidavit filed 12 November 2018.
The second respondent filed an Amended Application in a Case on 7 March 2019 supported by an affidavit by his solicitor filed 5 March 2019.
The Amended Application in a Case seeks relevantly orders, in summary, as set out above.
The Second Respondent’s evidence
The second respondent received a draft joint letter of instruction from the applicant wife’s solicitors on 17 November 2017. In response, the second respondent relevantly sought amendments to the joint letter of instructions that were:
a)inclusion of a sentence: “we confirm that neither party will communicate with you other than with the consent of the other party”;
b)inclusion of the following: “please note, your retainer is with our clients personally and our respective firms are not liable for your fees. The legal representatives may assist in securing your fees by holding monies in trust pending your valuation reports being completed”.
On 24 November 2017 the wife’s solicitors confirmed that the amendments were acceptable. Subsequently, the agreed joint letter of instructions were forwarded to the single expert on 27 November 2017.
On 29 November 2017 the second respondent received communication from the single expert in the following terms:
“my original understanding of this matter was that you may require additional forensic analysis to identify and comment on various transactions. As this additional work has not been referred to in either the court order dated 9 November 2017 or your letter of instructions dated 24 November 2017, I will require additional instructions if any of this work is to be performed.”
On 1 December 2017 the wife’s solicitors informed the single expert: “we confirm that the parties do anticipate that you will be required to perform forensic work.” The single expert responded: “I understand and I will include forensic procedures in the scope of our work”.
The second respondent then professes that it was his understanding that the single expert was to prepare a business valuation report, not forensic work. Accordingly, the second respondent caused his solicitor to write to the wife’s solicitors requesting that they refrain from communicating with the single expert especially in respect to further instructions they intended to provide. The second respondent also wrote to the single expert requesting that he comply with court orders and the letter of instructions noting there are no additional instructions for forensic work. The single expert acknowledged that correspondence. Subsequently the wife’s solicitors wrote to the single expert informing him “you will be contacted once the issue about forensic questions have been discussed and resolved”.
Subsequently, on 16 May 2018, the wife’s solicitors requested a progress update from the single expert as to the requested report. The single expert wrote on 21 June 2018 requesting further documentation to complete the valuation reports and seeking confirmation as to whether a valuation report was required for the D Pty Ltd. The second respondent’s solicitor subsequently enquired of the single expert as to whether any financial documents had been omitted from the original joint letter of instruction. On 10 July 2018 the wife’s solicitor provided to the single expert a list of documents provided in the original joint letter of instruction. Subsequently, on 24 July 2018, the husband’s solicitor wrote to the single expert in the following terms “kindly, confirm if there is any other documents outstanding and note that our client is available should you require any clarification on any matter or issue involving the companies pursuant to this matter.” The second respondent in response wrote to the husband’s solicitor advising that all communication with the single expert should be by way of joint communications and no parties are to provide “clarifications”.
Subsequently, on 26 July 2018, the single expert provided a list of further documents required to complete the valuations. The second respondent caused his solicitors to forward such documents to the single expert on 8 August 2018.
On 9 October 2018 the second respondent received correspondence from the single expert that referred to correspondence received by the expert from Mr P the subject companies previous accountant on 4 October 2018 advising of “significant irregularities discovered in the general ledgers provided to the court by me and that in my professional opinion the ledgers do not provide true and correct financial information and that in my opinion the ledgers are deliberately manipulated.”
Subsequently, the second respondent’s solicitors wrote to the husband’s and wife’s solicitors asking if there had been any communication with the accountant and proposing that the single expert be dismissed on the basis that any opinion he might now give has been hopelessly contaminated by what he was told by the accountant and the wife’s solicitors.
The wife’s Response
On 21 December 2018 the wife filed a Response to the second respondent’s Application in a Case. Relevantly, she sought an order that the orders sought by the second respondent seeking discharge of the single expert be refused and that the Application in a Case be dismissed.
The husband supported the orders sought by the wife.
The wife relied upon her affidavit filed 21 December 2018.
The wife notes that in the joint letter of instructions to the single expert, details were provided to the single expert as to the contact details of Mr P the subject companies’ former accountant.
On 29 November 2017 the wife’s solicitors received communication from the single expert providing the single expert’s terms of engagement. Inter-alia the single expert imposes on the parties a responsibility to provide him access to:
a)all information of which the parties are aware is necessary for the performance of the engagement;
b)additional information that he may request from the parties for the purpose of the valuation service; and
c)access to persons within the parties’ respective businesses from whom he may require cooperation in order to perform the engagement.
There is nothing unusual in this responsibility required of the parties to a single expert valuation.
The wife for her part denies that her solicitors have inappropriately communicated with the single expert. She acknowledges that there was communication with the single expert as to prospective “forensic work” that may be required as referred to above. Indeed, by email correspondence of 1 December 2017, the wife’s solicitors clarified that the communication about “forensic work” to the single expert related to prospective questions that may be administered to the single expert following the completion of his report.
It is contemplated by the Rules that such questions may be administered and any additional work required of the single expert to properly respond would be at the expense of the party administering such questions.
The wife says that in response to the single expert’s request for additional documents of 26 July 2018 further documents were received from the second respondent’s solicitors and were forwarded to the single expert on 8 August 2018 with the receipt of those documents acknowledged by the single expert on 16 August 2018.
In mid-September 2018 the wife’s solicitors enquired of the single expert as to the progress of his valuation report. All parties were copied into this correspondence.
On 9 October 2018 the wife’s solicitor received correspondence from the single expert expressing concerns as to suspected irregularities in financial documents and records of the subject companies, informing that he had received communication from the accountant Mr P, that any valuation prepared on current available evidence (without further forensic investigation) would be misleading to the parties and to the Court and seeking further instructions in default of which he would seek instructions directly from the Court.
On 29 October 2018 the wife’s solicitors received communication from the husband’s solicitors advising that:
a)a review has been conducted of bank statements relating to one of the subject entities;
b)that a number of transactions in the period from 17 April 2015 to 12 January 2017 were found to have no source documents nor explanation provided;
c)that a large number of transactions had been made by the second respondent during that period;
d)that they found it difficult to accept that the single expert would be able to complete a business valuation without source documents or information in respect of transactions of about $4.863 million;
e)they suggested that the previous accountants for the corporate entities provide any information in their possession and control to the single expert as a matter of urgency.
On 31 October 2018 the single expert forwarded correspondence to the Registrar of the Federal Circuit Court of Australia that, inter-alia, said:
a)that in the joint letter of instructions he was provided with the contact details of both the former and current tax accountants for the entities;
b)that as part of the valuation procedure he contacted accountants with a number of queries and was informed that a number of issues were of concern in terms of preparing an accurate valuation;
c)that he had come to the conclusion on the current available evidence provided to him “and without further detailed forensic investigations” that any valuation prepared by him would be misleading to the parties and to the Court.
On 9 November 2018 the second respondent’s solicitors corresponded with the wife’s solicitors and the single expert requesting information as to when the report would be finalised and asserting that the Court orders and joint letter of instruction did not require the single expert to undertake “forensic accounting”.
Discussion
Otherwise, it is to be noted that on 7 November 2018 a liquidator was appointed to the company B Pty Ltd. The liquidator is now a party to these proceedings as Intervener.
It is common ground that the subject corporate entities have been in the control of the second respondent at all relevant times. Clearly he would be in a position to provide to the single expert appropriate responses querying various transactions in the financial statements of the subject entities over the relevant period. Similarly, the respondent husband would be in a position to so clarify transactions in the financial statements of the subject entities to which she had personal knowledge or, indeed, received personal benefit from.
The single expert has been placed in an invidious position by the conduct of the second respondent in resisting the clear necessity for there to be some investigation and report into significant transactions that have impacted on the financial circumstances of one or both entities.
The single expert clearly is of the view that in the absence of him being able to administer enquiries of, seek documents from, and requested clarification from the parties engaged in the conduct of these corporate entities and those entities accountants his report would be of little utility to the Court.
Significant fees have already been paid to the single expert and that single expert has identified concerns that he needs to address in providing to the Court a reliable and accurate report as to the subject entities.
The Single Expert is charged not with valuing the entities themselves but in valuing “the Respondent Husband’s interest as of 16 September 2016 in the following business entities:
(1.3)B Pty Ltd, ACN: …; and
(1.4)C Pty Ltd, ACN: ….”
In the event that the parties are not in agreement that the single expert undertake a “forensic enquiry” in his role as single expert, there is no doubt that he would be able to do so in the process of answering any request for answers to specific questions administered to him by the parties or any one of them. Of course, primarily the single expert’s costs of undertaking the necessary enquiries to answer those questions would at first instance be the responsibility of the party administering the questions. Although on hearing there may be application that those additional costs relating to forensic enquiry be in fact paid by one or other of the other parties to the proceedings as a consequence of the findings of the single expert or the cooperation or lack of cooperation by a party.
It is readily apparent that in the event that what may be impugned transactions in the financial statements of the subject entities reveal payments to any of the parties or to anyone on their behalf that such payments not being made in the ordinary course of business should be recorded as loans to the recipients such that the recipients of largess if any received from the corporate entities not in the ordinary course of business would owe monies back to the entity or entities with such debt being recorded in the loan accounts accordingly. Such a treatment of funds clearly significantly impacts on the underlying valuation of the entity or entities concerned.
The resistance of the second respondent to a forensic enquiry that on the evidence before the Court appears necessary and intrinsic to the preparation of a single expert report that is accurate and has integrity is of concern.
It is clear on the little evidence available at present that such an enquiry is clearly necessary either on the basis of joint supplementary instructions that should be provided by the parties or in response to a request for answers to specific questions administered to the single expert under the rules (Rule 15.65).
The nature of instructions to the Single Expert are contained in Rule 15.54:
Instructions to expert witness
(1) A party who instructs an expert witness to give an opinion for a case or an anticipated case must:
(a)ensure the expert witness has a copy of the most recent version of, and has read, Divisions 15.5.4, 15.5.5 and 15.5.6 of these Rules; and
(b)obtain a written report from the expert witness.
(2) All instructions to an expert witness must be in writing and must include:
(a) a request for a written report;
(b) advice that the report may be used in an anticipated or actual case;
(c) the issues about which the opinion is sought;
(d) a description of any matter to be investigated, or any experiment to be undertaken or issue to be reported on; and
(e) full and frank disclosure of information and documents that will help the expert witness to perform the expert witness's function.
(3)The parties must give the expert an agreed statement of facts on which to base the report.
(4)However, if the parties do not agree on a statement of facts:
(a) unless the court directs otherwise – each of the parties must give to the expert a statement of facts on which to base the report; and
(b)the court may give directions about the form and content of the statement of facts to be given to the expert.
It is readily apparent that an investigative process if necessary is contemplated by the Rules as is the provision of alternate facts by either party if there is no joint agreement.
The Single Experts obligation to the court is set out in Rule 15.59:
15.59 Expert witness’s duty to the court
(1)An expert witness has a duty to help the court with matters that are within the expert witness’s knowledge and capability.
(2)The expert witness’s duty to the court prevails over the obligation of the expert witness to the person instructing, or paying the fees and expenses of, the expert witness.
(3)The expert witness has a duty to:
(a) give an objective and unbiased opinion that is also independent and impartial on matters that are within the expert witness’s knowledge and capability;
(b) conduct the expert witness’s functions in a timely way;
(c) avoid acting on an instruction or request to withhold or avoid agreement when attending a conference of experts;
(d) consider all material facts, including those that may detract from the expert witness’s opinion;
(e) tell the court:
(i) if a particular question or issue falls outside the expert witness’s expertise; and
(ii) if the expert witness believes that the report prepared by the expert witness:
(A) is based on incomplete research or inaccurate or incomplete information; or
(B) is incomplete or may be inaccurate, for any reason; and
(f) produce a written report that complies with rules 15.62 and 15.63.
(emphasis added)
The second respondent asserts bias on the part of the Single Expert.
In relation to any bias alleged against the single expert, the Full Court in Bass & Bass [2008] FamCAFC 67 said that there are two preliminary options open to parties to address concerns of apprehended bias with respect to a single expert:
[49]First, Division 15.5.6 of Part 15.5 provides a procedure for clarifying matters contained in a report prepared by a single expert witness. It was confirmed before us that that procedure had not so far been employed in this case. While we acknowledge that procedure may only be of limited assistance to the father given the nature of his complaints, we are nevertheless, of the opinion that that procedure ought to have been attempted before the application was made to Steele J, or to this Court.
[50]Secondly, and perhaps more significantly, the assertion of bias, be it apprehended or actual, on the part of the single expert, will best be able to be established through cross-examination of the single expert at the trial of the parenting proceedings, as indeed was recognised by Steele J. Following such cross-examination, all or parts of the expert’s report may be rejected or given only limited weight by the trial Judge… .
It is readily apparent that the application by the second respondent is premature.
The single expert has not released his report which it is to be inferred will express reservations as to the reliability of information or lack of it provided to him.
Indeed, under the Rules it is open to the wife to provide an alternate factual scenario to the Single Expert for consideration.
Once the report is released the parties are at liberty to use the provisions of the rule to seek to clarify the report, in particular, by the administration of requests for answers to specific questions to the expert that may involve the expert at the cost of the administering party of undertaking further forensic analysis and enquiry on the basis of further information unilaterally provided to the expert within the context of specific questions being administered.
In the circumstances of this matter, it is clearly appropriate that the application by the second respondent be dismissed.
An order will be made accordingly.
I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 3 July 2019.
Associate:
Date: 3 July 2019
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