Gaynor and Gaynor and Ors (Appointment of Single Expert)

[2011] FamCA 520

FAMILY COURT OF AUSTRALIA

GAYNOR & GAYNOR & ORS (APPOINTMENT OF SINGLE EXPERT)   [2011] FamCA 520

FAMILY LAW – PROCEDURAL – Whether a single expert should be appointed to value property and a trust

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Noetel v Quealey(2005) FLC 92-230.

APPLICANTS: B Pty Ltd
Mr GV
Mr PV

1^ST RESPONDENT: Mr Gaynor

2^ND RESPONDENT: Ms Gaynor

FILE NUMBER: SYC 7076 of 2007

DATE DELIVERED: 17 June 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Justice Le Poer Trench

HEARING DATE: 14 June 2011

REPRESENTATION

COUNSEL FOR THE APPLICANTS: Mr Lethbridge SC

SOLICITOR FOR THE APPLICANTS: HWL Ebsworth

COUNSEL FOR THE 1^ST RESPONDENT: Mr Richardson SC

SOLICITOR FOR THE 1^ST RESPONDENT: Clinch Long Letherbarrow

SOLICITOR FOR THE 2^ND RESPONDENT: Pearson Family Lawyers

Orders

1. The application in a case filed by the second to fourth respondents on 12 April 2011 is dismissed in all respects other than the costs of the application.

2. The second to fourth respondents have leave to file and serve a valuation of the GV Family trust as at 30 June 1999 and 30 June 2000 provided it can be filed and served by 26 September 2011.

3. The court notes the husband has placed on the court record that he will object to the court accepting into evidence any such valuation on the grounds of relevance and any other ground which may become apparent.

4. The second to fourth respondents have leave to file and serve a valuation of the property at C Street, Suburb D as at 30 December 2000 provided such valuation is served upon the husband by 26 September 2011.

5. The court notes the husband has placed on the court record that he will object to the court accepting into evidence any such valuation on the grounds of relevance and any other ground which may become apparent.

6. Any application for costs, arising from the application herein dismissed, is to be made in writing, supported by any affidavit and written submissions. Such documents to be filed and served by 24 June 2011. Any submission in response to be filed and served by 1 July 2011.

7. In the absence of any application to the contrary any cost application, made pursuant to these orders, will be determined in chambers.

IT IS NOTED that publication of this judgment under the pseudonym Gaynor & Gaynor & Ors (Appointment of Single Expert) proved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 7076 of 2007

B Pty Ltd
Mr GV
Mr PV

Applicants

And

Mr Gaynor

First Respondent

And

Ms Gaynor

Second Respondent

REASONS FOR JUDGMENT

1. Before the court is an application filed on 12 April 2011 by B Pty Ltd, Mr GV and Mr PV, the second to the fourth respondents in the substantive proceedings (“the second to fourth respondents”). By that application the second to fourth respondents seek two principal orders together with a number of ancillary orders. The two principal orders are:

   1. That a valuation be conducted of the [GV Family Trust] as at:

   a) 30 June 1999;and

   b) 30 June 2000

   4. [Mr E] of [F Valuers] be appointed to conduct a valuation of [C Street, Suburb D] as at 30 December 2000 as a joint expert.

2. In support of those applications the second to fourth respondents rely on an affidavit sworn on 12 April 2011 by Ms G. Ms G is a solicitor employed by HWL Ebsworth Lawyers, the solicitors on the record for the second to fourth respondents. By her affidavit she annexes documents which are principally correspondence between all of the parties in the proceedings before the court.

3. On 7 June 2011, Mr Gaynor (“the husband’) filed a response to the application by the second to the fourth respondents. That response, inter alia, seeks the second to the fourth respondents’ application be dismissed. In support of the response the husband relies on his affidavit sworn 30 May 2011 and he also tendered an affidavit of Mr H sworn 16 April 2010. The husband also relied upon a letter dated 9 June 2011 from the husband’s solicitor to the second to the fourth respondents.  

4. The second to the fourth respondents tendered a further bundle of correspondence which was marked as exhibit “A1.”

5. During submissions I was asked to read the points of claim document filed by the husband on 14 October 2010; the defence to the husband’s points of claim filed by the second to the fourth respondents on 24 March 2011; and the husband’s amended response to an application for final orders filed on 16 March 2010 (in particular the interim relief sought in paragraphs 18 and 19).

6. Lengthy submissions were made by Counsel for the second to the fourth respondents and Counsel for the husband.

7. While the second to the fourth respondents were the first to address it is helpful in determining the application to consider the submissions on the part of the husband first as they specifically identify the reasons why the husband opposes the orders for valuation as sought by the second to the fourth respondents.

Husband’s Submissions

1. The husband seeks that the application be dismissed. He would not, however, oppose the second to the fourth respondents obtaining their own evidence in the nature that they seek at their own cost. Should it ultimately prove to be the case that the respondents are permitted to rely upon such evidence then an adjustment to cost to be recognised in orders that could be made by the court at the conclusion of the final hearing.

2. The husband’s case is that there is no relevance in obtaining a valuation of the GV Family Trust as at 30 June 1999 and/or 30 June 2000. It is submitted by the husband that there is no event said to have occurred on either of those dates which is of relevance to any issue in dispute between the parties.

3. The husband asserts that it is no part of his case that the assets of the trust where in fact worth $18 million at any relevant date. It is his case, that it was represented to him by Ms Gaynor (“the wife”) that the assets of the trust had that value at a particular date. The husband submits that if the wife or any relevant person was in error in stating the value of the GV Family Trust at the particular relevant date as $18 million then it would have no affect on the outcome of the case as sought to be established by the husband.

4. The husband says there are matters which need to be considered which go to exercise of discretion in allowing or dismissing the second to fourth respondent’s application. The first of those is a matter of cost. It is submitted that the cost of the valuation would be very substantial. My attention is drawn to the affidavit of Mr H and in particular paragraph 53. A reading of that affidavit, it is submitted, must lead to a conclusion that the cost involved in valuing the GV Family Trust, at any time, would be very considerable.

5. It is further pointed out that if the valuations were prepared in accordance with the proposal by the second to fourth respondents they would be fundamentally inadmissible in the proceedings. It is submitted that in 1999 and 2000 the trust was an investment enterprise. The value of the underlying assets, being real estate, would need to be taken into account. The valuation of the trust, as proposed, would rely on core material which is not filed in the proceeding and would cause the whole of the valuation to fall if it were relied upon. The husband relies on the Full Court decision in Noetel v Quealey(2005) FLC 92-230 and particularly draws my attention to paragraph 99 of that judgment. The husband said that even if it was determined to be relevant to know the value of the GV Family Trust at the dates nominated by the second to fourth respondents, then it would be necessary to have proper valuations carried out in respect of the commercial and other land holdings and assets of the trust at those particular times.

The Husband’s Financial Position

1. The ancillary orders sought by the second to fourth respondents are that the husband pay one half of the cost of the valuations. The wife is not required, by the order sought, to contribute towards the cost of the valuations. It is submitted on behalf of the husband that his financial position, as disclosed in his affidavit which supports the response filed in this determination, would illustrate no real capacity to pay a substantial sum of money which might reasonably be anticipated for the valuation of the subject trust.(It is noted that there is no evidence of the likely cost of obtaining the valuations sought by the 2^nd to 4^th respondents).

2. In relation to the application for valuation of the property at C Street, Suburb D (“P property”) the husband submits that the valuation sought by the second to fourth respondents is not relevant. If there is any valuation of that property which has any relevance it would be as at 21 February 2001. Again the husband submits the valuation would not be in the nature sought. It is submitted that by letter dated 21 February 2001 there was not a provision of the transfer to the wife of a one third interest in the property at that time. Rather it was promised that upon the demise of the wife’s parents she would receive a one third interest in the property. Thus if there is any matter of valuation which has the potential to have relevance, it would be the present day value of the remainder share which she was promised.

3. It was submitted that, contrary to the assertion of the 2^nd to 4^th respondents, the purchase price of the P property ($12,360,000 as at 18 July 2000) was not an accurate indicator of its value as at 21 February 2001 because the evidence will show that upon acquisition of the property substantial renovations and/or redevelopment of the property occurred. The evidence will establish that for 18 months after its purchase the wife’s parents did not take up residence because of the works carried out upon the property. Any valuer carrying out a valuation, as required by the second to fourth respondents, would have to be acquainted with the change in the nature of the property from the time it was acquired until the date of valuation.

4. The husband put the second to fourth respondents on notice that if they wish to proceed to obtain from an adversarial expert witness a valuation of the GV Family Trust and/or the P property in the manner at the times specified and of the nature specified, by the application under consideration, that would not be opposed by the husband, provided that the adversarial evidence could be served on the husband’s solicitors no later than six weeks before the final hearing and the husband was not required to contribute to the cost of same. The husband served notice, by submission in this case, that objections will be taken to any such evidence sought to be relied upon on the ground of relevance and on any other ground available as objection to the evidence.

Second to Fourth Respondent’s Submissions

1. The submissions on the part of the second to fourth respondents are as follows.

2. In relation to the P property it is submitted that the value of the property as at December 2000 is important because it goes to the state of mind of the trustees. This again is important in relation to any allegation of breach of trust by the trustees.

3. It is submitted that the Family Law Rules 2004 (Cth) (“the Rules”) provide a specific mechanism for the obtaining of valuation evidence in proceedings under Part 8 of the Family Law Act 1975 (Cth). It is submitted that there is no reason not to apply the provisions as set out in Part 15.5 of the Rules under the title “Expert Evidence.”

4. In relation to the GV Family Trust it is submitted that in respect of relevance, the Deed Poll dated in 1999, a document with which all parties are acquainted, establishes the relevance of the value of the trust at that particular date. It is submitted that valuations of the trust as at 30 June 1999 and 30 June 2000 are relevant because they cover the period during which conversations within the family took place. The second to fourth respondents submit there is no reason to suspect that the market appraisals and valuations which were carried out for the trust and for the purpose of an audit of the trust for the years ended 30 June 1999 and 30 June 2000 would not have been given in good faith. It is submitted that should the single expert have a concern about the genuine nature of a particular valuation or that a particular property had changed in its nature between the two particular dates then the single expert could request further valuations be obtained.

5. The second to fourth respondents submit that the application of the Rules (that is the appointment of a single expert) in this case would see the cost of the valuations kept at a minimum. If the parties require the real estate owned by the trust at the relevant dates to be valued then that can be done.

6. The second to fourth respondents took the court to the husband’s points of claim document filed in the proceedings. Attention is drawn to points of claim paragraph 9 which, inter alia, contain the following words:

   Pursuant to the agreement, and to the said clause 3 of the Deed Poll, the wife duly elected and communicated her election to the trustee to forgo the offer to be paid the said 10 per cent share ( of $18 million) forthwith and instead duly elected and communicated the said election to the trustee.

7. The second to fourth respondents submit that paragraph 9, of the husband’s points of claim document, requires the husband to establish that the 10 per cent share had a value of $18 million at that relevant time.

8. Further the Court’s attention is drawn to paragraphs 25, 27 and 28 of the husband’s points of claim document. It is submitted that those particular paragraphs cast an onus on the husband to prove the value of the GV Family Trust at a particular date.

9. The second to fourth respondents submit that should the valuations be ordered and should it be established at trial that the evidence is irrelevant then there can be an adjustment made by Court order to recompense the husband for any contribution he has made in relation to those valuations.

10. In respect of the cost of the valuation of the GV Family Trust there is no estimate of its value. The respondents say that Mr H’s affidavit went to matters of discovery not valuation and that affidavit should not be seen as providing evidence indicative of the cost of the valuation of the GV Family Trust as sought by the second to fourth respondents. It is submitted that the accounts of the GV Family Trust were audited for the years ended 30 June 1999 and 2000. That fact, it is submitted, should make the valuation of the trust on those particular dates less expensive.

11. The respondents continue to press the relevance of the valuation of the P property as at 30 December 2000.

Conclusion

1. Rule 15.42 sets out the purpose of Part 15.5 of the Rules. Sub paragraph (a) is as follows:

   (a)    to ensure that parties obtain expert evidence only in relation to a significant issue in dispute;

2. There are four other stated purposes some of which would have particular application to this case such as (c ) and ( d) which are as follows:

   (c)    to ensure that, if practicable and without compromising the interests of justice, expert evidence is given on an issue by a single expert witness;

   (d)    to avoid unnecessary costs arising from the appointment of more than one expert witness; and

3. In some respects this is an extraordinary application to determine in such a complex piece of litigation. On the one hand, the second to fourth respondents are pressing for valuations of assets which they say will be necessary for the husband to establish/prove his case. The husband says the valuations sought by the second to fourth respondents in their application would not be relevant to any part of the case he is running. It is hard to avoid asking the question: “Why would the second to fourth respondents press for the obtaining of evidence which they say is absolutely necessary for the husband to prove in his case against them and the wife in the substantive proceeding?”

4. These types of applications are difficult for the court to determine in a definitive and absolute manner. The final hearing has not yet commenced; evidence of the parties is not yet closed, in terms of affidavits being filed; and argument has not been heard in relation to the case. In those circumstances, it is very difficult for the Court to determine matters of relevance. The Court can only safely work within boundaries of determining what may be relevant in such a hearing.

5. Listening to the submissions in an environment of very limited knowledge of the evidence which will finally be before the court, the submissions of the husband have the ring of correctness. In my view, the fairest method of determining this application is to permit the second to fourth respondents, should they continue to wish to do so, to obtain the valuations they seek, at their cost, and require that such valuations be served upon the other parties no later than four weeks prior to the date set for final hearing.

6. The matter is set down for final hearing to commence on 24 October 2011 for two weeks. In my view, it is desirable, so far as it can possibly be achieved, that the dates now reserved for the final hearing of this matter should not be vacated. This matter has already been listed for final hearing in early 2010 and for reasons known to the parties, that final hearing could not proceed. There have been a number of applications by each of the husband and wife to have payments made to them from a jointly held fund being the sale proceeds of the former matrimonial home. That fund is dwindling at a significant rate and each party has had a significant amount of funds paid to them from that joint fund. If the case can not be determined in October this year then it is anticipated that there will be further application by each of the parties to draw on that fund. Consequently, any order for valuation made now must be made in contemplation of the valuation being completed and available in good time before the final hearing.  

7. The husband submitted that any valuation obtained by the second to fourth should be served six weeks before the final hearing. In my view, four weeks would be sufficient given that the husband has not indicated any intention to seek adversarial evidence of his own in relation to either valuation.

8. For those reasons I make the orders set out at the commencement of this judgment.

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Le Poer Trench.

Associate:

Date:  17 June 2011