HARCOURT & LANGHAM

[2012] FamCA 515

FAMILY COURT OF AUSTRALIA

HARCOURT & LANGHAM [2012] FamCA 515

FAMILY LAW - EVIDENCE – Admissibility – Application seeking that a valuation report not be admitted into evidence for the final hearing of the proceedings – Application dismissed

Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth)
APPLICANT:	Mr Harcourt

RESPONDENT: Ms Langham

FILE NUMBER: MLC 3385 of 2011

DATE DELIVERED: 29 May 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 28 - 29 May 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Edward

SOLICITOR FOR THE APPLICANT: Slater & Gordon

COUNSEL FOR THE RESPONDENT: Mr Salamanca

SOLICITOR FOR THE RESPONDENT: Taussig Cherrie Fildes

IT IS ORDERED BY CONSENT

1. That the husband and the wife do all such acts and things, sign all necessary documents, provide all relevant documentation and cooperate with the fullest extent to:

   a. Engage Mr S of Company A as a Single Expert to prepare a valuation as at 30 June 2011 of the husband’s interest in the professional business conducted by him, such valuation to include, but not be limited to a valuation of the income, assets and liabilities of:

   i.E Pty Ltd as trustee of the E Unit Trust;

   ii.The professional business conducted by the husband in his own right;

   iii.Harcourt and Langham Pty Ltd;

   iv.Harcourt and Langham  Trust;

   v.Any other associated entity of and incidental to the conduct of the said professional business;

   b.Each pay one half of the costs of and incidental to the preparation of such valuation and the attendance by Mr S at the conference referred to in paragraph 5 of the Orders made on 29 February 2012 as amended.

2. That within 14 days of the conference of experts taking place in accordance with paragraph 5 of the Orders made on 29 February 2012 as amended, Mr S of Company A prepare and provide the parties with a report identifying the areas of agreement and the scope of any disagreement remaining between the three experts at the conclusion of the conference of experts, with the cost of same to be shared equally by the parties.

3. Within 7 days the husband make payment in full of Mr S’s outstanding fees and costs.

4. The husband forthwith authorise and direct B Accountants and C Accountants to provide documents in accordance with the requests received from Mr S and from the wife’s lawyer, together with any further requests that may be received from Mr S, the wife’s lawyer, Mr H of D Accountants and/or any other accountant engaged by the wife for the purposes of these proceedings.

5. The trial directions made on 29 February 1012 remain in full force and effect other than as follows:

   a.the date for compliance with paragraph 5 be extended to 13 June 2012;

   b.the date for compliance with paragraph 10 be extended to 14 June 2012;

   c.the date for compliance with paragraph 12 be extended to 28 June 2012; and

   d.the date for compliance with paragraph  13 be extended to 11 July 2012.

6. The parties forthwith do all such acts and things and sign all such documents as are necessary to jointly engage Company F as the single expert to value the property situate at and known as … I Street, Town P.

7. On or before 12 noon on 30 May 2012 the respondent husband file and serve upon the wife and electronically to … @familycourt.gov.au a bullet point summary of argument by way of response to the wife’s application for indemnity costs.

8. On or before 12 noon on 31 May 2012 the wife file and serve upon the husband and electronically to…@familycourt.gov.au a bullet point summary of any reply to the submissions of the husband.

9. The Application in a Case filed 17 May 2012 and the Response to an Application in a Case filed 28 May 2012 are otherwise dismissed.

IT IS FURTHER ORDERED

1. All applications for final orders be adjourned for hearing before Justice Macmillan at 10:00 am on 1 August 2012 as a 3 day matter.

2. The matter be listed for Mention before Justice Macmillan at 9am on 11 July 2012

3. By 4 pm on 31 May 2012 the applicant file and serve upon all other parties:

   a.   an amended application setting out with precision the orders to be sought;

   b.   the affidavits of evidence in chief of all witnesses relied upon; and

   c. a financial statement that complies with chapter 13 of the Family Law Rules.

4. The applicant pay all setting down and trial fees by 4 pm on 25 July 2012 or obtain the requisite waiver thereof.

5. By 4 pm on 21 June 2012 the respondent file and serve upon all other parties:

   a.   an amended response setting out with precision what orders are being sought;

   b.   the affidavits of evidence in chief of all witnesses relied upon;

   c. a financial statement that complies with chapter 13 of the Family Law Rules.

6. By 4 pm on 4 July 2012 the applicant file and serve any affidavit in reply to that of the affidavits of the respondent.

7. No party file any further material other than as provided by these orders without leave of the Court.

8. All parties have leave to issue subpoenae for the production of documents by arrangement with the registrar docketed with the management of the file.

9. All parties have liberty to approach the registrar responsible for the management of the court file to vary the obligations under these orders to ensure readiness for trial.

10. Should any party fail to comply with these orders or the ensuing amending directions of the docketed registrar, the party who has complied may immediately thereafter file an application in a case supported by an affidavit seeking for the matter to proceed on an undefended basis.

11. The practitioners for the parties file and serve electronically to …@familycourt .gov.au by 4 pm on 26 July 2012 the following:

    a.   a concise set of orders to be sought if different from those already filed;

    b.   a list of the applications and affidavits to be read and, if not the whole affidavit, the relevant paragraphs relied upon;

    c.   a list of assets and liabilities; and

    d.   a bullet-point summary of argument in relation to the issues in dispute.

12. Each party provide to the court at the commencement of the hearing, a statement setting out the costs incurred to that date and from what source those funds have been paid and what costs are expected to be incurred until the completion of the hearing.

13. The practitioners be at liberty to approach Justice Macmillan’s Associate, Miss Vercoe, for an urgent listing of the matter if required.

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel and solicitor.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 3385 of 2011

Mr Harcourt

Applicant

And

Ms Langham

Respondent

REASONS FOR JUDGMENT

1. Listed before me today is the husband’s Application in a Case, filed 17 May 2012, in which he seeks orders that the valuation report prepared by Mr S in relation to the E Unit Trust not be admitted into evidence for the final hearing of these proceedings, that the applicant wife pay all costs and fees incurred by the husband in relation to the valuation report and in relation to the questions served by the husband upon the single expert and the single expert’s answers to those questions; and that a suitably qualified expert be appointed as single expert to value the respondent husband’s units in the E Unit Trust at the joint expense of the parties. 

2. This matter has been fixed for final hearing in my list commencing on 1 August 2012. On 23 February 2012 the husband filed a similar application in which he sought orders that the single expert’s report not be admitted into evidence for the final hearing, and that the wife reimburse him for his share of the costs of that report. That was prior to the delivery of questions to the single expert. That matter was listed for hearing before me on 29 February 2012. On that date I made orders by consent which provided for a process, in accordance with the Family Law Rules 2004 (Cth), by which the parties could forward questions to the single expert, and which further provided that on or before 30 May 2012 the single expert and the parties’ respective shadow experts confer.

3. It is part of the husband’s case today that this conference should not take place.  Hence the listing of this matter at short notice.  The wife seeks orders dismissing the husband’s application, amending the times for the filing of documents in accordance with my orders of 29 February 2012, and requiring the husband to make payment in full of the single expert’s outstanding fees, to authorise his accountants to provide documents in accordance with requests from the wife’s solicitor or her shadow expert or the single expert, and to do all necessary things to appoint a valuer to value the property at I Street, Town P. 

4. The matter has been listed in the Judicial Duty List and proceeded on the basis of the affidavit of Mr Edward, sworn 15 May 2012, in support of the husband’s application, and the affidavit of Ms Cherrie, sworn 25 May 2012, by way of reply to the husband’s application, and the affidavit of Mr Edward in support of the wife’s response.  I also heard submissions made by both Mr Edward, on behalf of the husband, and Mr Salamanca of counsel, on behalf of the wife.  It is common ground that, in anticipation of a conciliation conference on 12 August 2011, the parties appointed the single expert by joint letter of engagement, instructing him as follows:

   Both parties accept your estimate of fees, and would be obliged if you would proceed with a single expert valuation of the units in the [E Unit Trust], as at 30 June 2011.

5. There were two elements to the husband’s case.  Firstly, that the single expert had not valued the units in the E Unit Trust, the entity he was instructed to value, and secondly, that the process by which the single expert purportedly valued the husband’s professional business was tainted by communications between the wife’s solicitor and the single expert. 

6. At page 2 of his report, dated 10 August 2011, the single expert stated as follows:

   We have been requested by the respective parties of the [Langham Harcourt] family law matter to prepare a single expert valuation report, in respect of the units of [E Unit Trust] as at 30 June 2011.  As indicated by the factors included in this report, and by us in our recent discussions with Taussig Cherrie Fildes Lawyers, we do not consider it appropriate to value the units in [E Unit Trust], without specific reference to the [professional businesses] and revenues generated privately by the [professionals] who utilise [E Unit Trust] merely as a service entity vehicle.  In the context of this matter, we have sought to value the specific [professional business] operated by [Mr Harcourt] with reference to [Mr Harcourt’s] notional proportional expenditure, incurred by way of use of the service entity [E Unit Trust]. 

7. It was on this basis that the single expert proceeded to value the husband’s professional business.  It was submitted by Mr Salamanca that the letter of instruction requiring the single expert to value the units in the E Unit Trust was nothing more than a technical mis-description and that both the husband and his solicitor would have at all times understood that it was the husband’s professional business that was to be valued.  He referred me to correspondence passing between the solicitors for the husband and the wife, in which reference was made to the husband’s business.  That correspondence includes the letter dated 28 June 2011, from the wife’s solicitor to the husband’s solicitor, in which she referred to both the husband’s business and the E Unit Trust and associated entities, and the letter dated 11 July 2011 from the husband’s solicitor, in which he said:

   In relation to my client’s [business], my client is happy for your client to obtain any document she wants, direct from the parties’ accountant, and that should satisfy your requirements.

8. Mr Salamanca also referred me to the authorities provided by the husband to the wife for the purposes of obtaining the documents she required, which referred to:

   all documents and information they may request from you in relation to the financial circumstances of [E Unit Trust] and my [professional business].

9. I’m satisfied that whilst the husband may not have agreed with the methodology adopted by the single expert to value the husband’s professional business, or the single expert’s conclusions, in all of the circumstances the husband would have understood that it was his business that was to be valued, and he would not have been surprised by the decision taken by the single expert to value the interest in the professional business and not just the husband’s units in the service trust. 

10. Notwithstanding what I could consider would have been the husband’s understanding of what was to be valued,  the husband’s current application seeks the appointment of a single expert to value the units in the E Unit Trust and not the business. This is  in circumstances where Mr Edward has conceded that valuation of the husband’s professional business, not just the units in the E Unit Trust, would be required for the trial.  Mr Edward also properly conceded that, if there were to have been any meaningful negotiations, a valuation of the professional business would have been required for the purposes of the conciliation conference.  Although his current application seeks orders with respect to the E Unit Trust, I can only assume in those circumstances that what is intended is a valuation of the husband’s professional business and not a valuation limited to the units in what is only a service trust. 

11. It is hard to see how, in those circumstances, the husband can now say another expert should be appointed to value what is conceded should have been valued, because the single expert did not value what he was instructed to value. 

12. The second of the husband’s complaints is that the process of valuation was tainted by the communications between the wife’s solicitor and the valuer.  It is common ground that Ms Cherrie wrote to the single expert, by a letter dated 15 July 2011, prior to his appointment as a single expert, advising him that:

    It is likely that the parties, if not jointly, then by our client unilaterally, will engage you to value units held in [a professional business], of which [Mr Harcourt] is a unit holder, and ask him for an estimate of his fees.

13. It is Ms Cherrie’s evidence that she did not at the time understand, or have a complete understanding of, the structure of the husband’s professional business.  The single expert replied by email dated 20 July 2011 referring to a discussion with Ms Cherrie the previous day, particularly around what was to be valued, and indicating that this might add a degree of complexity that would need to be allowed for in his estimate of fees.  Ms Cherrie forwarded a copy of this email to the husband’s solicitor under cover of her letter of 25 July 2011.  Ms Cherrie now deposes that the single expert, who was at that time not yet appointed as the single expert, telephoned her on 19 July 2011 in response to her letter of 15 July 2011.

14. On that occasion the single expert and Ms Cherrie spoke briefly about the proposed valuation and the likely costs of same, but, other than that, Ms Cherrie had no independent recollection of the matters discussed.  Whilst the husband’s solicitor deposes that he was not told by either the single expert or Ms Cherrie what was discussed by them on that date, it is clear that he did know, at least by 25 July 2011, that a discussion had taken place and, notwithstanding that fact, took no exception to the appointment of the single expert.  It was submitted by Mr Salamanca that one would have expected him to take exception to that conversation and to the appointment of that single expert, had he considered there was anything inappropriate in that communication.  I agree with that submission. 

15. The second discussion that I have been directed to took place between Ms Cherrie and the single expert on 5 August 2011.  At page 2 of his report,  and I believe I may have already referred to this, the single expert referred to having had recent discussions with Taussig Cherrie Fildes Lawyers.  Ms Cherrie deposes that she was contacted by the single expert on 5 August and that she was advised that, by reason of the methodology he was adopting, a wider class of documents was required, as a result of which she sent him the authority to the husband’s accountants provided by the husband to facilitate the provision of the necessary documents. 

16. This is consistent with the single expert’s answer to the questions posed to him by the husband in relation to this conversation.  Mr Edward submitted that I should treat the answer with some caution, as the single expert made no mention of the earlier telephone discussion with Ms Cherrie on 19 July 2011.  However, as submitted my Mr Salamanca, the question the single expert was asked was directed to the telephone conversation of 5 August 2011.  This is an interim hearing and until the evidence of Ms Cherrie, Mr Edward and the single expert is tested, I cannot make any findings with respect to the two conversations between the single expert and Ms Cherrie, or what conclusions I should draw in relation to those conversations. 

17. However, I do not find it particularly surprising that Ms Cherrie would have spoken to the single expert prior to his appointment, nor does it seem did Mr Edward at the time.  Even if Ms Cherrie should not have spoken to the single expert, that she did so was known to the husband and his solicitor.  Whilst there is some substance to the submission that any inquiries or requests for information made by the single expert, after his appointment as a single expert, should have been directed to the solicitors for both parties and not just to the solicitor for the wife, it does not necessarily follow, in my view, that the process is so tainted that the single expert should be replaced and a further single expert appointed. 

18. If I accept the husband’s case at its highest, there has been one conversation between Ms Cherrie and the single expert before his appointment, and one following his appointment, as a result of which, it is submitted, he has valued the husband’s professional business, contrary to the written instructions, in circumstances where it is conceded that the professional business needs to be valued for the purposes of the hearing.  I understand that the husband disputes the valuation of his business by the single expert.  The fact that he disputes the valuation is not a reason for the removal of the single expert, and, in my view, the circumstances of this case based upon the evidence before me and the submissions made this day do not warrant his removal. 

19. These are matters which can be addressed in various ways, including in the course of cross-examination, and may ultimately go to the weight to be given to the single expert’s evidence.  I am also mindful that this matter has been listed for final hearing on 1 August 2012, and I am assured by both parties that they want the matter to proceed on that date. 

20. The question of value is clearly a contentious issue, and I am conscious, in circumstances where both parties have engaged shadow experts, that the appointment of a further single expert might not resolve the dispute as to value.  There are other ways the husband, in my view, could have addressed this issue.  Having previously consented to an order that the experts, including the husband’s shadow expert and any shadow expert appointed by the wife, confer, he now seeks to resile from that order.  He does so on the basis of the information he says is now known to him, which of necessity must relate to the answers to the questions which were provided by the single expert.  In my view, the answers do not support this application, and the application is premature.  It is always possible that the experts might reach agreement and, in that case, this application would not have been necessary. 

1. In all of the circumstances I do not propose to appoint another single expert to value the husband’s professional business.  It was submitted by Mr Salamanca that the single expert’s valuation should be updated to include the 2011 figures, which are now available, and I agree that that is appropriate. 

2. Mr Edward agreed that, in the event that I did not appoint another single expert, I should make orders in the terms sought by the wife and, subject to any further submissions as to the details of those orders, I propose to do so. 

I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 29 May 2012.

Associate: 

Date:  9 July 2012