Harris and Breen

[2014] FamCA 297

FAMILY COURT OF AUSTRALIA

HARRIS & BREEN [2014] FamCA 297

FAMILY LAW – EVIDENCE – Admissibility – Expert evidence

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth) rr 15.42, 15.51, 15.52
Evidence Act 2005 (Cth) ss 76, 79

Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588

APPLICANT: Mr Harris

RESPONDENT: Ms Breen

FILE NUMBER: BRC 9614 of 2011

DATE DELIVERED: 9 May 2014

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 9 May 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Linklater-Steele

SOLICITOR FOR THE APPLICANT: Biggs Fitzgerald Pike Solicitors

COUNSEL FOR THE RESPONDENT: Dr Sayers

SOLICITOR FOR THE RESPONDENT: Ramsden Lawyers

Orders

1. The application of the respondent contained within the Application in a Case filed 1 May 2014 that the respondent be granted permission to tender a report and to adduce evidence at the trial from an expert witness, Mr A of B Accountants, is dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Harris & Breen 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 BRISBANE

FILE NUMBER: BRC 9614 of 2011

Mr Harris

Applicant

And

Ms Breen

Respondent

REASONS FOR JUDGMENT

1. Beginning next Wednesday, I am presiding at a trial of competing property adjustment orders applications between two former parties to a de facto relationship. Many things are in issue between this former couple, including what happened to all of the proceeds of sale of the Applicant’s interests in a couple of businesses sold whilst the relationship was still intact.

2. Today, I heard and dismissed an Application in a Case brought by the respondent, Ms Breen, in which she was seeking leave to rely upon the evidence of Mr A, chartered accountant, contained in and attached to an affidavit filed in the proceedings on 5 July 2013 whilst they remained in the Federal Circuit Court. These are the reasons I dismissed it.

Some Relevant Background

1. Whilst there remains dispute as to exactly when the parties’ de facto relationship actually commenced, it was either in the second half of 2005 or the first half of 2006. At the commencement of the relationship, the applicant had an interest in a business which was ultimately sold to his business partners in 2009. He received $1,200,000 for his interest and that amount was banked. A large amount of that money (around $700,000) was later drawn and contributed towards the purchase of real property. It is what happened to the balance that the parties do not appear to be able to agree upon.

2. The de facto relationship broke down and the parties finally separated in the latter part of 2010. The applicant, Mr Harris, commenced proceedings seeking injunctive relief and final property adjustment orders in the Federal Circuit Court on 27 October 2011. A number of interim applications were filed, heard and determined in the proceedings whilst they were in the docket of the Federal Circuit Court Judge and on 16 November 2012 the FCC Judge made orders requiring the respondent, Ms Breen, to provide certain disclosure and answers to specific enquiries made by the applicant in respect of transactions on her bank accounts.

3. On 5 July 2013, the parties filed their affidavits of evidence in chief in the FCC proceedings and one of the affidavits filed by the respondent, Ms Breen, was an affidavit of Mr A. The affidavit annexed a 26 page document described by Mr A himself as “an independent accountant’s report”. It attached hundreds of pages of appendices.

4. Mr A says in the “report” that he was instructed by Ms Breen to “review all documents and undertake an analysis of the use of funds received from the sale of shares formerly held by [the applicant] in C Pty Ltd.”  He says that he was also instructed to prepare a summary of the net asset positions for Mr Harris and Ms Breen “as at the beginning of their relationship as well as at the current point in time.”  Mr A says he adopted the 30 September 2005 as the date of the beginning of the relationship but does not say why he adopted that date. He also says he had not been provided with all the “necessary documents required in order to accurately assess the net asset positions.”

5. Mr A attaches as an appendix a copy of Ms Breen’s bank account for the period 24 July 2009 to 26 September 2011 which, he says, shows a deposit on 24 July 2009 of $1,200,000 and which, he says, was closed on 26 September 2011. Mr A’s “report” then includes a table that he describes as “comprised a summary of the actual use of funds from Ms [Breen’s] ... Bank Account.” The table is headed “Ultimate Use of Funds from Ms [Breen’s] [account]”. It has a heading “Receipts” and a heading “Payments”. There are only two entries under Receipts – “initial deposit” and “interest”. There are fourteen entries under “Payments”. Those entries basically list various categories or descriptors of expenditure and each category has a single figure beside it and a percentage figure (for the percentage of the total receipts each of the categories of “payments” represents). Mr A’s “report” also attached printed out copies of Excel spreadsheets with data entered on them sourced from the bank statements of Ms Breen’s bank account and other primary source documents such as credit card statements and other bank account statements.

6. At the hearing this morning, Counsel for the applicant argued, and counsel for Ms Breen agreed, that to the extent that the information relied on by Mr A to categorise each debit from the account into one or other of the 14 categories of “Payments” included in his table was not directly obvious from the face of the documents, Mr A relied exclusively on information given to him by Ms Breen, including by her hand written commentary on the bank statements. Indeed, Mr A himself acknowledges in his report that in respect of some of these items of asserted expenditure, although he has included figures and information provided to him by Ms Breen, he has not been provided with supporting documents to confirm the details. 

7. Another part of Mr A’s “report” is described as a “Summary of Tax Returns”. He attaches copies of the relevant tax returns for the years ended 30 June 2006 to 30 June 2012 and summarises the important data from them to show the taxable income of each of the applicant and the respondent for those years.

8. A further part of Mr A’s “report” is headed “Summary of Net Asset positions”. He presents a table of the estimated net asset position as at 31 May 2013 and another one of the estimated net asset position as at 30 September 2005. To the extent that there are assets in those tables that have required expertise to value them, Mr A has relied upon the expert valuation opinion of Mr D, accountant, who was engaged by the parties as a single expert to provide such opinion.

9. The proceedings were set for trial in the FCC on 5 August 2013. On that day, the FCC Judge transferred them to this Court. On arrival in this Court, trial plans were prepared and filed as directed by the Principal Registrar of this Court. In the applicant’s trial plan, Mr A was listed as a witness of the respondent and cross-examination of him was estimated as likely to take about 3 hours.

10. At the call-over of matters ready for trial that took place on 2 December 2013, the proceedings were listed for trial over 4 days before me commencing 14 May, 2014.

11. At the case management/compliance check hearing that I conducted on 29 April 2014, the solicitor for the respondent, clearly aware of the provisions of Rule 15.51(1) of the Family Law Rules 2004 (Cth), indicated that he wished to make oral application on behalf of the respondent for the court’s permission to rely on the affidavit and report of Mr A at the trial. I referred him to the provisions of Rule 15.52 and determined that I would not hear an oral application but that if the parties were not able to reach agreement about the issue, I would entertain an application filed in and served prior to the trial.

12. The respondent caused an Application in a Case to be filed on 1 May 2014 and I listed it for hearing this morning.

13. The respondent opposed leave being granted.

The Applicable Rules

1. In an affidavit filed with an application for leave to adduce and rely upon the evidence of an expert other than a single expert witness, a party must address all of the matters set out in Rule 15.52(2). Most relevant to the ultimate determination of this application is the issue about which the expert witness’s evidence is to be given and the reason the expert evidence is necessary in relation to the issue.  I have already set out that which Mr A was instructed to do and the matters he addresses in his report that the respondent seeks to rely upon.

2. Under the heading “Reason the expert evidence is necessary” the solicitor for the respondent, in his affidavit filed in support of the application for leave to rely on Mr A’s report, said the following:

   33. The parties’ financial circumstances as at the commencement of the relationship, what occurred during the relationship and their current financial position are all matters which are not yet agreed.

   34.The parties have endeavoured through their legal representatives to ascertain and clarify what occurred during the relationship with their finances and did so before and since the initiating application was filed on 27 October 2011.

   35. A significant part of the parties’ cases relate to this issue.

   36. The expert evidence sets out clearly and concisely what occurred from review of the bank statements and disclosure exchanged between the parties, in a manner that is easy to understand and to follow.

   37.The purpose of the expert evidence is to reduce the time taken during the trial in tracing through statements to follow monies, when that task has been completed by the expert.

3. Rule 15.52(3) says:

   When considering whether to permit a party to tender a report or adduce evidence from an expert witness, the court may take into account:

   (a)the purpose of this Part (see rule 15.42);

   (b)the impact of the appointment of an expert witness on the costs of the case;

   (c)the likelihood of the appointment expediting or delaying the case;

   (d)the complexity of the issues in the case;

   (e)whether the evidence should be given by a single expert witness rather than an expert witness appointed by one party only; and

   (f)whether the expert witness has specialised knowledge, based on the person’s training, study or experience:

   (i)relevant to the issue on which evidence is to be given; and

   (ii)appropriate to the value, complexity and importance of the case.

4. Rule 15.42 sets out the purpose of the Part as:

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

   (b)To restrict expert evidence to that which is necessary to resolve or determine a case;

   (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

   (e)To enable a party to apply for permission to tender a report or adduce evidence from an expert witness appointed by that party, if necessary in the interests of justice.

5. Ultimately, the determination of one party’s application to adduce evidence from an expert witness, not a single expert, is a discretionary determination made having regard to what best suits the interests of justice with all of those matters just set out being relevant factors in the process of determination.

6. In this case, there are matters of relevance to the determination that tend to support the idea of allowing the affidavit and the attached report of Mr A to be relied upon by the respondent. Those include:

   (i)The affidavit was filed in July 2013 as part of the evidence in chief of the respondent;

   (ii)No leave of the FCC was required to be able to adduce or rely upon that evidence as that Court has no provisions in its rules such as contained in Part 15.5 of the Family Law Rules 2004;

   (iii)No objection to the evidence was taken by the applicant prior to the matter being transferred from the FCC to this Court on the first day of the listed hearing dates in that Court;

   (iv)The trial plans of each of the parties filed in this Court after transfer from the FCC included evidence of Mr A and provision for  his cross-examination;

   (v)It is only because this Court’s single expert rules require leave to be obtained for evidence of an expert, not a single expert, to be relied upon by a party that the question arose after the matter was transferred to this Court;

   (vi)The applicant has had the report of Mr A in his possession since July last year; and

   (vii)Only after the application for leave to rely upon the evidence was brought did the respondent appear to take the position of opposing the leave.

7. However, as counsel for the applicant pointed out in his submissions, if the evidence sought to be relied upon is otherwise inadmissible in any event, leave to rely upon it should, irrespective of other matters, nevertheless be refused.

8. Section 76 of the Evidence Act 1995 (Cth) provides that evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed.

9. Facts in significant issue in this case include what was done with a substantial amount of money received by the applicant in 2009. Those facts in issue are to be determined, where relevant, by the consideration of admissible evidence. As just observed by reference to statutory provision, opinion evidence is not admissible to prove the existence of a fact, save, of course for evidence of opinion based on expertise that is admissible pursuant to s 79 of the Evidence Act 1995 (Cth). That statutory provision says:

   If a person has specialised knowledge based on the person’s training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge.

10. The report of Mr A clearly includes, in the tables that he has provided in it, statements of opinion as to amounts debited from Ms Breen’s bank account being categorised under certain headings of expenditure. He is effectively saying in my opinion I am satisfied that the money was spent in the following ways (listing 14 categories of expenditure) and the respondent seeks to rely upon that expressed opinion to prove the existence of those facts, namely that the money was spent in those ways.

11. To be admissible pursuant to s 79(1), the evidence sought to be relied upon must satisfy two criteria.[1] The first is that the witness who is giving the evidence “has specialised knowledge based on the person’s training, study or experience”. The second is that the opinion expressed in evidence by the witness “is wholly or substantially based on that knowledge.”

    [1]Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ at [32].

12. In this case, there was no challenge to Mr A’s specialised knowledge based on his training, study and experience as an accountant. The difficulty for the respondent in this case lay in establishing the admissibility of Mr A’s evidence as opinion that is “wholly or substantially based” on his specialised knowledge. 

13. As observed already by me, counsel for the respondent did not cavil with the proposition that the opinions expressed as to the categorisation of the expenditure of funds from the account were, to a very large extent, based on a simple acceptance of information given to him by the respondent herself. As she has told him that this is what certain transfers and withdrawals were spent on, he has simply accepted those instructions as representing fact and then expressed the opinion about them. Accordingly, his opinion is not “wholly or substantially based” on his specialised knowledge but rather is based, as counsel for the applicant submitted, on the hearsay of the respondent. As such, it cannot be admissible evidence under s 79 as opinion based on specialised knowledge.

14. Furthermore, to the extent that Mr A has simply taken information from documents and inserted that information in Excel spreadsheets or tables (such as the information from the tax returns of the parties) categorised either by reference to information clear on the face of the documents or simply by reference to representations made to him by the respondent it is not evidence on an issue that is required to be given by an expert. No reason was put to the Court as to why the respondent herself could not give such evidence. Indeed, the Court was informed that, to a substantial degree, the respondent had given evidence in her affidavit of evidence in chief in respect of this issue of expenditure and its categorisation and no issue was taken with that submission by counsel for the respondent.

15. As counsel for the applicant submitted, correctly in my view, the expert evidence rules and ss 76 and 79 of the Evidence Act 2005 (Cth) are important tools for the prevention of the use of experts as advocates for the parties, where their expertise is being used to give a “cloak of respectability and credibility” to evidence that is otherwise given, or should be given, by a party and upon which no opinion based on specialised knowledge is necessary to be considered by the Court for findings about the existence or otherwise of the fact in issue to be made. 

16. Accordingly, because I did not consider the evidence sought to be relied upon was either admissible or actually going to issues upon which expert accounting evidence was actually required, and also because I considered that by not allowing it to be relied upon by the respondent the trial might very well be shortened, I determined to dismiss the respondent’s application to be allowed to rely upon it at the trial commencing next Wednesday.

I certify that the preceding thirty one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 9 May 2014.

Associate: 

Date:  9 May 2014