Henschel & Sartre (No 4) - [2024] FedCFamC1F 41

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Henschel & Sartre (No 4) [2024] FedCFamC1F 41

File number(s): SYC 6123 of 2020

Judgment of: BERMAN J

Date of judgment: 6 February 2024

Catchwords: FAMILY LAW – PROPERTY – Where the trial is part heard – Where the wife now seeks interim orders to update a business valuation prior to the recommencement of the trial – Consideration of whether the updated valuation should be as at 30 June 2023 or 30 December 2023 – Where the husband concedes the 30 June 2023 date – Consideration of AJO & GRO [2005] FLC 93-218 – Consideration of whether the single expert could undertake a report prior to the commencement of the trial – Orders.

Legislation: Family Law Act 1975 (Cth) s 79.

Cases cited:
AJO & GRO (2005) FLC 93-218

Henschel & Sartre (No 3) [2023] FedCFamC1F 1081

Stanford v Stanford [2012] HCA52

Division: Division 1 First Instance

Number of paragraphs: 62

Date of hearing: 31 January 2024

Place: Adelaide via MS Teams

Counsel for the Applicant: Mr Karras

Solicitor for the Applicant: Karras Partners Lawyers

Counsel for the Respondent: Ms Gillies SC

Solicitor for the Respondent: ATW Family Law
ORDERS

SYC 6123 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:
MS HENSCHEL

Applicant

AND:
MR SARTRE

Respondent

ORDER MADE BY:

BERMAN J

DATE OF ORDER:

6 FEBRUARY 2024

THE COURT ORDERS THAT:
1.The parties instruct the single expert forensic accountant, Ms T to prepare a complete and formal valuation report in relation to the relevant entities comprising the “B Group” (as identified in her limited scope report dated 6 December 2023) as at 30 June 2023.
2.Within seven (7) days the husband provide to the wife’s solicitors and Ms T, profit and loss reports and management accounts for the B Group for the six (6) month period ending 31 December 2023.
3.If the single expert property valuer, Mr LL, considers he is able to do so, he be jointly instructed to express an expert opinion as to the fair market rental of the property known as H Street, Suburb J, New South Wales (“the Suburb J property”).

Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Berman J

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Henschel & Sartre (No 4)

Details

AGLC: Henschel & Sartre (No 4) [2024] FedCFamC1F 41
Case: [2024] FedCFamC1F 41
Decision Date: 6 February 2024

CaseChat Overview and Summary

In the Family Law Court, the case of Henschel & Sartre (No 4) involved a dispute between the husband and wife regarding the valuation of a business prior to the resumption of their trial. The wife sought interim orders to update the business valuation, with a specific focus on whether the updated valuation should be as at 30 June 2023 or 30 December 2023. The husband conceded that the valuation should be as at 30 June 2023, but raised concerns about the reliability of a single year's profit or growth as an indicator of future profitability.

The court was required to determine the appropriate valuation approach and consider the husband's contention that a snapshot in time might produce an unfair or unreliable valuation outcome. The court considered the history of losses and poor trading, and the husband's argument that a reliable valuation required a stable and steady history of profitability. The court concluded that while the trading period to 31 December 2023 was not without utility, it was neither reasonable nor practicable for the expert to undertake a formal valuation as at 31 December 2023. Instead, the court considered it reasonable that documents available to the husband for the period to 31 December 2023 be provided to the expert to assist in determining the reliability of the valuation as at 30 June 2023.

In reaching its decision, the court ordered that the wife instruct the single expert forensic accountant, Ms T, to prepare a complete and formal valuation report in relation to the relevant entities comprising the “B Group” as at 30 June 2023. The court also ordered that within seven days, the husband provide to the wife's solicitors and Ms T, profit and loss reports and management accounts for the B Group for the six month period ending 31 December 2023. This would enable Ms T to be confident as to whether the valuation report as at 30 June 2023 was a reliable indicator of value for the proceedings.

Orders

Orders of the court

THE COURT ORDERS THAT:

1. The parties instruct the single expert forensic accountant, Ms T to prepare a complete and formal valuation report in relation to the relevant entities comprising the “B Group” (as identified in her limited scope report dated 6 December 2023) as at 30 June 2023.

2. Within seven (7) days the husband provide to the wife’s solicitors and Ms T, profit and loss reports and management accounts for the B Group for the six (6) month period ending 31 December 2023.

3. If the single expert property valuer, Mr LL, considers he is able to do so, he be jointly instructed to express an expert opinion as to the fair market rental of the property known as H Street, Suburb J, New South Wales (“the Suburb J property”).

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

SUBURB J

The husband would argue that there has been a history of losses and poor trading, that a single year of profit or growth is not a reliable indicator of future profit and therefore reflected in an increased valuation in B Group and in any event, a FME valuation approach requires some level of certainty in terms of future profitability based upon a stable and steady history. CONCLUSION Whilst the parties have agreed that Ms T should complete a formal valuation as at 30 June 2023, I do not think it is reasonable nor even practicable for Ms T to undertake a formal valuation as at 31 December 2023. I consider that there is merit in the husband’s argument that the proposed further valuation is a snapshot in time and may produce an unfair or more likely, unreliable valuation outcome. That does not mean that the trading period to 31 December 2023 is without utility or assistance. The appropriate valuation approach to be adopted is likely to be informed by an assessment of current and future profitability as opposed to an asset backing valuation, I consider it reasonable that documents able to be readily available to the husband for the period to 31 December 2023 be provided to Ms T so that when she is called to give her evidence she can provide assistance to the Court as to the reliability of her valuation as at 30 June 2023. Ms T sent a letter to the wife’s solicitors dated 13 October 2023 concerning a valuation of B Group. Whilst the focus of the letter relates to an indicative valuation as at FY2023 as opposed to a formal valuation, Ms T considers what would be required for an indicative valuation and sets out documents that would be of assistance to her as follows:[4]2.In my experience, management accounts are often but not always available for medium sized business such as this; it depends upon the financial information that management considers essential for running their business on a day-to-day basis and how many people are involved in the executive/reporting functions. In this case, in the absence of management accounts to 31 December 2022, I received monthly Profit & Loss Statements for [B Group], [B3 Pty Ltd], [B2 Pty Ltd], [B4 Pty Ltd] and [B7 Pty Ltd] for the nine months to 31 March 2023. These are more relevant for valuation purposes than management accounts for the six months to 31 December would have been because they are a better reflection of the potential results for the full fiscal year of FY2023.[4] Husband's affidavit filed 29 January 2024 at Annexure “A”. Accordingly, whilst inadequate, to enable Ms T to undertake a formal valuation of the B Group as at 31 December 2023, the provision of profit and loss statements and management accounts to 31 December 2023 would enable Ms T to be confident as to whether the valuation report as at 30 June 2023 is a reliable indicator of value for the purposes of the proceedings. I propose to order that the husband provide to Ms T profit and loss statements and management accounts for the period ending 31 December 2023.RENTAL FOR

Ratio Decidendi

Legal Principle Established

Established by: SUBURB J

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File number(s):	SYC 6123 of 2020
Judgment of:	BERMAN J
Date of judgment:	6 February 2024
Catchwords:	FAMILY LAW – PROPERTY – Where the trial is part heard – Where the wife now seeks interim orders to update a business valuation prior to the recommencement of the trial – Consideration of whether the updated valuation should be as at 30 June 2023 or 30 December 2023 – Where the husband concedes the 30 June 2023 date – Consideration of AJO & GRO [2005] FLC 93-218 – Consideration of whether the single expert could undertake a report prior to the commencement of the trial – Orders.
Legislation:	Family Law Act 1975 (Cth) s 79.
Cases cited:	AJO & GRO (2005) FLC 93-218 Henschel & Sartre (No 3) [2023] FedCFamC1F 1081 Stanford v Stanford [2012] HCA52
Division:	Division 1 First Instance
Number of paragraphs:	62
Date of hearing:	31 January 2024
Place:	Adelaide via MS Teams
Counsel for the Applicant:	Mr Karras
Solicitor for the Applicant:	Karras Partners Lawyers
Counsel for the Respondent:	Ms Gillies SC
Solicitor for the Respondent:	ATW Family Law

SYC 6123 of 2020
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:	MS HENSCHEL Applicant
AND:	MR SARTRE Respondent

ORDER MADE BY:	BERMAN J
DATE OF ORDER:	6 FEBRUARY 2024