HRBH & IABH

[2009] FamCA 1131

FAMILY COURT OF AUSTRALIA

IABH & HRBH [2009] FamCA 1131

FAMILY LAW – PROPERTY – Interim hearing – permission to tender affidavit of and report of adversarial expert

Family Law Act 1975 (Cth)
Family Law Rules 1.12;  15.49(2)(b) and (c);  15.54(1) and (2);  15.65; 15.66

APPLICANT: Mr HRBH

RESPONDENT: Ms IABH

FILE NUMBER: TVF 6 of 2003

DATE DELIVERED: 20 November 2009

PLACE DELIVERED: Cairns

PLACE HEARD: Cairns

JUDGMENT OF: Watts J

HEARING DATE: 17 November 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Kirk, SC

SOLICITOR FOR THE APPLICANT: Miller Harris Lawyers

COUNSEL FOR THE APPLICANT: Mr North, SC

SOLICITOR FOR THE RESPONDENT: Taussig Cherrie & Associates

Orders

Orders made 17 November 2009

1. The wife’s application that Dr RW and Dr JC confer prior to the first day of the hearing is dismissed.

2. The lawyers for the parties confer for the purpose of attempting to make an arrangement for Dr RW and Dr JC to concurrently give their evidence by electronic (telephone) means.

3. The husband’s application that Mr DH and Ms MD confer prior to the hearing is dismissed.

4. The lawyers for the parties confer for the purposes of attempting to make an arrangement for Mr DH and Ms MD to concurrently give their evidence by electronic (telephone) means.

5. Permission is granted to the husband to tender the affidavit of Mr SQ sworn and filed 2 November 2009.

6. By consent, the wife (through her lawyers) may have oral or written privileged communication with Mr DD.

7. Not earlier than Friday 20 November 2009, Mr DD and Mr SQ conduct a conference pursuant to rule 15.69(3) Family Law Rules and each of them do all things required by that rule.

8. The applications in the case filed by the husband on 10 November 2009 and the applications in the response filed by the wife on 16 November 2009 are otherwise dismissed. 

IT IS NOTED THAT:

1. It is anticipated by counsel for the parties that there will be agreement in relation to the accommodation of expert witnesses by interposing them at times convenient to them during the hearing.

2. I have reserved giving my reasons for making order 5. 

IT IS NOTED that publication of this judgment under the pseudonym IABH & HRBH is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT CAIRNS

FILE NUMBER: TVF 6/2003

Mr HRBH

Applicant

And

Ms IABH

Respondent

REASONS FOR JUDGMENT

1. The husband, by way of Application in a Case filed on 10 November 2009, sought orders that Dr RW and Dr JC confer and that Mr DH and Ms MD confer.  After discussion, I dismissed these applications and senior counsel for the husband indicated that no formal reasons were required.

2. The husband also sought permission to tender an affidavit by Mr SQ which was sworn 2 November 2009 and filed 2 November 2009.  Mr SQ is a real estate valuer.  He was employed as a “shadow expert” by the husband, who now wishes to rely upon him as an “adversarial expert”.  Mr SQ expresses a different opinion to Mr DD. 

3. Mr DD was appointed as single expert by the parties to value a number of pieces of real estate.  One of the properties which he valued was located at 18-20 M Street.  Mr DD, in an affidavit sworn 29 October 2009 verified a valuation report that he had prepared in respect of this property dated 8 September 2009.  He valued this property using the capitalisation approach as his primary method and the direct comparison approach as the secondary or check method.  Mr DD valued the property at $4,350,000.  In doing so, Mr DD used a capitalisation rate of 6 percent and based his calculations on a vacancy factor of 2 percent.

4. The affidavit filed by Mr SQ upon which the husband seeks to rely contains a valuation dated 11 September 2009 which values the property at $3,975,000.  Mr SQ’s valuation report indicates that it is Mr SQ’s opinion that the capitalisation rate should be 7.75 percent and the vacancy factor should be 10 percent.

5. Senior counsel for the husband submits that although the valuations are about 10 percent apart, that is a gross difference.  The mortgage which encumbers this property (and also other properties which are security for the same mortgage) is about $3,000,000.  Senior counsel for the husband submits (and it was not put in issue by senior counsel for the wife), that the actual difference in the two valuations is of greater significance if the net equity in the property is considered.

6. Senior counsel for the husband relies upon rule 15.49(2) Family Law Rules (“FLR”) and in particular subrules (b) and (c) of that rule.  Under subrule (b), he asserts that Mr SQ is an expert who knows of matters not known to the single expert.  Under subrule (c) he asserts there is another special reason for adducing evidence from the other expert witness.

7. In relation to rule 15.49(2)(b) FLR, it appears on the face of the documents that Mr SQ may have information that was not available to the single expert witness that bears on the issues of what might be an appropriate percentage for the vacancy factor and an appropriate capitalisation rate. 

8. As I indicated in discussions, it was my view that the purpose of subrule 15.49(2)(c) FLR was, inter alia, to catch cases such as the current one where there appears to be a genuine difference between the opinions of experts in respect of the appropriate values to be used in a formulae to be applied to ascertain the value a commercial property.  As I discussed with senior counsel for the wife, it could be the case that senior counsel for the husband is able to demonstrate during the cross examination of Mr DD that the values that Mr DD has used in the formula he has applied to value the property cannot be relied upon.  If that happened and alternate expert opinion was not available, then it might be that a vacuum in the evidence would be created.  There would be no other evidence the court could rely upon in those circumstances.  The fact that that is not an unrealistic possibility in this case is a “special reason” for allowing the husband to adduce evidence from Mr SQ. 

9. I find that the requirement of both rule 15.49(b) and (c) are satisfied in this case. 

10. If I am wrong and rule 15.49(2) in the circumstances of this case does not provide a basis for me to allow the husband to tender Mr SQ’s report then pursuant to rule 1.12 FLR, I would dispense with rule 15.49(2) so it is not a bar to Mr SQ’s affidavit being adduced in evidence, for the same reasons as I have discussed above.

11. Senior counsel for the wife raised two further matters.  Firstly, the husband asked Mr DD questions about his report which Mr SQ helped draft. The wife complains that there was a delay of nine days between the husband receiving answers from the single expert to those questions and forwarding those answers onto the wife.  That delay however, in itself, is not sufficient in my view to disqualify Mr SQ from being a witness in this case. 

12. Secondly, senior counsel for the wife asserts the husband has breached rule 15.54(2) FLR. 

13. Rule 15.54(1) and (2) FLR are in the following terms:

    15.54(1)  A party who instructions 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.

    54.54(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. 

14. Senior counsel for the wife points out that the affidavit by the husband’s solicitor, Mr Keogh, sworn 6 November 2009 attaches to it a letter to Mr SQ from Mr Keogh dated 24 August 2009 which discloses that Mr Keogh and Mr SQ were to have a meeting face to face at Mr SQ’s office at 11am on 25 August 2009.  There was a further letter dated 21 October 2009 by Mr Keogh to Mr SQ which commences with the words “we confirm our client’s instruction for you to proceed with the valuation of [M Street] property”.  That letter also encloses a copy of the FLR. 

15. Senior counsel for the mother submitted that it was clear on the face of Mr Keogh’s affidavit that there had been oral communication between Mr Keogh and Mr SQ.  Counsel consequently submitted that the provisions of rule 15.54(2) had been breached because that rule says, inter alia, “all instructions to an expert must be in writing”.

16. It was part of the husband’s case that Mr SQ had only been proffered as a witness once the husband had, in the husband’s view, received unsatisfactory answers to specific questions (crafted by Mr SQ) from Mr DD. 

17. Senior counsel for the husband submitted that rule 15.54(2) does not prohibit oral conversations and discussions between a shadow or adversarial expert and lawyers for a party.  Senior counsel for the husband drew a distinction between instructions given to an expert and other conversations and discussions between a party and an expert.  It seems to me that can be a fine line to draw.  The rule, is in part, to ensure that any role a party has played in the process of the formation of an expert opinion, is transparent to the court and the other party once privilege is waived (by publication of that expert opinion) and that opinion is sought to be adduced in evidence. 

18. On the face of it, the report is prepared after the meeting between the solicitor and the expert on 25 August 2009 but before the date of the letter of formal instructions.  Senior counsel for the wife did not make any submission about that fact. There may be an explanation. 

19. It is not clear to me one way or the other as to whether or not in this matter there has been a breach of rule 15.54(2) FLR. 

20. In my view, however, any potential breach of rule 15.54(2) FLR does not, of itself, create a bar to the tendering of the expert opinion.  Depending on answers in cross examination and other evidence about oral communications, the weight of that opinion might be compromised.  In this case, I have insufficient information to know whether or not any oral communication has so contaminated the opinion, so that I should exclude the expert opinion on a discretion basis. 

21. I find that it is important for the court to have evidence at the final hearing in relation to the contested issue in respect of valuation of a significant property arising out of controversy in respect of vacancy factor and capitalisation rates and consequently I grant permission for Mr SQ’s affidavit to be tendered.

22. Accordingly, I will allow the husband to tender the affidavit and report of Mr SQ.

23. I note in conclusion that the wife indicated that she will rely at the final hearing on the report prepared by the single expert, Mr DD.  Once the wife was unsuccessful in excluding Mr SQ’s evidence, senior counsel for the wife made an application that the wife be permitted to have privileged discussions with the single expert.  I am mindful that the rules normally require communications with the single expert, after a report has been provided, to be in writing and provided to the other side (rules 15.65 and 15.66 FLR).  In this case, I allowed privileged oral discussions with the single expert about his report, given the short time prior to the trial that Mr SQ’s report had been published.  The discussions with Mr DD could not reasonably be described as “instructions”.  Senior counsel for the husband did not seek to have similar discussions with the single expert on a privileged basis. 

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts

Associate: 
Date:  20 November 2009