Keevers & Keevers

Case [2021] FedCFamC1F 338

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Keevers & Keevers [2021] FedCFamC1F 338

File number(s): MLC 9192 of 2021
Judgment of: WILSON J
Date of judgment: 22 December 2021
Catchwords:

FAMILY LAW – EVIDENCE – husband’s application for orders under Part 7.1 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 for the appointment of an adversarial witness to value a company said to be valued at in excess of $50 million – whether Rule 7.08 properly invoked – held, no – application refused.

FAMILY LAW – PRACTICE AND PROCEDURE – application for the appointment of an adversarial witness in circumstances where a single expert has already provided a valuation of the business – whether “substantial body of contrary opinion” – elements of rule 7.08(2) considered – held, no evidence of the existence of a substantial body of contrary opinion – rule 7.08(2) not properly invoked – application refused – Verdon & Verdon (2020) 62 Fam LR 573 – distinguished.  
Legislation:

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 rules 1.05, 7.02, 7.08, 7.09, 7.1, 7.10, 7.11 and 7.32

Family Law Rules rule 15.49

Cases cited:

Daniels & Walker [2000] 1 WLR 1385

Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588

Honeysett v The Queen (2014) 253 CLR 122

1           In the Marriage of Chick (1987) 12 Fam LR 64

Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705

Neales & Neales [2021] FamCA 525

2           Padnall & Padnall (No 3) [2014] FamCA 904

3           Salmon and Salmon [2020] FamCAFC 134

4           Salt & Salt [2019] FamCA 625

Tsoutsouvas & Tsoutsouvas and Ors [2012] FamCA 521

Verdon & Verdon (2020) 62 Fam LR 573
Division: Division 1 First Instance
Number of paragraphs: 44
Date of hearing: 6 December 2021
Place: Melbourne
Counsel for the Applicant: Mr C. Nehmy
Counsel for the Applicant: Sayer Jones
Counsel for the Respondent: Mr L. Glick QC
Solicitor for the Respondent: Suke & Associates

ORDERS

MLC 9192 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MR KEEVERS

Applicant
AND:

MS KEEVERS

Respondent

ORDER MADE BY:

WILSON J

DATE OF ORDER:

22 DECEMBER 2021

THE COURT ORDERS THAT:

1.The further hearing of this proceeding is listed for directions on 1 February 2022 at 10:00am. 

2.On or before noon on 24 December 2021 the parties must email a minute of the orders to be made by me, such orders to include the dismissal of the husband’s application for leave to rely on the affidavit of Mr B filed 22 November 2021.

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…

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AGLC
Keevers & Keevers [2021] FedCFamC1F 338
Case
[2021] FedCFamC1F 338
Decision Date

CaseChat Overview and Summary

In Keevers & Keevers, the court considered whether the husband's expert, Mr B, could provide evidence on the value of the Keevers Family Trust. The wife opposed this, arguing that Mr B's evidence did not meet the criteria set out in rule 7.08 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021. The court had to determine whether Mr B's evidence could be admitted under any of the criteria in rule 7.08(2). This involved examining whether there was a substantial body of opinion contrary to the single expert's opinion, whether Mr B knew of matters not known to the single expert, or if there was another special reason for adducing evidence from Mr B.

The court analysed the differences between the single expert's valuation and Mr B's valuation. The single expert valued the Keevers Family Trust at $52,968,602, while Mr B's valuation ranged from $37,390,853 to $46,390,853. The court examined whether the difference in overall valuation constituted "the same issue" as required by rule 7.08(2). The court also considered whether the difference in capitalisation rates was sufficient to meet the criteria for adducing evidence from another expert. Ultimately, the court concluded that the husband had not established the necessary prerequisites for permitting Mr B's evidence.

The court held that Mr B's evidence did not meet any of the criteria set out in rule 7.08(2). There was no substantial body of opinion contrary to the single expert's opinion, Mr B did not know of matters not known to the single expert, and there was no other special reason for adducing evidence from Mr B. The court found that the significant difference in overall valuation and the various other issues where Mr B ascribes a different valuation meant that Mr B's evidence did not pertain to "the same issue" as required by rule 7.08(2). Consequently, the husband's application to adduce evidence from Mr B was dismissed.

The court's decision meant that Mr B's evidence could not be admitted in the proceedings. The final orders reflected this, disallowing the husband's application to rely on Mr B's report. The court's reasoning was grounded in the strict interpretation of rule 7.08(2) and the necessity for the husband to meet one of the specified criteria to permit the adducing of evidence from another expert.

Orders

Orders of the court

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Background

Background to the litigation

As these reasons explain, I am of the view that the facts of this case are not on all four with those in Verdon & Verdon[1] in which I allowed an adversarial expert to provide evidence despite the existence of a single expert. To my mind, in this case, the necessary prerequisites to permitting an adversarial expert to give evidence have not been established. [1] (2020) 62 Fam LR 573. RELEVANT FACTUAL BACKGROUND The parties in this proceeding seek orders altering property interest under s 79 of the Family Law Act 1975. As part of the evidence to be adduced at the trial, Mr C, the single expert, made an affidavit on 22 November 2021 to which he exhibited his report dated 27 August 2021. In that report Mr C valued the Keevers Family Trust at $50,890,853 by application of the fair market value standard of value.[2] [2] Paragraph 14 of Mr C’s report is one source of that evidence. There are others. Following correspondence from the parties’ solicitors, Mr C amended his valuation by increasing it from $50,890,853 to $52,968,602. Mr B, a chartered accountant and registered liquidator and who is not a single expert in this litigation, was instructed by the husband’s solicitors to prepare his own report, which he did. The letter of instructions to Mr B provided that he was to – (a)act as a shadow expert to conduct a forensic review of Mr C’s valuation and the documentation on which Mr C relied; (b)prepare his own valuation; and (c)prepare requisitions addressed to Mr C. By report dated 16 September 2021 Mr B provided his own opinion of the value of the business and of the equity value in it. He provided a low, mid and high value. The business value expressed by Mr B in it were as follows – (a)low – $37,390,853; (b)mid – $41,890,853; and (c)high – $46,390,853. The husband sought leave to rely on the report of Mr B. The application was brought pursuant to rule 7.11 of the FCFCOA (FL) Rules. The wife opposed the husband’s application. Rule 7.08(2) of the FCFCOA (FL) Rules permits a party to adduce evidence from another expert witness if the court is satisfied of one of the three criteria specified in that rule. It is utile to set out rule 7.08(2), in terms, as follows –(2)The court may allow a party to tender a report or adduce evidence from another expert witness on the same issue if it is satisfied that:(a)there is a substantial body of opinion contrary to any opinion given by the single expert witness and the contrary opinion is or may be necessary for determining the issue; or(b)another expert witness knows of matters, not known to the single expert witness, that may be necessary for determining the issue; or(c)there is another special reason for adducing evidence from another expert witness. A significant debate emerged before me about whether the elements of subparagraph (a), (b) or (c) of rule 7.08(2) had been engaged. Mr Glick QC for the wife submitted that none of the provisions of rule 7.08(2) had been engaged. He submitted that the foundation for the receipt of Mr B’ s report under the FCFCOA (FL) Rules had not been established with the consequence that I should not permit the husband to adduce evidence from Mr B. The detail of those submissions is canvassed below. PART 7.1 OF THE FCFCOA (FL) RULES

Evidence

Evidence Before The Court

In this case Mr B is not a single expert. He is proposed to give evidence in accordance with rule 7.08, according to the husband. ADVERSARIAL EVIDENCE GENERALLY OR ON A SPECIFIC ISSUE The FCFCOA (FL) Rules recognise evidence being given by a witness who is not a single witness (colloquially known as an “adversarial witness”) in general opposition to the single expert’s evidence. That is the nature and effect of the combined operation of rules 7.10 and 7.11. Part 7.1 of the FCFCOA (FL) Rules also recognises that an expert witness, who is not a single expert, may give evidence on a discrete issue that is contrary to the evidence given by the single expert on the same issue. That is the nature and effect of rule 7.08. In this application, counsel for the husband relied on multiple rules in Part 7.1. In other words, the husband purported to rely on rule 7.11 in his application in a case filed on 22 November 2021 yet the husband concurrently relied on rule s 7.08 in other aspects of his submissions. That was important because rule 7.08 addresses the more limited issue of an attempt to adduce evidence from another expert on the “same issue”, as the rule expressly provides. Conversely, rules 7.10 ad 7.11 are not expressed to be limited to an expert, not being a single expert, whose evidence is limited to a discrete issue in the way rule 7.08 is so limited. On behalf of the husband, Mr Nehmy of counsel submitted[9] that rule 7.08(2) of the FCFCOA (FL) Rules applied. He contended that “the issue” to which rule 7.08 speaks in relation to “the same issue” as addressed by the single expert is “the business’s value”.[10] Mr Nehmy contended that according to Mr B, the value of the business is $41,890,853, being $11,000,000 less than Mr C’s valuation. [9] Paragraph 11 of the husband’s written submissions dated 5 December 2021. [10] Ibid. One of the questions for determination on this application was whether the overall valuation about which Mr C opined was “the same issue” as the overall valuation about which Mr B opined. The differences were significant in terms of dollar amounts. Alternatively, a question arose as to whether “the same issue” with which rule 7.08 was concerned took the form of one or more components that aggregated the overall valuation in amounts differently given by Mr C and Mr B. On behalf of the wife, Mr Glick QC contended[11] that the capitalisation rate applied by each of them to the adjusted (earnings before interest, taxes, depreciation and amortisation) was the only substantial difference of opinion between Mr C and Mr B. On that basis, that issue may (repeat, may) represent “the same issue” on which the expert who is not a single expert might give evidence. But if that were the proper characterisation of the difference, Mr B’s evidence on that issue would not account for the overall difference in valuation of the business, taking into account, as it does, a litany of other issues where Mr B ascribes a different, lesser, overall valuation for the business. [11] Paragraph 36 of the written submissions prepared for the wife dated 3 December 2021.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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