Laska & Garvey (No 3)
[2024] FedCFamC1A 34
•22 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Laska & Garvey (No 3) [2024] FedCFamC1A 34
Appeal from: Laska & Garvey (No 4) [2023] FedCFamC2F 1312 Appeal number: NAA 311 of 2023 File number: SYC 2667 of 2021 Judgment of: TREE J Date of judgment: 22 March 2024 Catchwords: FAMILY LAW – APPEAL – Property – Where the primary judge divided the property pool 60/40 in the appellant’s favour – Where the most valuable asset owned by the parties was a business – Procedural fairness – Whether the refusal to adjourn the trial was a denial of procedural fairness – Where such appeals are prohibited by s 26(2)(b)(ii) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) – Errors of fact – Whether the it was open for the primary judge to accept the single expert’s valuation of the business – Where the appellant did not raise the issue in cross-examination or submissions at trial – Inadequacy of reasons – Where to accept reading of the primary judge’s reasons urged by the appellant would be unreasonable and pernickety – No error identified – Appeal dismissed – Costs ordered in a fixed sum. Legislation: Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 26, 35 Cases cited: AIS v AMF (1999) 199 CLR 160; [1999] HCA 26
Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148
CDJ v VAJ (1998) 197 CLR 182; [1998] HCA 67
Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55
Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33
Edwards v Noble (1971) 125 CLR 296; [1971] HCA 54
Hedlund & Hedlund (2021) FLC 94-065; [2021] FedCFamC1A 84
House v The King (1936) 55 CLR 499; [1936] HCA 40
Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378
Laska & Garvey (No 3) [2023] FedCFamC2F 1083
Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28
Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110
Rafferty & Spencer (2016) FLC 93-710; [2016] FamCAFC 97
Sun Alliance Insurance Ltd v Massoud [1989] VR 8
Water Board v Moutsakis (1998) 180 CLR 491; [1988] HCA 12
Number of paragraphs: 62 Date of hearing: 14 March 2024 Place: Sydney (via video-link) Counsel for the Appellant: Mr Drysdale KC with Mr Stapleton Solicitor for the Appellant: Watts McCray lawyers Counsel for the Respondent: Mr Williams KC Solicitor for the Respondent: Barkus Doolan Winning ORDERS
NAA 311 of 2023
SYC 2667 of 2021FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS LASKA
Appellant
AND: MR GARVEY
Respondent
ORDER MADE BY:
TREE J
DATE OF ORDER:
22 MARCH 2024
THE COURT ORDERS THAT:
1.The appellant’s Application in an Appeal filed 7 February 2024 is dismissed.
2.The Amended Notice of Appeal filed 7 February 2024 is dismissed.
3.The appellant is to pay the respondent’s costs in the sum of $29,570.37 within 28 days.
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).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Laska & Garvey has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
TREE J:
INTRODUCTION
On 16 October 2023, a judge of the Federal Circuit and Family Court of Australia (Division 2) made final orders in parenting and property proceedings between the parties.
By Amended Notice of Appeal filed 7 February 2024, Ms Laska (“the wife”) appeals against the property settlement orders. Mr Garvey (“the husband”) opposes the appeal.
For the reasons which follow, the appeal will be dismissed.
BACKGROUND
The wife is presently 57 years of age and the husband 52. They commenced their de facto relationship in 1999 and finally separated in December 2019, thereby concluding a relationship of about 20 years. Six Children were born to the relationship, only two of whom are still minors.
The primary judge found that the net assets of the parties had a value of $3,721,042 (at [257]). By far the most valuable asset was the parties’ business known as B Group, which via a relatively complex array of structures, provides technical services to various industries. The primary judge ultimately accepted evidence from a forensic accountant, Ms AR, who valued B Group at $3,066,000 (at [247]). Her valuation was prepared on an underlying assets basis.
That valuation was contested by the wife (who self-represented at trial) although no competing valuation was relied upon by her. Rather she challenged the basis of the valuation, principally contending that B Group should be valued as a going concern. Her challenges to the valuation were all unsuccessful.
Ultimately the primary judge divided the property pool 60/40 in the wife’s favour, which saw her retain total net assets to a value of $2,232,625, however that was achieved by her being required to transfer her interest in B Group to the husband (Order 28) and the husband paying her entitlement in instalments over time (Order 29).
WIFE’S APPLICATION IN AN APPEAL
By Application in an Appeal filed 7 February 2024, the wife seeks to adduce further evidence in the appeal comprising an affidavit of hers filed 7 February 2024, and an affidavit from a forensic accountant, also filed 7 February 2024.
Section 35 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) gives this Court an unfettered discretion to admit further evidence on appeal. The principles relevant to the discretion were discussed in the High Court in CDJ v VAJ (1998) 197 CLR 182, where McHugh, Gummow and Callinan JJ observed:
114.No doubt the Full Court will readily admit further evidence which is not in dispute and which the Court is able to evaluate and take into account in considering the appeal without the necessity to have the proceedings re-heard. Further evidence of this kind is particularly likely to be admitted where the evidence relates to events occurring after trial. In the case of undisputed evidence which the Full Court can evaluate as part of the evidence in the appeal, the discretion to admit the evidence may even be properly exercised without the Full Court considering what effect it would have had on the trial judge's decision. In that context, the likely effect of the further evidence on the Full Court's view of the evidence before the trial judge is the important consideration. Where there is no need for a new trial or extensive taking of evidence, other discretionary factors such as the availability of the evidence at the trial and the need for finality of litigation are likely to be more relevant in the exercise of the discretion than the effect that the evidence would have had at the trial.
…
116.The failure to have adduced the evidence before the primary judge will be a variable factor, the weight of which will depend upon all the other factors pertinent to the case. Where the evidence has been deliberately withheld, the failure to call it will ordinarily weigh heavily in the exercise of the discretion. In other cases, the failure to call the evidence even if it could have been discovered by the exercise of reasonable diligence may be of little significance. No invariable rule concerning the failure to call the evidence can or should be laid down in view of the wide discretion conferred on the court by the section.
…
148.… The power conferred by s 93A(2) is not a solvent for correcting orders that the Full Court regards as unsatisfactory but which contain no appealable error. New hearings are not to be ordered merely because there is a real chance that a different order might be made by a different judge or that there is a real chance that the order under appeal does not serve the best interests of the child. It is true that finality of litigation cannot play the part in the exercise of the s 93A(2) discretion that it does in the exercise of the discretion to order a new trial in common law proceedings. Nevertheless, it does have a role to play in the exercise of the s 93A(2) discretion. Whatever the limits of that role, it at least rules out the admission of further evidence where the appellant cannot establish any error in the making of the orders but seeks to have a new trial because on the whole of the evidence now available different orders might be made at that trial.
The substance of the wife’s affidavit is that at no time prior to judgment was she aware of the contents of a letter (and attachments) sent to her by the husband’s solicitors six business days prior to the final hearing commencing. That material included the signed audited accounts for B Group to 30 June 2022, the relevance of which I will explain later. She details an explanation as to why she was so unaware, and asserts that had she known of the signed audited accounts, she would have challenged both the husband and Ms AR about them and their impact on the value of B Group in cross-examination (Wife’s Affidavit filed 7 February 2024, paragraph 9).
The affidavit of the forensic accountant comprises a critique of Ms AR’s valuation, and opines that if she had adopted a premise that certain related party loans were recoverable, then the valuation of B Group would have increased by $3,820,000 (Affidavit of Mr AS filed 7 February 2024, Annexure C, paragraph 7.2).
The further material relates solely to Ground 7, and I will defer further consideration of it until I am addressing that ground.
THE APPEAL
The Amended Notice of Appeal only contains 2 grounds, although they contain sub-grounds. Since one of the wife’s grounds of appeal alleges want of procedural fairness; I will deal with it first (Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577 at [117]).
At the outset, it is useful to restate the relevant principles which govern appeals from discretionary judgments. Particularly, it is well settled that error of the type identified in House v The King (1936) 55 CLR 499 at 504–505 (“House v The King”) must be established. There, the majority of the High Court said:
…The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. …
Ground 7
This ground provides:
7.The procedure adopted at trial by the trial Judge denied procedural fairness to [the wife] who was, during the running of the trial, unable to:
Particulars
a.Instruct legal representatives and/or a shadow forensic accountant to adequately review and challenge the contents of the single expert valuation report of Ms AR.
b.Adequately identify any disclosure that could or should be sought to challenge the representations of the directors / officers of the B group of companies (B Group) and the financial forecasts of B Group that were given to the single expert and that underpinned the single expert’s valuation.
c.Appropriately use any further disclosure to, or otherwise ask questions of, and or convene a conference with the single expert in accordance with the Family Law Rules (Rules).
d.Consider and if appropriate apply for the use of an adversarial expert in accordance with the Rules.
e.Use the knowledge and forensic advantage obtained by her from the steps in (a) to (d) above to cross-examine the respondent and the single expert to properly challenge the assumptions and conclusions of the single expert.
f.Use the steps in (a) to (e) above to challenge the single expert’s conclusions as to the value of B Group and to prove how the future maintainable earnings method could have resulted in a higher value for B Group.
g.To use the steps in (a) to (f) above to achieve a different result from that arrived at by the Judge below, by increasing the value of the pool of assets and the monetary value of the share of the assets [the wife] is to receive.
When the trial commenced on 1 August 2023, the wife self-represented. She pressed, amongst other things, an Application in a Proceeding filed by her on 7 July 2023, which sought to adjourn the trial. That application was unsuccessful and the trial proceeded. The wife was still under cross-examination at the end of 2 August 2023, however on 3 and 4 August 2023, she did not attend court, seemingly for health reasons. The listed hearing date of 8 August was vacated on 4 August, and further dates of 15, 16 and 17 August 2023 were allocated.
On 15 August 2023, the wife was legally represented, although only insofar as she pressed a further application for an adjournment, again unsuccessfully. The trial then proceeded with the wife reverting to self-representing.
Turning then to the ground, the impugned “procedure adopted at trial by the trial judge” was conceded by King’s Counsel for the wife to be the refusal of both applications for an adjournment of the trial (eg. Wife’s Summary of Argument filed 7 February 2024, paragraph 63).
However, an appeal against the refusal of an adjournment is prohibited (Federal Circuit and Family Court of Australia Act 2021 (Cth) s 26(2)(b)(ii)). Moreover, as Kings Counsel for the husband contended, no House v The King error is advanced in Ground 7 to challenge the refusal of the adjournment.
In his oral submissions, a valiant attempt was made by King’s Counsel for the wife to call in aid Hedlund & Hedlund (2021) FLC 94-065 (“Hedlund”) where at [25] the Full Court said:
25.In Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478, the High Court dealt with the role of an appeal court in dealing with interlocutory orders made in the context of the trial the subject of appeal. The majority recognised that “in at least some circumstances, a party may challenge the correctness of the final judgment entered in a matter on the ground that some interlocutory decision was wrong” (at [15]). The majority said:
6.The proposition that any interlocutory order can be challenged in an appeal against the final judgment in this matter is often stated in unqualified terms. The better view, however, is reflected in the formulation adopted in Spencer Bower, Turner and Handley where it is said that “on an appeal from the final order an appellate court can correct any interlocutory order which affected the final result” (emphasis added).
7.It is necessary to make the qualification, “which affected the final result”, at least to reflect the well-established principle that a new trial is not ordered where an error of law, fact, misdirection or other wrong has not resulted in any miscarriage of justice …
(Footnotes omitted)
However not only did Hedlund not involve the refusal of an adjournment, or indeed involve a prohibition on appealing from the relevant interlocutory order, but in any event it cannot be said that the refusal of the adjournment affected the final result. It is simply not possible to know what, if any, effect an adjournment of the trial may have had.
Against this context I return to a consideration of the proposed further evidence the subject of the wife’s Application in an Appeal filed 7 February 2024.
Even if all of it were admitted, it could not in any way ameliorate against the prohibition of an appeal from the refusal of the adjournments. Therefore the appropriate course is to dismiss the application.
Ground 7 fails.
Ground 8
This ground provides:
8.The adoption of opinion of Ms AR as to the value of B Group in the sum of $3,066,000 [AB-94; J247] the Court:
1. constituted an error of fact in the premises where:
(b)the expert in formulating her opinion proceeded on the basis as advised by the respondent that related party receivables of approximately $4,600,000 were not recoverable by B Group;
(c)the valuation of B Group would have increased in the event the receivables were recoverable;
(d)subsequent to the provision of the information in sub-paragraph (a) above to the Expert, [the husband] declared in the audited FY22 financial statements (the statutory accounts) that sums totalling approximately $4,600,000 were recoverable;
(e)the Court made a finding that the statutory accounts were materially reliable. [AB-94; J242 and AB-80; J170]
2.in the alternative to 1 in the premises of the above, the Court’s reasons for adopting the valuation as at [AB-94; J247] were inadequate
(As per original)
The ground therefore encompasses both a challenge of factual error, and in the alternative, a complaint of inadequate reasons.
As to the contended factual error, to succeed, the wife would need to persuade me that the finding was not reasonably open on the evidence (Edwards v Noble (1971) 125 CLR 296).
Some more background information is needed to put the contended error of fact in context.
Ms AR had in fact provided 2 valuations, one dated 26 July 2022 and another dated 11 July 2023, although only the later valuation was in evidence. However it appears that, as did the second report, the first valuation considered the recoverability of related party receivables in the course of determining the value of the underlying assets of B Group.
Now is an appropriate time to say that, although the entities within the purview of the valuation were identified by Ms AR (Affidavit of Ms AR filed 18 July 2023, Appendix B p.35) the identity of the “related-party” entities who owe money to B Group were not. Particularly it is not clear whether those related-party entities were part of the companies encompassed within the scope of the valuation of B Group; while certainly plausible, it was not explained on the evidence, as Ms AR was expressly not given financial information relating to a number of NZ companies within B Group. If those related-parties were within B Group, the recoverability is a likely moot point when it comes to valuation.
Of course if the related parties were not part of B Group as valued, then if they had value, one would ordinarily expect them to be separately listed in the balance sheet of the parties’ assets and liabilities, but they were not. One explanation for that might be that indeed they have no value, but without more, that is mere speculation.
In any event, in the course of preparing the first valuation report, Ms AR requested further information from the parties, which also was part of the information relied upon by her in the preparation of the second valuation. That request was in part about related parties receivables.
In the course of providing his response on 18 July 2022, the solicitor for the husband said:
Financial position
10.In summary of the related party receivables/payables (current and non-current) relates to loans owing to or from New Zealand entities which are non-trading and the net receivable amount is not recoverable by the business. Our client suggests that the appropriate course of action would be to remove the net amount when calculating the asset base of the group.
(Affidavit of Ms AR filed 18 July 2023, Appendix C p.53)
Two things are noteworthy about that. The first is that the wife’s solicitors (both then and now) were copied into the email, and there is no evidence that they contended anything contrary to what the husband’s solicitors had said. The second is that the quantum of the related party receivables was not specified, and may be in a different – even vastly different – amount to those as at 30 June 2022, which may explain the lack of contradiction by the wife’s solicitors in 2022.
In due course Ms AR proceeded to prepare her second valuation. It appears that in the course of doing so, she was provided with the unsigned audited accounts for B Group to 30 June 2022. Again she made inquiry of the parties as to related-party receivables referred to in those draft accounts. The solicitors for the husband responded on, it seems, 30 June 2023, and incorporated Ms AR’s request of 8 June 2023 into their response, as follows:
Financial position
We note the following instructions previously provided in relation to the 30 June 2020 balance or related party receivables:
In summary, of the related party receivables payables (current and non-current) relates to loans owing to or from New Zealand entities which are non-trading and the net receivable amount is not recoverable by the business. Our client suggests that the appropriate course of action would be to remove the net amount when calculating the asset base of the group.
As at 30 June 2022 the related party receivables totalled $4.636 million (comprising $3.252 million current and $1.384 non-current). In light of the previous instructions, please confirm what proportion of the related party receivables in considered recoverable as at 30 June 2022.
Related party receivable is not recoverable as of 30 June 2022 as such no changes to our previous comment.
(Affidavit of Ms AR filed 18 July 2023, Annexure A, appendix C p.65) (response in bold)
Again, there is no evidence of a contrary response by the wife (who by then was self-representing) although to be fair, there is no evidence she was copied into the husband’s solicitors’ response of 30 June 2023.
In her ensuing second valuation, Ms AR said:
36
…
(b)trade and other receivables – Totalling $12.3 million includes current related party receivables of approximately $3.3 million as at 30 June 2022. I have been instructed that this balance, in addition to the non-current related party receivable balance of approximately $1.4 million relates to loans owing from related NZ entities that are no longer trading. Based upon this instruction, the total related party receivable amount of $4.6 million [19] is no longer recoverable by the Group [20]. However, if this is the case, it is not apparently why the draft FY22 financial statements continue to reflect these amounts as receivable.
(Affidavit of Ms AR filed 18 July 2023, Annexure A)
Footnotes 19 and 20 state:
19.After allowing for rounding, the sum of the current and non-current and related party receivables of approximately $3.3 million and $1.4 million respectively totals $4.6 million.
20.Barkus Doolan Winning response to request for information letter dated 30 June 2023.
No document bearing a date of 30 June 2023 is in evidence, however I assume it to be the undated response to Ms AR’s request dated 8 June 2023.
The valuation was therefore compiled on the basis of the instructions, and not the 30 June 2022 unsigned accounts. That said, at paragraph 10 of her report Ms AR said:
Disclaimers
10.In respect of the information provided to me, I have not sought independent confirmation of its reliability, accuracy or completeness. This information has not been subject to an audit or independent verification (such as a “due diligence” investigation) by me and as a consequence I have no opinion on it its accuracy, reliability or completeness. I have assumed that the information provided is accurate, reliable and complete and no material facts have been withheld.
(Affidavit of Ms AR filed 18 July 2023, Annexure A)
Thus it can be seen that she was provided with two pieces of inconsistent information. On the one hand, she was briefed with unsigned audited 30 June 2022 financial accounts for B Group which showed it had recoverable related-party loans of $4.6 million of which about $3.3 million was current and $1.4 million non-current, and on the other hand she was expressly advised by the husband that $4.6 million of the related-party receivables were no longer recoverable. As I have noted, she expressly adverted to that inconsistency in her valuation report and, subject to the disclaimer, acted upon that instruction.
Subsequently, the 30 June 2022 B Group accounts were signed, and sent to the wife on 20 July 2003, although she now claims not to have seen them as she was too busy preparing for the imminent trial. Nothing turns on that.
On 19 July 2023 – only one day after Ms AR’s affidavit was filed – the wife emailed her and received a response that day (Laska & Garvey (No 3) [2023] FedCFamC2F 1083 at [46]–[47]) and asked further questions of her in between 4 and 15 August (Transcript 15 August 2023, p.293 line 43 to p.294 line 35; p.308 line 10). None of those communications concerned the issue of the recoverability of the related-party receivables.
Neither party – or indeed any lay witness – put on any evidence about the recoverability of the related-party receivables. Nor did the wife cross-examine the husband about them, although she did undertake the following cross-examination of Ms AR:
[THE WIFE]: At paragraph – at subparagraph 36(b), you have noted that there was $12.3 million in trade and other receivables. Is that correct?---
[MS AR]: That’s correct.
[THE WIFE]:This included $3.3 million in current related party receivables of approximately $3.3 million at June 30, 2022?---
[MS AR]:That’s correct.
[THE WIFE]:Could you please explain you understanding of these current related party receivables?---
[MS AR]:My understanding of these receivable is that they arose from funds advanced to entities in New Zealand, and that those entities are no longer trading, and that as a result, the amounts are not recoverable. And therefore, I was instructed to treat them as non-recoverable in the valuation.
[THE WIFE]:Okay. Could you please explain your understanding of the non-current related party receivables?---
[MS AR]: My understanding is that it’s a similar situation.
[THE WIFE]: Okay. So can you explain to me, then they sit – despite the fact that they’re in there – they have been now---?
[MS AR]:They have been excluded, yes.
[THE WIFE]:Correct. Okay, thank you. Were these figures included in the draft FY22 financial statement?---
[MS AR]:They were.
[THE WIFE]: Okay. How would the inclusion of these figures impact upon your valuation?---
[MS AR]: If they were included as recoverable amounts and included in the net assets of the B group, [their] value would increase.
[THE WIFE]: Thank you. When these two current and non-current related party receivables were excluded, can you explain to me what the reason for that was? Or was that an instruction?---
[MS AR]: [I]t was a response to a question asked about them and whether or not they were recoverable, which is a routine question generally asked in respect of related party loans. I was instructed that they weren’t recoverable.
[THE WIFE]: Did you receive any substantial documentation around those that could be further evidence that that was exactly the facts?---
[MS AR]: No, I have not.
(Transcript 17 August 2023, p.680 lines 7–39).
Whilst it seems that it was never made clear precisely what property settlement orders the wife was contending for at trial, it is nonetheless apparent that, notwithstanding her cross-examination of Ms AR, she never submitted to the primary judge that the related-party receivables should not be excluded in ascertaining the value of B Group.
Kings Counsel for the wife seemed to suggest that part of the reason for that was that the wife, contrary to what the primary judge had previously told her, was not given the chance to reply to then senior counsel for the husband’s submissions. However it is plain from the transcript during the husband’s submissions, that the wife either absented herself from the courtroom, or was excluded for her incessant interjection during those submissions. Notwithstanding that such a submission strays well beyond the factual error asserted by Ground 8, I could not possibly be satisfied that, had the wife been given the opportunity to address the primary judge for another 30 minutes at the end of the trial, she would have raised the issue of the recoverability of the related party receivables.
The salient parts of the primary judge’s reasons are as follows:
Sources of Information
201.Ms AR reviewed or relied upon the sources of information outlined in Appendix C of her report. Ms AR included the following disclaimer in her Report (footnotes included):
10.In respect of the information provided to me, I have not sought independent confirmation of its reliability, accuracy or completeness. This information has not been subject to an audit or independent verification (such as a “due diligence” investigation) by me and as a consequence I have no opinion on it its accuracy, reliability or completeness. I have assumed that the information provided is accurate, reliable and complete and no material facts have been withheld.
11.I understand the accounting and other financial information that was provided to me was prepared in accordance with generally accepted accounting principles and in a manner consistent with the method of accounting in previous years. I also understand that the financial statements of the Group are audited. [Footnoting: “However, I observe that the Group financial statements for the year ended 30 June 2022 have been provided unsigned and the 30 June 2021 financial statements provided to me do not contain a copy of the audit report].
12.No budgets or forecasts have been provided to me in respect of the future operations of the B Group post 30 June 2022. However, I note that the draft statutory accounts provided for the B Group for the year ended 30 June 2022 indicate that the financial statements were prepared on a going concern basis, based upon (inter-alia) the preparation of a financial forecast for the period to 30 June 2024. I have requested the aforementioned financial forecasts from the Husband and have been instructed that no such forecasts exist. [Footnoting: When questioned as to the availability of this financial forecast the Husband has provided the following response “No budget or forecast was available at end June 22”. Source: Updated Request for Information – responses.pdf (sent under cover of email from Barkus Doolan Winning dated 6 June 2023].
13.In view of the above limitations, I reserve the right to amend my opinions should further information be made available to me subsequent to the date of this report which materially affects the opinions contained herein
202.Ms AR’s report, and the affidavit through which the Report is adduced, complies with rule 7.21(1) and (2) of the Federal Circuit and Family Court (Family Law Rules) 2021 (“the Rules”). No challenge was made to the declarations contained in the Report which respond to rule 7.21(2).
Financial Position
203.Ms AR summarised the consolidated financial performance of the group for the five years to 30 June 2022 at paragraph 33 of the Report. The source of this summary was the statutory accounts for B Group for FY 2019 to FY 2022. The statutory accounts that were provide for the FY 2022 were unsigned.
204.During cross-examination, the wife raised an issue about the potential discrepancy between the unsigned statutory accounts and a later signed version, initially stating that she had not been served with the signed accounts. In the context of an objection, senior counsel for the husband identified that the signed accounts had been served on the wife. This objection was met without demur and no proposition was put to Ms AR to the effect that the signed and unsigned accounts were different. In those circumstances, I find that nothing turns on the fact that Ms AR was provided with unsigned statutory accounts for the FY 2022.
205.The reported position of B Group as at 30 June 2021 and 30 June 2022 was summarised at the table in paragraph 35 of the Expert Report, and further explained in paragraph 36. This summary was based on the statutory accounts for FY 2022. Ms AR provided more information about this summary at paragraph 36 of her Report.
206. At paragraph 36(b) of her Report, Ms AR wrote (footnotes included):
trade and other receivables – totalling $12.3 million includes current related party receivables of approximately $3.3 million as at 30 June 2022. I have been instructed that this balance, in addition to the non-current related party receivable balance of approximately $1.4 million relates to loans owing from related NZ entities that are no longer trading. Based upon this instruction, the total related party receivable amount of $4.6 million [Footnoting: After allowing for rounding, the sum of the current and non-current and related party receivables of approximately $3.3 million and $1.4 million respectively totals $4.6 million] is no longer recoverable by the Group. However, if this is the case, it is not apparent why the draft FY22 financial statements continue to reflect these amounts as receivable
207.Of paragraph 36(b), Ms AR explained in her oral evidence that her understanding of these receivables:
… is that they arose from funds advanced to entities in New Zealand, and that those entities are no longer trading, and that as a result, the amounts are not recoverable. And therefore, I was instructed to treat them as non-recoverable in the valuation.
(Transcript 17 August 2023, p.50 lines 28-31)
…
213.Of paragraph 36(h), Ms AR said that she obtained the information about these loan agreements in response to the requests for information which were sent to the husband’s instructing solicitors.
…
242.The inclusion of disclaimers is the normal practice of experts. The wife’s case is that the husband has not disclosed the financial circumstances of B Group to, inter alia, permit a valuation as at 30 June 2022. I have previously found that the husband has disclosed his financial position and that of B Group, and that the statutory accounts are materially reliable.
The issue which this ground raises is, to put it simply, whether it was, on the evidence, open to the primary judge to find that the value of B Group was as opined by Ms AR. To so state the question obviously suggests the answer, however does not sufficiently factor in 2 matters favouring the wife:
(a)The primary judge’s contended inconsistent finding that the accounts to 20 June 2022 were accurate;
(b)The lack of any direct evidence, beyond a representation in a solicitor’s letter, that the related-party receivables were irrecoverable.
Conversely it does not sufficiently factor in 2 matters favouring the husband:
(a)The complete lack of any actual controversy about the recoverability of the related-party receivables at trial;
(b)The lack of any direct evidence to support the representation in the accounts to 30 June 2022 that the related-party receivables were recoverable, other than the accounts themselves.
Of course the ground assumes that the finding in relation to the accuracy of the accounts to 30 June 2022 was correct, and indeed there is no notice of contention contending otherwise.
The answer to this question is found in the general rule that a party is ordinarily bound by conduct of their case at trial, such that new arguments cannot be raised on appeal (Metwally v University of Wollongong (1985) 60 ALR 68), unless the point could not be met by evidence (Water Board v Moutsakis (1998) 180 CLR 491) which is clearly not the case here.
The rationale for restricting a party to their conduct of the case at first instance is that otherwise a trial would be “little more than a preliminary skirmish” (Coulton v Holcombe (1986) 162 CLR 1 at 7).
This is par excellence the case here. Given time for reflection, the wife has now identified a line of cross-examination and submission which she should have raised at trial, but did not. In an effort to secure a second go, she now contends that the primary judge erred by making a finding which she did not suggest was not open at trial. She is bound by her conduct of the case below.
Further, Ms AR did not ever resile from her opinion that B Group had a value of $3,066,000, and no contrary valuation or value was proffered or contended for by the wife. There plainly was evidence to support the primary judge’s finding, and hence the factual error limb of Ground 8 fails.
As to the adequacy of the primary judge’s reasons, the obligation to provide reasons is well established. In Bennett and Bennett (1991) FLC 92-191 at 78,266, the Full Court adopted the following test articulated by Gray J in Sun Alliance Insurance Ltd v Massoud [1989] VR 8 at 18:
The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if:
(a)the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b)justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.
More pertinently, in Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110, McColl JA with the concurrence of the other members of the bench said:
58.The extent and content of reasons will depend upon the particular case under consideration and the matters in issue. While a judge is not obliged to spell out every detail of the process of reasoning to a finding, it is essential to expose the reasons for resolving a point critical to the contest between the parties.
59.The reasons must do justice to the issues posed by the parties' cases. Discharge of this obligation is necessary to enable the parties to identify the basis of the judge's decision and the extent to which their arguments had been understood and accepted … it is necessary that the primary judge “‘enter into’ the issues canvassed and explain why one case is preferred over another”.
(Citations omitted) (emphasis added)
Further, it will be sufficient if the inference of a finding is adequately clear (Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 386 per Mahoney JA; Rafferty & Spencer (2016) FLC 93-710 at [30]).
It is true that there is a degree of tension between, on the one hand, the primary judge’s acceptance of the 30 June 2022 audited financials as reliable, and on the other, her Honour’s acceptance of Ms AR’s valuation of B Group which was prepared on her acceptance (subject to the disclaimer) of express instructions as to irrecoverability of those same loans, without exposing precisely why the valuation was arrived at. Her Honour must be taken to have been aware of the discrepancy identified by the valuer, because she expressly referred to it at [206]–[207], and hence must have accepted that acting on the express instruction was reasonable. To read her Honour’s reasons otherwise is unreasonable and pernickety (AIS v AMF (1999) 199 CLR 160 per Kirby J). That is all the more so given the lack of any dispute about the reasonableness of how the valuer dealt with those related party loans being even hinted at any time before or during the trial.
No deficiency in the primary judge’s reasons is established.
Ground 8 fails.
Outcome
Given that neither ground of appeal succeeds, the appeal will be dismissed.
COSTS
In the event that the appeal was dismissed, the wife accepted that there should be an order for costs against her in the sum of $29,570.37. Those costs should be payable to the husband within 28 days.
I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Tree. Associate:
Dated: 22 March 2024
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