Mason and Mason

[2012] FamCA 224

FAMILY COURT OF AUSTRALIA

MASON & MASON [2012] FamCA 224

FAMILY LAW - PROPERTY– Value of companies owned by the parties – Application for adjournment – Where single expert appointed to value companies – Where husband applied for permission under rule 15.49 of the Family Law Rules 2004 (Cth) to adduce expert evidence from other experts – Where there is a significant difference in the opinion of the experts – Ordered that the experts confer and to provide a joint statement to the parties and to the Court – Application to adduce adversarial expert evidence adjourned – Application for adjournment granted.

Family Law Rules 2004 (Cth) r 15.49(2), 15.64B

Daniels v Walker [2000] 1 WLR 1382

APPLICANT: Ms Mason

RESPONDENT: Mr Mason

FILE NUMBER: SYC 6476 of 2008

DATE DELIVERED: 2 May 2012

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Ryan J

HEARING DATE: 2 May 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Gillies

SOLICITOR FOR THE APPLICANT: Greg Alfonzetti Solicitor

COUNSEL FOR THE RESPONDENT: Mr Sansom

SOLICITOR FOR THE RESPONDENT: Champion Legal

Orders

1. The matter is listed for further hearing on 18, 19, 20, 23 and 24 July 2012.

2. The husband’s application for an adjournment made this day is granted on terms and his application to adduce further evidence is adjourned to the further listing of the matter.

3. The husband is granted leave to provide Mr M with a copy of the reports and affidavits of Ms W and Mr D as soon as practicable

4. That as soon as practicable thereafter Mr M and Ms W confer and produce a joint statement setting out areas of agreement between them, disagreement and the reasons therefore.

5. BY CONSENT the husband is to pay to the wife’s solicitors the sum of $16,750.00 within 21 days of today’s date such cost representing a portion of the wife’s costs thrown away by the husband’s adjournment of today’s hearing. 

6. BY CONSENT within 7 days of the provision of any necessary document to the husband’s solicitor he shall execute any such document that is necessary to permit the wife to draw down up to $20,000.00 in further funds from the mortgage secured over the Suburb R property for the express purpose of funding these proceedings, if required.

7. Within 7 days of the wife’s solicitor providing to the husband an invoice or estimate of fees from the appropriate person/ organization the husband shall cause to be paid:

   (a)any cost for Mr M conferring with Ms W and preparation of  any memorandum flowing from that conference, including any prepayment required by him.

8. BY CONSENT both parties shall have liberty to apply to relist the matter upon 72 hours notice including for the purposes of the wife having liberty to apply for any additional costs that are incurred by her as a consequence of the husband’s adjournment application.

9. The matter is listed for further directions before me on 14 June 2012 at 9.30 am.

PENDING FURTHER ORDER

1. The husband be restrained from:

   (a)winding up any corporate entity in which he is a shareholder/director or R Pty Ltd;

   (b)further encumbering or permitting any company of which he is a director to enter into any transaction that would further encumber it other than in the ordinary course of business, to comply with orders to pay an amount to the wife and to pay his legal expenses in these proceedings but in any event not greater than $20,000.00 without the wife’s written consent; and

   (c)drawing down or disbursing any corporate or company funds other than for the purposes of conducting day to day business of the company(ies) other than in the ordinary course of business, to comply with orders to pay an amount to the wife and to pay his legal expenses in these proceedings but in any event not greater than $20,000.00 without the wife’s written consent.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Mason & Mason 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 SYDNEY

FILE NUMBER: SYC 6476 of 2008

Ms Mason

Applicant

And

Mr Mason

Respondent

REASONS FOR JUDGMENT

1. These reasons were delivered orally.

2. Earlier today, I refused an application by the husband for permission to rely on two expert reports; they being reports of Mr D, who is a remuneration expert, and Ms W, who is a forensic accountant.  Their evidence relates to a series of companies owned by one or both of the parties.

3. Permission was necessary because the reports were sought to be introduced contrary to the expert rules found in Family Law Rules 2004 and contrary to trial directions. Time constraints have not permitted my yet giving reasons for my decision to refuse permission. However, in exchanges with counsel I explained that my particular concerns were:

   (1)the husband’s non-compliance with the Family Law Rules in relation to adducing expert evidence;

   (2)his non-compliance with trial directions;

   (3)inadequate notice to the wife, in relation to which I observed that the Ms W report was served yesterday, and Mr D’s some weeks ago;

   (4)lateness, generally.  This material is in essence adduced in response to evidence given by the single expert, Mr M, whose reports were produced in 2009 and 2011;

   (5)prejudice to the wife in the manner identified by her counsel; and

   (6)prejudice to the trial, in particular the likelihood that it would not finish in the time allocated if this further evidence was introduced.

4. The husband now applies for an adjournment of the hearing.  In essence, this is to enable directions to be made for the introduction of this expert evidence, but in the context of a timely and not pressured hearing.  His argument is predicated upon the importance to his case and the Court’s ability to deliver a just and equitable outcome to the parties.  It is conceded by him that any adjournment would be on terms; essentially that he pays the wife’s costs and expenses associated with an adjournment and his attempt to adduce late adversarial expert evidence. 

5. In order to determine the adjournment application it is necessary to conduct a preliminary assessment of whether the husband may eventually succeed on an application pursuant to rule 15.49(2).

6. Turning firstly to Mr D, as has earlier been indicated he is a remuneration expert, which Mr M is not.  In coming to his opinion about the value of the various entities, Mr M relied upon published data from the Australian Taxation Office in relation to average weekly earnings to which he then added a management component and an adjustment for superannuation.  It is not contended that this is a sophisticated assessment of the husband’s role in the company.  It could well be argued by the husband that in relation to Mr M’s opinion about an appropriate level of remuneration for the husband, the husband has established compliance with subrule (2)(b).

7. Ms W gives evidence in relation to the value of various entities and adopts an approach, although consistent with that adopted by Mr M, that differs in the sense that she contends that the entities should be valued as a group and not individually, as Mr M has.  She identifies significant factual disputes about accounting and valuation treatment of various items by Mr M, and I particularly note paragraphs 37 to 39 of her report.  In relation with Ms W, it may well be contended by the husband that he can establish compliance with subrule (2)(a). 

8. A party need only establish one of the grounds in subrule (2).  Having done so, the use of the word “may” shows that the rule is discretionary.  The argument advanced in relation to why the Court would exercise its discretion in the husband’s favour, is in essence that the corporate entities potentially constitute a significant component of the asset pool in relation to which it is clear that their development has been a key component of the parties’ efforts during cohabitation and subsequently by the husband. 

9. The other point that is well made by counsel for the husband is that there is a significant difference in the opinions of the valuers which centres upon the different approaches adopted by Ms W and Mr M.  In relation to Mr M particularly if the information provided by Mr D is factored in..  These are all weighty factors which, had an application been made in a timely way and in accordance with the rules, may well have seen the husband succeed and leave granted to rely on evidence of this type much earlier.

10. The fact that he presents an application and evidence which, on the face of it, suggests that ultimately an application pursuant to the rule may succeed, weighs heavily in his favour in relation to the application for an adjournment. 

11. The other matters that I take into account in my decision to grant an adjournment is that the Court has dates available in about two months time.  Thus evidence prepared for this hearing is highly unlikely to need to be redone and at best or worst, depending on one’s perspective, a relatively small amount of updating material may be required. 

12. The Court can accommodate the adjourned dates without dislocating another hearing.

13. Another factor I take into account in favour of the adjournment application is that this is the first time upon which an application for an adjournment of a trial has been made by the husband.  Not that I would want to encourage him to make another application of this type. 

14. The interests overall of justice persuade me that with appropriate injunctions, if sought, and the concession in relation to costs in the wife’s favour; that justice requires an adjournment on this occasion. 

15. Returning to what should occur in relation to Mr D and Ms W’s reports.  In Daniels v Walker [2000] 1 WLR 1382 per Lord Woolf MR his Lordship had this to say in the context of considering whether permission should be given to instruct another expert.

    In a case where there is a substantial sum involved, one starts, as I have indicated, from the position that, wherever possible, a joint report is obtained.  If there is disagreement on that report, then there would be an issue as to whether to ask questions or whether to get your own expert’s report.  If questions do not resolve the question and a party, or both parties, obtain their own expert’s report, then that will result in a decision having to be reached as to what evidence should be called.  That decision should not be taken until there has been a meeting between the experts involved.  It may be that agreement could then be reached; it may be that agreement is reached as a result of asking the appropriate questions.  It is only as a last resort that you accept that it is necessary for oral evidence to be given by the experts before the Court.  The cross-examination of expert witnesses at the hearing, even in a substantial case, can be very expensive.

    With these comments Latham LJ agreed.

16. The rules with which their Lordships and I are concerned differ slightly but share a similar purpose.  Neither court’s rules requires that a party convenes a conference of experts as a procedural precondition to an application for permission to adduce evidence from another expert.  The rationale for imposing such a step as a matter of discretion is, as Lord Woolf’s remarks demonstrate, apparent.  A conference of experts potentially will narrow the issues and significantly reduce the amount of trial time.  This achieves a lessening of costs for the parties as well as courts.  In the event that there remain outstanding issues these can then be considered in the context of an application such as this.

17. Rule 15.64B enables a party to convene a conference with a single expert witness prior to the hearing for the purpose of clarifying the single expert report.  This includes, as the note to subrule (4) reveals, enabling arrangements for a conference which includes the attendance of another expert.  If the parties are unable to agree upon the arrangements for the conference, by subrule (7), the Court, on the application by a party, may order that a conference be held in accordance with any conditions the Court determines.

18. Before the husband is given leave pursuant to rule 15.49(2) to continue this application, the material contained in Mr D’s report must be given to Mr M, the material contained in Ms W’s report must be given to Mr M, and Ms W and Mr M must confer and provide a joint statement to the parties and to the Court. To enable these steps to be taken, the husband’s application for an adjournment will be granted. His application to adduce adversarial expert evidence from Mr D and Ms W will be adjourned to be relisted at a mutually convenient time, and after the steps I have referred to have been completed.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 2 May 2012.

Associate:     

Date:              4 June 2012