Mendicino and Mendicino and Ors; (No 6)
[2015] FamCA 553
•17 July 2015
FAMILY COURT OF AUSTRALIA
| MENDICINO & MENDICINO & ORS (NO 6) | [2015] FamCA 553 |
| FAMILY LAW – APPLICATION FOR PERMISSION FOR EXPERT EVIDENCE – Rule 15.52 of Family Law Rules 2004 (Cth) – Whether opinions expressed by expert fall within the criteria of admissibility of s 79(1) of the Evidence Act 1995 (Cth) – Whether the expert has “specialised knowledge” for the opinions expressed and whether those opinions are based wholly or substantially upon that knowledge – Where it is not demonstrated, or made apparent, that the expert has “specialised knowledge” linked to the opinions relied upon – Where opinions not admissible – Where it is not possible to extract from the inadmissible any other opinions as to value/discounting – Application dismissed. |
Evidence Act 1995 (Cth)
Evidence Act 1995 (NSW)
Family Law Act 1975 (Cth)
| Family Law Rules 2004 (Cth) |
| AAPT Ltd v Cable & Wireless Optus Ltd (1999) 32 ACSR 63 |
| APPLICANT: | Ms Mendicino |
| FIRST RESPONDENT: | Mr Mendicino |
| SECOND RESPONDENT: | Mr D Mendicino |
| THIRD RESPONDENT: | Ms E Mendicino |
| FOURTH RESPONDENT: | G Pty Ltd | |||
| FILE NUMBER: | BRC | 875 | of | 2013 |
| DATE DELIVERED: | 17 July 2015 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Kent J |
| HEARING DATE: | 13 July 2015 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Kirk QC with Mr SJ Williams |
| SOLICITOR FOR THE APPLICANT: | Cooper Grace Ward Lawyers |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr Richardson SC with Dr Ingleby |
SOLICITOR FOR THE FIRST RESPONDENT: | HopgoodGanim Lawyers |
| COUNSEL FOR THE SECOND, THIRD AND FOURTH RESPONDENTS: | Dr Brasch QC |
| SOLICITOR FOR THE SECOND, THIRD AND FOURTH RESPONDENTS: | Phillips Family Law |
Orders
IT IS ORDERED THAT:
The Wife’s application for permission to tender the report of, and adduce evidence at trial of, Mr W of W Pty Ltd pursuant to Rule 15.51 of the Family Law Rules 2004 (Cth) is dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Mendicino & Mendicino & Ors (Permission for Expert Evidence) 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 BRISBANE |
FILE NUMBER: BRC 875 of 2013
| Ms Mendicino |
Applicant
And
| Mr Mendicino |
First Respondent
And
| Mr D Mendicino |
Second Respondent
And
| Ms E Mendicino |
Third Respondent
And
| G Pty Ltd |
Fourth Respondent
REASONS FOR JUDGMENT
The applicant wife seeks permission, pursuant to r 15.52 of the Family Law Rules 2004 (Cth), to tender the report of, and adduce evidence from, Mr W of W Pty Ltd.
Mr W’s report dated 9 July 2015 is Annexure “A” to the wife’s affidavit filed in support of this application on 9 July 2015.
The first respondent husband (and the other respondents) opposes the application. That opposition is founded principally upon, in summary and paraphrased form, the following contentions:
a)It is not within Mr W’s area of expertise to interpret the trust deed for the C Investment Trust (“CIT”) (and associated documents) to determine the effect of those documents and advance his interpretation and determination;
b)It is not within Mr W’s area of expertise to express opinions as to the practical or likely actions that would be taken by those individuals having relevant roles to perform, with respect to the CIT, under the terms of the trust deed for CIT.
It is thus contended that Mr W’s evidence does not meet the requirements of s 79(1) of the Evidence Act 1995 (Cth) for expert opinion to be admissible as such.
On the first respondent husband’s contentions (with which the other respondents agree), having expressed inadmissible opinions about the proper construction and interpretation of the trust deed for CIT; and inadmissible opinions as to how those individuals with responsibility for the CIT would likely act; Mr W proceeds to determine a value for the husband’s
pro-rata interest (as identified by Mr W) with discounting, assuming the overall value for CIT addressed by the single expert Mr X. It is contended that this represents a departure by the wife from her pleaded case in circumstances where the trial is to commence on Monday next.
The objection to these latter aspects of Mr W’s opinions are, first, that the assessment of value is inextricably bound to the (impermissible and inadmissible) opinions Mr W expresses concerning the construction and interpretation of the CIT deed and his contentions about how those individuals with relevant roles to perform with respect to CIT would perform them. Second, it is said that a procedural fairness or natural justice issue arises in that, if expert evidence was to be obtained on this issue, it ought to have been obtained from a single expert jointly engaged in the usual way.
In Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 (“Dasreef”) the High Court examined the operation of s 79(1) of the Evidence Act 1995 (NSW) which is in precisely the same terms as s 79(1) of the Commonwealth Act.
It follows from Dasreef (at [31]) that the starting point in determining this application is to identify the fact in issue that the wife asserts Mr W’s opinion proves or assists in proving.
It would seem that the fact in issue is whether the combined effect of the husband’s roles/positions in CIT create an asset or pro-rata interest of the husband (with his two siblings) in the assets of CIT which is property within the meaning of s 79 of the Family Law Act 1975 (Cth).
The wife contends that Mr W’s opinion is relevant to that issue. That is, that it is “evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding”.[1]
[1] Section 55(1) of the Evidence Act 1995 (Cth).
In order for Mr W’s opinions to be admissible under s 79(1) the following two criteria must be satisfied:
a)That Mr W “has specialised knowledge based on [his] training, study or experience”; and
b)The opinion expressed “is wholly or substantially based on that knowledge”.
(emphasis added)
Whilst Mr W’s impressive curriculum vitae is attached to his report, in my judgment it is not made apparent from that or the report generally how there is a link between the opinions expressed by Mr W upon his interpretation of the trust deed for CIT; or his opinions about the likely behaviour of those performing the roles referred to in CIT; with any “specialised knowledge” possessed by Mr W.
Undoubtedly, Mr W has impressive qualifications in Economics and is an expert in the valuation of businesses and companies and company shares and has lengthy experience in those fields. He is, amongst other things the author of a leading text on valuation. Undoubtedly he is an expert in the interpretation of financial statements and other financial information relevant to his expertise in the fields referred to.
However, Mr W’s report and curriculum vitae does not establish that he has any relevant “specialised knowledge” with respect to trust law; or the performance by trustees of their roles; or the discharge of their fiduciary obligations. There is nothing to suggest relevant study, training or experience in how trustees or appointers should or would act. His opinions about such matters and commercial or practical aspects may be correct, but they are not expert opinions admissible under s 79(1) of the Evidence Act 1995 (Cth) absent their foundation in “specialised knowledge”.
I am not satisfied that Mr W’s opinions concerning the proper interpretation or effect of the trust deed for CIT are based upon any “specialised knowledge” that Mr W is demonstrated to have. I therefore do not consider those opinions to be admissible pursuant to s 79(1) of the Evidence Act 1995 (Cth).
As was observed by Giles JA of the NSW Court of Appeal in Adler v Australian Securities & Investments Commission (2003) 46 ACSR 504 commencing at [631]:
631.Whether an opinion has been shown to be based on the specialised knowledge is a question of fact, and s 79 provides that it is sufficient that it is substantially based on that knowledge. What is required by way of the explanation of which Heydon JA spoke in Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at [85] will depend on the circumstances…
632.A solicitor shown to have specialised knowledge of conveyancing practice can give opinion evidence of general conveyancing practice without spelling out the links between his training, study and experience and his opinion. The links are apparent from the nature of the specialised knowledge. If an exotic matter of conveyancing practice were in issue, it may be necessary for a satisfactory link to be made apparent…
As to Mr W’s opinions about likely or expected behaviours, again it must be demonstrated that there is a link between “specialised knowledge” possessed by Mr W and the opinions he expresses on that topic.
In Allstate Life Insurance Co v ANZ Banking Group Ltd (No 6) (1996) 64 FCR 79 an opinion of a United States Attorney, one Mr Altman, was sought to be relied upon as expert evidence of likely investment behaviour. Lindgren J observed (at page 85):
…I read par 24 as based upon what is a generalised description of actual investor behaviour contained in the first sentence. Critical to the whole paragraph, in my view, is Mr Altman's statement "that no reasonable prospective purchasers of the Debentures, which would be subordinated to all other debt, would disagree that those facts would be important considerations in deciding whether to invest in the securities".
In order to establish the qualification to express the opinion so understood, Mr Altman would need to be qualified to give evidence of investor behaviour. His expertise is as an attorney, albeit an attorney highly qualified in respect of securities law and in the related policies and practices of the SEC as regulatory authority. However, that expertise does not entitle him to express the opinion that no reasonable prospective purchaser would in fact act in a particular way.
In Australian Cement Holding Pty Ltd v Adelaide Brighton Limited & Anor [2001] NSWSC 645 Barrett J considered an application to rely upon, as expert evidence, the evidence of one Mr Anderson, a chartered accountant of some 40 years standing. The question was whether, based on Mr Anderson’s experience, he could give evidence as to what an experienced and competent company director would do, in described circumstances. At [5] of his judgment Barrett J observed:
5.…I must confess to great difficulty in identifying a relevant body of specialised knowledge, based on his training, study or experience, which enables Mr Anderson to speak about the conduct of experienced and competent company directors. It is not suggested that Mr Anderson has studied, in any formal sense, the behaviour of company directors or that he has any training in their ways. It is said only that he has experience, consisting of dealing with company directors for some 40 years and attending audit committee meetings over about 20 years. He says that he has become aware in that way of what is well known by experienced and competent directors in Australia and how they act.
6.I do not think that the experience of watching practitioners do what they do, or even discussing with them why they do what they do, arms the observer with specialised knowledge of the particular field of practice. The emphasis must be on "specialised" in the phrase "specialised knowledge". This connotes something beyond the product of the observations of a nonparticipating onlooker….
Interestingly, in that decision Barrett J, in reviewing other authorities, referred to an earlier decision in the Equity Division of the New South Wales Supreme Court in AAPT Ltd v Cable & Wireless Optus Ltd (1999) 32 ACSR 63 (“AAPT”). It is interesting because in the AAPT case Austin J had to decide whether to admit as expert evidence the evidence of Mr W concerning the expected content of takeover documents. Obviously, as AAPT was decided in 1999, Mr W’s experience since then extends for a further 16 years or so. However, in AAPT Austin J observed of Mr W the following:
However, [Mr W's] field of specialisation has its limits. He is an expert in the valuation of businesses and companies and company shares, and the interpretation of financial statements and other financial information. That expertise qualifies him to provide financial advice to shareholders and others, and he frequently gives such advice. Specialised knowledge and experience of those kinds does not, in my opinion, qualify him to give evidence of the kind which he purports to give in the paragraphs of the affidavit to which objection has been taken. The opinions in those paragraphs are expressed too widely to be wholly or substantially based on [Mr W's] specialised financial knowledge. He purports to speak “from a commercial perspective” rather than strictly from a financial perspective. Some of his opinions are about what he regards as proper or standard or reasonably expected disclosures and practices in Part A statements, though he claims no recent experience in assisting in the drafting of those documents and in answer to questions in cross-examination, was not able to display any detailed familiarity with the contents of Part A statements in recent widely discussed takeovers.
In my judgment the opinions expressed by Mr W in his report both as to his interpretation of the trust document for CIT and the potential behaviours of those performing their roles within CIT has not been demonstrated to be based upon any “specialised knowledge”, in whole or part, possessed by Mr W.
For these reasons his opinions in those respects are not admissible pursuant to s 79(1) of the Evidence Act 1995 (Cth).
As to what may be conveniently described as the “second stage” of Mr W’s report where he proceeds to assess a value for what may be described as the husband’s pro-rata interest or right in CIT (based on Mr W’s opinion in the first stage); the question is, aside from natural justice and procedural fairness issues concerning pleadings, whether it is possible to consider that evidence to be admissible by extracting it from the objectionable material in the first stage.
Reference was made by senior counsel for the husband to Pownall and Others v Conlan Management Pty Ltd (1995) 16 ACSR 227 and the judgment of Ipp J with whom Malcolm CJ agreed. In the course of his judgment Ipp J observed:
As regards evidence that contains a mixture of objectionable hearsay and legitimate material, obviously there may be instances where the evidence will be trimmed, with the objectionable material being discarded so that the legitimate evidence remains. But there may be cases where the inadmissible and the admissible evidence are so intertwined that they cannot readily be separated. In such event, the entire body of evidence will be rejected. The same result follows where it is not possible to say which of the evidence is admissible and which is not, or to what degree the witness has relied on the inadmissible evidence.
…
In my opinion, expert opinion based entirely on inadmissible evidence is itself inadmissible and there is no discretion to admit it. I form this view as to admit such an opinion would be to admit, indirectly, the inadmissible evidence itself. If an opinion, based solely on evidence that the court by law is required to exclude, is itself admitted, the inadmissible evidence would have some influence over the court’s decision. Such a result would defeat the purpose of the law that excludes the inadmissible evidence. If the primary facts on which the evidence is based are not admissible, the opinion is valueless and irrelevant and, in my opinion, should be excluded…
(original emphasis)
In my view the opinions of Mr W as to value and discounting are inextricably bound with the opinions he has expressed concerning the interpretation of the trust documents for CIT and the behaviours or likely behaviours he opines about as regards the roles performed by those within CIT. They are not severable and are therefore not admissible under s 79(1).
Given this conclusion it is unnecessary to discuss or determine the natural justice or procedural fairness arguments advanced in opposition to the application.
In my judgment Mr W’s opinions as contained in his report do not satisfy the criteria for admissibility in s 79(1) of the Evidence Act 1995 (Cth).
For these reasons the application for permission to adduce the report of Mr W in evidence and to rely upon Mr W’s evidence is dismissed.
I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 17 July 2015.
Associate:
Date: 17 July 2015
0
7
0