Moffett & Moffett
[2023] FedCFamC1F 448
•1 June 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Moffett & Moffett [2023] FedCFamC1F 448
File number(s): SYC 6888 of 2018 Judgment of: CHRISTIE J Date of judgment: 1 June 2023 Catchwords: FAMILY LAW – PRACTICE & PROCEDURE – Where the husband lives in the USA – Where the wife remains in Australia with the parties’ children – Where the husband seeks appointment of a single expert to advise on the tax consequences of disposing of shares in his employer.
FAMILY LAW – PRACTICE & PROCEDURE – Where the husband seeks leave to appear via electronic means at the final hearing – Where the wife opposes the application – Where the husband’s application is refused.
Legislation: Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 7.02, 7.04, 15.16 and 15.17 Division: Division 1 First Instance Number of paragraphs: 30 Date of hearing: 1 June 2023 Place: Sydney Solicitor for the Applicant: Ms Santo, Santo Family Lawyers Solicitor for the Respondent: Ms Jabbour, Macquarie Law Group ORDERS
SYC 6888 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR MOFFETT
Applicant
AND: MS MOFFETT
Respondent
order made by:
CHRISTIE J
DATE OF ORDER:
1 June 2023
THE COURT ORDERS THAT:
1.Pursuant to Division 7.1.2 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”), a single expert witness be appointed (“the Australian single expert”) for the purpose of preparing and providing a written report as to the Australian taxation consequences of exercising and disposal of the husband’s shares in D Company (“the husband’s D Company shares”).
2.For the purposes of the appointment of the Australian single expert the husband have leave to send the draft letter annexed and marked “A” to each of the following (“the proposed Australian single experts”) in order to ascertain whether they have the appropriate expertise and also their costs of being appointed as single expert:
(a)Mr C at E Limited;
(b)Mr F at G Financial Services;
(c)Mr H at J Lawyers; and
(d)Mr K at L Lawyers
3.Within seven days of receiving a response from each of the proposed Australian single experts, the wife is to nominate one of the proposed Australian single experts who have indicated that they have appropriate expertise, who is thereafter to be appointed as the Australian single expert.
4.Within seven days following the wife’s nomination as to the Australian single expert pursuant to Order 3, the husband shall provide to the wife’s solicitors a draft letter of instruction to the Australian single expert and within three days thereafter, the wife shall instruct her solicitors to execute and send the joint letter of instruction or request amendments/additions to same, with the intention that an agreed joint letter will be sent to the Australian single expert within seven days of the wife’s nomination of same.
5.In the event the wife fails to nominate an expert pursuant to Order 3, the husband is to nominate one of the proposed experts who is thereafter to be appointed as single expert and have leave to send a letter of instruction to the expert copying in the wife’s solicitor.
6.Within seven days of receiving any written request from the Australian single expert for documents or information, the husband shall provide to the Australian single expert copies of all such documents and information in his/her respective possession, custody or control (with a copy of same being simultaneously provided to the solicitors for the wife).
7.Further, the husband shall at the request of the single expert, provide a signed authority permitting the single expert to speak with and obtain documents from an employee of D Company at the request of the single expert.
8.The husband be permitted to dispose of the amount of D Company shares required to meet the cost of the Australian single expert report.
9.For the purposes of the appointment of the USA single expert the husband have leave to send the draft letter annexed and marked “B” to each of the following (“the proposed USA single experts”) in order to ascertain whether they have the appropriate expertise and also their costs of being appointed as single expert:
(a)E Limited, State M;
(b)N Limited, State M;
(c)O Limited, State M; and
(d)P Limited, State M.
10.Within seven days of receiving a response from each of the proposed USA single experts, the wife is to nominate one of the proposed USA single experts who have indicated that they have the appropriate expertise, who is thereafter to be appointed as the USA single expert.
11.Within seven days following the wife’s nomination of the USA single expert pursuant to Order 9, the husband shall provide to the wife’s solicitors a draft letter of instruction to the USA single expert and within three days thereafter, the wife shall instruct her solicitors to execute and send the joint letter of instruction or request amendments/additions to same, with the intention that an agreed joint letter will be sent to the USA single expert within seven days of the wife’s nomination of same.
12.In the event the wife fails to nominate an expert pursuant to Order 9, the husband is then to nominate one of the experts who is thereafter to be appointed as single expert and have leave to send a letter of instruction to the expert copying in the wife’s solicitor.
13.Within seven days of receiving any written request from the USA single expert for documents or information, the husband shall provide to the USA single expert copies of all such documents and information in his/her respective possession, custody or control (with a copy of same being simultaneously provided to the solicitors for the wife) and shall, if requested by the single expert, provide a signed authority permitting the single expert to speak to an employee at D Company to obtain any relevant information or documents requested by the single expert.
14.The husband be permitted to dispose of the amount of D Company shares required to meet the costs of the USA single expert.
15.The wife serve any request for answers to specific questions under the Rules within 28 days of today’s date.
16.The parties have liberty to re list the matter on 3 business days notice to the court and the other party in respect of the issues which may jeopardise the final hearing dates.
17.The parties’ costs of this application are reserved.
18.The husband’s application and the wife’s response are otherwise dismissed.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Moffett & Moffett has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX-TEMPORE REASONS FOR JUDGMENT
CHRISTIE J:
This is an interim application for procedural orders in financial proceedings between the husband, Mr Moffett, and the wife, Ms Moffett.
The parties commenced co-habitation in 2003 and separated in October 2018.
The parties are the parents of three children: Y (born 2009), X (born 2008) and Z (born 2012) (“the children”).
The children live with the wife in Australia. The husband currently lives in the United States of America where he is employed by D Company.
These proceedings relate to the husband’s application for appointment of a single expert to give expert evidence about the taxation consequences of realisation of shares in his employer. The wife, it appeared, resisted that application. As best can be ascertained from the correspondence between the parties’ respective solicitors and then subsequently from her response and affidavit filed today, the basis of her resistance is an assertion that the husband has failed to comply with disclosure obligations and engaging an expert at this stage is premature as the expert would not be able to consider all relevant documents for their report.
THE LAW
Chapter 7 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) deals with experts and assessors.
Rule 7.02 provides:
The purpose of this Part is as follows:
(a)to ensure that parties obtain expert evidence only in relation to a significant issue in dispute;
(b)to restrict expert evidence to that which is necessary to resolve or determine a proceeding;
(c)to ensure that, if practicable and without compromising the interests of justice, expert evidence is given on an issue by a single expert witness;
(d)to avoid unnecessary costs arising from the appointment of more than one expert witness;
(e)to enable a party to apply for permission to tender a report or adduce evidence from an expert witness appointed by that party, if that is necessary in the interests of justice.
By way of r 7.04, the Court may, on application of a party, order that expert evidence be given by a single expert.
Rule 7.04(2) provides:
When considering whether to make an order … the court may take into account any matters relevant to making the order, which may include the following (without limiting the matters which may be relevant):
(a)the overarching purpose of these Rules (see rule 1.04) and the purpose of this Part (see rule 7.02);
(b)whether expert evidence on a particular issue is necessary;
(c) the nature of the issue in dispute;
(d) whether the issue falls within a substantially established area of knowledge;
(e) whether it is necessary for the court to have a range of opinion.
This case also deals with an application for permission to attend by electronic communication. Such applications are governed by rr 15.16 and 15.17 of the Rules. Although I note that 15.17 does not apply as the husband is in the USA.
CONSIDERATION
This matter is listed for a final hearing for five days commencing Monday, 11 September 2023.
It is plain that the Court will be required to reach a conclusion about the value of the husband’s entitlements to shares in his employer. In order to realise those shares and provide funds to the wife in accordance with each of their respective applications, the husband contends that there will be taxation consequences on realisation. He is not in a position, nor it would appear is the wife, to provide expert opinion evidence (or in its absence, an agreement) as to the taxation consequences in Australia and the United States. In the absence of that evidence, the Court will not have an accurate picture as to the net assets of the parties available for distribution between them.
As earlier indicated, the wife does not appear to resist the making of an order for appointment of a single expert on the basis that same is unnecessary or the evidence would be irrelevant. The wife asserts that the husband has not made adequate disclosure. It follows that the wife tacitly accepts that the question of opinion evidence of the taxation consequences of realisation is relevant.
The wife’s concerns about non-disclosure are not new. The wife filed an affidavit today and no objection was taken to my receipt of same. That affidavit repeated her concerns about disclosure. Unfortunately, the content of the affidavit is mere assertion. It does not contain any evidence on which I could find on the balance of probabilities that there has not been disclosure. I was taken from the bar table to what are said to be small inconsistencies between documents and suspicions. I cannot on the basis of those things form the conclusion that the husband has failed to make disclosure. It seems that both parties accept that disclosure will be an issue for the final hearing. I was informed that a subpoena had been issued to D Company in December 2022 and documents have been produced.
In order to deal with the wife’s concerns about disclosure, I raised with the lawyers during the hearing whether or not it might be appropriate for any additional information required by the single expert be obtained directly from the source. Both parties accept that is an appropriate course, albeit that on behalf of the wife it was suggested that the information could be obtained by Q Limited. The information to be obtained has to be obtained by that person who holds that information. The husband’s employer would appear to be the only person who would hold information about the number of shares, the way in which shares may be realised, the conditions which attach to realisation and the like. Accordingly, I cannot find that it would be appropriate to do anything other than request that the husband execute an authority if the valuer requires that the husband do so. I will make some orders accordingly.
It strikes me, on the basis of the evidence before me, that the possibility of the wife being able to make good on her assertion as to non-disclosure is enhanced by the engagement of a single expert whose role it is to give evidence about taxation consequences rather than diminished. That person is an objective third party who owes a duty to the court to produce a report and to ask such questions as are necessary to form a view. As I made plain to the parties during the course of this hearing, I have no concluded view about the wife’s assertions because in order to form a concluded view, I would need to have the benefit of admissible evidence and hear cross-examination. Accordingly, that is a matter for final hearing.
In the absence of any concrete basis, I note that it is appropriate that evidence be given by a single expert about taxation consequences and I propose to make orders which will permit that to occur.
I propose to make them largely in accordance with the Minute of Order, which was put forward on behalf of the husband in circumstances where I did not hear any submissions about the form and content of those orders. I will make some of my own amendments to deal with questions of style and typographical errors.
HUSBAND’S PARTICIPATION IN THE FINAL HEARING
The husband has made an application to attend the final hearing by electronic communication. One of the factors to be taken into account when such an application is made is whether or not there is consent of the other party.
Rule 15.16(2) of the Rules provides that: “before making a request [to the Court], the party must ask any other party whether the other party agrees, or objects, to the use of electronic communication for the purpose proposed by the party”. The wife says in her affidavit:
Given the complexity of the proceedings and significant financial repercussions, I believe it is only fair, just and appropriate that [Mr Moffett] attends the final hearing in person. He has had many trips to Australia and being in a position of seniority in terms of employment, I do not see how this would be an issue noting on many occasions, since separation, he has travelled on holiday.
I would be unduly prejudiced if [Mr Moffett] is granted leave to appear by AVL and I am required to attend in person noting I would have to arrange for someone to accommodate to our Children who are in my care.
(As per the original)
I take it from those paragraphs the wife does not consent to application.
The Court may take into account the following when considering a request: the distance between the party’s residence and the place where the court is to sit: r 15.16(6)(a) of the Rules.
I accept that the husband is currently resident in State M, some considerable distance from where the proceedings are taking place.
Pursuant to r 15.16(6)(b),the husband does not given evidence of any illness or disability which prevents him from travelling.
Pursuant to r 15.16(6)(c), the husband asserts that it is too expensive for him to attend but gives no evidence of the expense.
Pursuant to r 15.16(6)(e), the husband gives no evidence that his attendance by electronic communication is for reasons for security, family violence or intimidation.
Under r 15.16(6)(g) I have to take into account the nature of the hearing. This is a final hearing in which the two primary parties to the litigation are the husband and the wife. One of the matters which is relevant to the exercise of my discretion in permitting or dismissing the application for the husband to attend by electronic communication is whether or not there is any real or perceived unfairness if one party is permitted to give evidence by electronic communication but the other party is giving evidence in person.
There are practical difficulties involved with giving evidence by electronic communication which include difficulties relating to the time difference between Australia and the country in which the husband will be present, which may necessitate as I was told in submissions the husband giving evidence, hearing cross-examination or being required to give instructions at times when he would otherwise be asleep. The other practical difficulties include the vagaries of internet service in either place. The husband’s affidavit material does not give any evidence as to where he will physically be when he gives his evidence.
The husband raises a barrier to him attending upon the final hearing, an inability to have time away from his workplace. However, it is noted that the husband would need to have those days away from his workplace in any event, given he is involved in the final hearing. Given that the hearing starts on a Monday and concludes on a Friday, any travel could be undertaken during the weekend. The other option which the husband proposes sees him, I would assume, attending both at his place of his employment and participating in the hearing. That cannot be in the interests of the hearing. Other practical difficulties can be encountered when a party give evidence by electronic communication including difficulties in showing the witness documents while cross-examination is underway.
On balance I find it would not be appropriate to grant leave to the husband to attend via electronic communication. He has known for some time that the hearing has been listed and should have been able to make arrangements to attend.
The wife in her application raises a question about whether or not she needs leave to deal with parenting proceedings. I note that 30 August 2022 the wife filed a further amended Initiating Application which deals with parenting issues. I had considered that there were parenting issues before the court. The wife does not require leave.
I certify that the preceding thirty (30) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 1 June 2023
0
0
1