Morcomb and Lennox

[2014] FCCA 1870

FEDERAL CIRCUIT COURT OF AUSTRALIA

MORCOMB & LENNOX [2014] FCCA 1870

Catchwords:
FAMILY LAW – Property – valuation – court expert – court expert report – application for leave to adduce further expert evidence.

Legislation:

Family Law Act 1975 (Cth), s.79

Family Law Rules 2004, r.15.49
Federal Circuit Court Rules 2001, rr.15.09, 15.12

Cases cited:
Dasreef Pty Ltd v Hawchar [2011] HCA 21

Applicant: MR MORCOMB

Respondent: MS LENNOX

File Number: SYC 1963 of 2013

Judgment of: Judge Scarlett

Hearing date: 18 August 2014

Date of Last Submission: 18 August 2014

Delivered at: Sydney

Delivered on: 20 August 2014

REPRESENTATION

Counsel for the Applicant: Mr Givney

Solicitors for the Applicant: Vizzone Ruggero & Associates

Counsel for the Respondent: Ms Kennedy

Solicitors for the Respondent: Tsolakis Solicitors

ORDERS

1. The Application in a Case filed on 14 May 2014 is dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Morcomb & Lennox is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 1963 of 2013

MR MORCOMB

Applicant

And

MS LENNOX

Respondent

REASONS FOR JUDGMENT

Application

1. This is an Application in a Case by the substantive Applicant in property proceedings for leave to adduce valuation evidence of a property at Property V in addition to the valuation evidence of the Court Expert.

2. The Application is opposed by the Respondent.

Background

1. The parties entered into Consent Orders on 17 June 2013 which provided for the appointment of a valuer as a Court Expert under Rule 15.09 to provide a valuation of the parties’ property at Property V, New South Wales. The Orders provided that:

   a)the Wife should nominate three valuers;

   b)within seven days the Husband would select one of the three valuers and prepare the joint letter of instructions to the selected valuer; and

   c)the parties would share the costs of the valuation equally.

2. This duly happened and Mr R of (omitted) Valuers was nominated as the Court Expert to prepare the valuation.

3. On 5 August, Mr R prepared a valuation of the property. He valued the property as having a current market value of $1,400,000.00.

4. The Applicant is not satisfied with this valuation, believing that Mr R has undervalued the property significantly. He has obtained his own valuation from Mr P, of (omitted) Valuers. Mr P valued the property on 5 May 2014. Mr P expressed the opinion that the current fair market value of the property is $1,800,000.00.

5. As there is a significant discrepancy between the two valuations of some $400,000.00, the Applicant wishes to rely on Mr P’s valuation. One reason why he does so is because the Respondent, in her Response, seeks an order that in return for a payment by her of $281,000.00, the Applicant should transfer to her all of his interest in the property.

Court Experts

1. Division 15.2 of the Rules provides for the way expert evidence is provided to the Court. Rule 15.09 sets out the way that a Court Expert is appointed. Rule 15.12 provides that if a Court Expert has made a report, a party may adduce evidence of another expert with the leave of the Court.

Submissions

1. Counsel for each party prepared written submissions and spoke to those submissions at the hearing.

2. Mr Givney of Counsel submitted that the property at Property V, is the parties’ major asset, which the Respondent wishes to retain. The value of the property is to be determined by the Court as the first step in the adjudication of the dispute between the parties. He submitted that the Applicant no longer wishes to rely upon the expert evidence of Mr R and no longer has faith in his ability.

3. Mr Givney referred the Court to the decision of the High Court of Australia in Dasreef Pty Ltd v Hawchar[1], where the Court held at [91]:

   The authorities. At common law there is no doubt that an expert opinion is inadmissible unless the expert states in chief the reasoning by which the expert conclusion arrived at flows from the facts proved or assumed by the expert so as to reveal that the opinion is based on the expert’s expertise. The Court does not have to be satisfied that the reasoning is correct: “the giving of correct expert evidence cannot be treated as a qualification necessary for giving expert evidence”. But the reasoning must be stated. The opposing party is not to be left to find out about the expert’s thinking for the first time in cross-examination.[2]

   [1] [2011] HCA 21

   [2] Per French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ

4. It is submitted that Mr R does not meet the test in Dasreef v Hawchar, in that he does not set out his reasoning for arriving at the value:

   One is then left to guess or assume the methodology adopted by Mr R.[3]

   [3] Applicant’s Submissions page 4 paragraph 17

5. Mr Givney notes that Mr P in his report is critical of Mr R’s approach, commenting:

   The report states that the valuation has been prepared to provide an assessment of the fair market value of the Subject Property, however it does not state anywhere within the report how this assessment was to be undertaken, and no valuation methodology has been detailed, no realistic comparable analysis provided, and no valuation rationale explaining how the assessment was determined was provided.[4]

   [4] Valuation Report (omitted) Valuers forming Annexure “A” to affidavit of Mr Morcomb 13.5.2014

6. Mr Givney goes on to submit that the most critical point between the two valuers is that they are $400,000.00 apart and thus:

   If the Court did not give the Applicant the opportunity to rely upon Mr P’s report then there is likely to be a significant injustice to be suffered by the Applicant. This injustice is two-fold, firstly that of procedural fairness in that he is not able to bring evidence to indicate that Mr R may be wrong and secondly, because the Wife may receive a windfall.[5]

   [5] Applicant’s Submissions page 5 paragraph 22

7. Ms Kennedy of Counsel, who appeared for the Respondent, submitted that it was the parties jointly who requested that the Court make an order appointing a court expert valuer.

8. Ms Kennedy referred to Rule 15.49 of the Family Law Rules 2004, not because that Rule applies in this Court, it does not, but as a guide to the Court in deciding whether to grant leave to tender a report or adduce evidence from another expert witness. In particular, sub-rule 15.49(2) provides:

   15.49(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 that the contrary opinion may be necessary for determining the issue;

   (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.

9. It is submitted that the report from Mr P does not meet any of the three tests in sub-rule 15.49(2). There is no challenge to the qualifications of Mr R. In particular, it is submitted that Mr P wrongly suggests that Mr R “does not state anywhere within the report how this assessment was to be undertaken and no methodology has been detailed”.

10. Ms Kennedy submits that to allow the Applicant’s Application will cause a blow out in time and costs of the hearing. Further, the Respondent proposes a complete answer to the issue raised by the Applicant, which is for Mr R to update his valuation close to the new dates for trial.

Conclusions

1. The purpose of appointing an expert as court expert, under the Federal Circuit Court Rules, or single expert, under the Family Law Rules, is to reduce the cost of litigation and the time taken and avoid the expense of “duelling experts”. There must be a good reason for the Court to grant leave to allow further expert evidence once an order has been made for there to be a court expert to provide expert evidence.

2. In this case, the Applicant consented to an order that a court expert should be appointed and chose Mr R from the list of three names nominated by the Respondent. Now, the expert’s report is not to his liking and he wants another report.

3. This, to my mind, is simply a case of “report shopping” by the Applicant. His concern is that the value of the Property V property is lower than he would like, which would mean that the Respondent, if she were to retain the property, would be able to buy him out for a lower amount.

4. This is one of the risks of appointing a court expert to provide a report, that the report may not be to a party’s liking. I am not of the view that the criticisms made of the report of Mr R are such that the Court should grant leave to rely on another expert valuer.

5. I note that Mr R completed his report on 5 August 2013, whilst Mr P’s report dates from May 2014. It would seem that, in any event, there will be a need for Mr R to update his report prior to the final hearing, which will not now take place until mid-2015. The valuation may be very different.

6. I do not propose to grant leave to rely on the expert valuation of Mr P.  The Application in a Case will be dismissed.   

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of Judge Scarlett

Associate: 

Date:  20 August 2014