Morris & Morris
[2022] FedCFamC1F 982
Federal Circuit and Family Court of Australia
(DIVISION 1)
Morris & Morris [2022] FedCFamC1F 982
File number: SYC 4955 of 2021 Judgment of: CAMPTON J Date of judgment: 6 December 2022 Catchwords: FAMILY LAW – PROPERTY – Where the wife seeks that a number of entities be valued by a single expert witness – Where the husband contends the underlying assets of the entities, rather than the entities themselves, ought be the subject of expert valuation – Orders made for appointment of single expert witness to value the entities in accordance with the wife’s application – Updated trial directions. Legislation: Family Law Act 1975 (Cth) s 79
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 3.03, 6.02
Division: Division 1 First Instance Number of paragraphs: 17 Date of hearing: 6 December 2022 Place: Sydney Counsel for the Applicant: Mr Richardson SC Solicitor for the Applicant: Barkus Doolan Winning Counsel for the Respondent: Mr Smallbone Solicitor for the Respondent: Prime Lawyers ORDERS
SYC 4955 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS MORRIS
Applicant
AND: MR MORRIS
Respondent
order made by:
CAMPTON J
DATE OF ORDER:
6 DECEMBER 2022
THE COURT NOTES THAT:
1.Orders and directions for trial were made by Justice Campton on 26 August 2022.
2.Notation B made on that date identified the primary purpose of the trial management listing on 6 December 2022 as being identification of any disputes as to the necessary single expert evidence and the making of directions as to material to be filed going to this issue.
3.A draft Joint Balance Sheet was filed on 1 December 2022 (Order 12 made 26 August 2022 required it be filed by 30 November 2022).
4.On 2 December 2022 the solicitors for the husband and wife conferred by telephone in accordance with Order 13 made 26 August 2022 and the orders set out hereafter are intended to address the areas where expert evidence may be required. The lawyers for the husband also provided a letter dated 29 November 2022 to the lawyers for the wife, identifying inter alia issues which will need to be addressed as part of expert evidence in relation to various aspects of the B shareholding.
5.Each party has served offers of settlement in accordance with the Orders made 26 August 2022.
6.The wife has filed affidavits of evidence for the trial from herself and 6 witnesses on 18 November, 25 November, 1 December 2022 and 5 December 2022. There is an affidavit still to be received from an overseas based witness and an affidavit from the wife’s treating healthcare professional. Order 6 made 26 August 2022 required that they be filed by 18 November 2022.
7.The wife has not yet filed an undertaking as to disclosure. Order 6 made 26 August 2022 required that it be filed by 18 November 2022. There is an issue as between the parties as to disclosure in respect of certain documents and attempts are being made as between lawyers to resolve that, and once resolved or determined then the undertaking as to disclosure will be filed by the wife.
8.On 1 December 2022 the applicant wife lodged an Application in a Proceeding for the joinder of 3 further proposed respondents. Whilst served on the respondent husband, that Application is in the process of being served on each of the 3 further proposed Respondents each of which is based in New Zealand.
9.The wife has proposed that a Health Report be prepared by C Group and is providing the husband with email communications between them and her legal representatives. In the event that they are acceptable to the husband then the orders below provide for letters of instruction, and if not acceptable to the husband then the orders provide for the husband to provide a panel of experts for the wife's consideration and nomination.
10.The husband has informed the wife that following receipt of a report from a medical specialist on the wife's health he may seek that an actuary be appointed as a single expert to provide an expert opinion to the wife's life expectancy. The wife does not at this time agree that such an expert report is required or that any order for same should be made and the issue may require determination by the court in March 2023.
11.The husband and a related entity controlled by the husband being D1 Limited, own a substantial number of motor vehicles. The husband will provide the wife with a complete listing of all motor vehicles and his estimated value of each of them with a view to avoiding the need for valuations of some/all of them, and the parties will undertake valuations of those that remain not agreed.
THE COURT ORDERS THAT:
12.In relation to single expert medical evidence:
(a)that on or before 4pm on 12 December 2022, the husband provide the wife with the names of 3 experts to provide a report on the wife's health in respect of:
(i)Medical expert;
(ii)if C Group is not accepted by the husband, another expert or organisation to provide two medico-legal reports;
(b)that on or before 4pm on 21 December 2023, the wife nominate one from those proposed by the husband in each category;
(c)that on or before 4pm on 30 January 2023 the wife shall provide to the husband a draft letter of instruction to each expert, and by 13 February 2023, the husband shall either sign and return same or provide a marked-up version of proposed changes.
13.In relation to single expert financial evidence:
(a)that on or before 4pm on 14 December 2022, the wife provide the husband with the names of 3 experts to provide a report in respect of:
(i)accounting/tax issues:
A.the B Limited shares including those matters raised by the letter dated 29 November 2022 from Prime Lawyers to Barkus Doolan Winning;
B.D1 Limited (NZ and UK);
C.D2 Limited;
D.D3 Limited;
E.D Trust;
(ii)motor vehicles (there may need to be several subject to the husband identifying the location of each vehicle);
(iii)plant and equipment of D1 Limited (NZ and UK) and there may need to be several subject to the husband identifying the location of same;
(iv)other transport (with the husband to identify the location of same);
(v)contents and jewellery (there may need to be several subject to the location thereof);
(vi)K Street, Suburb L, NZ (owned by M Limited)
(b)that on or before 4pm on 21 December 2022, the husband nominate one from those proposed by the wife in each category
(c)that on or before 4pm on 30 January 2023 the husband shall provide to the wife a draft letter of instruction to each expert, and by 13 February 2023, the wife shall either sign and return same or provide a marked-up version of proposed changes.
(d)The court NOTES that at date in 2023 closer to the trial, the parties will arrange for updated valuation (and in respect of Suburb L property an initial valuation) reports to be prepared in respect of:
(i)N Street, Suburb O, NSW - T Valuers
(ii)R Street, Suburb S, NSW – T Valuers
(iii)P Street, Suburb Q, New Zealand – U Valuers
(iv)G Street, City H, Country G – V Valuers.
(v)K Street, Suburb L, New Zealand (owned by M Limited)
Variation of directions
14.That the time for filing of affidavits for trial and undertakings as to disclosure be extended and varied as follows:
(a)In relation to Order 6 made 26 August 2022, delete "18 November 2022" and substitute "22 December 2022" for affidavits;
(b)In relation to Order 7 made 26 August 2022, delete "16 December 2022" and substitute "17 March 2023";
(c)In relation to Order 8 made 26 August 2022, delete “10 March 2023” and substitute “21 April 2023”;
(d)That Order 6c and Order 7c made 26 August 2022 be discharged and the court Orders that "In the event that either party has not filed and served an Undertaking as to Disclosure by 3 March 2023, the court NOTES that it will on that next occasion make an Order requiring the filing and service of same within a short period thereafter."
Material for any issue requiring determination on 3 March 2023
15.That the half day hearing on 17 February 2023 be vacated and the matter be instead next listed before the Hon Justice Campton at 10.00 am on 3 March 2023 for a half day hearing by Microsoft Teams.
16.That the Application in a Proceeding of the wife filed 1 December 2022 be listed for hearing on 3 March 2023.
17.NOTE that the document titled ‘Further Amended Initiating Application’ purported filed on 1 December 2022 has not been the subject of any grant of leave and direct that any question to grant leave be dealt with at the same time as the Application in a Proceedings referred to in this Order 16.
18.The husband and proposed second, third and fourth Respondents file and serve any Response to an Application in a Proceeding of the wife filed 1 December 2022 and affidavit to be relied upon by 4.00 pm on 10 February 2023.
19.Any of the husband and wife wishing to raise such further matters for determination shall file and serve any Application in a Proceeding and affidavits on which they rely by 4.00 pm on 31 January 2023;
20.Any Response to the Application in a Proceeding filed pursuant to Order 19 thereof and affidavit to be relied upon is to be filed by 4.00 pm on 10 February 2023.
21.Any Application in a Proceeding pursuant to Order 19 or Response to the Application in a Proceeding pursuant to Order 20 is to be listed at 10.00 am on 3 March 2023.
22.In the event of dispute as to any letter of instruction to an expert or in relation to any issue as to disclosure shall be determined by the court at the half day hearing on 3 March 2023.
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 Morris & Morris has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
CAMPTON J:
These are proceedings in the Major Complex Financial Proceedings list, which have been listed for hearing before me commencing on 30 October 2023. By way of an Application in a Proceeding filed on 1 December 2022 the wife seeks the joinder of additional respondents to the proceedings pursuant to r 3.03(4) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”). The additional proposed respondents are:
(a)D2 Limited, being the proposed second respondent;
(b)F Limited as trustee for the D Trust, being the proposed third respondent;
(c)E Limited as trustee for the D Trust, being the proposed fourth respondent.
It is uncontroversial that in late 2021, the husband transferred nearly 50 million shares held by him personally in an Australian Stock Exchange listed corporation, B Limited, to D2 Limited. By that transaction, the husband reduced the shares held personally by him in B Limited from nearly 60 million shares, or approximately 33.5 per cent of the issued shares in that company, to just under 6 per cent of the issued shares in that company. D2 Limited therefore held approximately 28 per cent of B Limited subsequent to the transaction.
The husband submitted and conceded during the hearing and it is agreed for the purposes of the litigation pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”):
(a)The shareholders of D2 Limited are the proposed third and fourth respondents, F Limited and E Limited;
(b)The husband is the only eligible beneficiary of the D Trust (for which F Limited and E Limited are the trustees); and
(c)F Limited and E Limited are the alter egos of the husband, and the husband controls F Limited and the husband’s accountant controls E Limited.
Each of the additional proposed respondents may have been served overnight with the wife’s Application in a Proceeding filed on 1 December 2022 and affidavit in support thereof, together with the further Amended Initiating Application of the wife filed on 1 December 2022 (albeit that leave is required for the wife to rely on that further Amended Initiating Application the Rules).
It is agreed that in the circumstances, so as to provide procedural fairness to each of the additional proposed respondents, that the wife’s Application in a Proceeding cannot be determined today and ought be adjourned for hearing.
An agreed suitable date for that hearing of the relief sought in the wife’s Application in a Proceeding is 3 March 2023 at 10.00 am, by way of Microsoft Teams format. Directions will be made listing the wife’s Application in a Proceeding on that day, together with directions for the filing of any Response to an Application in a Proceeding and affidavit in support thereof by the husband and the additional proposed respondents.
Further issues have arisen between the parties as to the preparation of the matter for trial as envisaged by the trial directions made on 26 August 2022. Those issues have been helpfully reduced to writing contained in a draft Minute of Order, which has become Exhibit 1 in the proceedings today.
The first primary issue in dispute as identified in Exhibit 1 rests in proposed Order 13 of Exhibit 1. Broadly, the compass of the dispute relates to the instructions to be provided to either single experts, or by way of arrangement between the parties, as to items contained in the balance sheet identifying the pool of property available for adjustment as part of the substantive s 79 hearing.
The wife proposes what might be described as the traditionally understood process of valuation, whereby a forensic accountant would apportion a value of the interests of the parties in specified entities, being D1 Limited (New Zealand and United Kingdom), D2 Limited, D3 Limited and the D Trust. The wife does not contest that the primary underlying assets of each of these entities will be either shareholdings, cash, interests in motor vehicles and other similar assets, including other transport and/or an enterprise by way of servicing this transport. She contends that the value of the parties’ interests in these entities will include not only the value of the underlying assets of each corporation, but also will be a factor impacted upon by debit and credit loan accounts, and potentially, the valuation of the parties’ interests in the entities may be impacted upon by way of significant taxation losses accumulated in some entities.
The wife contends that the adoption of a process whereby a forensic accountant will opine a value to the overall interests of the parties in the identified entities will not cast a significant burden by way of process or cost upon the parties, in circumstances where the valuation of their interests in property, comprising some of the entities to be valued, is well in excess of $600 million.
Putting it simply, it is the wife’s position that her approach to the valuation of the parties’ interests in the specified entities should not be summarily determined at this point and should not be, in effect, be glossed over.
The husband contends that the simplified process he proposes as identified in proposed Order 13 of Exhibit 1 seeks to determine the underlying value of the specified entities. He illustrates, by way of example, that D2 Limited holds nearly 50 million shares in B Limited and cash, and there is little other value to be addressed in that enterprise. He additionally contends that D1 Limited (New Zealand and United Kingdom) develops motor vehicles that have been funded by the husband, or sources that he controls, and that the real value of the interest in that entity is simply the development of the motor vehicle and little more. It is the husband’s proposal that his approach to valuation would ignore debit and credit loan accounts and adopt a “simplified” process so as to allow the parties to get to the nub of the dispute expeditiously and efficiently.
At this point in time, without having an opportunity to carefully consider the financial statements of the relevant entities and obtaining a clear understanding each from an evidentiary standpoint, and in circumstances where the husband is yet to file his primary affidavit material to be relied on for the purposes of the trial, I am attracted to the approach promoted by the wife. At the present time, I am not minded to take a shortcut and ignore what the wife contends may be relevant matters in the assessment of an opinion as to value, as to contributions, and as to determining the justice and equity of any s 79 order to be made at the trial.
It may be that the approach adopted by the wife is of little consequence to the balance sheet, but that said, I am not prepared at this time to make a summary determination on that issue. In the circumstances, I am attracted to and shall made orders consistent with the wife’s approach as contained in Order 13 of Exhibit 1. That approach proposes that the wife shall provide the husband with three names of proposed experts and for him thereafter to select one. The husband conversely proposes the reverse (that is, he shall provide the wife with the name of three proposed experts, and the wife will pick one). In circumstances where the wife is the applicant in the proceedings, I consider it appropriate for the wife to propose the three experts and for the husband to select one of those experts, and will so order.
As to the other matters in dispute as identified in Exhibit 1, the parties now agreed to the wife’s proposal contained in proposed Order 14.1, so that the wife’s outstanding affidavit from her Healthcare professional will be filed and served by 22 December 2022. An order will be so made.
The husband had some attraction as to there being some fixed date for each party to provide an Undertaking as to Disclosure in compliance with r 6.02 of the Rules. In the circumstances, I propose to amend the prior trial directions such that in the event Undertakings of Disclosure are not filed by each party on or before 3 March 2023, orders will be made on that day for the filing of those Undertakings within a specified period of time. It is self-evident, and both the parties would be aware, that the obligations of disclosure as codified in the Rules are absolute and continuing, and it is anticipated in the circumstances of this matter, having regard to the calibre of the legal representatives involved, that each of the parties will continue to comply with those obligations.
It is agreed that for the purposes of Notation 6 of Exhibit 1, the wife’s general practitioner has filed an affidavit and I will amend Exhibit 1 to reflect same.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Campton. Associate:
Dated: 13 December 2022
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