Morris & Morris (No 5)

Case [2023] FedCFamC1F 940

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Morris & Morris (No 5) [2023] FedCFamC1F 940

File number: SYC 4955 of 2021
Judgment of: CAMPTON J
Date of judgment: 3 November 2023
Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Where the husband seeks to put questions to the single expert witness pursuant to r 7.26 during the course of a trial – Where the wife objects to the experts report being adduced into evidence – Where the wife objects to the questions being posed to the expert report writer – Where the wife contends that the questions as posed are outside that as envisaged by r 7.26 – husband’s application dismissed.
Legislation:

Family Law Act 1975 (Cth) ss 78 and 79

Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 67 and 68

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) ch 7, Divs 7.1.4, 7.1.5 and 7.1.6, rr 7.22, 7.24, 7.25, 7.26 and 7.27)

Evidence Act 1995 (NSW) s 79
Cases cited:

Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588

Morris & Morris(No 2) [2023] FedCFamC1F 835

Morris & Morris (No 4) [2023] FedCFamC1F 931
Division: Division 1 First Instance
Number of paragraphs: 45
Date of hearing: 1 – 2 November 2023
Place: Sydney
Counsel for the Applicant: Mr Richardson SC with Mr Roberts of counsel
Solicitor for the Applicant: Barkus Doolan Winning
Counsel for the Respondents: Mr Kelly SC with Mr Smallbone and Dr Parkinson of counsel
Solicitor for the Respondents: Prime Lawyers

ORDERS

SYC 4955 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS MORRIS

Applicant
AND:

MR MORRIS

First Respondent

D2 LIMITED

Second Respondent

F LIMITED ATF THE D TRUST (and another named in the Schedule)

Third Respondent

ORDER MADE BY:

CAMPTON J

DATE OF ORDER:

3 NOVEMBER 2023

THE COURT ORDERS THAT:

1.The oral application of the husband for an order that the respondents be at liberty to administer to the single expert witness Mr JJ questions numbered 1, 2, 3, 5, 7, 8 and 9 as contained in a letter dated 27 October 2023 from the husband’s solicitors to the single expert witness is 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 pseudonyms Morris & Morris has been approved pursuant to s 121(9)(g) of the Family Law…

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AGLC
Morris & Morris (No 5) [2023] FedCFamC1F 940
Case
[2023] FedCFamC1F 940
Decision Date

CaseChat Overview and Summary

The Federal Circuit and Family Court of Australia (Division 1) heard an application by the husband in the case of Morris & Morris (No 5). The application sought to allow certain questions to be put to the single expert witness, Mr JJ, who was appointed to opine on the likely effect of a sale of shares in B Limited on the company's share price. The wife objected to the expert's report being adduced into evidence and also objected to the specific questions posed to the expert, arguing they were outside the scope of Rule 7.26. The court had to determine whether the husband's proposed questions were permissible under the Rules and if they should be allowed to ensure that the expert's opinion was fully expressed and admissible.

The husband argued that the questions were intended to clarify the expert's qualifications and reasoning, addressing the criticisms raised by the wife's objections. He contended that the questions were necessary to expose in more detail the expert's reasoning and how it related to his qualifications, especially given the constraints of the single expert rule. The husband also suggested that the court should exercise its discretion to allow the questions to ensure the expert's opinion was fully expressed and admissible. The wife, on the other hand, argued that the report was barely relevant and that the proposed questions were not appropriate under the Rules.

The court considered the arguments and concluded that the husband's application should be dismissed. The court found that the questions were formulated after the wife had objected to the contents of the report, and thus were not in compliance with Rule 7.26. The court also noted that the expert's opinion was already an educated guess based on qualitative judgments and that the proposed questions did not significantly alter this nature. Consequently, the court decided that allowing the questions would not serve the purpose of ensuring the expert's opinion was fully expressed and admissible.

In conclusion, the court dismissed the husband's application. The oral application for an order that the respondents be at liberty to administer questions numbered 1, 2, 3, 5, 7, 8, and 9 to the single expert witness Mr JJ was dismissed. This decision highlights the importance of adhering to the procedural rules in family law proceedings, particularly concerning expert evidence.

Orders

Orders of the court

SYC 4955 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS MORRIS

Applicant

AND:

MR MORRIS

First Respondent

D2 LIMITED

Second Respondent

F LIMITED ATF THE D TRUST (and another named in the Schedule)

Third Respondent

ORDER MADE BY:

CAMPTON J

DATE OF ORDER:

3 NOVEMBER 2023

THE COURT ORDERS THAT:

1. The oral application of the husband for an order that the respondents be at liberty to administer to the single expert witness Mr JJ questions numbered 1, 2, 3, 5, 7, 8 and 9 as contained in a letter dated 27 October 2023 from the husband’s solicitors to the single expert witness is 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.

Background

Background to the litigation

For the reasons that follow, the oral application of the husband is dismissed.BACKGROUND Mr JJ was instructed to opine, as a ch 7 single expert, as to the likely effect on the share price of an ASX listed corporation, B Limited, should orders be made that the husband and the other respondents sell quantities of shares they hold to meet his or their obligations arising from orders pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”). Mr JJ was appointed as a single expert pursuant to orders made 15 May 2023:6. As to the expert evidence relating to the value (and related matters) of the [B Limited] shares, the husband has requested and the wife has without admission by her as to the existence of a relevant field of opinion evidence in each case: …c)Agreed to obtain an expert report from a stockbroker or investment banker as to the likely effect a sale of shares as sought by the wife would have on the share price of [B Limited], including what discount, if any, would be commanded at point of sale. The relevant report is dated 22 October 2023 (Exhibit B in the application) At the commencement of the proceeding in July 2021, the husband held 57 million shares in B Limited, a publicly listed company on the ASX. The husband on or about late 2021 caused 48 million of those shares to be transferred to the D Trust, subsequently joined as a respondent in the proceeding. The husband personally continues to hold 9 million shares (see Morris & Morris(No 2) [2023] FedCFamC1F 835. It is the wife’s case that the shares in B Limited held by the D Trust are the husband’s property for the purposes of the s 79 determination and are amenable to orders despite subrogation to the D Trust. As recorded in Morris (No 2) at [4], the husband conceded during the course of the hearing on 6 December 2022, that for the purposes of the litigation pursuant to s 79 of the Act that:(a)The husband is the only eligible beneficiary of the D Trust (for which F Limited and E Limited are the trustees); and (b)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. The wife contends that the B Limited shares held by the husband and D Trust have a current value of $584,250,000 (being a calculation of the ASX listed share value at the commencement of the trial multiplied by the number of shares held) and that the property of the parties has a net value in the range of $697,092,033. Her relief by way of adjustment of the property of the parties (Exhibit 2) seeks to achieve orders whereby she would receive 50 per cent of that property, being made up of cash payments jointly and severally payable by the husband and the other respondents of not less than $320,000,000 by instalments payable between 1 December 2023 and 1 December 2026, together with the adjustment of other property interests in specie. Implicitly, it is her case that it is a matter for the husband and the other respondents as to how they source the funds to pay the adjusting sum by instalments as and when they are due. In default of payment of an instalment of a cash sum jointly and severally due by the husband and the other respondents, she seeks orders for the balance of unpaid instalments to become payable and for the husband and the other respondents to sign all documents necessary to sell sufficient shares in B Limited to pay the balance of the sum due to the wife.

Evidence

Evidence Before The Court

Mr JJ was appointed as a single expert pursuant to orders made 15 May 2023:6. As to the expert evidence relating to the value (and related matters) of the [B Limited] shares, the husband has requested and the wife has without admission by her as to the existence of a relevant field of opinion evidence in each case: …c)Agreed to obtain an expert report from a stockbroker or investment banker as to the likely effect a sale of shares as sought by the wife would have on the share price of [B Limited], including what discount, if any, would be commanded at point of sale. The relevant report is dated 22 October 2023 (Exhibit B in the application) At the commencement of the proceeding in July 2021, the husband held 57 million shares in B Limited, a publicly listed company on the ASX. The husband on or about late 2021 caused 48 million of those shares to be transferred to the D Trust, subsequently joined as a respondent in the proceeding. The husband personally continues to hold 9 million shares (see Morris & Morris(No 2) [2023] FedCFamC1F 835. It is the wife’s case that the shares in B Limited held by the D Trust are the husband’s property for the purposes of the s 79 determination and are amenable to orders despite subrogation to the D Trust. As recorded in Morris (No 2) at [4], the husband conceded during the course of the hearing on 6 December 2022, that for the purposes of the litigation pursuant to s 79 of the Act that:(a)The husband is the only eligible beneficiary of the D Trust (for which F Limited and E Limited are the trustees); and (b)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. The wife contends that the B Limited shares held by the husband and D Trust have a current value of $584,250,000 (being a calculation of the ASX listed share value at the commencement of the trial multiplied by the number of shares held) and that the property of the parties has a net value in the range of $697,092,033. Her relief by way of adjustment of the property of the parties (Exhibit 2) seeks to achieve orders whereby she would receive 50 per cent of that property, being made up of cash payments jointly and severally payable by the husband and the other respondents of not less than $320,000,000 by instalments payable between 1 December 2023 and 1 December 2026, together with the adjustment of other property interests in specie. Implicitly, it is her case that it is a matter for the husband and the other respondents as to how they source the funds to pay the adjusting sum by instalments as and when they are due. In default of payment of an instalment of a cash sum jointly and severally due by the husband and the other respondents, she seeks orders for the balance of unpaid instalments to become payable and for the husband and the other respondents to sign all documents necessary to sell sufficient shares in B Limited to pay the balance of the sum due to the wife.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The husband conceded that the formulation of the questions pursuant to r 7.26 and proposed to be put to Mr JJ occurred after he had received notice of the wife’s objections to the contents of the report being adduced into evidence at the trial. CONSIDERATION The husband submitted that his enquiries by way of the objected questions are intended to, and in fact do, address the criticisms made by way of the objections made by the wife and that they are an attempt to expose in more detail the exposition of his reasoning and how the subject matter relates to his qualifications. He further submitted that the proposed questions seek further clarification of his qualifications, of reasons for the conclusion which has already given, and the relationship between the two. It was his submission that the questions did no more than seek clarification of the relationship between Mr JJ’s qualifications and his reasoning. He said it is appropriate to permit them to be administered in circumstances where a consequence of the Rules does not permit the husband to have a conference with the expert. Alternatively, the husband submitted that if the questions as posed were not strictly as envisaged by the Rules, they should nevertheless be permitted to be administered so the evidence does not “come up short” to ensure that an opinion is “fully expressed and admissible”. Although not formally made, this was a further oral application to dispense with the Rules insofar as was necessary so as to permit the questions posed to be put before the witness. In support of this implicit further application, the husband submitted that “we are working within the prism” of the single expert rule, and the policy limitations that inform it. He submitted that the parties does not have the traditional adversarial method to converse with the witness to ensure that he submits his opinion in a fashion that is admissible and given such constraints, the court should allow the parties to do what can be done to ensure that the expert witness that does not express himself in a way consistent with that required by existing authority has the opportunity to do so. Having regard to what the husband contends is the “significance of the evidence and where it goes” a pivot to an exercise of discretion to dispense with the Rules comes from ensuring that the court has available all possible evidence relevant to the qualities of the property by way of the publicly listed shares and the consequences to the value of that property if it is sold. He submitted that this is a powerful factor driving the conclusion that the expert evidence ought to be considered “as to its substance” and not be deflected by any deficiencies in the way the expert has expressed himself. The husband submitted that it would be a matter of “significant prejudice” to him not allow a party to adduce evidence on a subject matter through no fault of their own. The wife submitted that the evidence contained in the report is “barely relevant”. She identified the portions of the report. As to his methodology, the report records:I have had regard to precedent market transactions and factors that typically determine the pricing (or pricing discounts) of large share sales. In Opinions 1 – 4, I have presented what I believe are relevant precedents and an assessment of the factors that I believe will influence the share price of [B Limited] and of any share sales. I have made a number of assumptions in addition to those listed in the letter of instruction, each listed in this section or in the relevant Opinion section.It should be noted from the outset that the share price impact of any new circumstance will be determined by the many thousands of market participants that are willing to buy or sell shares in that company. There will always be many different views among market participants as to what is an attractive level to buy or sell the shares. The share price at any one time simply reflects the price at which one buyer and seller are willing to transact with one another based on the circumstances of the time. It is often the case that share price trading levels or share price movements do not have regard to a company’s operating or financial performance, or past share price levels. Any opinion on the share price impacts of a new set of circumstances is therefore a qualitative judgement as to how those circumstances affect the behaviour of the many thousands of possible buyers and sellers in those shares. As such any opinion is an educated guess as to the likely behaviour of market participants. My views regarding potential share price impacts in Opinion 1 are based on my experience in the Australian equity market and my judgements as to how investors may react to the new circumstances presented,rather than on any particular quantitative factor.