Murphy & Murphy

FAMILY COURT OF AUSTRALIA

BILLINGTON & BILLINGTON

[2007] FamCA 785

FAMILY LAW - EVIDENCE - Expert evidence - Adversarial expert - Requirement to place evidence before the Court to satisfy the rules - Question of natural justice considered

APPLICANT:

MRS BILLINGTON

RESPONDENT:

MR BILLINGTON

FILE NUMBER:

SYF

3567

2005

DATE DELIVERED:

13 July 2007

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Cronin J

HEARING DATE:

9,10, 11 & 12 July 2007 Part Heard

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Richardson SC with Mr Kearney

SOLICITOR FOR THE APPLICANT:

Barkus Edwards Doolan

COUNSEL FOR THE RESPONDENT:

Mr Batey

SOLICITOR FOR THE RESPONDENT:

Watts McCray

Orders

That the husband not be permitted to rely upon the affidavit of Mr G filed 20 June 2007.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Cronin delivered this day will for all publication and reporting purposes be referred to as Billington v Billington

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 3567 of 2005

MRS BILLINGTON

Applicant

And

MR BILLINGTON

Respondent

REASONS FOR JUDGMENT

On 10 July 2007, the second day of a property hearing, I made orders that the husband was not permitted to rely upon the affidavit of a proposed adversarial witness. These are my reasons for that order.
The proceedings are between the parties after a thirty year marriage. There are significant assets and each party has a significant income.
The proceedings have been in the list for a considerable period of time and I commenced hearing the matter on Monday, 10 July 2007 with an anticipated hearing time allocated of three days. There were, however, a number of issues of a procedural nature in dispute and as at the end of the second day, there was still no agreement on a number of issues in the “Balance Sheet”.
The issue about the appointment of an adversarial witness has been contentious since the release of the report of the single expert witness. The single expert witness, Ms W, was appointed by order and on 16 March 2007, a joint letter of instructions was sent to her.
On 1 June 2007 Justice Le Poer Trench made an order which was not by consent of the parties but made without argument permitting the husband to file an affidavit of Mr G but the wife’s position in relation to the ability of the husband to rely upon the affidavit was reserved.
Sensibly, the parties agreed that the proposed adversarial witness and the single expert should communicate with one another to prepare a joint statement of experts.
Notwithstanding the process that has transpired subsequent to the orders of Justice Le Poer Trench, the wife has maintained her objections to the filing of the affidavit of Mr G
In this case, the parties have a pool of assets which is somewhere in the vicinity of $14,000,000.00 to $15,500,000.00 depending on a number of issues. One of those is the treatment of the wife’s contingent interest in her father’s estate as a residuary beneficiary.
The significant arguments relate to the contribution that each party has made during their 30 year marriage, but also about what money should be added back to the pool.
In respect of the discrete issue of the adversarial expert witness, in my view, the dispute is not enormous. According to the single expert, the husband has various interests including loan accounts, capital accounts and shares in the P Group which she values at $1,376,000.00. The husband’s view is that that is wrong and that the value is about $995,000.00. The difference is therefore about $380,000.00 or 2.5 per cent of the total pool of assets depending upon which net sum is ultimately found to be the case. The significant dispute within this discrete issue is the valuation of the husband’s shares in the Group.
The determination of this matter is largely, but not entirely, governed by Chapter 15 of the Family Law Rules 2004.
Rule 15.42 sets out the purpose of this part and the Rules provide those purposes as:
(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 case;
(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; and
(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 necessary in the interests of justice.
The over-arching principle behind the Family Law Rules is set out in Rule 1.04:
The main purpose of these Rules is to ensure that each case is resolved in a just and timely manner at a cost to the parties and the court that is reasonable in the circumstances of the case.
Rule 15.49 says:
(1)If a single expert witness has been appointed to prepare a report or give evidence in relation to an issue, a party must not tender a report or adduce evidence from another expert witness on the same issue without the court’s permission.
(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 is or 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.
Had this matter been determined prior to the commencement of the hearing and by way of application, the Court would have had to consider the matters set out in Rule 15.52(3) which sets out:
(3)When considering whether to permit a party to tender a report or adduce evidence from an expert witness, the court may take into account:
(a)the purpose of this Part (see rule 15.42);
(b)the impact of the appointment of an expert witness on the costs of the case;
(c)the likelihood of the appointment expediting or delaying the case;
(d)the complexity of the issues in the case;
(e)whether the evidence should be given by a single expert witness rather than an expert witness appointed by one party only; and
(f)whether the expert witness has specialised knowledge, based on the person’s training, study or experience:
(i)relevant to the issue on which evidence is to be given; and
(ii)appropriate to the value, complexity and importance of the case.
Rule 15.52(2) sets out the details in affidavit form required to support an application for an appointment of an adversarial witness. In this case, I have had the benefit of reading the affidavit of Mr G filed 1 May 2007 and I shall return to that below.
One of the issues in Rule 15.52(2) is set out in sub paragraph (g) wherein a party is required to indicate whether there is any previous connection between the proposed expert witness and that party.
The only affidavit I have in this case upon which I am asked to rely is that of Mr G to which I have just referred.
It would seem that there is no previous professional connection between Mr G and the husband, however, there is an issue of concern as to whether Mr G and/or the husband have been completely candid about the background of Mr G’s involvement and more particularly, whether Mr G has become partisan.
To that end, prior to commencing the argument about this discrete issue, there was an issue ultimately resolved between the parties about the release of what was described as documents provided under subpoena by Mr G about which privilege was initially claimed. That issue was ultimately resolved by agreement between the parties but in the course of that agreement, a number of documents were disgorged. It transpires that Mr G was approached by the solicitors for the husband in 2005. There is a file note dated 9 January 2005 apparently prepared by Mr G requiring assistance to be provided to the husband and his legal advisors. Furthermore, in March 2007, after the release of the single expert’s report, the accountants for the husband provided a very comprehensive critique of the single expert’s report pointing out forcefully where they disagreed. This particular letter has some markings or notations on the side in various places and there is an inference open that Mr G adopted some of the concepts as his own for the purposes of his report.
These issues are compounded by the fact that on 5 July 2007, the solicitors for the wife sought from the solicitors for the husband all of the information upon which Mr G prepared his report. Although it must be conceded that that is only some days ago, there has been no response to that request.
The matters to which I have just referred have limited significance because the basis upon which an application for an adversarial witness is determined is that which I have set out above in Rule 15.49(2). However, ultimately, the determination of the issue is a discretionary one and the foregoing matters have affected my discretion to some extent in the determination I have made.
In relation to the matters set out in Rule 15.52(3) I have taken into account that there is little likelihood that the costs of the appointment of another expert witness will impact upon the costs of this case. I have seen the respective letters of the legal practitioners and the sums already spent have been enormous.
However, I am concerned to look at Rule 15.52(3)(c) and (d) together. The likelihood of an adversarial witness delaying the proceedings is clear. However, what is not clear is the question of the complexity of the issue. In my view the issues are not particularly complex notwithstanding the fact that there remain real disputes about opinions. This is not a case where the factual material will have much impact upon the valuation. It is more a question of the valuer’s methodology. It is important therefore to distinguish between the opportunity to call some evidence about facts as distinct from being given the opportunity to test the evidence of the single expert. I can clearly understand how the husband might complain of a potential miscarriage of justice if he were not given the opportunity to test that evidence. Here, he has that opportunity.
My attention was drawn to the decision of The State of Queensland v J.L. Holdings Pty Ltd [1997] 189 CLR 146 wherein the High Court (Dawson, Gaudron and McHugh JJ) said:
“Justice is the paramount consideration in determining an application such as the present one ... Case management involving as it does the efficiency of the procedures of the Court, was in this case a relevant consideration but it should not have been allowed to prevail over the injustice of shutting the applicant out from raising an arguable defence, thus precluding determination of an issue between the parties.”
For the reasons I have just set out, the husband is not shut out from raising an arguable defence, nor is he precluded from testing the evidence. In my view, therefore, this is a case where the evidence should be given by a single expert rather than an expert appointed by one of the parties.
I set out now why the matters in Rule 15.49(2) have not been satisfied.
The first of the considerations is that I need to be satisfied that there is a substantial body of opinion contrary to any opinion given by the single expert witness and that that contrary opinion is or may be necessary for determining the issue. At best, Mr G in paragraph 7 of his affidavit refers to the fact that a noted author Wayne Lonergan has said, “In many cases ... the value of an individual partner’s asset in the form of goodwill is either nil, or, at the very least, materially different from that partner’s pro-rata interest in the goodwill of the practice as a whole.” In my view, that statement is far from satisfying the test that there is a substantial body of opinion contrary to that given by the single expert. Mr Lonergan refers to “many cases” but that must of necessity mean that the issue is arguable in another way. I place much emphasis on the fact that the Rules refer to a “substantial” body of opinion. Pointing to the view of Mr Lonergan is no more than another opinion with which the single expert may in fact disagree.
Importantly, the Rule goes on to say that evidence of the contrary opinion is or may be necessary for determining the issue. There can be no question in this case that the single expert, having proffered an opinion, will be subjected to cross-examination. Her opinion may not necessarily be ultimately accepted. It may be that the contrary opinion referred to by Mr Lonergan will be put to the single expert and a finding will have to be made.
In the circumstances, I am not satisfied that the applicant has established the requirements of Rule 15.49(2)(a).
The second of the three issues and they are read conjunctively, is also hard to see as being relevant based on the evidence of Mr G. Whilst Mr G may be critical of Ms W’s approach, I do not see any evidence that Mr G knows of matters not known to Ms W that may be necessary for determining the issue. Mr G certainly criticises Ms W saying that she has not taking into account things such as tax and also that when she considered alternative methods of valuation, she did not consider the method he described as that being commonly applied in professional partnerships but as I have indicated, that matter can be the subject of cross-examination.
Mr Batey for the husband argued that in respect of the third of the three criteria, there were special reasons that should permit Mr G’s evidence to be led. One of those was that the single expert had not considered the future maintainable earnings method preferred by Mr G, nor had she taken into account the tax on superannuation profits. There is no definition of what a special reason is for the purposes of these rules but in my view, it must be governed by the underlying purpose of Part 15.5.
To permit an adversarial witness at this late stage will potentially extend the hearing in my view unnecessarily.
Rule 15.42(b) makes it clear that expert evidence is to be restricted to that which is necessary to resolve the case. As I have pointed out, the single expert will no doubt be subject to cross-examination.
The purpose also sets out that the interests of justice should not be compromised. That point is made on two occasions within the rule. It is argued by the husband that to preclude him calling evidence of an arguable issue is a denial of justice. I reject that on the basis as I have already said, the purpose behind the rule is to enable the parties to only have one expert but to have that evidence tested in the proper way of cross-examination. In addition, justice is a balancing matter and to extend the hearing of the case and potentially lose the momentum gained creates injustice for the wife.
Another matter of some concern in this case is that the criticism of the single expert by the adversarial witness is a discrete issue within that valuation process. The valuation of the shares of the husband is what is really in dispute arising out of the methodology used by the single expert. It is quite clear from the single expert’s report at paragraph 78, “[s]he sought and obtained the agreement of both parties to the valuation of the entities as one group”. How the valuation of the shares in those circumstances is affected is a matter which will no doubt be the subject of extensive cross-examination.
Returning then to the exercise of the discretion, I find that if I was to allow the evidence of Mr G to be led, where the accusation of partisanship is apparent, I have no doubt that the case would expand exponentially. In my view, that is unjustified in the circumstances having regard to:
a)the magnitude of the issue in dispute by comparison to the size of the pool of assets bearing in mind the discretionary nature of the overall judgment that I am required to make as set out in s 79 of the Family Law Act; and
b)the opportunity for the single expert evidence to be tested.
Accordingly, I find that it would not be appropriate in the circumstances to depart from the purpose of Part 15.5 and I say that I do not accept that the interests of justice would be compromised.

I certify that the preceding thirty eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate:

Date: 13 July 2007

[2007] FamCA 785

13 July 2007

Key Legal Topics

Areas of Law

Family Law

Civil Procedure

Legal Concepts

Procedural Fairness

Reliance

Appeal