Nesbitt and Nesbitt

[2010] FamCA 1040

FAMILY COURT OF AUSTRALIA

NESBITT & NESBITT [2010] FamCA 1040

FAMILY LAW – PRACTICE AND PROCEDURE – Case management and valuation issues

APPLICANT: MS NESBITT

RESPONDENT: MR NESBITT

FILE NUMBER: MLC 10190 of 2008

DATE DELIVERED: 18 NOVEMBER 2010

PLACE DELIVERED: MELBOURNE

PLACE HEARD: MELBOURNE

JUDGMENT OF: YOUNG J

HEARING DATE: 18 NOVEMBER 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr  DICKSON

SOLICITOR FOR THE APPLICANT: GILLIAN COOTE FAMILY LAW

COUNSEL FOR THE RESPONDENT: Mr  MAWSON SC

SOLICITOR FOR THE RESPONDENT: TAUSSIG CHERRIE FILDES

Orders

IT IS ORDERED

1. THAT the extempore reasons for judgment on the issues of both the valuation of the business and the valuation of the property at K be transcribed as a matter of urgency, placed upon the Court file and be made available to all parties (the receipt of these reasons for judgment are required prior to 10.00 a.m. Monday 22 November 2010.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 10190 of 2008

MR NESBITT

Applicant

And

MS NESBITT

Respondent

REASONS FOR JUDGMENT

1. The matter of Nesbitt is listed before me for mention at 2.15 this day.  Mr Mawson of Senior Counsel appears for the husband and his instructing solicitors are in court but his client is not present.  Mr Dickson of Counsel appears for the wife and has no instructing solicitor and no client in Court.  This matter is listed for a defended three day hearing before me commencing Monday next.  The matter was sought to be listed on a property valuation issue, but prior to that matter being raised, another matter has been raised by Counsel.

2. Mr Dickson tendered a letter dated 12 November 2010 from the solicitor for the husband which purportedly advised his solicitor as at that day of major errors that have been identified within the trade debtors balance of the financial statements of W Pty Ltd for the financial year 2007/2008.  The letter advised that that error had the effect of inflating the sales figures for that year by over $400,000.  It was disclosed that no information had been provided to the single expert valuer, Mr L.  Annexed to that solicitor’s letter is a letter from P Accountants, the accountants for the business and the husband.

3. That letter is dated 21 October of this year and advised that they have lodged an amended 2008 income tax return for the company.  That was required to correct a major error in the trade debtors balance.  That is explained in the letter.  The significant changes are that sales income has been reduced by $419,430, trade debtors are reduced by the same amount and income tax refunded has increased from $63,498 to $189,327.  A draft updated balance sheet and profit and loss extract were annexed to that letter.  Of surprise is the fact that that letter was provided as at 12 November and not at any earlier date. 

4. These extempore reasons for judgment are being recorded to cover the submissions of Counsel and are not for the purposes of any orders made this day.  I record that I have an open mind on all issues arising out of submissions this day and the matter will remain listed for a defended hearing next Monday.  This matter had been before me in August of this year and then, more recently, on 26 October of this year.  At no time had there been any disclosure of financial errors in past accounts or taxation returns of such a serious nature as to require the re‑drawing and lodgement of such documents.

5. From Mr Dickson’s information to the Court, none of that information was disclosed to him at that time.  Indeed, there was a Mediation Conference held out of Court when Mr Melilli of Counsel appeared for the husband and Mr Dickson of Counsel for the wife, that was in early November this year and no such updating disclosure was made, notwithstanding that by then the husband had signed and lodged his amended taxation return.  The issue between now and Monday is that there must be full disclosure of all financial accounts – that is, both taxation returns and financial statements – to the wife through her solicitors and to Mr L.

6. The impact this may have upon the valuation of Mr L remains unknown, but pursuant to his amended letter of valuation as encompassed within his affidavit filed 26 August 2010, his current value of W Pty Ltd as at 30 June 2009 was $508,205.  Likely that valuation must change because of the identified errors in the ‘07/08 financial year carried forward in subsequent financial years.  The matters that may come before the Court include an adjournment of the defended hearing which has been foreshadowed by Mr Dickson on behalf of the wife.

7. There are stated to be issues of the level of past disclosure to the Court, the accuracy of information provided on behalf of the husband and through his instructions, likewise when information first became apparent, and in that context and with leave of the Court, Mr Mawson was permitted to file an affidavit of Mr E, accountant.  I have carefully read paragraph 4 thereof which provides the background to the current issue and also a timetable as to when he or other accountants of the company first became aware of past recording and financial errors.  All of those matters can await another day, but as an overview, it does seem that there could be matters of some financial significance that have been known to the husband and not passed on to the wife or respective solicitors for a lengthy period of this year.

8. As I say, I carefully pre-judge no issue and leave all matters before me on Monday.  What I have invited Counsel for both parties to do is to come prepared with any application they seek, prepared with some care, as to what should be covered by and what should be included within those interim orders, if they be necessary.  My primary intent is for the matter to be able to proceed on Monday and conclude within the available time limit.  I have made it abundantly clear to all in court this day that any adjournment will be for a substantial period if the matter is to remain in my docket and it will be in late June or July of next year, which is the first time I have three consecutive days to hear this matter, which has already had its various listing opportunities.

9. The other matter to which I now turn is Mr Mawson’s application pursuant to an application in a case presented to the Court and accompanying affidavit of the husband sworn 12 November, though yet unfiled, as to the market value of the property at K.  His application is that an updated valuation should be obtained because, at the husband’s expense, a Mr B has valued the property as at 18 October this year at $3.4 million on what is said to be recent comparable sales which were at the time not available to the independent valuer who had earlier undertaken, at the direction of the court, that valuation exercise and where the property had then been valued at $3.9 million.

   RECORDED:  NOT TRANSCRIBED

10. The further issue that is before me is the question of a valuation of the real property at K.  The husband’s solicitors have caused to be filed an application in the case and an affidavit of the husband.  I have granted leave this day for those documents to be filed.  What is sought is that a further and additional valuation, prepared by Mr B and dated 18 October 2010 be admitted into evidence.  I decline to determine that issue at this time.  I have, however, read the valuation report and the comparable sales annexed thereto.  That document has been previously forwarded to the wife’s solicitors and to the court appointed valuer.  He has not responded to the purported reduced valuation of $3.4 million and/or any assessment of the additional comparative sales that are said to have occurred post the date of Mr C’s valuation. 

11. There is no agreement between Counsel and there is no order of the Court.  What I intend to do is to stand these matters over to Monday morning when the matter is listed before me in the defended list of cases.  The clients must be present at Court on that day as with Solicitors and Counsel.  What I have raised with Counsel and what I am assured will occur is that Mr C is now proceeding to review and assess the additional comparative sales identified by Mr B and they will form part of some updated letter or report of valuation.  Additionally, if Mr C has any other comparable sales of relevance that he locates and would think relevant and would rely upon to support any amended or the original valuation of the property, they must be disclosed to both solicitors and to Mr B.  I have invited the two valuers to confer at 4 o'clock Friday and I am assured by the legal practitioners in the case that will be facilitated.

12. As to the additional costs of Mr C in pursuing an update of his valuation on the basis of the amount disclosed additional comparative sales, his fee is $900 and there is consent from the husband’s legal practitioners that as he seeks that update he will pay that $900 fee and thus that is his sole responsibility.  Any other cost arising from any additional relevant comparative sale that may be relevant will be decided upon by the court at another time.  I clearly emphasise to all that I have not ruled on the application.  There is and remains one court-appointed valuer.  The difference in valuation and the basis for such difference and other related matters will be reconsidered, if relevant, on Monday morning when the matter is next listed. 

I certify that the preceding twelve
(12) paragraphs are a true copy of the reasons
for judgment of the Honourable Justice Young
delivered on 18 November 2010.

Associate: ……………………………………………………………

Date:  …………………………………………………………………