Pitt and Pitt (No 4)

[2009] FamCA 1173

FAMILY COURT OF AUSTRALIA

PITT & PITT (NO. 4) [2009] FamCA 1173

FAMILY LAW – EVIDENCE – Expert evidence – whether the Rules have been successfully engaged to permit a party to rely on the report of a further expert

Family Law Rules 2004 rr.15.42, 15.49, 15.52.

APPLICANT: Ms Pitt

RESPONDENT: Mr Pitt

FILE NUMBER: SYC 2905 of 2007

DATE DELIVERED: 20 November 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: The Honourable Justice Rose

HEARING DATE: 20 November 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT:	R Lethbridge SC and D Dura
SOLICITOR FOR THE APPLICANT:	Slade Manwaring
COUNSEL FOR THE RESPONDENT:	C Simpson SC and P Livingstone
SOLICITOR FOR THE RESPONDENT:	Armstrong Legal

Orders

1. That Orders be made in terms of the document entitled “Terms of Settlement” signed by the parties and marked as “Exhibit A” as set out hereunder:

   BY CONSENT ORDER BE MADE AS FOLLOWS:

   1. That the parties forthwith cause R Pty Ltd to pay to the Husband and the Wife the sum of $250,000 each by way of interim costs and disbursements.

   2. That each party shall execute all documents as may be necessary to secure from the Westpac Banking Corporation Ltd an additional bank bill or bills in an amount necessary to meet the sums required in 1, above and 3, below, and thereafter sign all documents as may be necessary to continue to rollover that bill pending the determination of the proceedings.

   3. That the parties cause R Pty Ltd to pay forthwith to the Wife the sum of $50,000 with the designation of that sum to be determined by the Trial Judge. 

   4.        That the costs of each party be reserved.

2. That Orders be made in terms of paragraphs 1 to 4 inclusive of the Amended Application in a Case of the wife filed 12 November 2009 as set out hereunder:

   1.That pursuant to Rule 15.49 leave is granted to the Wife to tender the report of Mr M, Accountant annexed to his Affidavit sworn 5 November 2009 and filed 5 November 2009 in relation to the issue of the taxation implications of the costs associate with the F Pty Ltd business venture.

   2.That the Wife cause a sealed copy of the Affidavit referred to in Order 1 to be served on Mr LR, Accountant forthwith.

   3.That the parties make arrangements for Mr M and Mr LR to confer for the purposes of compliance with all of the provisions of Rule 15.63 on or before Wednesday 25 November 2009.

   4.That the parties arrange for Mr M and Mr LR to lodge their completed Joint Statement referred to in Rule 15.69(3)(e) lodged with the Associate to the Honourable Justice Rose and served on or before 5.00pm on 27 November 2009.

3. That by consent the parties and their legal representatives have leave all documents produced on subpoena by RC, Accountant.

4. That by consent the parties and their legal representatives have photocopy access to such documents referred to in Order 2.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER:  SYC2905 of 2007

MS PITT

Applicant

And

MR PITT

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 7 September 2009 the substantive hearing before me was adjourned part heard, and has been listed to resume for a further three days commencing 10.00am, 1 December 2009.

2. Amongst the issues for determination are matters of commercial complexity so far as the valuation of the company and its subsidiaries otherwise known as R Pty Limited.

3. For the purpose of enabling a determination of a tax issue that arose, an agreed single expert.  Mr LR was appointed and his report was completed and filed.  All parties have a copy of it.

4. Before me is the Amended Application in a Case (“the application”) filed on behalf of the wife on 12 November 2009.  Paragraphs 1 to 4 inclusive of the application sought orders which enable leave to be granted for the wife to rely on a further expert in relation to an important tax issue.  An affidavit of Mr M sworn on 5 November 2009 also filed on that date has been read together with all other material to which counsel made reference.

5. The application on behalf of the wife is made relying upon r.15.49(2)(a) and (c). Submissions have been made by senior counsel in relation to the application. The wife’s application is opposed by the husband.

Conclusion

1. I have concluded that leave will be granted on the terms sought in the wife’s application.

2. My reasons for doing so are briefly set out as follows.

3. It is clear from the affidavit of Mr M that the question of the treatment of various matters in the accounts of R Pty Limited, particularly in terms of whether expenditure referred to in his detailed report is a capital expenditure or not, has significant tax implications.  Whilst his report does not spell out the commercial effect in money terms, should his report and the opinions contained in it be accepted, senior counsel for the wife assured me that commercially there is a substantial difference.  That proposition was not contested by senior counsel for the husband.

4. Rather, the opposition is based on the lack of Mr M’s report complying with the Rules, in that it is merely an opinion of another expert, in the nature of submissions, as opposed to illustrating what is called for in r.15.49(2)(a) namely, “a substantial body of opinion contrary to any opinion given by the single expert witness”.

5. Consequently, it was necessary to re-examine Mr M’s report.  Mr M’s report, in my view, does provide a detailed analysis of the platform for his ultimate conclusions and in doing so, inferentially, is relying upon what he contends to be a substantial body of opinion.

6. If that was not the case, then every possible additional expert witness would need to bolster his or her report by the reports and or opinions of other alleged experts to demonstrate a substantial body of opinion.

7. In my view, that would have a substantial effect on the conduct of litigation and make that Rule unworkable in many cases, and in particular, would lead to some difficulties in meeting the purpose of Pt 15.5 set forth in r.15.42. In considering whether leave should be granted, I have also taken into account the provisions of r.15.52(3) and its various paragraphs.

8. In my view, the issue which the reports of Mr LR and Mr M are concentrated upon, does represent an important issue that does require a determination for the purpose of striking a value of R Pty Limited, particularly in the event that the husband’s application is unsuccessful.  I have taken into account that the effect of the husband’s application, if successful, renders neutral so to speak the issue of taxation treatment.  However, I cannot assume that his application will be successful.

9. If the wife’s application is successful, then on the evidence before me, it may be, and one would hope that those advising the wife and the husband have considered this matter, that they apply themselves to the question of the value of the company likely to be struck, taking into account tax on the wife’s application, as opposed to not taking into account on the husband’s application, for the reasons cogently outlined by the husband’s senior counsel.  The impact of the appointment of an expert witness will undoubtedly increase the cost.  It may also lengthen the hearing.

10. However, I have concluded that the weight which should be attached to the complexity of the issue for consideration is such that it should not be sacrificed on the altar of expediency.  The parties are entitled to put forward their case within reasonable parameters, having regard to the issues that have been agreed should be the subject of ultimate determination.

11. It is for those reasons, and particularly bearing in mind that neither senior counsel for the wife or the husband submitted that should the application be granted, it would then necessarily interfere with the dates fixed for the resumption of the part-heard hearing, that I have determined to make orders as sought.

12. Before making those orders, I will allude to a matter that I raised with senior counsel.  Namely, given the complexity of the issue and approach that should be taken to it, whether it may be more satisfactory for the parties to prospectively spend less money on jointly retaining senior counsel at the Sydney Bar who has the reputation of being an expert in tax, and to abide by his or her opinion, rather than potentially having the costs incurred and the time that will be taken to deal with duelling experts in court, with the greater uncertainty as to the ultimate result.

13. Regrettably, neither the Act nor the rules that apply in this Court are in the same terms as in the Supreme Court of New South Wales.  Consequently, I cannot make an order which refers this aspect of the matter for arbitration.  However, that should not prevent the parties from considering this approach, for the reasons just given.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose

Associate:

Date:  3 December 2009