Pitt & Pitt
[2009] FamCA 620
•16 July 2009
FAMILY COURT OF AUSTRALIA
| PITT & PITT | [2009] FamCA 620 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Whether leave should be granted to enable expert evidence to be given in relation to valuation of a company in addition to the evidence of the single expert – consideration of ground of a contrary substantial body of opinion |
| Family Law Rules 2004 (Cth) Rules 1.04; 15.42; 15.49(2)(a) and 15.52(3) |
| APPLICANT: | Ms Pitt |
| RESPONDENT: | Mr Pitt |
| FILE NUMBER: | SYC | 2905 | of | 2007 |
| DATE DELIVERED: | 16 July 2009 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Rose J |
| HEARING DATE: | 28 May 2009 11 June 2009 |
| WRITTEN SUBMISSIONS: | 28 May 2009 1 June 2009 3 June 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | R. Lethbridge S.C. |
| SOLICITOR FOR THE APPLICANT: | Slade Manwaring |
| COUNSEL FOR THE RESPONDENT: | C. Simpson S.C. |
| SOLICITOR FOR THE RESPONDENT: | Armstrong Legal |
Orders
That pursuant to Rule 15.49, leave is granted to the Wife to tender the report of Ms N Accountant annexed to her affidavit sworn 22 May 2009 and filed 25 May 2009 in relation to the issue of the valuation of the shareholding of the parties in R Pty Limited.
That the Wife cause a sealed copy of the affidavit referred to in Order 1 to be served on Ms D accountant on or before 5pm 20 July 2009.
That the parties make arrangement for Ms D and Ms N to confer for the purposes of compliance with all of the provisions of Rule 15.69(3) on or before 5pm 7 August 2009.
That the parties arrange for Ms D and Ms N 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 5pm 21 August 2009.
Costs reserved.
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: SYC 2905 of 2007
| MS PITT |
Applicant
And
| MR PITT |
Respondent
REASONS FOR JUDGMENT
Introduction
The substantive proceedings between the parties in which each of them seek orders for property settlement have been set down for trial for seven days commencing 10am 31 August 2009.
On 1 May 2009 case management and pre-trial directions were made.
On 25 May 2009 an Application in a Case was filed on behalf of the Wife in which an order was sought that Ms N “be appointed as an adversarial expert in relation to the value of the parties’ shareholding in [R] Pty Ltd (“[R Company]”) and otherwise the matters specified in paragraph 1 of that Application.” Further directions were sought on the premise that the Wife’s Application would be successful. The Application is opposed. The parties are represented by Senior Counsel.
On 28 May 2009 against a background that the submissions on behalf of the Wife were set out in the “Outline of Case Document” filed in Court on that day, I made directions for the filing and service of written submissions on behalf of the Husband and in reply on behalf of the Wife by 4pm 1 June and 3 June 2009 respectively. Those directions have been complied with. On 11 June 2009 I made the following notation:-
“B.That by consent, the issue of whether or not leave should be granted to permit a further expert to be appointed on behalf of the Wife is to be determined in chambers on the basis of the written submissions lodged by counsel for the parties.” (emphasis added)
Rule 15.49
Ms D is the Agreed Single Expert Witness for the purpose of preparing a valuation report in respect of R Company.
On behalf of the Wife, reliance is placed upon the following provisions of Rule 15.49 for the purpose of the order being made as sought by her:-
“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.”
The “issue” is the valuation of R Company.
Controversial Issues of Valuation
These issues can be discerned from Annexure “C” to the affidavit of Ms N sworn 22 May 2009 and filed 25 May 2009. They are principally as follows:-
i) Different methodology utilised.
ii) Different adjustments appropriate to determine EBIT.
iii) Different basis for financial forecasts.
iv) Differences in the appropriate capitalisation rate.
v)Different approach to “weighting” in the calculation of maintainable earnings.
The ultimate difference in conclusions is that so far as the Single Expert is concerned her scenarios “A” and “B” amount to $8,348,000 and $10,049,000 respectively whereas Ms N’s conclusions as to value is considered by her to be “in the range of $15,230,610 to $16,437,625.”
Conclusion
I am grateful for the well considered and detailed written submissions made by Senior Counsel. Matters of substance were cogently argued in those submissions. I have ultimately determined that the Wife’s Application is successful for the following reasons.
Fundamental to the valuation reports prepared by the Single Expert and Ms N is the methodology used. Quite clearly, there is a significant difference in that respect in that the Single Expert applies a different methodology for each of “Scenario A” and “Scenario B” as opposed to the single methodology applied by Ms N.
Whilst the nature of adjustments by themselves are arguably not sufficient to attract Rule 15.49, nonetheless the treatment of those adjustments and the outcome which results are significant matters.
In addition, the other discreet issues raised in Ms N’s Report and the financial consequences of the treatment of those issues have a material bearing upon the ultimate valuation of R Company that may be accepted.
Whilst I accept the submissions made on behalf of the Husband that certain factual issues may need to be resolved at trial, nonetheless it appears that the Single Expert and Ms N have received information which each has considered appropriate to rely upon for the purpose of the valuation to be struck. Given that each of the Experts has acknowledged the relevant Rules in relation to experts’ duties and obligations, including in essence professional objectivity and integrity, I consider that I can infer at this stage, subject to any subsequent cross examination at trial, that such standards have been applied by each of them so far as reliance upon information which each has considered to have substance.
Senior Counsel for the Husband is of course correct in his contention that the mere holding of a different opinion does not lead to a conclusion that there is “a substantial body of opinion contrary”. However, for the reasons that I have previously stated, I do not accept such an approach applies in this particular case.
In accordance with the submission made by Senior Counsel for the Husband, I have considered the provisions of Rules 1.04; 15.42 and 15.52(3). Whilst I accept the implied submission that the effect of those Rules is that the trial may be lengthened with consequent increased legal costs, I have formed the view that those rules do not mean that the interests of justice are sacrificed for expediency and to save costs. Indeed, in view of the significant differences as between the reports of the single expert and Ms N, which have been previously described and summarised by me, a dismissal of the Wife’s Application may lead to compromising the interests of justice. It must of course be emphasised that the granting of leave on the ground relied upon pursuant to Rule 15.49(2)(a) does not mean that the valuation contended by Ms N will be preferred to that of the Single Expert. That is a matter which must await the necessary findings of fact and submissions following the testing of evidence in the forthcoming trial.
With regard to the contention that should an order be made as sought by the Wife the Husband would be placed “at a significant forensic disadvantage as his ability to confer and seek information from the Single Expert would be constrained by the Rules”, I note and accept the concession made by Senior Counsel for the Wife that the Husband “and his advisors should have access to confer with Ms. [D] in relation to matters where she differs from the opinion of Ms [N]”.
I also note that no application has been made on behalf of the Husband or indeed the Wife that the Single Expert be relieved of her appointment. Consequently, I inferred that the Husband continues to rely upon her report.
I will make orders which also provide for the experts to confer and to complete a Joint Statement, briefly setting out the matters upon which they agree, the matters of disagreement and the reasons for such disagreement.
I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose.
Associate:
Date: 16 July 2009
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