Quill & Quill (No. 2)
[2021] FamCA 627
•31 August 2021
FAMILY COURT OF AUSTRALIA
Quill & Quill (No. 2) [2021] FamCA 627
File number(s): MLC 6573 of 2010 Judgment of: MCGUIRE J Date of judgment: 31 August 2021 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Review of a Senior Registrar’s decision – Hearing de novo – Interim Application by husband to adduce single expert evidence from a forensic accountant – Application dismissed. Legislation: Family Law Act 1975 (Cth) Number of paragraphs: 33 Date of hearing: 26 August 2021 Place: Hobart Counsel for the Applicant: Mr Frankel Solicitor for the Applicant: Consult Solicitors Counsel for the Respondent: Mr Dixon Q.C. Solicitor for the Respondent: Coote Family Lawyers ORDERS
MLC 6573 of 2010 BETWEEN: MR QUILL
Applicant
AND: MS QUILL
Respondent
ORDER MADE BY:
MCGUIRE J
DATE OF ORDER:
31 AUGUST 2021
THE COURT ORDERS THAT:
1.The husband's Application in the Case dated 23 August to 2021 seeking a review of the orders of Senior Registrar Hoult of 18 August 2021 be dismissed.
2.Pursuant to rule 19.05 of the Family Law Rules 2004 (Cth) it was reasonable to engage counsel to attend.
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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Quill & Quill has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McGUIRE J
Application
Before me is an application in the case filed by the husband, Mr Quill, seeking to review the decision of Senior Registrar Hoult of 18 August 2021. Pursuant to the Rules[1] such application proceeds by way of hearing de novo.
[1] Family Law Rules 2004 (Cth).
After discussions with counsel, the only issue remaining from my determination is the husband's application for liberty to adduce evidence from a forensic accountant, Mr KK, by way of expert report in respect of the husband’s substantive application, currently listed for trial on 27 September 2021, and seeking orders under s 79A(1)(a) of the Family Law Act 1975 (Cth) (‘the Act’) to set aside the final property orders made by consent between the parties on 21 July 2010. Both the substantive and interlocutory applications are opposed by the wife, Ms Quill.
RELEVANT BACKGROUND
The husband is 77 years of age and the wife is 62 years.
They married in 1979 and separated in 2000. A divorce was granted in 2021.
The parties entered into final consent orders as to property settlement on 21 July 2010. Both parties were represented at that time. The limited evidence before the Court suggests that the parties were then of some considerable wealth. They owned a number of the parcels of real property. They operated a farming partnership, ‘DD Company'. The consent orders provided, as is available, for the parties to continue to operate to the partnership despite the intent of s 81 of the Act. It also seems agreed that the husband remained in occupation of a property which fell to the wife under the consent orders and that he paid rent at least until 2020.
On 29 January 2021 the wife filed an application in this Court effectively seeking enforcement of a number of the orders from 2010.
On 1 February 2021 the husband filed an application seeking orders under s 79A of the Act. The applications became came before McMillan J on 16 February 2021 whereupon the matter was bifurcated to allow preliminary hearing of the husband s 79A application which was then listed for trial for three days duration commencing 1 June 2021.
Broadly speaking, in respect of his substantive application, the husband relies on s 79A(1)(a) that there has been a miscarriage of justice and s 79A(1A) that the parties conduct gave rise to an explicit or implied consent that the parties vary the orders and specifically that the wife was to hold certain assets coming to her under the consent orders on trust for the husband and apparently so as to avoid scrutiny by a potentially litigious creditor of the husband.
Trial material appears to have been filed in anticipation of the trial to commence 1 June 2021. The husband filed his trial affidavit on 6 April 2021.
Nevertheless, on 22 April 2021 the husband filed an application in a case seeking to rely on the single expert valuations of:
(i)Mr B – real estate valuer;
(ii)Mr GG – building experts; and
(iii)Mr KK – forensic accountant.
Queens Counsel for the wife now before me submits, and I accept, that at that stage the husband had obtained substantive reports from Mr B, but not from either Mr GG or Mr KK.
The husband's interlocutory application came before Hartnett J for hearing on 10 May 2021. Her Honour gave judgement on 14 July 2021 ordering inter alia that the husband have liberty to rely on expert evidence of the Mr B, but dismissing the application in respect of the each of Mr GG and Mr KK.
No appeal was lodged in respect of the determination of the Hartnett J. Quite obviously, the trial date of 1 June 2021 was vacated and the matter was allocated for trial before me on 27 September 2021.
On 12 August 2021, some six weeks prior to the second allocated trial date and some month following Her Honours determination, the husband filed a second application in a case seeking orders inter alia that the husband have liberty 'to rely on expert evidence of Mr KK…’
(i)as to whether the methodology adopted by Ms Q in preparing 3 versions of the summary of the parties’ financial circumstances in about June 2010 was sound;
(ii) in respect of the retrospective valuation (as at 21 July 2010) of the assets the subject of the applicant husband's application under is 79A.
The Application also sought an extension of time to file Mr B's evidence permitted by Her Honour’s orders of 14 July 2021. Senior Registrar Hoult extended time for Mr B's evidence to 1 September 2021 and otherwise dismissed the application.
To his credit, Counsel for the husband concedes that the application coming before me is 'unusual and, not without its difficulties’ in circumstances where arguably Hartnett J has determined this issue and where no appeal has been lodged. Counsel, however, does argue that there is 'new' evidence not agitated before Her Honour on 10 May 2021 and which (arguably) was not available to the husband at that time. In any event, no preliminary argument is mounted before me as to whether or not I should do proceed to hear this application for review.
Relevantly, it is inherent in this application that should it succeed then the trial of the matter currently listed for 27 September 2021 be further adjourned with counsel for the husband anticipating that the matter would then be ready for trial 'around December'. This submission and application, of course, presumes available judicial resources and court time in December which, again with the appropriate concession by counsel for the husband, may be unreasonably presumptuous.
Application – Mr KK
The essence of the argument in respect of Mr KK is that it is both necessary and relevant to the husband’s substantive case that Mr KK be permitted to provide evidence of the 'real value' of the parties' property pool as of the time of making the consent orders in in 2010.
Indeed, counsel argues that Hartnett J effectively created a precedent permitting such evidence of 'real value’ in giving liberty for the husband to adduce evidence from the real estate valuer, Mr B. Counsel refers me to and relies upon a decision of the Full Court in Barker & Barker[2] where their Honours, similarly dealing with an application under s 79A(i)(a) of the Act, considered retrospective valuations appropriate or necessary to determine the 'real value' of the assets as at the time of the original orders. Accordingly, counsel for the husband argues that the proposed evidence of Mr KK 'is necessary and relevant' to the miscarriage of justice ground in s 79A(i)(a) as likely to be of strong probative value.
[2] [2007] FamCA 13.
The argument before me was therefore in these general terms of Mr KK being able to provide:
(i)retrospective valuations of the assets;
(ii)to show 'real value as at the year date of the 2010 consent orders; and
(iii)that such evidence is both necessary and relevant.
Specifically, the focus of the submissions before me is the evidence of three iterations of financial summaries of balance sheets prepared for the parties by their then joint accountant, Ms Q, in June 2010, which the husband says formed the basis of the alteration of their property by reason of the consent orders. The husband argues some form of financial manipulation evidenced by these summaries.
Significantly, at [16] of the husband's counsel’s written submissions there is an admission that such material was available and disclosed prior to the hearing before Hartnett J. Counsel for the husband says, however, that this evidence is now 'new' because such was as an exhibit to the wife's 42 page affidavit of 4 May 2021 filed in the substantive proceedings being only a matter of days prior to the hearing before Her Honour on 10 May 2021. Counsel claims that neither the husband nor his legal representatives had read the wife's trial affidavit prior to the interlocutory hearing before Hartnett J and hence it is 'new' material.
Specifically, on the submissions of his counsel, the husband proposes to adduce evidence from Mr KK in respect of the following:
(i)the methodology of Ms Q with reference to her three iterations of a balance sheet;
(ii)the inclusion of the actual or potential capital gains tax liability;
(iii)the inclusion and transfer to the husband pursuant to the consent orders of the right to pursue and recover a debt to a Mr NN.
(iv)the value attributed to the assets of the ‘N Trust’.
The husband relies on his affidavit of 12 August 2021 where he deposes that his own education and background do not allow him to provide such expert type evidence. There is also an affidavit on a ‘preliminary basis' from Mr KK himself sworn 12 August 2021 setting out the following at [8]-[9]:
[8] I agree with the statement made by [the wife] in paragraphs 31 – 32 of the Affidavit that the Family Court Application appears to have been based on the values adopted by Ms Q in the third version of the Financial Summary.
[9] The Financial Summaries purport to:
(a) value each of the family assets and entities belonging to [the husband] and [the wife’s] as at July 2010.
(b) set out Ms Q's proposal for the division of assets between [the husband] and [the wife] for the purposes of the Family Court Application.
Whilst counsel for the husband, properly in my view, concedes that the evidence in the 'Ms Q Summaries' is not necessarily under the cover of ‘new evidence' but simply evidence available but not read by the husband's legal practitioners prior to the hearing before Hartnett J, he argues that the interests of justice and the Court having the best evidence are overriding and that the application should be permitted and despite the inevitable loss of the trial date of 27 September 2021.
The fundamental and general submission of Queens Counsel for the wife, opposing the application, is that the evidence of the Mr KK is neither necessary nor relevant to the s 79A issue.
Firstly, and in respect of the Application now before me, the wife argues that the material is not 'new' to that considered by Justice Hartnett. Significantly, there was no application to re – open before Her Honour and despite Her Honour's judgment being reserved between 10 May and 14 July 2021. As mentioned above, there has been no appeal in respect of Her Honours judgment and these matters are relevant, in my view, in respect of the potential delay in the judicial process weighed against the 'necessary' and 'relevant' argument of the husband.
Specifically, however, the generalised argument before me obfuscates the issues of direct 'relevance' and ‘necessity'. Firstly, and importantly, the assets of the parties in 2010 comprised almost entirely of real property including the assets of the N Trust. Her Honour has already acceded to the application to adduce evidence from the real estate valuer for retrospective valuations. This is not a field of Mr KK expertise.
Secondly, I accept the submission of Queens Counsel for that the wife that there is no 'necessity' for expert evidence in respect of Ms Q's 'methodology' and her apparent preparing of three summaries. It is conceded by Mr KK himself that Ms Q relies on the third summary. Ultimately this issue is one for the Court and Mr KK would not give evidence but simply critique as to the soundness of the process. Again, the orders made in the 2010 were by consent and where each of the parties was the represented. Mr KK own affidavit at [8] states that the Financial Summary prepared by Ms Q is ‘based on values’. The values relates primarily to real estate. These have been attended to by Mr B and Mr KK can offer no further evidence.
Similarly, the inclusion by Ms Q of an actual or potential capital gains tax liability is a matter for consideration for the Court and not comment by Mr KK.[3]
[3] Rosati v Rosati (1998) FLC 92–804.
Further, counsel for the husband submits, and it is conceded that there are no ‘enterprises’ of the parties other than the partnership. The husband retained an ‘asset’ or chose-in-action by reason of the consent orders being the right to recover a debt from a Mr NN. The husband himself can give evidence as to the nature of the debt and its recoverability. Matters such as the prospects of the recovery and the like are not properly the subject of such expert opinion and as anticipated from Mr KK.
CONCLUSION
In conclusion, therefore, I am not persuaded that there is either necessity or relevance within the context of this s 79A application for expert forensic accounting evidence from Mr KK. The assets essentially comprise of real property now the subject of expert historical valuations by Mr B and issues as to the inclusion of a capital gains tax liability and/or the recoverability of the Mr NN debt are matters of fact for the Court assisted by relevant to authorities.
Given this determination, I need comment no further on the delays in this matter and the submissions by Queens Counsel for the wife as to any motivation of this application. Again, it was not argued that I should not hear the application and I have not done so. The application will be dismissed. The matter will remain listed for trial to commence 27 September 2021.
I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McGuire. Associate:
Dated: 31 August 2021
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