Rojo and Durban

[2007] FamCA 528

FAMILY COURT OF AUSTRALIA

ROJO & DURBAN [2007] FamCA 528

FAMILY LAW - EVIDENCE - Expert evidence - Appointment of single expert witness - Reasonably professional fees - Ambit of report - Liability for cost of expert witness fees

APPLICANT: MS ROJO

RESPONDENT: MR DURBAN

INTERVENOR:

INDEPENDENT CHILDREN’S LAWYER:

FILE NUMBER: BRF 227 of 2005

DATE DELIVERED: 24 January 2007

PLACE DELIVERED: Brisbane

JUDGMENT OF: Barry J

HEARING DATE: 24 January 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Judge appearing by telephone link

SOLICITORS FOR THE APPLICANT: Goldrick Farrell Mullan

SOLICITOR FOR THE RESPONDENT: Mr Maunsell

SOLICITORS FOR THE RESPONDENT: Maunsell Pennington Solicitors

Orders

1. That Ms E of H Pty Ltd be appointed as the Single Joint Expert pursuant to Rule 15.45 of the Family Law Rules for the purpose of preparing a report on:

(a).The value of B Pty Ltd trading under the name DS at the following dates:

(i).30^th November 2004;

(ii).27^th January 2005;

(iii).the date of these Orders.

(b).The extent to which, if any, the conduct of either party either solely or jointly with any other person or entity has affected the value of B Pty Ltd trading under the name Industry DS during the following periods:

(i).1^st January 2004 to 30^th November 2004;

(ii).30^th November 2004 to 27^th January 2005;

(iii).27^th January 2005 to the date of these Orders.

1. (a).     That Order 4 of the Orders of the Honourable Justice Barry dated 17^th

   February 2006 be vacated;

(b).The Wife be responsible for the payment of the fees and expenses of the Single Joint Expert in the first instance of up to $30,000.00 with the issue of the ultimate payment of those fees and expenses by either party to be reserved to the Trial Judge. In the event that the fees and expenses of the Single Joint Expert exceed $30,000.00, then same shall be met equally by the parties;

1. (a).     The parties shall within twenty-one (21) days of the date of Orders      confer for the purpose of preparing an agreed letter of instructions for        the Single Joint Expert;

(b).If the parties cannot agree to the wording of an agreed letter of instructions for the Single Joint Expert, then both parties shall within a further period of seven (7) days file a draft letter of instructions for settling by the Honourable Justice Barry with the matter to be re-listed before him at the next available date convenient to the Court.

1. Both parties shall do all acts and things necessary to give validity and effect to these Orders, particularly with respect to co-operating with the Single Joint Expert for the purpose of the preparation of her report.

1. Costs of both parties reserved. 

FAMILY COURT OF AUSTRALIA AT  

FILE NUMBER: BRF227 of 2005

MRS ROJO

Applicant

And

MR DURBAN

Respondent

REASONS FOR JUDGMENT

1. The Rules of Court provide for a single expert to be appointed and that is in effect the preferred basis for the conduct of proceedings.  Rule 15.42 is in the following terms:

   "The purpose of this part is:
   (a)       to ensure the 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."

2. Rule 15 then goes on:

   "If the parties agree that expert evidence may help to resolve a substantial issue in a case they may agree to jointly appoint a single expert."

3. Rule 15.45 provides:

   "The Court may, on application or on its own initiative, order that expert evidence be given by a single expert witness."

4. Rule 15.47 starts with the presumption that the parties are equally liable to pay a single expert witness's reasonable fees and expenses incurred in preparing the report and the single expert witness is not required to undertake any work in relation to his or her appointment until the fees and expenses are paid or secured.  There is a notation to that rule to say "This rule applies unless the Court orders otherwise" and 15.54 deals with instructions to expert witness:

   "A party who instructs an expert witness to give an opinion for a case or an anticipated case must ensure the witness is aware of the obligations under the rules"

   and the various other provisions there about the instructions being in writing and the issues about which the opinion is sought.

5. The wife's application on today's date is an amended application which apparently was filed a few days ago, probably late last week.  She seeks an Order that Ms E, who is a chartered accountant of H Pty Ltd in Sydney be appointed as the single joint expert and she then seeks that the expert value the company B Pty Ltd trading under the name DS at the following dates: 30 November 2004, 27 January 2005 and the date of these Orders.

6. She seeks an Order that the report cover the extent to which, if any, the conduct of either party, either solely or jointly with any other person or entity has affected the value of the company at the relevant dates and then seeks an Order that a previous Order I made back in February last year be vacated.  She seeks an Order that she pay at first instance the fees of the expert up to a total of $30,000 but the issue of the ultimate payment of those fees be reserved to the trial Judge; and an Order in relation to the parties conferring about an appropriate letter of instructions to the single joint expert.

7. The husband has filed an amended response document.  That document seeks that the wife's application be refused and that subject to the wife complying with the original paragraph 4 of my Order of 17 February 2006, Mr H of V Company be appointed as the single joint expert for the purpose of preparing a report on:

   a)the value of B Pty Ltd trading under the name DS at the following dates:

   (i) 30 November 2004;
   (ii) 27 January 2005.

   An Order in general terms is then sought that both parties do all things to

   co-operate with the single joint expert.

8. The wife, with her initiating application of 19 December last year filed a very lengthy affidavit.  I commented at the commencement of today's hearing, the affidavit provides far more than I need to know for the purpose of the current application.  To her lengthy affidavit the wife annexes correspondence she has had with H Pty Ltd and in particular Ms E.  The letter from H Pty Ltd dated 21 September 2006 is annexure 1.  The author gives some details of her hourly rate and estimates her fees in preparing the report somewhere in the range $15,000-$25,000.  The hourly rate for a director is $450, I assume she is a director.  An associate director is $340 to $370 and the manager is $290 an hour.

9. Orders have been made by JR Smith back in May of 2005 and one of those Orders, paragraph 3, was that the sum of $15,000 be provided to the husband's solicitors and to the wife's solicitors, to be paid to the wife's solicitors if the wife so chooses to enable the parties to pay legal costs and outlays in relation to the provision of a single expert's report of the valuation of the business.  Such sum or sums to be made available from the moneys held by BI Ltd.

10. I made an additional Order on 17 February 2006, paragraph 4, that the wife comply within 30 days with paragraph 3 of the Orders made by the Judicial Registrar and then simply repeated those terms, that she had to pay in effect, the sum of $30,000 for the provision of the report.

11. I would have thought it was implicit in the two Orders that had been made that a single expert would be appointed.  As I have read the correspondence, that has not necessarily been the view taken by the husband or his legal advisers, although they say back at the time when proceedings were initiated, they were seeking the appointment of a joint accountant either C Company or V Company.

12. On today's date the wife has appeared through counsel by phone link from Sydney.  The husband has appeared in person in Brisbane, represented by his solicitor, Mr Maunsell.

13. The issues to be determined effectively are four-fold.  They may be summarised as follows:  Firstly, who should be the single expert?  As I have noted, the husband has in correspondence, opposed the need for an appointment on the basis of his statement that the company has no value whatsoever.  He has also in effect, sought such Orders from the Court but concedes, effectively, that there has to be a single expert.  He contends for Mr H of V Company who practises predominantly in Brisbane.  V Company have recently opened a Sydney office and presumably Mr H visits Sydney from time to time although there is no evidence on this aspect.

14. The matter of Mr H's costs are to be found in an annexure to the husband's affidavit filed 19 January 2007.  He sets his fees at $300 an hour for a partner and staff at $150 to $200.  He says on his estimate of fees:

    "Our professional fees are based on the time actually spent by the individuals assigned to the engagement plus direct out-of-pocket expenses.  Based on my understanding of the activities of [B] Pty Ltd I expect our fees to be in the order of $6000 to $8000 plus GST.  This estimate does not include a site visit.  Once I have undertaken a preliminary view of financial information I would contact my instructing solicitors should my estimate change."

15. The wife points out that the nature of the business was such that a site visit is not necessary.  I would have thought the quote of $6000 to $8000 is a gross under-estimate.  That is an aside on my part but based on my experience in this jurisdiction, accountant's fees charged for preparation of reports and based on my knowledge of the quantity of material that would have to be canvassed by any accountant, $6000 to $8000 is wide of the mark I would have thought.

16. The next issue I have to determine is, in effect, the terms of the letter of instructions or more importantly, the ambit of the report.  What the wife says in paragraphs 1(a) and (b) is that the parties don't dispute that the entity should be valued as at the two dates, November 2004 and January 2005.  The husband disputes that it should be valued at the current time but more importantly in paragraph 1(b), the wife seeks the report canvass the extent to which the conduct of the parties, either solely or jointly, has affected the value of the company.  The husband objects to the single expert having to consider the issue of conduct of the parties for reasons given by Mr Maunsell in the course of his submissions.  I do not find it necessary to repeat those.

17. The third issue is, who pays?  Put simply, the wife offers to pay which is really a confirmation of the original Orders made by the Judicial Registrar and myself.  Seemingly the husband did not particularly agree to the wife's orders in those terms but it was also clear that he was not offering to pay.  He was concerned that the wife was going to pay by instalments and that was suitable to Ms E just on a monthly accounting basis with an initial deposit of $3300.  The husband was concerned that the wife does not have the ability to pay and under the letter of instructions he would be jointly liable.  Well I am confident that if ever that came to pass the trial Judge could make appropriate Orders to compensate out of existing assets of the parties.

18. The final issue really is the preparation of the actual joint letter of instructions.

19. I note that the wife has been pressing in correspondence since September 2006 - there may be earlier correspondence but certainly I have located that - for H Pty Ltd to be appointed.  It was only on, as best I can ascertain, the 18 January of this year that the husband's solicitors first wrote to engage V Company.

    RECORDED : NOT TRANSCRIBED

20. Well it may be that there had been an earlier approach to V Company but certainly, no response for a number of months to the wife's correspondence other than the assertion that a report was unnecessary. 

21. Counsel for the wife contended that the documents in relation to the business were predominantly in Sydney.  This really is a neutral submission in view of the fact that both accountants operate practices in Sydney, although I accept that Mr H is resident in Brisbane and Ms E is permanently in Sydney and it would be more convenient for her presumably.  The wife objects on the basis that one of the partners of V Company (not Mr H) is a close friend of the husband and attended his wedding and they have had coffee together over the years.  The husband does not accept that that is the case, that they are close friends.

22. The wife contends that each party is qualified as a chartered accountant and both have practised in Brisbane and it is more preferable on an objective basis that an accountant from Sydney who is unlikely to have known the parties, be appointed.

23. I note that under the Rules which I have quoted, where the parties cannot agree on an expert, they are to approach the Court each with a list of names and the Judge presumably sees if there is any name in common or from his or her own experience in the jurisdiction the Judge can select.  I had given consideration to sending the parties away for each to put forward a list of a number of people able to act in the matter.  However, that would result in more delay and yet more expense for the parties.  I have no doubt the parties have incurred significant legal expense to date.  They have approached the Court, each with their individual legal advice and that advice has been to come to the Court and one party contends for accountant A and the other one contends for accountant B.  

24. On balance, I prefer Ms E.  She has given a more realistic assessment of the cost of what is involved and what needs to be done.  It is beyond argument that neither party has had any association with her or her firm.  That is not the case involving V Company where there has been some association which could lead to the wife feeling a sense of prejudice or unfairness.  I note, as I have previously recorded, that the documents are in Sydney and Ms E is permanently in Sydney, as is the wife.

25. In relation to the second issue, that is the ambit of the report, predominantly the conduct of the parties, I would have thought the conduct of the parties in relation to the activities of the company were highly relevant.  I accept the submission by counsel for the wife that there are a number of allegations and counter-allegations made by each party as to the events which occurred at the time.

26. There are numerous decisions of the Full Court which require a Judge to consider issues such as conduct, including wasting of assets, collusion, fraud and such like.  It would be highly artificial to preclude an expert accountant from examining such issues in the context of the allegations raised in this case.  I accept that the accountant may not be able to determine such an issue and would observe that such a conclusion could only be a matter for the Judge, based on an assessment of credibility.  On the other hand, there may be a documentary trail or other evidence which would allow the accountant to voice an opinion on the issue.

27. The third issue is - who pays?  The wife's proposal is eminently reasonable in my view.  She says that she will pay the $30,000.  How she secures it is her business.  Beyond that, it is to be shared equally which seems reasonable and the matter - ultimately the cost of the report is to be left to a determination to the trial Judge.  So I will be making Orders in terms of paragraphs 2(a) and 2(b). 

28. In terms of paragraphs 3(a) and 3(b), really that is a procedural issue, it is not a substantive issue.  The parties can confer within the next 21 days for the purpose of preparing an agreed letter of instructions to the single joint expert.

29. Accordingly, for the reasons given, I will make Orders in terms of paragraphs 1, 2, 3 and 4 of the wife's amended application.  I will reserve on the issue of costs of both parties.

I certify that the preceding 29  paragraphs are
a true copy of the reasons for judgment herein
of The Honourable Justice Barry

………………………………………………………..
Associate: 
Date:

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as ROJO & DURBAN