Royce & Donovan

[2012] FamCA 168

FAMILY COURT OF AUSTRALIA

ROYCE & DONOVAN [2012] FamCA 168

FAMILY LAW - PROPERTY - Expert evidence - Where the parties agreed upon a single joint expert to undertake valuations of corporate entities - Where the shadow expert of the Applicant challenges the evidence of the single expert - Where the Applicant seeks to be allowed to tender the report, and adduce evidence from, the expert retained by her

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Aon Risk Services Australia Ltd v Australian National University (2009) 258 ALR 14
Bass & Bass (2008) FLC 93-336
Fencott v Muller (1983) 157 CLR 570
Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146
Simonsen & Simonsen [2009] FamCA 698
Smith & Smith (No 2) [2009] FamCA 1223

APPLICANT: Ms Royce

RESPONDENT: Mr Donovan

FILE NUMBER: BRC 10773 of 2010

DATE DELIVERED: 23 March 2012

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Kent J

HEARING DATE: 1 March 2012

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Hopgood Ganim

COUNSEL FOR THE RESPONDENT: Mr McGregor

SOLICITOR FOR THE RESPONDENT: Hardings Gulhane Solicitors

Orders

1. The Application in a Case filed by the Wife on 29 February 2012 be dismissed.

2. Each party’s costs of and incidental to this application be reserved to the trial.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Royce & Donovan has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 10773 of 2010

Ms Royce

Applicant

And

Mr Donovan

Respondent

REASONS FOR JUDGMENT

Introduction

1. In the context of substantive proceedings for property Orders pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”), the trial of which is set down for four days commencing 2 April 2012, the Respondent in the substantive proceedings (“the Wife”), filed an Application in a Case on 29 February 2012, which was heard on 1 March 2012.

2. At that hearing, the Applicant in the substantive proceedings (“the Husband”) raised no objection to the first two Orders sought in the application, which were directed to the filing of material for trial, and Orders in those terms were made by consent. The balance of the Orders sought were disputed.

Issues

1. The issues raised are:

   a)Whether, on 26 October 2011, at a callover or mention of this matter before His Honour Justice Murphy, His Honour made (or intended to make) an Order pursuant to r 15.49 of the Family Law Rules 2004 (Cth) (“the Rules”) allowing the Wife to adduce evidence from Mr C, an expert accountant; and

   b)If not, whether pursuant to r 15.49 of the Rules, the Wife ought be allowed to adduce that evidence at trial.

2. On the first issue, it is apparent from an examination of the sealed Orders issued on 26 October 2011 bearing the signature of His Honour that no Orders are included allowing the Wife to tender a report of, or adduce evidence from, Mr C.

3. The transcript of the hearing before His Honour on 26 October 2011 was provided for the purpose of this hearing and is attached to the affidavit of the Wife’s solicitor, Ms Wigan, which was filed on 22 February 2012.

4. On one reading of the transcript, particularly with respect to His Honour’s references to a “conference of experts”, the impression is conveyed that His Honour assumed the need for such a conference, and thus must have implicitly, if not expressly, acknowledged that Mr C would be involved. On my cursory reading of the transcript in advance of the hearing that was the impression I formed. However, having reviewed the transcript of the hearing in detail since the hearing, I am not persuaded that His Honour either made, or intended to make, the relevant Order pursuant to r 15.49.

5. There is no statement by His Honour in the form of any pronouncement that could reasonably be construed as the pronouncement of an Order to that effect. Whilst more is stated below about case management principles as reflected in the Rules relevant to this aspect, for present purposes the terms of r 15.49(2) assume some prominence. That rule provides for the Court’s discretion to allow a party to adduce evidence from an expert witness other than the appointed single expert witness, but it also sets the parameters in which that discretion is to be exercised, as expressed in subparagraphs (a), (b) and (c). The rule requires special reason to be shown, either of the kind identified in each of subparagraphs (a) or (b), or “another” special reason as referred to in subparagraph (c).

6. The transcript recording what His Honour said on 26 October 2011 does not reflect that His Honour embarked on deciding a controversy judicially.[1] That much appears clearly from the features that, in circumstances where no relevant application had been filed on behalf of the Wife in advance of the callover hearing, His Honour gave no indication that he was allowing the application to be made orally,[2] and did not invite submissions from the Husband’s solicitor, either as to the application being made orally, or, more particularly, on the substance of the application. In that respect, His Honour was told that the Husband’s solicitors received a copy only of Mr C’s affidavit and report only on 23 October 2011, three days before the callover hearing.

   [1] i.e. ascertaining the facts, applying the law and exercising a judicial discretion per Fencott v Muller (1983) 157 CLR 570, 608 (Mason, Murphy, Brennan and Deane JJ).

   [2] Family Law Rules 2004 (Cth) r 11.01, Item 3(h).

7. The transcript reflects that at an earlier point in the hearing, the Husband’s solicitor had told His Honour that the Husband’s solicitors were yet to receive a “hard copy” of Mr C’s report and the Husband’s solicitor stated in that context:

   So we need some time to examine that. Our Counsel needs time to look at that. So we’re suggesting at least a two-week extension.

8. Further, whilst affidavits were referred to in the course of the exchanges before His Honour, there was no formal reading of material in support of any application, nor in response to it, and it is clear that His Honour did not read either the subject single expert report, or that of Mr C referred to in those brief exchanges.[3] Nor did His Honour express reasons, as would be expected if His Honour was exercising a discretion.

   [3] Whilst the Wife’s solicitor informed His Honour that Mr C’s affidavit was filed 23 October 2006 (tx page 4, line 25), the affidavit was e-filed on 20 October 2011.

9. Immediately after the exchange referred to, the Wife’s solicitor, Ms Wigan, referred to permission being sought under r 15.49 of the Rules, His Honour moved to consider when the trial would be ready to proceed and the length of the trial.

10. Read in its full context, the transcript confirms that, unsurprisingly, His Honour’s focus at a callover hearing was upon the listing of the matter for trial. I am comfortably satisfied that His Honour did not exercise any discretion under r 15.49 of the Rules, and did not make, or intend to make, an Order pursuant to that rule. In the context of listing the matter for trial, His Honour’s statements are to be properly understood as making due allowance for the prospect of another expert being involved, and the consequent need for a conference of those experts, but His Honour, beyond allowing for that prospect, did not decide the issue leaving it to the further directions hearing prior to trial.

11. In those circumstances, the issue to be determined is whether or not the Court should exercise its discretion to allow the Wife to tender a report or adduce evidence from Mr C pursuant to r 15.49 of the Rules as was identified by both parties in the application before me as the applicable rule.

Relevant Chronology

1. It is not in issue that for the purposes of Part 15.5 of the Rules, the parties agreed to the appointment of Mr M, chartered accountant, as a single expert witness as reflected in the correspondence countersigned by both parties’ solicitors to Mr M dated 16 March 2011.

2. Specifically, it can be seen that for the purposes of Rule 15.44, the parties agreed that expert evidence would help to resolve a substantial issue in the case, and specifically, the valuation of the parties’ interests in the following:

   a)R Pty Ltd;

   b)V Pty Ltd;

   c)P Pty Ltd;

   d)S Company; and

   e)Asteron Insurance Policy in the name of Mr Donovan.

3. The countersigned letter of instructions to Mr M appears as Annexure “A” to the report of Mr M attached to his affidavit filed 3 November 2011.

4. Subparagraph (2) of r 15.44 provides that a party does not need the Court’s permission to tender a report or adduce evidence from a single witness appointed under that rule.

5. It is important to note the terms of Mr M’s retainer by the parties in this context. That is, in any comparison of Mr M’s report with the report subsequently provided by Mr C, it must be kept in mind that, aside from the feature that Mr M was instructed jointly, whereas Mr C was instructed only by the Wife, the terms of the respective retainers of the experts are quite different. What Mr C was retained by the Wife to do is set out in paragraph 1.2 of his report dated 18 October 2011, annexed to his affidavit filed on 20 October 2011.

6. Mr C was asked not only to consider and comment upon the report prepared by Mr M, but was also asked to, “…consider and advise…”on:

   ·“The loans made by [R Pty Ltd] to the Husband…”;

   ·“The intellectual property…”;

   ·“The Husband’s financial position…”;

   ·“Capital gains tax…”; and

   ·“Any other matter I consider appropriate…” (emphasis added).

7. I note in passing that one consequence of the difference in the terms of the respective retainers, which seems to have been overlooked by Mr C, is that at paragraph 8 of his report, Mr C makes comments on Mr M’s report including in paragraph 8.4, a discussion as to the Husband’s personal income tax liability. It will shortly be seen that what appear to be criticisms of Mr M are not in fact accurate but, that aside, comments about Mr M verifying the tax liability claim; or “…the grounds on which the figure was accepted,” and the conclusion, “…yet there is no apparent reconciliation which would give an indication whether or not the Husband is prone to over-exaggeration…” all assume that Mr M was retained to investigate the Husband’s personal taxation liability when it is plain on the face of Mr M’s report and the joint letter of instructions that he was not.

8. To similar effect, it must be understood that paragraph 7 of Mr C’s report purports to address the funds that are said to have been available to the Husband from various sources from 24 April 2006, which is in answer to Mr C’s specific retainer by the Wife, but did not form any part of the joint instructions to Mr M.

9. Pursuant to his appointment as the single expert witness in the terms referred to, Mr M provided his report dated 28 September 2011. Whilst that report was not filed in the Court until the affidavit annexing it was filed on 3 November 2011, it is clear that the report itself was provided to the parties on or about 28 September 2011.

10. After receipt of that report, the Wife retained Mr C in the terms referred to, including that Mr C review and comment upon Mr M’s report.

11. On 18 October 2011, Mr C compiled his report as it appears annexed to his affidavit filed on 20 October 2011.

12. Whilst Mr C’s report is dated 18 October 2011, it can reasonably be inferred, given the correlation between the two documents, that what is contained in Mr C’s report was the foundation for the questions the Wife’s solicitors directed to Mr M by letter dated 11 October 2011 in exercise of the Wife’s right pursuant to r 15.65 of the Rules to seek to clarify the report of a single expert witness. Annexed to the affidavit of the Husband’s solicitor, filed 1 March 2012, is the letter dated 11 October 2011 containing some 66 questions directed to Mr M.

13. By letter dated 4 November 2011, likewise annexed to the Husband’s solicitor’s affidavit, Mr M provided his answers to the questions posed of him.

14. 26 October 2011 was the callover mention of this matter before His Honour Justice Murphy as already discussed.

15. On 1 November 2011, the Wife’s solicitors forwarded to the Husband’s solicitors correspondence enclosing a list prepared by Mr C of the, “…information and/or documents…” which the Husband was called upon to provide. It appears Mr C had prepared that document on 28 October 2011 and the Wife’s solicitors forwarded it to the Husband’s solicitors on the understanding that leave had been granted for the Wife to adduce the evidence of Mr C. I accept that was a genuinely held view by the Wife’s solicitors, but for the reasons already given, it was mistaken.

16. In the context of this application, bearing in mind in particular that the Wife bears the onus of satisfying the Court of the existence of special reason in one of the forms expressed in r 15.49(2) in order for the Court to exercise the discretion to allow the Wife to adduce evidence from Mr C, there are some important matters to note following from the above chronology.

17. First, and perhaps foremost, there is no evidence before me on this application that the answers to questions provided by the single expert witness, Mr M, under cover of his letter dated 4 November 2011 as already referred to, have been provided to Mr C to determine whether or not those answers resolve some or all of the issues raised in Mr C’s report of 18 October 2011.

18. The questions posed are detailed and extensive, running to some 66 questions of the single expert witness. Likewise, the answers of the single expert witness are extensive. As already noted, the questions correlate to the substance of Mr C’s 18 October 2011 report.

19. Both at the callover mention on 26 October 2011 before His Honour Justice Murphy, and in the hearing before me, it was the content of Mr C’s 18 October 2011 report that was agitated as the basis, for the purposes of r 15.49, for the Wife to be allowed, under that rule, to adduce evidence from Mr C at the trial. Obviously, at the time of the mention before His Honour, the answers were yet to be provided. Before me, whilst Ms Wigan made a submission to the effect that the answers had not assisted, there is no evidentiary basis for a conclusion that despite the contents of the answers, Mr C holds to the views expressed in his report of 18 October 2011.

20. What is clear from the hearing on 26 October 2011 already referred to, is that the Wife apparently determined upon a course to seek to be allowed to rely upon the evidence of Mr C despite the feature that the answers to questions of the single expert witness were yet to be received.

21. As will be further discussed, a number of relevant authorities emphasise the importance of the procedures for clarification of a single expert report as a discretionary consideration to the Court allowing a party to rely upon the evidence of another expert.

Comparison between Single Expert and Mr C

1. I have already noted that there is no evidence before me as to Mr C’s position in light of the answers provided by the single expert, and the significant limitation that that imposes upon the Wife discharging the onus she bears on this application.

2. That aside, examining the nature and extent of the differences between the single expert and Mr C as identified in the latter’s report of 18 October 2011, the answers provided by the single expert should expose whether or not any ground under the relevant rule is made out.

3. It is convenient to undertake that task by the topics raised.

Figures in paragraph 3.1.3 of single expert report

1. The $50.00 error in addition in the amount identified in notional realisation costs is acknowledged in the answers, but does not alter the total in Schedule 1.1. Nothing turns on this.

Potential tax liability of the Husband

1. As already noted, the tone and content of paragraph 8.4 of his report indicates that Mr C has overlooked that the parties did not identify the Husband’s income tax liability as an issue (within the meaning of r 15.44 of the Rules) for the single expert, as the answers of the single expert reiterate.

2. The Husband’s current liability for tax is a matter of fact. All that the single expert has done is to relate in his report and in his answers to questions the information he was provided about this topic as expanded upon in paragraphs 2 and 3 of the answers. There, the single expert specifically refers to the assumptions and limitations of his report; explaining that his findings are inconsistent with the information provided by B & Company on behalf of the Husband, and Mr M’s answer in paragraph 3 confirms that the single expert does not purport to determine the Husband’s true income tax position or investigate the allegations of the accountant as that was not part of his retainer.

Loan accounts – value of R Pty Ltd

1. Mr C endorses the approach of the single expert to value R Pty Ltd on an asset backing basis. Any issue on these topics is clearly not a difference in valuation methodology, but highlights only a difference of factual foundation for the opinions expressed.

2. It is trite that an expert opinion may only be relied upon (or indeed, may only be admissible as expert opinion) to the extent that the factual foundation for the opinion is made out. Likewise, the expression of an expert of an assumption made for the purpose of the opinion does not convert the assumption into fact.

3. What is apparent from the respective reports, and is further exposed by the answers of the single expert (see paragraph 8), is a difference of factual foundation, not accounting methodology.

4. Those matters of fact essentially comprise the true facts as to when loans were made to the Husband from R Pty Ltd; the amounts of the loans; and the accuracy or otherwise of what is recorded in the company’ s records about them.

5. Paragraph 8 of the answers details the single expert’s efforts to obtain information. That paragraph concludes:

   I consider that my adjustments in Schedule 2 are correct based on the information provided by the Wife and her accountant which I used in the preparation of my report.

   If the Wife now contends that the advances made to the Husband were in fact debited to her loan account, which was not previously disclosed and is inconsistent with the financial statements disclosed, then the adjustments made in Schedule 2 will require updating to reflect these new advices.

6. In submissions before me, Ms Wigan for the Wife advanced propositions to the effect that the single expert had overstated the value of R Pty Ltd by $234,000.00, and had not taken into account “incorrect” journal entries in respect of loans, “…of $200,000…” as if these were matters of demonstrable error on the part of the single expert. However, the essence of these propositions, taken from Mr C’s report, are reflected in the questions directed to the single expert and the answers provided make it plain that the differences actually lie not in any errors in approach or application of methodology, but in the different information received by the respective accountants. As paragraph 8(a) of the answers reveals, the single expert pursued enquiries with the Wife and her accountant. He met with the Wife and her accountant for that purpose. Paragraph 8(b) reveals that the single expert requested detailed general ledger listings for any loan accounts for relevant years. He plainly relied on financial statements prepared by the Wife and her accountant. As the conclusion expressed in paragraph 8(c) reveals, in circumstances where both accountants applied the same methodology, there is no reason to suppose that if the factual basis relied upon by Mr C were to be satisfactorily made out, the result would not follow, that is, that the single expert would make adjustments reflecting that.

1. This again highlights the significance that no response by Mr C to the answers provided by the single expert is in evidence before me.

Intellectual Property

1. Associated with this topic is the valuation of each of V Pty Ltd; P Pty Ltd; V Pte Ltd and P Pte Ltd.

2. To a significant extent, the questions to, and answers of, the single expert are devoted to these issues. The answers in paragraphs 5 to 7 and 9 to 36 of the single expert relate to issues raised by Mr C in his report of 18 October 2011 on these topics. This again highlights the significance of the feature that there is no evidence as to whether Mr C maintains any of his views in light of the answers provided.

3. As there was little in the way of specific reliance on a particular facet addressed in submissions in support of the application against the background referred to above, I do not propose to address, seriatum, each and every topic of the questions or answers; nor is it necessarily desirable that I do so in circumstances when the trial of the substantive proceedings is to occur before me in the near future. However, I make the following observations.

4. The single expert was not retained to value “intellectual property” per se, but to value the entities referred to;

5. Any identifiable issue between the single expert and Mr C is not referable to Mr C adopting any different value or values to the nil values ascribed by the single expert. Rather, the essential contention of Mr C in his 18 October 2011 report is that the single expert had insufficient information to make that assessment. In the context of the relevant rule, whilst that fundamental proposition may be the opinion of Mr C, even accepting that to be so I do not see how, in the context of the relevant rule, that could, for example, amount to a “substantial body of opinion”.

6. Moreover, paragraph 5 of the answers of the single expert confirms that the single expert reviewed the financial statements provided by the various entities, “…which did not disclose any disposal or acquisition of intellectual property nor any disclosure of licence fees paid or received.” The single expert confirms that in his meeting with the Husband and the Husband’s accountant, neither advised that there was a licence to utilise the intellectual property or that that had been transferred to any overseas entity. The single expert refers there to an assertion made by Mr B in correspondence of 24 August 2011, and that Mr B failed to respond to the single expert seeking further information.

7. At paragraph 10(b), the single expert makes the obvious point that he does not profess to have expertise in information technology, and as such does not have the expertise to respond to questions about the completion of development of the intellectual property. The answers otherwise contain a response to the propositions advanced by Mr C. Relevantly, for example, at paragraph 30(a) of the answers, the single expert states:

   The value of intellectual property is determined by the future cashflows attributable to the asset. If no positive cashflows are being generated, the intellectual property is unlikely to have any fair value and consequently, will not be a major asset.

   Based on the financial information provided and my subsequent review, there were no licence fees paid to this entity [referring to [V Pty Ltd]]. As such, it does not produce any cashflows.

8. In submissions before me, Ms Wigan sought to highlight that Mr C had identified that the Husband has had come into his hands, “…some $2.3 million during the marriage…” and that, “…about $1.1 million may have gone into [the relevant entities] where [Mr M] says it has a nil value.” The first part of that submission relates to the area earlier identified that Mr C was asked to address, or did address, which was not part of the function of the single expert. As to the expenditure of $1.1 million on the “intellectual property” or the relevant entities, whether that be the correct figure or not, there is nothing in Mr C’s report to suggest that relevant entities did not in fact make substantial losses. At paragraph 5.2 of his report, Mr C records that, “Since 2001, [P Pty Ltd] has spent $302,743 on office equipment and capitalised software development costs. In addition, P Pty Ltd has incurred losses of $853,979 since 2001 because its expenses have exceeded the Ltd [I assume meaning “limited”] income received.”

9. I reiterate that many, if not all, of the propositions advanced by Mr C in his report of 18 October 2011 are reflected in the questions posed to the single expert and in the answers provided. Without traversing the answers seriatum, it is clear enough that the single expert made many of the enquiries suggested by Mr C and has otherwise provided responses relevant to the questions raised by Mr C.

10. Surprisingly, as if it was relevant to a question of value, at paragraph 8.8(d) of his report, Mr C asserts that, “Someone, with complete knowledge of the company, was prepared to pay $200,000 for 50% of the company only to be told by the Husband that the offer was an insult.” The “someone” there referred to is not identified, nor does there seem to be a basis for the assertion, “…complete knowledge of the company…” contained in the report. Most importantly, as the answers of the single expert point out, an offer is not evidence of value.

Capital Gains Tax

1. The submission by Ms Wigan before me was that the single expert, “…has understated the tax position of [R Pty Ltd] by $440,000…”

2. At paragraph 8.12(c) of his report, Mr C refers to the Wife’s shares in R Pty Ltd (rather than the company itself) having an in-built capital gain with a “potential” tax liability of $440,000 calculated at the top marginal rate.

3. Paragraphs 40, 41 and 42 of the questions and answers respectively deal with this topic.

4. Notably, paragraph 41 of the answers reveals that there is no issue as to the cost base of the subject shares, and in paragraph 42, adopting the assumption that is asked of him, the single expert outlines the basis for his opinion that the Wife’s interest in the company can be disposed of with the taxation consequences as detailed in Schedule 1.1 of the single expert’s report.

5. No evidence is advanced before me to show that this remains an issue. That is, there is no evidentiary basis for the submission referred to.

Asteron Insurance Policy

1. Section 11 of the single expert report deals with the subject income protection insurance policy. Paragraphs 37, 38 and 39 of the answers of the single expert corrects the date upon which the Husband actually commenced receiving payments. Paragraph 39 specifically reconciles the annual 5% increases of payments relevant to the current payment.

2. Comparison between paragraph 9 of Mr C’s report and section 11 of the single expert report (as supplemented by the answers referred to) does not yield the conclusion that was contended for by Ms Wigan.

3. Ms Wigan submitted, in essence, that the single expert asserts the policy to have a “nil” value, whilst Mr C ascribes a present value of those earnings until age 65 of $280,782.00. In other words, that on the opinions expressed by the respective accountants, there was a difference in the order of $280,000.00.

4. Both accountants acknowledge that the payments under the policy represent an income stream or the receipt of income. The single expert did not opine simply that there was a “nil” value of the policy. Relevantly, the single expert noted, commencing at paragraph 11.1.10 of his report:

   11.1.10 Given these payments replace the Husband’s income stream due to his inability to work, I do not consider this is an asset that can be quantified. However, I do recognise that it represents an income stream, subject to the Husband meeting the medical requirements, until the Husband reaches the age of 65.

   11.1.11 I consider this income to be assessable income of the Husband and taxable in his hands. I am advised the income tax is not withheld from the payments received by the Husband…

5. Mr C does not suggest that this is in fact an “asset” that can be quantified. All that Mr C does is, as he says, “For the purpose of providing the court with some idea of the Present Value of such receipts, I have carried out the following calculation.” Thereafter, Mr C gives a present value calculation based on what the Husband is likely to receive on the assumption that he continues to receive that income until his sixty-fifth birthday, but applying a 35% discount for, “…death, other vicissitudes of life etc.”

6. Mr C’s calculation was not put to the single expert in the questions directed to the single expert referred to. It is unknown whether the single expert agrees with the calculation, including its components such as the discount of 35% applied. However, in any event, on the fundamental proposition that the income stream is not an “asset” in the relevant sense, there is no apparent difference between the single expert and Mr C.

7. No doubt, the single expert could be asked, either in advance of trial or at trial, to ascribe a present value to an income stream if that were thought to be relevant. That is subject to the Court accepting at trial (about which I express no conclusion) as to whether it is necessarily within the province of an expert accountant to provide such evidence in the sense that it is necessarily a matter for expert evidence.

Resolution

1. Rule 15.42 expresses the purpose of Part 15.5 of the Rules. Relevantly, the purpose of that Part is to ensure that parties obtain expert evidence only in relation to a significant issue in dispute; to restrict expert evidence to that which is necessary to resolve or determine the case; to ensure that, if practicable and without compromising the interests of justice, expert evidence is given on an issue by a single expert witness; to avoid unnecessary costs arising from the appointment of more than one expert witness; and, finally, to enable the parties to apply for permission to tender a report or adduce evidence of an expert witness appointed by that party if that is necessary in the interests of justice.

2. In circumstances where a single expert has been appointed, the relevant rule is r 15.49, rather than r 15.52, in terms of any additional expert evidence.[4]

   [4] Smith & Smith (No. 2) [2009] FamCA 1223 (1 May 2009) per Strickland J.

3. Pursuant to r 15.49(2), the Court has a discretion to allow a party to tender a report or adduce evidence from another expert witness on the same issue, but only if it is satisfied of one or more of the matters identified in subparagraphs (a), (b) or (c). In short, the rule requires a special reason for a Court to grant leave for evidence of a further expert to be adduced when a single expert has already been appointed.

4. A number of cases highlight the need to address questions to a single expert or to take the steps provided for in the Rules (such as a conference) to clarify a single expert report before embarking upon an application to be allowed to adduce evidence from another expert witness.[5] Rule 1.04 prescribes the purpose of the Rules and each of r 1.06 and r 1.07 address the manner in which the Court applies the Rules to promote the main purpose, and to achieve the main purpose of the Rules, respectively.

   [5] See, for example, Bass & Bass (2008) FLC 93-336 (FC); Simonsen & Simonsen [2009] FamCA 698 (20 July 2009) per Murphy J.

5. It is readily apparent from those rules that there is recognition that the demands of justice and the management of cases are not limited to the particular case before the Court. There is recognition that disproportionate time spent on one case might cause delay and consequent injustice for other cases.

6. In Aon Risk Services Australia Ltd v Australian National University (2009) 258 ALR 14 (“Aon”), the High Court considered relevant rules as to Court procedure in the Australian Capital Territory in the context of a leave to amend case. Rule 21(2) of the Court Procedures Rules 2006 (ACT) provided that the Rules were to be applied in civil proceedings:

   with the objective of achieving

   (a)the just resolution of the real issues in the proceedings; and

   (b)the timely disposal of the proceedings, and all other proceedings in the Court, at a cost affordable by the respective parties.

7. The plurality in that case, in expressing conclusions, noted at paragraph 113:

   In the past it has been left largely to the parties to prepare for trial and to seek the Court’s assistance as required. Those times are long gone. The allocation of power, between litigants and the Courts arises from tradition and principle and policy. It is recognised by the Courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings.

8. The conclusions otherwise expressed by the plurality in that case highlight the importance of case management principles as expressed in rules of procedure and what was earlier said by the High Court in Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, must be considered in light of the conclusions of the plurality in Aon.

9. In the present context, r 15.42 reflects imperatives that expert evidence is only obtained where necessary and ought be given by a single expert witness (and only one expert witness) if that is practicable and does not compromise the interests of justice. The safeguard is that a party may apply for permission to tender a report or adduce evidence from an expert witness appointed by that party if that can be said to be necessary in the interests of justice. Rule 15.49(2) informs the exercise of the discretion for the Court to allow a party to adduce evidence from another expert witness. The test is whether special reason can be shown, and subparagraphs (a) and (b) identify specific special reasons for the discretion to be exercised, leaving (c) as a safeguard provision for cases not specifically within (a) or (b) but nevertheless involving “another” special reason.

10. Parties usually, as they did here, have input into the single expert selected. That is, it is relevant that it cannot be said that the actual single expert here, Mr M, has been imposed upon the Wife. He was selected by her and by the Husband.

11. The Rules confine the parties to the way in which they may instruct the single expert. It restricts communications with the single expert as regards instructions in the various ways identified in the Rules.

12. Balanced against that, the Rules provides means for clarifying the report of the expert, either by questions (as here), or also by conference.

13. In any case where a single expert has been appointed, allowing another party to tender evidence from another expert on the same issues creates an imbalance. That is, only one party may have what may be described as an adversarial expert, whilst the other party has only the evidence of the single expert who has acted within the constraints, in terms of instructions, as provided for in the Rules. The further possibility is the other party seeking to have their own expert to redress that perceived imbalance.

14. It must also be borne in mind, as was submitted by Mr McGregor on behalf of the Husband, to the effect that the Rules do not preclude a party from obtaining, on their own behalf, the assistance of an expert as the Wife has done here in respect of Mr C. The Wife is thereby enabled to have the assistance of Mr C in informing the cross-examination of the single expert witness at trial.

15. As already discussed, whilst the Wife exercised her right to direct questions to the single expert witness, those questions being informed by Mr C as reflected in his 18 October 2011 report, there is no evidence before me that in the face of the extensive answers provided by the single expert, Mr C adheres to the views earlier expressed in his report. That aside, for the reasons already discussed, I am not satisfied that special reason within the meaning of r 15.49(2) has been established by the Wife or that balancing the competing considerations, I can be satisfied that the justice of the case requires the Wife being allowed to adduce evidence from Mr C.

16. For these reasons, the Wife’s Application in a Case is dismissed.

17. I propose to reserve any questions of costs to the trial. This is a case where it was submitted to me that the Wife proposes to advance a case of significant non-disclosure on the part of the Husband. I note there are several references in both the report of the single expert and the answers the single expert has provided which may be relevant to that aspect of the case.

18. I make it clear that nothing in these reasons should be interpreted as absolving either party from their duty of disclosure. I note, for example, the letter of 1 November 2011 earlier referred to in which the Wife sought information and documents from the Husband, albeit that this was formulated when it was thought that the Wife had been granted permission to adduce evidence from Mr C.

19. Whilst I have determined otherwise as to that permission, it should not be taken that inherent in that is a determination by me that the Husband is not obliged to provide the information or documents requested.

20. I will determine issues of non-disclosure at the trial, but both parties ought proceed on the understanding that the consequences of non-disclosure are illuminated in a number of authorities in this jurisdiction with respect to cases of this type, and the parties may assume the law will be applied to this aspect of the case.

21. I therefore make Orders as set out at the commencement of these reasons.

I certify that the preceding ninety (90) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 23 March 2012.

Associate: 

Date:  23 March 2012