Sanders & Sanders & Ors - [2012] FamCAFC 136

FAMILY COURT OF AUSTRALIA

SANDERS & SANDERS AND ORS

[2012] FamCAFC 136

FAMILY LAW – APPEAL – Adequacy of reasons – Appealable error established.

Family Law Act 1975 (Cth)

Bennett and Bennett (1991) FLC 92-191
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247

APPELLANT:

Ms Sanders

FIRST RESPONDENT:

Mr Sanders

SECOND RESPONDENT:

U Pty Ltd

THIRD RESPONDENT:

CG Pty Ltd

FOURTH RESPONDENT:

S Pty Ltd

FIFTH RESPONDENT:

K Pty Ltd

SIXTH RESPONDENT:

Y Pty Ltd

SEVENTH RESPONDENT:

N Pty Ltd

EIGHTH RESPONDENT:

Mr EB

NINTH RESPONDENT:

AS Pty Ltd

TENTH RESPONDENT:

Mr YY

FILE NUMBER:

SYC

8576

2007

APPEAL NUMBER:

142

2011

DATE ORDERS MADE:

26 July 2012

DATE REASONS PUBLISHED:

29 August 2012

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Bryant CJ, Ainslie-Wallace &
Rees JJ

HEARING DATE:

26 July 2012

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

18 November 2011

LOWER COURT MNC:

[2011] FamCA 881

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Paul

SOLICITOR FOR THE APPELLANT:

Paul & Paul Lawyers

FOR THE FIRST RESPONDENT:

Mr Sanders in person

FOR THE SECOND RESPONDENT:

Mr YY in person

FOR THE THIRD RESPONDENT:

W Sanders in person

FOR THE FOURTH RESPONDENT:

Mr YY in person

FOR THE FIFTH RESPONDENT:

G Sanders in person

FOR THE SIXTH RESPONDENT:

No appearance

FOR THE SEVENTH RESPONDENT:

No appearance

FOR THE EIGHTH RESPONDENT:

No appearance

FOR THE NINTH RESPONDENT:

No appearance

FOR THE TENTH RESPONDENT:

Mr YY in person

Orders made on 26 July 2012

That the appeal be allowed, with reasons to be published later.
That, by consent, further expert evidence in the proceedings be given by a single expert, Mr E, chartered account (“the single expert”).
That the single expert report on the interests of the husband and wife as at 31 August 2010 and 30 June 2012 in:
(a)       NPA (“the partnership”);
(b)       Sanders-A Family Trust;
(c)       Sanders Family Trust; and
(d)       Sanders Family Trust (I).
That in carrying out the exercise in Order (3), the single expert consider and, if appropriate, take account of:
(a)the effect of the discharge by the husband and wife of the NAB loans secured over the former matrimonial home in the sum of $1,457,000; and
(b)in particular whether that discharge gives rise to a debt owed by the partnership to the husband and wife, and, if so, in what proportions.
That, if the single expert concludes that the value of the partnership and other entities is a net deficit, he report on the capacity of the partners, jointly and severally, to meet the liabilities of the partnership, including any monies owed to the husband and wife.
That the fees of the single expert be paid in the following proportions:
(a) 20 per cent by the wife;
(b) 20 per cent by the husband; and
(c)20 per cent each by Mr YY, Mr W Sanders and Mr G Sanders, or the corporate entities that they represent (or in such other proportions as they agree).
That…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Sanders & Sanders & Ors

Details

AGLC: Sanders & Sanders & Ors [2012] FamCAFC 136
Case: [2012] FamCAFC 136
Decision Date: 26 July 2012

CaseChat Overview and Summary

The case of Sanders & Sanders & Ors involves a dispute regarding the valuation of a partnership business, with the wife seeking a property settlement from the husband. The matter was heard in the Family Court of Australia. The central issue before the court was the appropriate capitalisation rate to be applied to the business's average net profit for the purposes of determining its value. This was a critical point of contention as it significantly affected the overall valuation of the partnership and, consequently, the potential property settlement.

The court had to decide whether the appropriate capitalisation rate was 2.5 or 3, as suggested by the respective experts for the husband and wife. This decision hinged on the interpretation of an agreement between the experts, where they agreed on an average net profit figure but disagreed on the applicable capitalisation rate. The court examined the evidence and submissions from both parties, including the handwritten agreement document and the oral testimony of the experts.

The court ultimately determined that the agreed average net profit figure of $416,667 should be multiplied by 2.5, as per the husband's expert's testimony, resulting in a total valuation of $1,041,667. The court found that this figure, when supplemented with the $700,000 of suppressed sales, accurately represented the entire partnership as it stood. The court emphasised the importance of adhering to the agreed facts and the limited scope of evidence on the disputed capitalisation rate. The wife's counsel's attempt to broaden the scope of questioning was deemed irrelevant to the specific dispute at hand.

The final orders of the court reflected the valuation arrived at by applying the 2.5 capitalisation rate, setting the basis for the subsequent property settlement proceedings.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

Immediately after making that ruling, her Honour was informed that Mr M and Mr B had reached “significant agreement”.Evidence of Agreement between the Valuers A handwritten document was tendered (Exhibit W12) which reflected that agreement between the experts. It read:Agreed Issue1. The (business) average net profit for the three years end 30 June 2010 after adjusting for interest, (indecipherable) interest, profit on sale of non-current assets, drawing in lieu of salaries and suppressed sales approximates $416,667 per year. Mr [B] has stated that he believes the suppression of sales from 1st July 2007 to 30th June 2010 is $700,000. Mr [M], having reviewed the GST Activity Statements, believes it is not unreasonable to adopt such a figure for the purpose of the valuation.Disagreed Issue2. Mr [B] believes 3 is the appropriate multiplier to be used in the valuation. Mr [M] states his view is that it should be 2.5 Her Honour permitted Mr B to give oral evidence limited to the point of disagreement with Mr M, the appropriate capitalisation rate. Mr M was recalled at the request of counsel for the wife. Counsel said:MR LLOYD: …Now, dealing with point 1, the position is, having a regard to your view about the multiple, the simplistic approach to this and the correct approach would be the 416,667 that you’ve agreed is the appropriate figure with Mr [B] would simply be multiplied by 2.5 in your instance, wouldn’t it?---Yes.And that would be, for your Honour’s benefit $1,041,667 and some cents. Now, in addition to that, one would have on the balance sheet, wouldn’t one, the suppression of sales of $700,000?---Yes.Total: $1,741,667. Now, that figure would then be representative of the entire partnership as it currently exists. Do you agree?---Yes. Counsel for the wife then moved to ask Mr M further questions about the loan account of N Holdings. After objection from counsel for the husband, her Honour asked counsel for the wife how his present line of questions related to the “.5 percent difference in the rate”, being, we understand, a reference to the difference between the two experts on the capitalisation rates referred to in part 1 of the agreement document. Counsel in his answer to her Honour’s question said: …So far, the evidence means that, as I understand it from Mr [M], that we have a value of 1.74 million. And that’s made up on his argument of 416,667 times 2.5, and then one would need to add to the balance sheet, which he agreed with me, the $700,000 of suppressed sales totalling 1.74… Mr M then said: “No. I didn’t say it was worth 1.7 million”. Her Honour then said:…Look, Mr Lloyd, the basis of this approach was that we had an agreed fact and that there was going to be brief, confined evidence on whether or not the rate should be 2.5 or three… I don’t recall any discussion about cross-examination about the meaning of the agreed fact. As to the capitalisation rate, Mr M maintained that the appropriate rate was 2.5.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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