Soldo and Soldo (No. 2)

[2019] FamCA 754

FAMILY COURT OF AUSTRALIA

SOLDO & SOLDO (NO. 2) [2019] FamCA 754

FAMILY LAW – RULING – admissibility of a report that went beyond the agreed single expert report filed earlier – whether any prejudice if evidence admitted – whether report in question independent – whether witness an “expert witness” by reason of alleged want of independence – conduct of parties in allowing impugned evidence to stand.

Family Law Rules 2004 (Cth), rr 15.51, 15.52, 15.69
Income Tax Assessment Act 1997 (Cth), Div. 7A

Commonwealth v Verwayen (1990) 170 CLR 394

APPLICANT: Ms Soldo

FIRST RESPONDENT: Mr Soldo

SECOND RESPONDENT: S Pty Ltd

THIRD RESPONDENT: I Pty Ltd (IPL)/ IPL Trust Pty Ltd Both In Its Own Capacity And In Its Capacity As The Trustee Of The IPL Family Trust

FOURTH RESPONDENT: C Pty Ltd/C Trust (Australia) Pty Ltd Both In Its Own Capacity And In Its Capacity As The Trustee Of The C Pty Ltd/C Trust Family Trust

FIFTH RESPONDENT: B Pty Ltd

SIXTH RESPONDENT: H Pty Ltd (HPL) Pty Ltd Both In Its Own Capacity And In Its Capacity As The Trustee Of Soldo Investment Trust No.1

FILE NUMBER: MLC 1835 of 2017

DATE DELIVERED: 15 October 2019

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Wilson J

HEARING DATE: 14 October 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr M Bartfeld of One of Her Majesty's Counsel with Mr T Puckey of counsel

SOLICITOR FOR THE APPLICANT: Lander & Rogers

COUNSEL FOR THE FIRST RESPONDENT: Mr D Brown of One of Her Majesty's Counsel with Ms L Colla of counsel

SOLICITOR FOR THE FIRST

RESPONDENT:

Hicks Oakley Chessell Williams

COUNSEL FOR THE SECOND RESPONDENT: Mr D Brown of One of Her Majesty's Counsel with Ms L Colla of counsel

SOLICITOR FOR THE SECOND RESPONDENT: Hicks Oakley Chessell Williams

COUNSEL FOR THE THIRD RESPONDENT: Mr D Brown of One of Her Majesty's Counsel with Ms L Colla of counsel

SOLICITOR FOR THE THIRD RESPONDENT: Hicks Oakley Chessell Williams

COUNSEL FOR THE FOURTH RESPONDENT: Mr D Brown of One of Her Majesty's Counsel with Ms L Colla of counsel

SOLICITOR FOR THE FOURTH RESPONDENT: Hicks Oakley Chessell Williams

COUNSEL FOR THE FIFTH RESPONDENT: Mr D Brown of One of Her Majesty's Counsel with Ms L Colla of counsel

SOLICITOR FOR THE FIFTH RESPONDENT: Hicks Oakley Chessell Williams

COUNSEL FOR THE SIXTH RESPONDENT: Mr D Brown of One of Her Majesty's Counsel with Ms L Colla of counsel

SOLICITOR FOR THE SIXTH RESPONDENT: Hicks Oakley Chessell Williams

Orders

1. The affidavit of Mr R sworn 2 September 2019 is admitted into evidence.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

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 r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 1835 of 2017

Ms Soldo

Applicant

And

Mr Soldo

First Respondent

And

S Pty Ltd

Second Respondent

And

I Pty Ltd (IPL)/ IPL Trust Pty Ltd Both In Its Own Capacity And In Its Capacity As The Trustee Of The IPL Family Trust

Third Respondent

And

C Pty Ltd/C Trust (Australia) Pty Ltd Both In Its Own Capacity And In Its Capacity As The Trustee Of The C Pty Ltd/C Trust Family Trust

Fourth Respondent

And

B Pty Ltd

Fifth Respondent

And

H Pty Ltd (HPL) Pty Ltd Both In Its Own Capacity And In Its Capacity As The Trustee Of Soldo Investment Trust No.1

Sixth Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. These are my reasons for ruling that the affidavit of Mr R made 2 September 2019 ought to be admitted into evidence.

2. In order to understand the evidentiary debate over Mr R’s affidavit it is necessary to place his affidavit in context.

3. The parties agreed to appoint Ms O as a single expert so as to ascertain the value of the interests of the husband and of the wife in a collection of companies and trusts that together are called in this litigation “the Soldo Group”.  That group is made up of the following entities –

   (a)B Pty Ltd;

   (b)E Pty Ltd;

   (c)Soldo Investment Trust No. 1;

   (d)C Pty Ltd/C Trust Family Trust;

   (e)M Unit Trust;

   (f)G Pty Ltd (GPL)/ G Trust/ G2 Trust;

   (g)G Trust (Old);

   (h)N Unit Trust; and

   (i)IPL Family Trust.

4. Ms O prepared a report dated 14 August 2019 that she exhibited to her affidavit of the same date. 

5. Ms O’s report was a single expert’s report within the contemplation of rule 15.52 of the Family Law Rules. Mr R was not a single expert. It seems he may have been an adversarial witness within the contemplation of rule 15.51 of the Family Law Rules. If properly characterised as such, Mr Puckey, junior counsel for the wife contended that before Mr R’s affidavit could be admitted into evidence the husband needed to, and in this instance failed to, make application for permission under rule 15.51(1) to tender Mr R’s affidavit following the procedure prescribed by rule 15.52.

6. It seems that no point was taken about formal defects in Mr R’s affidavit, particularly about whether Mr R had previously acted for both the husband as well as the wife nor about whether he was independent in the way an expert witness must be in order to qualify as an “expert” or an “expert witness”, properly so called, for the purposes of defined terms under the Family Law Rules.

7. Pursuant to orders made on 16 September 2019 a conference of experts was conducted in accordance with rule 15.69 of the Family Law Rules.  By definition, such a conference is of “expert witnesses”.  That order was made by consent.  Inferentially, the mere fact of the parties urging for orders for the convening of such an experts’ conference carried with it the recognition that those persons participating in that conference were, in fact and in law, experts.  Mr Puckey invited me to conclude that his client preserved her entitlement to contend that the whole of Mr R’s affidavit was inadmissible especially on the grounds now advanced by reason of the preamble to the 16 September 2019 orders.  With respect, I disagree.  By that preamble the wife reserved her entitlement to apply to “strike out” Mr R’s affidavit – whatever that may have meant.  The important issues were that -

   (a)the wife agreed that Ms O and Mr R would confer and, if possible, agree on such issues as they were able at a joint conference of experts; 

   (b)Mr R’s participation at that conference was in his capacity as an expert, in fact and in law; and

   (c)the parties entertained a reasonable expectation that agreement could be reached about certain valuation issues once those experts conferred.

8. The experts in fact conferred and prepared a joint statement expressed to be made under rule 15.69 of the Family Law Rules.  That joint statement is a considered, well-constructed report.  In it the experts addressed the following more probative matters –

   (a)whether a discount for liquidity constraints was correctly applied in relation to the holding of a 27.5% interest in E Pty Ltd;

   (b)whether a discount for liquidity constraints was properly applied in relation to G Pty Ltd (GPL)/ G Trust/ G2 Trust and M Unit Trust;

   (c)whether foreign exchange losses should be brought to account in relation to forward contracts held by the C Pty Ltd/C Trust Family;

   (d)whether balance sheet disclosures should be preferred in relation to the B Pty Ltd and C Pty Ltd loan accounts;

   (e)whether capital gains tax adjustments should be made;

   (f)the application of Division 7A of the Income Tax Assessment Act; and

   (g)the calculation of selling costs.

9. In the upshot, Mr R has persisted in his opinion that for a variety of accountancy reasons, the figure at which Ms O has arrived when valuing the Soldo Group should be reduced.  The husband wishes to rely on Mr R’s evidence.  The wife resists that. 

10. Before me Mr Puckey advanced several submissions supporting his client’s contentions to exclude Mr R’s affidavit.  In no special order, they included the following –

    (a)Mr R was not independent as he had previously acted for both the husband and the wife and therefore his evidence was not that of an “expert witness”; and

    (b)Mr R is put forward by the husband as a separate expert after Ms O had been appointed as a single expert witness and the husband should not be permitted to go beyond the single expert evidence. 

11. It seemed to me that both submissions were met by the same response.  Whether or not Mr R lacked independence having acted previously for both husband and wife, by their conduct, in

    (a)not demanding compliance with the procedure in rule 15.52 in relation to Mr R’s report; and

    (b)agreeing that Mr R’s participation in the joint conference of experts and in the production of the experts’ joint report,

    in my view, the wife is now estopped from taking the points she now takes in her attempt to foreclose upon Mr R’s report being used as evidence in this case.

12. It seems to me that the principles espoused by the majority in the High Court decision of Commonwealth v Verwayen[1] are on point. In this case, it was the experts – not the parties – who first raised a point about Mr R’s independence and that was after they conferred leading to the production of their joint report. Prior to then, the parties were willing for Mr R to advocate his views that stood in part (while not in whole) at odds with those of Ms O. The parties may have complained about the fact that Mr R was an expert under rule 15.51 whereas Ms O was the agreed single expert, yet any such complaint if it existed at all was highly muted because Mr R secured a seat at the joint experts’ conference.

    [1] (1990) 170 CLR 394

13. Self-evidently, had the experts been able to agree on all matters following their joint conference, no point would thereafter have arisen about Mr R’s status as an expert, the information he imparted, his independence or the conclusions he reached.  The parties were perfectly willing for Mr R to undertake the joint conference.  Whatever may be made of the reservation indicated by the wife that she wished to strike out Mr R’s evidence, had Mr R agreed with Ms O after their conclave then it was an inference open to me that no such application would have been made.  As it happens, on a proper reading of the joint experts’ statement the experts do in fact agree on certain issues.  Having agreed to the process of the joint conference, and in that the use of Mr R’s version of events, it seemed to me that it would be wrong to permit the wife to shut out Mr R in giving the evidence that he took – by agreement – to the joint conference of experts.  It would be equally wrong to permit the wife to successfully impugn Mr R’s evidence on the basis that he is not an expert in accordance with the Family Law Rules when the wife was willing to permit Mr R to participate in the experts’ conference on the basis that he was, in fact and in law, an expert. 

14. My task in this case is to conduct a fair trial.  To permit the wife’s objections to Mr R’s evidence to succeed having regard to her stance to date in relation to it would be unfair.  

15. In those circumstances I allow the husband to rely on the affidavit of Mr R.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 15 October 2019.

Associate: 

Date:  18 October 2019