Summitt & Summitt and Ors (Re-opening)
[2009] FamCA 365
•8 May 2009
FAMILY COURT OF AUSTRALIA
| SUMMITT & SUMMITT AND ORS (RE-OPENING) | [2009] FamCA 365 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Leave to Re-open – Principles Applicable – Factors Informing The Exercise Of Discretion – Potential Prejudice to the Parties in Re-opening | |
| Family Law Act1975 (Cth) Evidence Act 1995 (Cth) | |
| EBv CT (No. 2) (2008) QSC 306 | |
| APPLICANT: | Mr Summitt |
| 1st RESPONDENT: | Ms Summitt |
| 2nd RESPONDENTS: | Mr and Mrs Summitt (Snr) |
| FILE NUMBER: | BRF | 709 | of | 2006 |
| DATE DELIVERED: | 8 May 2009 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Murphy J |
| HEARING DATES: | 8 & 28 April 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Kirk SC |
| SOLICITOR FOR THE APPLICANT: | Hopgood Ganim Lawyers |
| COUNSEL FOR THE 1ST RESPONDENT: | Mr North SC |
| SOLICITOR FOR THE 1ST RESPONDENT: | K L King & Associates |
| COUNSEL FOR THE 2ND & 3RD RESPONDENTS | Mr Forrest |
| SOLICITOR FOR THE 2ND & 3RD RESPONDENTS: | Murdoch Lawyers |
Orders
The Application in a Case filed by the husband on 17 April, 2009 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Summitt & Summitt and Ors (Re-opening) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: Brisbane 709 of 2006
| MR SUMMITT |
Applicant Husband
And
| MS SUMMITT |
1st Respondent Wife
And
| MR AND MRS SUMMITT (SNR) |
2nd & 3rd Respondents
REASONS FOR JUDGMENT
On 14 November, 2008, a five-day trial of the wife’s application for settlement of property concluded. The case concerned complex arguments including, among others, whether property should be regarded as a commercial partnership’s property (as distinct from property of the parties) and, for example, whether a particular property ought be impressed with a constructive trust. Judgment was reserved.
On 2 March, 2009, at a time when a draft of the judgment was all but complete, correspondence was received from the solicitors for the husband. That correspondence (which was back-copied to the solicitors for the wife) indicated that a re-opening of the hearing would be sought.
The court responded in an e-mail communication addressed to all parties proposing prospective dates when any such application could be heard at the earliest opportunity. As no further communication had been received from any party by 3 April, a further e-mail was sent to all parties. In essence, the court indicated that, as it had not heard further from any party, judgment would be delivered at 2.15pm on 8 April.
Correspondence was then received from the solicitors for the husband on 6 April, indicating that the hearing of an urgent application was sought. The matter was mentioned on 8 April at which time all of the correspondence earlier referred to was admitted as Exhibit 1.
The essence of the application can be found in the affidavit of the husband’s solicitor, who deposes to instructions from the husband that: “… the values of the relevant real properties had significantly reduced due to the impact of the global financial crisis, and also, the ongoing drought and problems associated with the lack of water available for the [Summitt] farming operation.”
At the trial of the action, valuation evidence had been obtained by a single expert valuer, Mr T. His values were accepted for the purposes of the trial.
By reason of the solicitors for the wife not consenting, in an exchange of correspondence, to a request from the solicitors for the husband to prepare fresh valuations consequent upon the husband’s instructions earlier referred to, the husband obtained valuation evidence from Mr L, a licensed valuer.
It is Mr L’s evidence which is relied upon to substantiate the husband’s claim as to the significant diminution in value.
What are the Applicant’s Arguments?
In written submissions on behalf of the husband, Mr Kirk SC argues that:
4.1During the course of the period from July 2008 when the real property of the parties was valued (it being by far the major component of the pool) to the date it became a source of concern to the husband in late February 2009, Australia confronted the global financial crisis, an event unlike anything witnessed in our lifetime. It has been compared to the Great Depression of the 1930’s such is its impact.
4.2In this case the husband’s concerns about the value of several properties was not limited to the global financial crisis but were exacerbated by the ongoing drought in this area and problems associated with the lack of water available for the [Summitt] farming operation.
Those two propositions are at the heart of the argument advanced on behalf of the husband in this application. (The application is supported by the second respondents who are the parents of the applicant husband, are involved in the Summitt farming operation with him, and were active participants in the trial).
The argument advanced on behalf of the husband goes on to point out that, in reliance upon the valuation of Mr L which assesses the values of “…the parties’ interests as contended for by the husband at $400,000.00 less than determined by the single expert Mr [T] in July 2009”. (The reference to July 2009 is an error and should read July 2008).
Reference is then made to calculations based on examples of a division of the pool which illustrate a result said to evidence the potential injustice to the husband. This example, and these figures, will be referred to later in these reasons.
It is said that, as a result, it would be clearly unjust in those circumstances for the Court to proceed on the basis of the valuation evidence from the single expert, Mr T which the Court had before it at the trial. It is argued that the proposed evidence of Mr L is so material that the interests of justice and, specifically, the requirement upon the Court to do justice and equity in arriving at orders pursuant to s 79, demand a re-opening so that it might be received. That evidence, it is argued would, if accepted, clearly affect the result and impact upon the justice and equity of any orders.
What are the Applicable Principles?
In a case involving an application for settlement of property, it can broadly be said that common law principles govern applications to re-open in this Court. (see eg Gelley & Gelley (1992) FLC 92-290 and the cases there discussed).
Those principles make it clear that the granting of leave to re-open is discretionary. That discretion is guided by the interests of justice. The essential question is, is the court more able to do justice in the facts and circumstances of the particular case if the application is granted. (see eg Smith v NSW Bar Association (1992) 176 CLR 256; Urban Transport Authority v NWEISER (1992) 28 NSWLR 471 at 478 and EBv CT (No. 2) [2008] QSC 306)
In cases where reasons for judgment have not been delivered, the High Court has held that the primary consideration should be embarrassment or prejudice to the other side. (see Smith above, at 266-267)
A recent decision of the Supreme Court of Queensland, EBv CT (No. 2) [2008] QSC 306 was referred to by both counsel for the husband and wife. That case involved an application for property settlement under (then applicable) State law with respect to a de facto relationship. In that case, Applegarth J summarised, by reference to earlier authorities, the (common law) principles applicable to a re-opening:
[2] The guiding principle in deciding whether to grant leave to re-open is whether or not the interests of justice are better served by allowing or rejecting the application. Reference is made in Finbrough Investments Pty Ltd v Airlie Beach Pty Ltd and in the cases referred to in it to the need for finality and litigation.
[3] In Smith v New South Wales Bar Association the High Court stated that different considerations may apply depending on whether the case is simply one in which the hearing is complete, or one in which reasons for judgment had been delivered. As to the former situation, the Court said it was difficult to see why the primary consideration should not be that of embarrassment or prejudice to the other side.
[4] In Reid v Brett the criteria governing the exercise of the discretionary power to re-open a case to admit further evidence where the hearing has concluded but judgment has not been delivered, was said to be as follows:
The further evidence is so material that the interests of justice require its admission;
(b) the further evidence, if accepted, would most probably effect the result of the case;
(c) the further evidence could not by reasonable diligence have been discovered earlier;
(d) no prejudice would ensue to the other party by reason of the late admission of the further evidence.
[footnotes and references omitted]
In addition, his Honour held that:
[5] Reference by the High Court to prejudice to the other party, and the guiding principle of the interests of justice, require account to be taken of the strain that litigation imposes on personal litigant. The prejudice caused by delay in the delivery of an expected judgment at the end of stressful litigation can not always be measured in terms of money or cured by an order for costs. The interests of justice is served by finality in litigation, particularly where prolonged litigation imposes a strain on personal litigants.
I consider that that is particularly true of litigation in this court generally, and in this case specifically. I will return to this issue below.
The decision just referred to involved a claim, under the Queensland legislation then applicable, for property adjustment in the context of a de facto relationship.
His Honour considered that, in determining that application, the property of the parties and its value should be determined as at the date of the hearing. That principle is applicable, generally speaking, to applications for settlement of property pursuant to s 79 of the Family Law Act 1975. In the context just described, his Honour went on to say:
[6] The application to re-open is not to overcome a technical defect in the evidence or to tender evidence that is omitted by inadvertence. The application seeks to raise a new issue, namely the current value of certain assets of one of the parties, whereas the issue litigated at the hearing of the assets, financial resources and liabilities of the parties as at the date of hearing. It is impossible to see how the respondent could be permitted to call evidence of the current value of some of his assets without, in fairness, opening up the general issue of the current value of the parties’ assets. To do otherwise would be to fall into error. It would be wrong to determine the matter on the basis of the current value of some assets and the value as at the date of hearing of the balance of the assets.
However there are, here, significant points of distinction. This is not a case (as was the case before his Honour) where the application is to allow the re-valuing of the property of one party only. However, his Honour goes on to say (at [7]) that:
“… the relevant issue is the value of the parties’ property at the date of the hearing. The interests of justice do not require the admission of the evidence to determine that issue. It is contrary to the interests of justice to re-open the evidence to enable the value of the assets to be re-assessed at dates after the respondent’s case has closed and after the hearing was concluded.”
Without expressing any view of what the position might have been in respect of the then relevant Queensland legislation, it is necessary, I think, to be a little more circumspect about the position in respect of s 79 applications under the Family Law Act. It has been said for example (albeit in a different context) that: “… in addition to the date of the hearing, the value of property at other dates may be important.” (Australian Family Law, Lexis Nexis, Vol 1, [79.113]). That is because, primarily, the nature of contributions can change. Thus, the issue at a trial may be broader than simply the value of property at the date of the hearing.
That said, it is equally true to say that the date of hearing is almost inevitably an important date for the ascertainment of the value of s 79 property and very frequently – as was the case here – used as the relevant date for the purpose of ascertaining the value of “the property of the parties or either of them” within the meaning of s 79.
The Respective Valuations of Mr T and Mr L
The husband cannot be criticised for seeking to introduce evidence from Mr L in lieu of Mr T for the purpose of this application.
The evidence reveals that an attempt was made to have the wife agree to Mr T undertaking (at the husband’s expense) new valuations in light of the (sworn) view of the husband about the value of the properties now. The wife refused. Mr L’s valuations were undertaken as a result of that refusal.
Accordingly, it is understandable - and, as I find, permissible - see, rr. 15.49(2)(c); 15.51 Family Law Rules 2004) - for the husband to not have a “current” value from Mr T and to rely upon a valuation from another expert witness.
It is also accordingly understandable that the court does not know what Mr T would say about the current value of the properties and what difference, if any, there is between any such values and those at trial.
Methodologies and Comparisons
Mr T used the “comparable sales” method of valuation to arrive at his valuations. His inspection dates were in July 2008. Mr L also adopts the comparable sales method. His inspection dates were in March 2009.
Mr T relies upon ten relevant sales to substantiate his valuation of the properties known as W property, D Farm, N Property and “the Home Farm” and twelve in respect of the property at P. Those sales occurred between October 2005 and August 2007. Five sales were used in respect of W property, occurring between December 2005 and February 2008. The three sales used in respect of E Farm occurred between May and October 2007. Three sales were used in respect of the residential properties at A, occurring in February and March 2008.
In assessing values, Mr T refers, at least in some respects, to the matters relied upon by the husband as underpinning what he alleges to be the diminution in values and what the husband alleges to be the bases for Mr L’s valuations being significantly lower:
Under the Heading “Climate and Seasonal Conditions”:
“…Rainfall has however been very sporadic over the last 10 – 15 years and although in many instances, average annual rainfalls have been achieved, the occurrence of these rainfalls have either been ‘all at once’ or in two to three occasions per annum only when maximum benefits are not achieved …For this flow [into and from the local Creek] to commence, some 500 millimetres of rain over the next few months would need to occur within the headwaters of the catchment”
Under the heading “General Market Commentary” a number of broad market considerations were discussed. Included among them were the comments:
“The potential for the US to slip into recession is unfortunately becoming more of a reality each day. This has seen the Australian stock market ‘adjust’ downwards by about 24.5% off it’s (sic) 6,873 point high in early November, 2007 … The impact a US recession will have on Australia in general will vary from industry to industry but needless to say it will not be positive”.
“… there is a general perception that the market has plateaued and has possibly retracted in the order of 5% to 15% “across the board”. If the season continues to improve, agents are indicating that the number of properties on offer may again increase and this may place further pressure on some property values, particularly the less than average quality operations that may in recent times have not been discounted as much as they should have been.”
Under the heading “Valuation Approach” Mr T referred to considerations given by him to the sales used. Among them were:
“Current conditions of the bores with respect to quality and quantity and the impact the drought in general is having on the market within this region.”
Exhibited to the affidavit of the husband’s solicitor (Exhibit FRW-7) is her letter of instructions to Mr L. Mr L was provided with a copy of Mr T’s valuations. The letter of instructions says, in part:
“We are instructed by our client that property values have altered substantially since the previous valuation in July 2008 due mainly to the further lack of water resources and also the global economic climate…”
“… we have received our client’s instructions to re-open the case and seek to adduce further evidence in relation to the value of the properties so that His Honour may also consider this information prior to delivering his judgment given the likelihood that values have reduced.”
The letter goes on to seek “a current valuation” of the properties. No request was apparently made seeking Mr L’s assessment of value as at November 2008, nor was he specifically asked his opinion in respect of the above-quoted assertion of the husband about diminution in value since July 2008 or November 2008.
The valuations of Mr L do not mention the valuations of Mr T.
The valuations of Mr L do not specifically mention any factors said to have impacted on value in either the period July 2008 to March 2009 (when Mr L’s valuations are based) or in the period between November 2008 (the date of trial) and March 2009.
The valuations of Mr L do not indicate within them that there has been any change in the value of any property in either of the periods just mentioned.
Mr L uses 13 comparable sales in respect of the properties known as W Farm, D Farm, N property and “the Home Farm” and the same 13 in respect of P property. Of those 13 sales, none occurred between the date of trial and the date of valuation. Two occurred between the date of Mr T’s valuation and the trial.
Mr L uses ten sales in respect of O property. Of those ten sales, possibly only one (listed as occurring in “November 2008”) occurred in the period between trial and the date of Mr L’s valuation. Three occurred between the date of Mr K’s valuation and the trial.
The same ten sales were used by Mr L in assessing the value of the E Farm property. Thus, in respect of this property, too, one comparable sale possibly occurred in the period between trial and the date of Mr L’s valuation and three occurred between the date of Mr T’s valuation and the trial.
Finally, in respect of the residential properties at A, Mr L (having observed that “the demand in the suburb has been constant but with a declining number of completed contracts since late 2008”) goes on to assess the values of each of the two properties (based on sales all occurring after Mr T’s valuation and one, and perhaps two, occurring after the trial) as being, respectively $155,000 and $145,000. (This compares to Mr T’s valuations of, respectively $160,000 and $150,000.)
The valuations of Mr L do mention, at least in some respects, the matters relied upon by the husband as underpinning what he alleges to be the diminution in values and what he alleges to be the bases for Mr L’s valuations being significantly lower:
Under the heading “Summary” (p.2):
“The values have been assessed on the basis of individual farms each with significant water deficiencies but at the same time working together to provide elements of efficiency to ensure regular production of quality [produce].”
Under the heading “Land” (in respect of W Farm):
“The water supply, at inspection, was deteriorating.
“…Three of the bores have no water …”
Under the heading “Comments” (in respect of W property):
“The demand for agricultural land has declined due to external factors, severe drought, depleted underground water and economic downturn.”
Under the heading “Valuation Rationale”:
“The overall figures have been discounted to allow for the decreased demand for agricultural land.”
It is to be observed that no time frame is given by Mr L over which, in his opinion, the water supply had been deteriorating, demand had decreased, underground water had depleted and in respect of which the economy had downturned.
Comments to similar effect have been made by Mr L in his valuations of the other properties (See, eg. pp. 4, 8 re “Home Farm”; pp. 5, 8 re D Farm; pp. 5, 14 re P property).
Differences in Valuations and the Potential for Injustice
Mr T was a single expert, appointed as such pursuant to the Family Law Rules 2004. (See rr. 15.44, 15.45). His values were accepted by all parties for the purposes of the trial. By definition, then, the potential for other valuations to be relied upon at trial was eschewed by all parties.
Within that context, it is also very important to observe that neither the husband, nor any other party, sought at the trial to challenge any aspect of the valuations by Mr T. No party sought to cross-examine him.
In particular, in light of the arguments advanced by the husband in this application and the observations about to be made about the valuations of Mr L (including the comparable sales relied upon by him) Mr T was not cross-examined to the effect that the world or Australian economic situation, or on-going drought, or lack of water had impacted upon his valuations in the period between July 2008 when they were undertaken and the trial in November.
Further, and specifically in relation to values, there was no attempt made to suggest to Mr T that there had been any downward movement in his values in the approximate four months between valuation and trial.
Mr North SC, in written submissions with respect to the instant application submits:
“The husband in his oral evidence [at the trial] made reference to the diminishing water supply and thereby indicated that he was aware of it and capable of giving appropriate instructions to his lawyers prior to the trial…”
“… the global economic crisis was in full swing by the [date of trial]. Fannie May and Freddie Mac had been placed into “conservatorship” in the first week of September, 2008. Lehman Brothers had announced filing for bankruptcy on 14 September 2008 and on that same day Merill Lynch was sold to the Bank of America.”
“In October 2008 the Australian Government had both announced its guarantee of bank debt and its first economic stimulus package.”
The matters just referred to in relation to the prevailing economic circumstances, were not the subject of evidence at the trial and not the subject of evidence in this application.
Section 144 of the Evidence Act 1995 provides:
(1) Proof is not required about knowledge that is not reasonably open to question and is:
(a) common knowledge in the locality in which the proceedings is being held or generally; or
(b) capable of verification by reference to a document the authority of which cannot be reasonably questioned.
(2) The judge may acquire knowledge of that kind in any way the judge thinks fit.
(3) The Court (including if there is a jury, the jury) is to take knowledge of that kind into account.
(4) The judge is to give a party such opportunity to make submissions, and to refer to relevant information, relating to the acquiring or taking into account of knowledge of that kind as is necessary to ensure that the party is not unfairly prejudiced.
The matters referred to in the submissions made by Mr North SC are, in my view, notorious in the sense referred to in s 144 – that is, they are “common knowledge”. The matters are referred to as part of circumstances said to exist at the time of trial.
Similar circumstances which, also, are not the subject of specific evidence, are relied upon on behalf of the husband as pertaining to the situation now. (See para 4.1 of the written submissions of Mr Kirk SC cited above).
Relying upon s 144 of the Evidence Act 1995 I take each into account in support of the respective cases to which they relate.
To the extent that value is determined at the date of hearing (or any other relevant date) for the purposes of s 79 applications, it is, axiomatically, arbitrary in the sense that it involves the assumption of values at a particular snapshot in time.
Moreover, it will almost inevitably be the case (and was the case here) that there will be a time lag between the date of valuation and the date of hearing. Thus, whilst the “date of hearing” is spoken of as being the date upon which values are often ascribed, it is, in fact, almost always (and was here) an earlier date – i.e. the date when the valuation was obtained.
That is likely to be all the more true when, as is the case in this court, the Rules provide that, in the usual course, a single expert valuer is to be used; joint instructions need to be settled and the valuation received by both parties (and the court) in good time for the trial. The trial valuations here were dated approximately July 2008 (ie they reflect values at a time about four months prior to the trial).
The assumption at trial (in the absence of evidence to the contrary) that values have not moved in the period between valuation and trial involves the assumption – or, at least, the acceptance – that whatever economic and other exigencies may have been present in that period will be ignored for the purposes of arriving at the value of property at the trial.
The increasing complexity of matters confronting the courts, when merged with a judge’s desire to write a considered judgment, sometimes results, regrettably, in a delay between trial and judgment. As Campbell J said in King Investments Solutions Pty Ltd v Hussain and Another (2005) 64 NSWLR 441 at [164] “… [the realities of] the case listing procedures of the Court force judges to write reasons in whatever odd corners of time are left over from their other duties …”.
Often, that delay might encompass the occurrence of the sorts of exigencies just referred to. That will not, usually, result in a case being re-opened. Finality in litigation is a powerful component of the interests of justice.
In assessing the materiality of the evidence sought to be led by the husband at a re-opened trial, the starting point is the trial itself. There, evidence from Mr L (or any expert other than Mr T) could not have been led without the court’s permission (rr. 15.49; 15.51 Family Law Rules 2004). A (relevant) factor in the court granting any such permission is that “another expert knows of matters, not known to the single expert witness, that may be necessary for determining the issue” (r. 15.49(2)(b)) or that there is some other “special reason” for adducing the evidence (r. 15.49(2)(c)).
In my judgment the report of Mr L satisfies neither of those criteria. Indeed, the report of Mr L, including the comparable sales referred to by him, would appear to indicate at face value that it has been informed by precisely the same sorts of considerations that informed Mr T’s valuation.
That fact points, in my judgment, against the materiality of the evidence of Mr L.
However, that consideration is clouded by the fact that Mr L’s report exists only because the lack of consent of the wife precluded a further report from Mr T. Given the proximity in time of his earlier report, it seems to me that I can infer that it is likely that any such report from Mr T would have squarely addressed the issue of change of value (if any) whether by reference to the factors relied upon by the husband, or, presumably, otherwise.
Yet, it is the husband who assumes the burden of establishing the requisite injustice so as to re-open the trial in the context of the factors, including finality and potential prejudice including stress, that might otherwise point against it.
Whilst the husband is properly entitled to say that it is not as a result of any action or inaction on his part that Mr T does not provide “new” evidence for the purposes of this application, it is precisely because of this circumstance that any alternative expert evidence would, for the purposes of this application, need to address materiality in quite specific ways.
It seems to me incumbent upon the husband to satisfy the court that Mr L’s evidence is, in terms of its materiality, of such a nature as to be more than simply another expert opinion which, if sought to be adduced at the original trial was unlikely – on the surface of it – to have satisfied the requisite test for admission under the Rules.
Specifically, it seems to me essential for the husband to adduce cogent evidence to show that facts or factors impacting on value now are different from facts or factors impacting on value at the trial and that it, or they, are material to the decision and need to be taken into account to prevent injustice.
It is in my judgment not sufficient, in that respect, to adduce, without more evidence that valuer A says that the properties are now valued at $x whereas valuer B said, eight months previously that they were valued at $y, particularly where there is no question that $y was accepted as their value four months prior to them being valued at $x.
If that is so, it is in my view not to the point that arguments can be mounted (as was done by the husband here) showing that, if $x is accepted as the value, then the application of specified percentages will result in significantly lower entitlements than if the value of $y is employed.
In my view, the evidence adduced by the husband and the argument based upon it can be encapsulated in the manner just described.
Other Alleged Injustice to the Husband?
At paragraph 2.1.5 of the written submissions of Mr Kirk SC on behalf of the husband it is submitted that;-
“The husband accepts that these proceedings have been stressful for all of the parties but has no choice but to seek to re-open it as, to do otherwise, could lead to “financial ruin” (Husband’s affidavit, para 8).”
At the paragraph of the affidavit there referred to, the husband deposes:
“In addition to the pressure of court proceedings, I have endured emotional stress and hardship because of the climatic conditions giving rise to severe drought and lack of water reserves and the prospect of loosing the farming operations. I have faced enormous stress and also distress to preserve the farming operation in the face of these difficulties. However, I have had no other choice but to make the current application to re-open the proceedings to reduce further valuation evidence of the properties as not to do so could give rise to financial ruin for me”.
I do not doubt for a moment that the court proceedings have been stressful in the manner described by the husband. He acknowledges that the wife has “suffered enormous and financial pressure as a result of these proceedings”. He deposes (at para 7) that:
“The proceedings have been ongoing for a number of years. Not only was I forced to endure the emotional upset of [the wife] leaving me with no warning, and then having to deal with the separation, but I have continued to look after the welfare of our children particularly our youngest child”.
I have not the slightest doubt that the breakdown of what is a very long marriage, the events post-separation as each of the parties adjust to that circumstance, and these proceedings, have caused very significant stress to each of the parties. Each of the parties appear to recognise as a matter of personal reality that which is, in an application of this type, a matter of law: as earlier referred to, the notion of prejudice to the respondent to an application of this type “requires account to be taken of the strain that litigation imposes on personal litigants”.
Equally it is not difficult to imagine, and I accept for the purposes of this application, that the husband has faced considerable stresses in attempting to run what is clearly a significant farming operation in the aftermath of a marital separation and in the shadow of a prospective settlement of property with the wife.
However, a number of matters about the case run by the husband at trial need to be observed. First, the husband always contended that he (and/or the second respondents) would retain the vast bulk of the real property – essentially being the farming operations. It was always part of his case (and part of the case of the second respondents and the wife) that the wife would retain the two residential properties, chattels and receive a cash sum.
No case was ever put forward by the husband at the trial that some or all of the real properties would need to be sold in order to find the cash sum which the husband would urge upon the court as payable to the wife. No case for “financial ruin” was made out by the husband at the trial. At that time, the then values would see him paying to the wife a cash sum greater than (as he would have it) that payable to her by reference to the reduced value for which he now contends.
Marital breakdown, particularly after very long marriages, often results in significant economic difficulties for each of the parties and is often a sad, but inevitable, consequence of a just and equitable settlement of the property between the parties to that marriage.
It is axiomatic to the arguments of each of the parties that value is dependant on the world and Australian economic cycle. And it is a cycle. The world and Australian economies bubble and burst. The evidence of Mr T portends (in July 2008) the possibility of a US recession and a negative effect on the Australian economy.
It is not necessary for me to make findings about whether there is a recession as that term is defined. I can, it seems to me, take judicial notice of the fact that, in a general sense, significant pessimism currently attends the economic outlook. Yet, it seems to me I can also take judicial notice of the fact that the nature of world capital economies is for the down cycles to turn into up cycles (and again into down cycles).
The husband (and/or the Second Respondents) is, on the case presented at trial by each of the parties (including the wife) to retain all of the real property save for the residential properties. The evidence is clearly to the effect that, subject to a fair distribution upon death, the properties are to be retained and worked as a commercial farming enterprise into the future. To that effect, some, at least, of the parties’ adult children now work the farms.
Trials occur, anyway, at a snapshot in time and, thus, at a particular point in the broad economic cycle. The possibility of significant commercial landholdings of significant value increasing in value in the future as they are retained and farmed is also a matter forming part of the facts and circumstances surrounding the decision about the injustice alleged.
Prejudice / Injustice to the Wife
Mr North SC contends in written submissions on behalf of the wife that:-
“24. If this application succeeds the prejudice to the wife will be significant indeed. She is in a difficult financial circumstance. Unlike the husband she has not had the benefit of borrowing from the other entities in order to fund her litigation but has had to seek her litigation funding from Impact Capital. She has no prospect of further funding from that source. She is already significantly in debt to her lawyers. Were your Honour minded to grant this application she would wish to have other expert evidence gathered so she would be in a position to critically assess and consider challenging the evidence of Mr [L]. Her financial position may not enable her to do that. That process will add to the delay and likely give rise to further disputed issues.
25. The wife is under significant emotional stress. Even the prospect of re-opening has caused the wife to seek the support of a psychologist.
26. Any re-opening will necessitate a much longer period of delay, likely require the wife to incur further debt and a greater interest burden, place her under increasing emotional strain and cause her extreme prejudice”.
Subsequent to the conclusion of his submission, Mr Kirk SC advised the court of instructions from his client that his client would fund a further valuation from Mr T to the extent of $20,000 to be available at the trial. To that extent, then, it is argued that the financial prejudice to the wife is, at least, ameliorated.
At a re-opening of the trial, assuming Mr T undertakes a further valuation, it is highly likely that Mr L and Mr T would be required to confer with respect to their valuations and any issues arising from them. Each may well be required for cross examination at the re-opened trial.
The submissions of Mr North SC contemplate a desire on the part of the wife to have “other expert evidence gathered so she would be in a position to critically assess and consider challenging the evidence of Mr [L]”. The submissions of Mr Kirk SC and, more particularly, the offer to fund the further report form Mr T do not necessarily put an end to that ambition on the part of the wife. It might be, in the circumstances of this case, and, in particular, in light of an assertion that external factors have impacted upon value in nine months, that the wife might legitimately seek to have an expert independent of either Mr T or Mr L provide valuation evidence to her.
There was evidence at the trial of the very considerable sums owed by the wife to Impact Capital which, it is to be noted, provide finance at interest rates significantly above those pertaining to, for example, personal loans from a bank. She has borrowed funds from other sources in the post separation period. She has utilised funds that were available to her during that period.
It is by no means clear that the wife would be able to avail herself of the legal representation of her choice – or any legal representation – at a re-opened trial. In circumstances where, as the husband deposes “the proceedings have been ongoing for a number of years” and where the wife has been represented by the solicitor and counsel of her choice in the lead up to, and at, the trial of this action, the potential for her to be unrepresented at any re-opened trial (or alternatively not have the representation of her choice) is, it seems to me, a very significant potential prejudice.
Whilst accepting that litigation has been stressful on both parties, and whilst accepting the husband has had the stress of managing the farm in the post separation period including the period leading up to the trial, nevertheless it is he who brings this application. The High Court said in Smith v NSW Bar Association, above at 267, that “it is difficult to see why… the primary consideration should not be that of embarrassment or prejudice to [the respondent].”
I consider the prejudice to the wife in this case of a re-opening to be a very significant matter pointing against such an order being made.
Conclusions
For the reasons given I am not persuaded that the interests of justice are better served by allowing the application to re-open.
For that reason, the Amended Application in a Case filed 17 April 2009 is dismissed.
I indicate in these reasons that I have proposed to deliver reasons for judgment in the trial of this matter within a week.
I order accordingly.
I certify that the preceding ninety-four (94) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy.
Associate:
Date: 08 May 2009
40
4
12