Tsoutsouvas & Tsoutsouvas and Ors
[2012] FamCA 521
•21 June 2012
FAMILY COURT OF AUSTRALIA
| TSOUTSOUVAS & TSOUTSOUVAS AND ORS | [2012] FamCA 521 |
| FAMILY LAW - PRACTICE AND PROCEDURE - Expert Evidence - Where leave is sought to rely upon adversarial experts where a single joint expert has already been appointed |
| Family Law Rules 2004 (Cth) |
| Aon Risk Services Australia Ltd v Australian National University (2009) 258 ALR 14 Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 |
| APPLICANT: | Ms M Tsoutsouvas |
| 1st RESPONDENT: | Mr V Tsoutsouvas |
| 2nd RESPONDENT: | Mr H Tsoutsouvas and Ms N Tsoutsouvas |
| FILE NUMBER: | BRC | 10291 | of | 2009 |
| DATE DELIVERED: | 21 June 2012 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Kent J |
| HEARING DATE: | 2 March 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Matthews |
| SOLICITOR FOR THE APPLICANT: | Edwards Lawyers |
| COUNSEL FOR THE 1ST RESPONDENT: | Ms Black |
| SOLICITOR FOR THE 1ST RESPONDENT: | Q Solicitors |
| COUNSEL FOR THE 2ND RESPONDENTS: | Ms Black |
| SOLICITOR FOR THE 2ND RESPONDENTS: | Q Solicitors |
Orders
The Wife have leave to adduce evidence from:
(a) Mr S as per his affidavit filed 23 November 2011;
(b) Mr B as per his affidavit filed 24 November 2011; and
(c) Mr D as per his affidavit filed 23 November 2011.
The Husband’s application for permission to adduce evidence from Mr W be refused.
The Husband have permission to adduce evidence from Mr C.
The Second Respondents have permission to adduce evidence from Mr R.
The costs of this hearing be reserved to the trial judge.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Tsoutsouvas & Tsoutsouvas and Ors 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 10291 of 2009
| Ms M Tsoutsouvas |
Applicant
And
| Mr V Tsoutsouvas and Mr H Tsoutsouvas and Ms N Tsoutsouvas |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter commenced on 11 November 2009 with the filing of an Initiating Application by Ms M Tsoutsouvas (“the Wife”) for final property Orders against Mr V Tsoutsouvas (“the Husband”). Due to the Wife’s claim that she has an equitable interest in a property of which the Husband’s parents are the registered owners, the Husband’s parents, Mr H Tsoutsouvas and Ms N Tsoutsouvas (“the Second Respondents”), have also been joined as respondents in this matter.
The parties are both presently 44 years of age. They married and commenced cohabitation in 1995 and remained living together until they finally separated in June 2009. Both parties are trained in the personal services industry.
During their relationship, the parties founded and built a business known as T Business in Suburb F, an (initially) successful personal services business. The business has since been sold in what the Wife alleges are suspicious circumstances, but that is not an issue to be decided at an interim stage. The parties also accumulated significant amounts of real property during their relationship but that, too, has since been sold to reduce the liabilities of the parties and their business.
A joint single expert forensic accountant, Mr L of Company E, was appointed by the Court on 14 December 2009 for the purposes of preparing a report for trial. His forensic accounting report, dated 25 March 2010 but not filed in this Court until 14 September 2010, gives the business interests of the party an approximate value of $650,000.00.
For present purposes, there are three issues to be addressed. The first is the Application in a Case of the Wife filed 25 November 2011, requesting that she be permitted, for the purposes of the trial in the matter in July of this year, to rely upon the evidence and affidavits of Mr B filed 24 November 2011, Mr S filed 23 November 2011 and Mr D filed 23 November 2011. Only the latter two were opposed.
The second issue is the Application in a Case filed by the Husband on 24 November 2011, requesting that he be permitted to adduce adversarial evidence from Mr W and rely upon Mr W’s reports and that he be permitted to adduce adversarial expert evidence from Mr C and rely upon Mr C’s reports. Only the admission of Mr W’s evidence was opposed and in those circumstances the Husband ought have permission to adduce evidence from Mr C.
The third issue is the Application in a Case filed by the Second Respondents on 24 November 2011, requesting that the Second Respondents be permitted to adduce adversarial evidence from Mr R and to rely upon his report. This was not opposed by the Wife nor, in the result, the Husband.
Applicable Law and Principles
Adversarial Expert Witnesses
Despite the fact that a single expert witness, Mr L, has been appointed by the parties to value the parties’ interest in Tsoutsouvas Pty Ltd, both the Husband and the Wife seek to rely upon what may conveniently be termed “adversarial” expert witnesses in this respect, namely Mr W and Mr S respectively.
It is convenient to deal briefly here with the question of the admission of Mr S’s evidence. Although the Wife’s Application in a Case filed 25 November 2011 refers to his evidence as adversarial, during oral submissions before me, it became apparent that the Wife is relying on Mr S’s report as evidence of particular facts or as further expert evidence rather than as adversarial expert evidence, on issues addressed directly by the single expert.
During oral submissions, Counsel for the Wife, Mr Matthews, submitted on behalf of the Wife that the central reason for their application for the admission of Mr S’s report was that it set out that the accounts given to Mr S and those which were filed with the Australian Taxation Office in respect of Tsoutsouvas Pty Ltd were not the same as those provided to Mr L, the single expert, for the purpose of Mr L preparing an expert report. This is a question of fact and not one in respect of which Mr S expresses expert opinion. Therefore, Part 15.5 of the Family Law Rules 2004 (Cth) (“the Rules”) does not apply and the evidence is admissible for that purpose. The other purpose of Mr S’s evidence, Mr Matthews submitted on behalf of the Wife, was to express an opinion about the anomalies in the accounts of Tsoutsouvas Pty Ltd relied upon by the Husband (in particular, anomalies regarding cash only receipts). In this latter respect, Counsel for the Wife accepted that Mr S does not, at any time, challenge the final valuation of Tsoutsouvas Pty Ltd as arrived at by Mr L. I therefore find that, in this latter respect, Mr S’s evidence is not truly “adversarial” in character despite its expert nature.
Therefore, r 15.52 applies to the question of the admissibility of this latter part of Mr S’s evidence. In particular, in considering the matters set out in r 15.52(3), I note that Counsel for the Husband, Ms Black, conceded that Mr S’s evidence, “…may very well be useful…” I agree. Given that Mr S’s expert evidence is limited to analysing anomalies in the accounts relied upon by the Husband, an area well within his area of expertise as an accountant, and thus will not excessively or unhelpfully delay the progression of the trial, I find that the evidence of Mr S as regards those anomalies is admissible as further expert evidence under r 15.52 of the Rules.
Regarding Mr W, Counsel for the Husband, Ms Black, submitted that his evidence is directly adversarial as it expresses different conclusions of value from those reached by the single expert accountant. Ms Black submitted on behalf of the Husband that Mr W’s evidence should be accepted on the basis of r 15.49(2)(a) of the Rules; namely, that there is a substantial body of opinion contrary to any opinion given by the single expert witness and that contrary opinion is or may be necessary for determining the issue. In support of this submission, Counsel for the Husband put forward paragraphs 17 to 19 of the affidavit of Mr G filed on 24 November 2011. Those paragraphs read as follows:
17. The expert evidence of [Mr W] is necessary due to the complex nature of the issues surrounding, and the methodology of, the valuation by [Mr L] of the business due to the effects of;-
17.1 Variations in Staff emoluments prior to Administration;
17.2 Liability for Long Service Leave;
17.3 Calculations of EBIT;
17.4 Adoption of Maintainable Earnings;
17.5 Calculation of Earnings Multiple;
17.6 Goodwill;
17.7 Stock values;
17.8 Director Loan recovery; and
17.9 the overriding effects of the GFC; and
17.10 the fact that the company has subsequently been placed in liquidation.
18. As a result of these matters raised in paragraph 17.1 through to paragraph 17.10 hereof, [Mr W’s] evidence is necessary to be admitted both through tender of his reports and by way of oral evidence.
19. It is submitted that [Mr W] is a more appropriate expert in issues of forensic accounting than [Ms J] as he is the Lead Partner in [O Accountants’] Forensic Accounts Division. He has 26 years of experience, and has expertise in the valuation of both companies and the assessment of net worth in Family Law Matters. [Mr W’s] Bachelor of Commerce from (sic) [K University], and he is a Chartered Accountant.
(emphasis in original)
Those paragraphs do not provide any evidence of a, “…substantial body of opinion contrary to any opinion given by the single expert witness…” and thus is not admissible under that rule on that ground.
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.
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.[1]
[1] Smith & Smith (No. 2) [2009] FamCA 1223 (1 May 2009) per Strickland J.
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.
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.[2] 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.
[2] See, for example, Bass & Bass (2008) FLC 93-336 (FC); Simonsen & Simonsen [2009] FamCA 698 (20 July 2009) per Murphy J.
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.
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.
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.
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.
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.
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 L, has been imposed upon either party.
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.
Balanced against that, the Rules provide means for clarifying the report of the expert, either by questions, or also by conference.
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, undermining the original purpose of appointing a single expert; that is, to avoid a “battle of the experts”.
It must also be borne in mind that the Rules do not preclude a party from obtaining, on their own behalf, the assistance of an expert as the Husband has done here in respect of Mr W. The Husband is thereby enabled to have the assistance of Mr W in informing the cross-examination of the single expert witness at trial.
Here, it appears that, on the Husband’s own case, Mr W had information available to him that was not available to Mr L at the time of Mr L’s preparation of his single expert report. However, it seems that none of that information has been provided to Mr L, nor has the Husband taken advantage of the opportunity to pose questions to Mr L under r 15.65 of the Rules regarding his opinion given the new information now available. Asking such questions of a single expert witness should be the first step taken by a party when there are issues raised about the accuracy of that single expert’s report, as it may, in the event, be the case that the single expert either agrees with the particular criticisms or changes their opinion on the basis of the new information provided.
Given that the Husband has failed to make reasonable attempts to avoid the need for an adversarial expert either by asking questions of the single expert or by providing the single expert with the new information in Mr W’s report and asking for a further report of the single expert, I find that there is no “special reason” under r 15.49 by which the evidence of Mr W could, at present, be permitted to be relied upon by the Husband as an adversarial expert witness.
The Husband also raised two other ways in which he intended to rely upon Mr W’s report. The first was in respect of the Schedules 1 and 2 to Mr W’s report marked “DW2” which detail the actual and projected income and expenses of the property from which Tsoutsouvas Pty Ltd was operated and the notional net benefits from that property. It was submitted on behalf of the Husband that this information was useful in that it addressed the depreciation of that land and provided evidence of a lack of unjust enrichment. Counsel for the Wife indicated that he did not oppose reliance on that particular part of Mr W’s report for those limited reasons. In any event, those schedules do not amount to expert evidence and are instead simply evidence of fact as they do not truly draw any conclusions that challenge those of Mr L but rather simply state data.
Counsel for the Husband then submitted that they were orally applying to further be able to rely upon the entirety of “DW2”. This was opposed by Counsel for the Wife on the bases that the assessments, including, for example, the assessment in paragraph 2.4 of the report, were empirical reports of data, the contents of which are unknown, and that there is no evidence of the written instructions provided to Mr W by the Husband, rendering it difficult to understand what Mr W perceived to be the scope of his report. This can be dealt with in the same manner as the previous submission by Counsel for the Husband; namely, that questions should have been put to the single expert covering the information dealt with in Mr W’s report before consideration of admitting Mr W’s report as evidence of an adversarial expert witness will be permitted. Particularly given that Mr W had information not available to Mr L which was sourced from the Husband, any other finding would not be consistent with the purpose of Part 15.5 as discussed above.
I now briefly turn to the Application in a Case filed by the Second Respondents on 24 November 2011, in which they seek leave to rely upon the evidence of Mr R. That Application was not opposed by either the Husband or the Wife. I note in passing that although the Application in a Case of the Second Respondents is framed in terms of a request for leave to rely upon adversarial evidence, I instead accept the force of the submissions of Counsel for the Wife, Mr Matthews, that this application was in reality a request for leave to rely upon further expert evidence as Mr R’s report focuses on the Capital Gains Tax effects of the “family arrangement” between the Husband and the Second Respondents regarding the premises out of which T Business was operated, which is not dealt with in Mr L’s report.
Further Expert Evidence
The Wife’s Application in a Case filed 25 November 2011 also sought permission to rely upon the expert evidence of a forensic document examiner, Mr D, for the purpose of verifying the verity of the Wife’s signature on certain documents.
The relevant rule in this case is r 15.52(3) of the Rules, which deals with the considerations this Court may take into account when considering whether to grant a party leave to rely upon an expert witness.
Counsel for the Wife submitted on her behalf that the evidence of a forensic document examiner was required as the Wife alleges that she never signed a particular sublease to Tsoutsouvas Pty Ltd and in fact did not even know of the existence of that sublease until it was disclosed to her as part of the disclosure process involved in preparing this matter for trial. The Wife further alleges that, although both her and the Husband’s signatures appear on the document, which is said to have been signed in Brisbane, the Husband was not in fact in Brisbane on the date he asserts to have signed the document in that location. It was submitted on behalf of the Wife that this evidence was important in this case as it went to both questions of substance and the credit of the Husband.
Counsel for the Husband submitted that the evidence of Mr D is irrelevant as the Wife does not challenge that she later signed surrender documents relating to the challenged sublease, indicating that she would have known of the sublease by at least that point in time. However, what this submission fails to recognise is that it is not necessarily the knowledge of the Wife of the sublease which is relevant, but the fact of whether or not she actually signed the document and thus whether or not the Husband, or some agent or associate of his, forged the signature of the Wife at all.
The forging of a person’s signature is potentially a very serious matter and one that can significantly impact upon the credit of a witness. The evidence of Mr D is therefore potentially important and will not unnecessarily delay the progress of the trial nor unnecessarily increase its cost. In those circumstances, the Wife should have leave to rely upon the affidavit of Mr D filed 23 November 2011.
I therefore make Orders as set out at the commencement of these reasons.
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 21 June 2012.
Associate:
Date: 21 June 2012
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