Walls & Keeble
[2022] FedCFamC2F 1804
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Walls & Keeble [2022] FedCFamC2F 1804
File number(s): MLC 1269 of 2020 Judgment of: JUDGE BETTS Date of judgment: 9 December 2022 Catchwords: FAMILY LAW – Property – final hearing, part heard –where the husband has made an oral application to re-open the evidence so that a further valuation report can be obtained – where a potential rezoning of property may impact the value of the property – wife opposes any reopening of the evidence – where the husband has no admissible valuation evidence of his own, it would be manifestly unjust to reopen evidence – husband’s application dismissed – just and equitable outcome. Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia(Family Law) Rules 2021 (Cth)
Cases cited: Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175
Preston & Preston [2022] FedCFamC1A 157
Division: Division 2 Family Law Number of paragraphs: 93 Date of last submission/s: 30 November 2022 Date of hearing: 29-30 November 2022 Place: Newcastle Counsel for the First Applicant: Mr Bithrey Solicitor for the First Applicant: Kekeff & Associates Counsel for the First Respondent: Mr Graham Solicitor for the First Respondent: Lindeman Lawyers ORDERS
MLC 1269 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS WALLS
Applicant
AND: MR KEEBLE
Respondent
order made by:
JUDGE BETTS
DATE OF ORDER:
9 DECEMBER 2022
THE COURT ORDERS THAT:
1.The Husband’s Application to re-open the evidence in respect to the value of the property at Town B, is dismissed.
2.The matter remains listed for submissions on 25 January 2023 at 10.00am.
3.The wife’s Costs of and incidental to today are reserved.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Walls & Keeble has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE BETTS
These reasons for judgment were delivered orally. They have been corrected from the transcript in order to make them easier to read.
INTRODUCTION
These are de facto property settlement proceedings conducted pursuant to the provisions of Part VIIIAB of the Family Law Act 1975 (Cth). They arise out of the breakdown of the de facto relationship between the applicant wife, Ms Walls, and the respondent husband, Mr Keeble. While the parties were never legally married, for ease of reference I will refer to them as “the husband” and “the wife” respectively in these reasons. The parties were in a relationship for some eight (8) years or so before their relationship broke down irretrievably in early 2020.
The parties entered the relationship as mature adults. Each had their own assets. The wife’s were much greater than those of the husband. In the course of the relationship the parties purchased land at J Street, Town B and upon which there was situated a tourist resort in a somewhat dilapidated or run-down state. The parties purchased the land and the resort for a combined figure of $1.5 million. They went on to incorporate a company, The Town B Company Pty Ltd, which effectively conducted and continues to conduct the operation of the tourist resort.
The Town B Company Pty Ltd acts as corporate trustee for The C Trust, being a trust in which the parties have an interest and which was also established during the course of their relationship.
To say that this has been an acrimonious separation would be an understatement. This case has involved very high levels of acrimony, in my observation, and it is certainly one which needs to be brought to a resolution as soon as possible.
The final hearing proceeded before me on 28, 29 and 30 November 2022 and is presently part-heard. It has been adjourned to 25 January 2023 for final submissions. However, an issue has arisen towards the end of the hearing on 30 November 2022 in relation to the valuation of the major asset in this case, being the beachside land at Town B.
By way of further explanation, the real debate in this case, insofar as the value of the Town B property is concerned, relates to its potential future rezoning. It is currently zoned as RU1 Primary Production under the Region D Local Environmental Plan 2010. The Region D Local Council, the Region E Local Council and the Region F Local Council have since been amalgamated into a new Region G Council and in December of 2020 the Region G Council provisionally approved a document known as the “Region O Housing Strategy”. Pursuant to that Region O Housing Strategy, the property at Town B may be rezoned as medium density residential.
A rezoning would potentially impact the value of the property as it may permit the registered proprietor to build housing or other accommodation on the property in such a way as to potentially increase its value. Now the fact that there has been a possible rezoning looming is hardly a new matter. In the course of the trial before me, the wife had been questioned about an email that she had written in 2019 in which she referred to the property being rezoned and revalued in the future. But there is absolutely no certainty, at this time, as to when any such rezoning will take place and, ultimately, what impact it may have on the value.
The husband has, effectively, brought an oral application to re-open the evidence such that a further valuer or further valuation report would need to be obtained. A question arises as to who the identity of that valuer ought to be and there are various machinery and related machinery clauses that will inevitably need to be considered in the event that the husband’s application is successful.
The wife opposes any re-opening of the evidence.
I will address the relevant factual background as well as the evidential basis for the husband’s application. I will also address the legal considerations as they arise.
LITIGATION HISTORY
The proceedings were first commenced by the wife on 7 February 2020, almost three (3) years ago. They have taken until 28 November 2022 to come on for final hearing. Despite their separation, the parties have been inextricably financially linked for some two and three quarter (2 ¾) years or thereabouts.
In these proceedings, it appears that the value of the Town B property has always been something of a live issue. The wife was, and remains, very keen to retain the property. Her own mother lives nearby in a home that was purchased during the relationship for her. The husband was, at one stage, seeking the sale of the Town B property. In more recent times, however, he seems to have taken the view that the wife may retain it.
On 12 August 2021, that is some sixteen (16) months ago or so, the proceedings came before Registrar H, as she then was, back when this court was known as the Federal Circuit Court of Australia. On that occasion, Registrar H made a consent order which included an order that:
1.That within three (3) calendar months from the date of this order the respondent [the husband] do all acts and things necessary to obtain valuations of entities or property, which remain in dispute, including:-
…
1.4 “The C Trust trading as Town B Resort”.
Some three (3) months later on 12 November 2021, the proceedings came before me for trial directions. Those directions specifically provided for the parties to file and serve their trial material by close of registry filing on 26 September 2022. Each party was to file and serve a Case Outline by 21 October 2022 which was to annexe that party’s proposed Balance Sheet as well as summarising relevant evidence and contentions with respect to any disputed items therein. The matter was listed for trial from 28 to 30 November 2022.
At the outset of the trial on 28 November, each party had filed a Case Outline. The husband’s Case Outline contained the following submission in relation to the Town B property, noting that it was, by this stage, the husband’s position that the wife ought to be able to retain it: [1]
7.See paragraph 4 and 5 of the PTA [sic – should read “PDA”] Planning Report of the 14 April 2021 in which it is said “we have included an attachment of a section of the report presenting to council in December 2020 which identifies that [J Street Town B] will be rezoned R3 medium density under the provisions of the new LEP [local environment plan]. The consequences for this new zone will predominantly be the ability to build residential uses up to the height of 12 metres provided such uses provide medium density-style housing.” It is submitted that the wife will benefit from this in the future and the husband will not. It will be submitted that the court will need to take this into account in doing justice as between the parties to the de facto relationship.
[1] At page 6 of the document
The wife’s Case Outline responded to this argument: [2]
2.The Court, it is submitted, cannot and should not make an adjustment on account of the disparate value of property that would be retained by each party as a result of their contribution-based assessment. To do so would be double handling the party’s assets by application of section 90SM(4) and section 90SF(3) in a manner that is contrary to well established authority. (Such authority most recently being reiterated in Preston & Preston [2022] FedCFamC1A 157 at paragraphs 20 and 21 in particular.)
[2] At page 7 of the document
At trial, the only party who had filed admissible evidence as to the value of the Town B property was the wife. The husband had no admissible valuation evidence. This is despite the previous orders of Registrar H of 12 August 2021 and the trial directions that I had made in this matter.
The wife had filed an affidavit by Mr K, a valuer, which was sworn by him on 21 October 2022 but not filed until 11 November 2022. Mr K had valued the Town B land at $3 million describing it as “valuable beachfront reserve.” He had valued the improvements as having an added value of $1.1 million so that the total land value was $4.1 million.
At trial, it was quite apparent that the husband’s argument would engage relevant case law in respect of double-counting, including the decision in Preston & Preston (supra) referred to by the wife’s counsel. There was some argument before me in relation to the application of those authorities and I indicated that it seemed to me that it would not be permissible for me to count the value of the Town B property both as an asset for the purposes of the Balance Sheet and, separately, to make some additional allowance or adjustment in relation to the potential future increase in value of the property which might arise upon a rezoning.
In the circumstances Mr Graham, on behalf of the husband, decided that he wanted to cross-examine the wife’s valuer, Mr K, who was then made available to give evidence by telephone.
I have before me competing contentions as to value which, ultimately, is what led to the husband’s oral application to re-open the evidence.
To be clear, the only valuation evidence I have is from Mr K. According to his report, at page 21 under the heading “Council Planning Considerations” he records that he had spoken to the Region G Council and particularly the Principal Strategic Planner (who in oral evidence he said was one Mr L) in regard to the potential rezoning of the subject land. He was advised that there was a proposed rezoning of the land to the north of this property which would be rezoned as R3 medium density residential, but that J Street was not part of that rezoning and was still zoned as rural.
Mr K’s report went on to say that there was opportunity in the future for rezoning as the land has been identified in the Region O Housing Strategy, however this is a guideline only and does not provide certainty. For the land to be considered for rezoning, extensive reporting is required to address erosion, vegetation, bushfire matters as well as other concerns. Mr K’s report went on to say that, furthermore, Council had indicated that the best opportunity for the subject land to be considered for rezoning in the future is when the Region G Local Environmental Plan (LEP) is proposed to be prepared in a few years at the earliest. Mr K concluded in his report that:
In summary, the property can only be assessed in its current state as a large rural-zoned beachfront reserve lot with future potential for rezoning subject to extensive studies and Council approval.
Mr K’s report being the only admissible valuation evidence at trial, the wife, for reasons that are not entirely clear to me (although hindsight is always 20/20) decided to file an affidavit by Mr M. Mr M is a solicitor with a Masters Degree in Environmental Law, a Graduate Diploma in Legal Practice, a Bachelor of Legal Studies, a Bachelor of Science and who also holds an Electrical Engineering Certificate. He is an expert in planning, administration and environmental law advice and litigation, property law, environmental and planning law, compliance, compulsory acquisition and due diligence and planning agreements.
Mr M had been commissioned by the wife to provide her with written report on 16 February 2022, long before this matter was to proceed to trial, and a copy of that report is annexed to his affidavit. He was specifically asked to advise as to the prospects of a change in zoning for the property in the near to medium term future. His report very thoroughly canvasses all of the relevant regulatory requirements, including consultation requirements in respect of environmental issues and the like. He makes the observation that it will take quite some time for the local environmental plan to come to fruition and for any potential rezoning to occur. He said that this involves pre-lodgement of the plan, which is stage 1, a planning proposal, which is stage 2, a gateway determination, which is stage 3, a post-gateway determination, which is stage 4, and a public exhibition and assessment at stage 5 before a finalisation at stage 6.
He says that the realistic timeframe for this process would likely exceed fourteen (14) months. He observes that the “rural strategy” had just come off public exhibition as at the time of that report but that various other reports still needed to be undertaken as well, including environmental reports.
Mr M concluded that the Region O Housing Strategy did foreshadow that the zoning of J Street, Town B Road would change from primary production to part “environmental protection” and part “medium density residential”. He says that about 54 % of the total land could benefit from the medium density residential zoning but that about 46 % would be likely to be included within the environmental protection zone as abutting sand dunes and the like, such that it couldn’t be developed as medium density residential.
Mr M also said that until the new local environmental plan was exhibited and finalised, the actual zoning outcome remained tentative.
Mr M’s report was updated and, in particular, he prepared a report of 1 November 2022 addressed to the wife which is also annexed to his affidavit. This report was a specific response to the report of the husband obtained from PDA Planning (Mr N) of 14 April 2021 – being the report mentioned in the husband’s Case Outline as referred to earlier.
In his updated report, Mr M effectively agreed with many of the things that Mr N had said, while at the same time putting in issue various other aspects of what Mr N said. That is to say, he endorses some but not all of Mr N’s observations in the PDA report.
I will turn briefly then to the PDA Planning report prepared by Mr N.
Mr N’s report had been commissioned by the husband on 14 April 2021. Self-evidently, the husband had been in possession of this report for 19 months or thereabouts before the final hearing. Mr N was never put on affidavit. Mr N was not available for cross-examination at the trial.
It appears to me that Mr N is an expert Town Planner, rather than an expert valuer. Mr N’s report speaks glowingly about the rezoning potential of the Town B property, referring to the potential for the existing tourist facility to increase in size and that if it was redeveloped as medium density residential then the value of the property might increase significantly.
He referred to the three local council environmental plans that existed across the Region G region. He referred to their impending consolidation into a single local environmental plan. He referred to the draft housing strategy adopted by the Region G Council in December 2020 to which I have referred. He estimated that the new LEP would come into effect some time in 2023. His opinion was that upon it coming into force, the proprietor of the Town B property would be able to build residential accommodation up to a height of 12 metres provided it was medium density housing only. He said:
The site has been identified and accepted by Council as a future Medium Density zone. This new zoning will come into effect in the new LEP which at this stage may occur in 2023. The new zoning provides significant development opportunity for the provision of medium density housing in a unique beachfront location. Such medium density development could occur by conversion of the existing tourist units to a residential use, or complete redevelopment of the site to provide a new medium density development.
Such locations available for development of the [sic] nature are becoming very rare in coastal beachfront location [sic] in New South Wales. In our opinion the future development potential significantly increases the value of the land. Given the current zoning of the land is Rural, it would not be unexpected that the site could realise a land value increase of between 250 - 400 % when the new medium density zoning comes into effect.
Annexed to the PDA Planning report is an analysis of zoning issues and relevant responses in support of a rezoning of the Town B property to medium property residential.
Again, I reiterate, Mr N was never put on affidavit. No expert evidence was called from him in admissible form by the husband at trial.
An important point to note here is that the only reason the PDA Planning report is even before me is because the wife chose to file an affidavit by Mr M which specifically responded to it. In that sense, she put that report before me.
In his report of 1 November 2022 responding to the PDA Planning report, Mr M agreed with the current zoning of the property, as set out by Mr N. He agreed that there was a single consolidated local environmental plan being progressed and he agreed that the draft housing strategy adopted by Region G Council in December 2020 identified the Town B property as medium density residential.
Mr M’s report stated that he is far from convinced that a rezoning to R3 medium residential would permit a maximum height of 12 metres in respect of any dwellings built on the property. He observed that this was speculative. He also observed that the timing of the LEP was speculative, particularly, that there were other constraints not referred to by Mr N in his report. This included that the change of zoning was not a certainty, that even if the change of zoning occurred there would be constraints, such as wetland/vegetation, coastal erosion issues and no certainty about permitted height controls.
He also questioned the Mr N’s expertise to value the property. I agree. There is no way, in my view, that the evidence of Mr N as to a 250-400 % increase would be admissible evidence of that fact because he is clearly not a valuer. I do not say that disrespectfully. It is a simple matter of law that he does not, on the face of that report, have the requisite expertise for that evidence to be admissible expert evidence.
Returning then to Mr M’s response to the PDA Planning report, Mr M observes that there are many steps that are involved before Council could finalise the local environmental plan. He refers to the various layers of mapping which take quite a significant amount of time to complete. They include land application, land zoning, consideration of lot sizes, building heights, heritage issues, land reservation acquisitions, acid sulphate soils, flood planning, wetlands, urban release area, drinking water catchment, etcetera.
He reiterates the various stages that have to be followed before the Council can adopt a consolidated local environmental plan. He observes that any development control plan is not the same pathway as the LEP. He observes that until the public exhibition of the draft LEP it will remain unknown if the change of zoning tentatively proposed will actually reflect the land use zoning depicted in the housing strategy. His report says that in any event there will be two (2) site constraints - namely a vegetation and coastal hazard zone that would arguably impact on any redevelopment potential.
He also observes that there may well be amendments to the coastal hazard zone given the impact of global warming and the fact that climate change seems to be proceeding more quickly than perhaps the science had earlier anticipated.
In short, it would be fair to say that Mr M gives a significantly more subdued outlook for the rezoning potential than does Mr N. He also observes that there can be no assumption as to increased valuations of the property merely based on the change in the zoning because it is necessary to consider the actual development potential of the land itself. He does not himself suggest that he would be in a position to place a value on the property.
He does, however, say that a proper valuation must reference and consider the environmental, economic and broad planning constraints as part of the valuation algorithm and that these would include a consideration of the potential developable area of the property. He says that just because there may be some change to the underlying zoning in the future does not automatically mean that the new zoning becomes the default best value use or highest use of the property. He says the ongoing viability of the resort, whether under a continuing existing use right, must also be considered.
In short, Mr M disagrees with the advice from PDA Planning and his report concludes as follows:
38.We disagree with the PDA Advice, in our opinion, we are unlikely to see a new Region G LEP and DCP coming into effect until at least 2024.
39.There remains a degree of uncertainty as to whether the property will be rezoned R3 Medium Density. The draft LEP when it is finally exhibited can increase that certainty, but even at that point adjustments in zoning can still be made.
40.Based on the current site constraints, in our opinion, under a best-case scenario only about 54 % of the Property would potential have for any R3 zone permissible development [sic]
41.There is no certainty that a height of building control at 12 metres will be imposed.
42.The increase in value of an RU1 to R3 rezoning, expressed under the PDA Advice of “250 – 400%” is entirely speculative. It is not apparent whether the author of the PDA Advice has any formal qualifications as a valuation expert.
43.Applying that range of an increase to the current market value of the Property, without qualifications as to timing and constraints is an exercise fraught with risk and error.
44.A business case would also need to be developed to understand the most economical use of the Property post any zoning change. The continued use and expansion of the Tourist Resort may make greater commercial sense.
When the matter came on for trial, as I indicated, it was apparent that there was going to be a debate about whether the value of the Town B property could be “double counted” in the sense of including it at the Mr K valuation for balance sheet purposes ($4.1M) but then making, perhaps, some other additional adjustment in the husband’s favour to compensate for the possible future change in zoning.
Mr Graham decided to cross-examine Mr K in relation to his report and in so doing he put Mr M’s affidavit and annexures to him.
At the outset, a timing issue arises here in that Mr K had sworn his affidavit annexing his valuation report on 21 October 2022 whereas Mr M had sworn his affidavit on 1 November 2022. That is to say, Mr K had not seen Mr M’s affidavit but he had made his own inquiries with Council, as I have referred to earlier.
Mr Graham showed Mr K the report prepared by Mr N from PDA Planning which was annexed to Mr M’s affidavit. Mr K property conceded that he had never seen that report and he appeared to be somewhat surprised at how optimistic that report was in light of his own inquiries with Council which were much more conservative, as set out in his report. Indeed, his description was that he was very surprised.
Mr K said that if the property was rezoned then in all likelihood it would increase in value. It was quite apparent to me that the real issue for Mr K was that he had been given a much more conservative assessment of the future development potential of the property than what Mr N was portraying.
In the circumstances, Mr Graham contended that there was a “gap” in the valuation evidence and that it would be essential for a further report or updated report to be obtained. Hence, he made an oral application to that effect.
After hearing some submissions from both Mr Graham and Mr Bithrey I decided, out of an abundance of caution, that Mr K should be re-called to be asked some more specific questions going to the question of an adjournment. Mr K was kind enough to make himself available again that afternoon and, in the course of some further cross-examination, it was obvious to me that he was prevaricating somewhat about whether they may or may not be a change in value from what he had estimated in his report.
He said that he was “thinking out loud” and obviously he was caught somewhat off-guard by the fact of not having ever seen the report of Mr N before.
He said that that the value of the property may go up or it may go down over time. If he were to undertake a fresh valuation at a future time its value may have changed. He said that it may be necessary to demolish existing structures if the property was revalued so that the ultimate value of the land may not, in fact, increase even if the rezoning took place. He said that the market may possibly be softened by the interest rate rises that have occurred in the meantime.
In short, Mr K clearly seemed to be grappling and, to some extent, prevaricating about what the value of the Town B land might be but, ultimately, it was apparent that he had based his decision on the most recent information given to him by Mr L at Council as recorded in his report.
In the end, Mr K said that he could not say that there would be an increase in value based on the PDA Planning report which had now been brought to his attention and that probably there would not be any increase in value unless there was more certainty about the rezoning of the land.
With respect, Mr K’s oral evidence did not fill me with confidence. He did appear to be struggling somewhat. But fundamentally, and with some reservations, he stood by his original valuation figure of $4.1M which is incorporated in the Balance Sheet.
Mr Graham and Mr Bithrey then had a further vigorous argument before me about what all of this meant and whether the trial needed to be adjourned over to enable further expert evidence to be obtained.
Mr Graham contended, quite reasonably, that the Court is obliged to make an order that is “just and equitable”: s 90SM(3). He said there was no unequivocal evidence about the value of the Town B land and that, fundamentally, the Court was faced with an absence of sufficient evidence. He contended that there was such real uncertainty about the value of the Town B land that it was necessary to commission further evidence and further information so that the valuation could be updated.
Mr Bithrey contended that the parties have a joint obligation to provide valuation evidence to the Court. He pointed to the consent order made by Registrar H on 12 August 2021 which gave the husband the opportunity, and indeed on one view cast an onus on him, to obtain his own valuation report, which he had not done. Mr Bithrey referred to the fact that the PDA Planning report was addressed to the husband only and that it was not, in that sense, before the Court as part of the husband’s material. He also questioned Mr N’s ability to put any value on the property given that he is a Town Planner and not a valuer.
WEIGHING THE MERITS OF THE APPLICATION
I find this a very interesting debate and it is one that I have grappled with over the past week or so since the matter was adjourned. It seems to me that there are a number of relevant principles that need to be borne in mind in arriving at a decision in this matter.
First and foremost, I have before me evidence from an expert valuer (Mr K) which values this property and the structures thereon at $4.1 million. The report contains an acknowledgment that an allowance has been made for future development potential. In that sense, although Mr K did not have the report of PDA Planning, it is clear enough that Mr K was aware of the possibility, or even probability, of the land being rezoned. Indeed, as I have observed earlier, a possible rezoning for this property has been on the cards since at least 2019 although as I observed at trial, it has not happened yet.
The matter has taken some two (2) years and nine (9) months to reach a trial. It could well be months or years before the Council local environmental plan is finalised. These things are uncertain.
Mr Graham, as he was entitled to do, chose not to cross-examine Mr M. Mr M’s evidence is unchallenged for the purposes of this trial and Mr M paints a far more conservative picture than Mr N in terms of the future development of this land.
The husband has not sought an adjournment of this trial pursuant to section 90SM(5) of the Act. Pursuant to section 90SM(5), the court may grant an adjournment in de facto property settlement proceedings where it is of opinion that: (a) there is a likely to be a significant change in the financial circumstances of the parties to the de facto relationship or either of them; and that having regard to the time when that change is likely to take place, it is reasonable to adjourn the proceedings.
In summary, the husband has come to this Court armed with no admissible valuation evidence of his own but has merely - and with respect in some ways opportunistically - seized upon his own report from PDA Planning commissioned by him in April 2021 which was annexed to the report of Mr M. Had the wife not filed the affidavit of Mr M, the report of Mr N would never have seen the light of day frankly.
I do not suggest that it was an abuse of the process for the husband’s counsel to be able to ask questions of Mr K by reference to the report by Mr N. But equally, the manner in which the husband has attempted to “punch a hole” in the only valuation evidence before the Court, namely that of the wife, does not do his case any particular credit.
There is merit in the submission that, as Mr Graham says, it does not matter “how the hole in the evidence” has emerged and that the fact is that, on his case, there is a hole and the Court cannot ignore it.
But, equally, there is also force in Mr Bithrey’s submission that both parties have an obligation to put valuation evidence before the Court and that the way in which the husband has now, effectively through the use of Mr N’s unsworn and untested report, attempted to obtain an adjournment demonstrates, perhaps, a lack of good faith or, at the very least, a failure to properly engage with the husband’s own responsibilities as a litigant in this case.
In Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175, the High Court of Australia addressed issues of case management and the public interest in the efficient conduct of litigation. This was in the context of an application in a civil proceeding to adjourn a trial so as to enable a party to substantially re-plead their case. The trial Judge granted such leave. The matter was appealed to the Court of Appeal and, ultimately, ended up in the High Court who determined that the trial judge erred.
French CJ observed that there had been an unduly permissive approach in that particular case, both at trial and appellate level, to an application made late in the day which his Honour considered was inadequately explained and necessitated the vacating or adjournment of trial dates and raised new claims not previously agitated, apparently because of a deliberate tactical decision not to do so.
His Honour observed that in such circumstances the party making the application bears a heavy burden to show why, under a proper reading of the applicable rules of Court, leave should be granted. His Honour the Chief Justice observed that any application for adjournment – and in that case, amendment - required a trial Judge to consider not just the particular prejudice to a party on the other side of such application and whether the party could be paid cost to compensate. The Court also needed to take into account the irreparable element of unfair prejudice in unnecessarily delaying proceedings, and particularly and additionally the fact that the Court was a publicly-funded resource which needed to act efficiently.
Gummow, Hayne, Crennan, Kiefel and Bell JJ delivered the plurality judgment. After reviewing a number of other authorities in the civil jurisdiction, their Honours said (endnotes omitted):
94.It will be recalled that in J L Holdings the plurality said that nothing in Sali v SPC suggested that principles of case management might be employed "except perhaps in extreme circumstances, to shut a party out from litigating an issue which is fairly arguable". Their Honours said that case management was not to be seen as an end to itself and that the ultimate aim of the court remained the attainment of justice, even in changing times. In Gale v Superdrug Stores Plc Millett LJ expressed a similar concern, regarding the need to ensure that justice is not sacrificed. Waller LJ, delivering the judgment of the Court of Appeal in Worldwide Corporation Ltd v GPT Ltd, said that such a concern did not pay sufficient regard to the fact that the courts are concerned to do justice to all litigants. Where a party had had a sufficient opportunity to plead his or her case, it may be necessary for the court to make a decision which may produce a sense of injustice in that party, for the sake of doing justice to the opponent and to other litigants.
95.The statement of Waller LJ identifies a fundamental premise of case management. What may be just, when amendment is sought, requires account to be taken of other litigants, not just the parties to the proceedings in question. The statement is consistent with what was said in Sali v SPC, which reflected a proper understanding of case management. The statements in JL Holdings do not reflect such an understanding and are not consistent with what was said in Sali v SPC. To say that case management principles should only be applied "in extreme circumstances" to refuse an amendment implies that considerations such as delay and costs can never be as important as the raising of an arguable case; and it denies the wider effects of delay upon others.
The High Court was there referring to the requirement in the relevant court procedure rules that there be a just resolution of proceedings. The court emphasised that a balancing act was required but that the balance ought not to be necessarily in favour of the party seeking an adjournment, particularly in circumstances where the party has had an opportunity to properly plead their case and where an adjournment will result in delay and possible injustice, particularly to other parties.
AON Risk (supra) is also the decision in which Heydon J delivered his Honour’s somewhat famous observation:
156.The presentation and adjudication of the case in the courts below do cause it to merit a place in the precedent books. The reasons for placing it there turn on the numerous examples it affords of how litigation should not be conducted or dealt with. The proceedings reveal a strange alliance. A party which has a duty to assist the court in achieving certain objectives fails to do so. A court which has a duty to achieve those objectives does not achieve them. The torpid languor of one hand washes the drowsy procrastination of the other.
In my view, the husband and the wife are both well aware of the possibility and, perhaps probability, of the Town B property being rezoned; it has been on the cards for years. It has not yet happened. There are many uncertainties. There are many planning considerations. Even if the rezoning occurs there will be many other considerations relevant to a valuation, such as whether the existing use is not, in fact, a better use for the property. Or whether the costs of “improving” the property to take advantage of that change in zoning will, in fact, outweigh the benefits and, if so, would they outweigh them in such a fashion as to make a significant difference to the value of the land.
In short, there are a lot of unknowns in this case.
If I adjourn these proceedings over, it seems to me that the Court will be waiting, potentially, for an interminably long time, with respect, for the Region G Council to arrive at a decision as to zoning. And, even then, that will not be the end of the matter. I do not know when the zoning change will happen. If it does, then it could be sometime late in 2023, it could be in 2024, it could be later or, perhaps, it will not happen at all.
If I adjourn this proceeding, I potentially condemn the parties to adjourning for further years on end - and I mean years, not months. Given that the proceedings were commenced in February of 2020, that the husband and wife are both legally represented, then with respect they went into this trial with their “eyes wide open”.
As I indicated before, perhaps with the best of intentions, the wife, in putting the evidence of Mr M before me created the gap through which Mr Graham attempted to go. But I am not prepared, on the evidence before me, to adjourn this trial to enable a re-opening of such evidence and a commissioning of a further report. It seems to me that if the husband wanted to adjourn the proceeding, he ought to have made the application under section 90SM(5) and that, in any event, given the significant delay in this matter, it would simply not be just for me to now adjourn the proceeding, potentially adding significant delay while we await further Council deliberations.
Pursuant to rule 1.04 of the Federal Circuit and Family Court of Australia(Family Law) Rules, the overarching purpose of these rules is to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible. In circumstances where the husband has not commissioned a single admissible valuation report for the purposes of this trial despite on his own oral evidence that he has valiantly tried to get one, I consider that it would be manifestly unjust to permit him now to re-open the evidence in that respect and to, effectively, have yet another bite at the cherry, in terms of obtaining valuation evidence in circumstances where the only basis for him to do so appears in a report he commissioned and which the wife, not the husband, put before the Court.
Moreover, Mr M’s report in many ways detracts from the significance and cogency of PDA Planning report and Mr Hayne’s evidence is unchallenged.
For these reasons the husband’s application to re-open the evidence in respect of the value of the property at J Street, Town B is dismissed.
By way of postscript, I should add that the husband has given me evidence that a person, through an entity, made an earlier offer to purchase the property for $5.15 million which exceeds the value set out in Mr K’s report. The wife admits she never responded to that offer. She says that the property was not on the market at that time and that she wanted to retain it.
Mr K was asked specifically about that offer and he said that it was difficult to place weight on offers where he is not sure who was making the offer, whether they had a particular or special interest in the property - for instance, if they owned adjoining land - and that he would need to look closely at all of the circumstances of the offer and, most particularly, who made it. He would need to consider a bunch of background information.
The husband did not call the offeror to give evidence at trial in respect of the offer of settlement. Potentially he could have done so. He has chosen not to put that evidence before the Court but the evidence of Mr K is that the existence of an offer in those terms is not something which, of necessity, would result in a revisiting of the valuation. And given:
•the unsatisfactory way in which the evidence of the offer comes before the Court; and
•the general lack of information the Court has to the matters referred to by [Mr K] concerning the offer; and
•that the husband could have presented such evidence in a better and an admissible form had he wished to;
the Court does not consider that the offer makes any difference to the outcome of the husband’s application to re-open the evidence.
CONCLUSION
For these reasons, as I indicate, the husband’s application is dismissed.
The matter will, otherwise, remain listed before me for submissions on 25 January 2023.
I indicate that on that day, it would be open for the husband (if he wishes to) to argue more fully the debate in relation to whether or not I can take into account potential increases in the value of the property by reason of rezoning issues. I had indicated that I do not think that he is likely to succeed on that argument but, nonetheless, the issue still remains “live” before me to the extent that the husband may wish to argue the matter.
For the sake of completeness, and given that this proceeding remains part-heard, it is appropriate that I have these reasons taken out in writing and provided to the parties.
I will reserve the wife’s costs of and incidental to today being in respect of delivery of the judgment of the application to reopen the evidence.
I certify that the preceding ninety-three (93) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Betts. Associate:
Dated: 9 December 2022