WASLEY & WASLEY

[2009] FamCA 930

FAMILY COURT OF AUSTRALIA

WASLEY & WASLEY [2009] FamCA 930

FAMILY LAW – PRACTICE AND PROCEDURE – expert evidence – application by the wife seeking leave to file an expert report – where a report has previously been prepared on the joint instructions of the parties – leave granted to the wife to adduce evidence from another expert

FAMILY LAW – PRACTICE AND PROCEDURE – leave to issue subpoenas granted – first day of trial vacated

Family Law Rules 2004 (Cth) rr 15.42 & 15.49
Federal Magistrates Court Rules 2001 (Cth)

Bass & Bass (2008) FLC 93-366

APPLICANT: Ms Wasley

RESPONDENT: Mr Wasley

FILE NUMBER: ADC 1428 of 2008

DATE DELIVERED: 15 September 2009

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Dawe J

HEARING DATE: 15 September 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr McGinn

SOLICITOR FOR THE APPLICANT: Dianne Myers Pty Ltd

COUNSEL FOR THE RESPONDENT: Mr Traianos

SOLICITOR FOR THE RESPONDENT: Mellor Olsson

Orders

1. If the wife is to rely upon any expert report that the same is filed and served by the 20 November 2009.

2. The 1^st Day of Trial listed for the 21 September 2009 is vacated and the matter is adjourned to the 7 December 2009 at 10.00 am for a 1^st Day of Trial before the Honourable Justice Dawe.

3. The wife is given leave to issue a subpoena to the National Australia Bank Limited in terms of Annexure “B” to her affidavit provided it relates to the Family Court of Australia, Records Section.

4. The wife is given leave to issue a subpoena to the Department of Immigration and Citizenship in terms of Annexure “C” to her affidavit filed on the 9 September 2009 provided it relates to the Family Court of Australia, Records Section.

5. The wife is given leave to file and serve the expert’s report by Mr V of V & Co (chartered accountants):

   (a)analysing and commenting on the report of E Accountants;  and

   (b)providing a valuation of the interest of the Wasley Family Trust in S Business.

6. Leave is given to the applicant husband to file and serve an Amended Application on or before 2 November 2009.

7. Leave is given to the wife to file and serve any Amended Response on or before 9 November 2009.

8. The wife is to file a Financial Questionnaire in the Family Court of Australia by 9 November 2009.

9. Within twenty-one [21] days from today the wife to add her values into the balance sheet SAVE AND EXCEPT for the value in relation to the S business (which will await the preparation of Mr V’s report) and to send that to the husband’s solicitors and a copy to the Court.

10. By 27 November 2009 each party is to file and serve minutes of particular orders sought by that party, a list of proposed witnesses, a short outline of the nature of evidence to be given by the witnesses and a brief chronology of relevant events AND UPON NOTING the husband has already done so and can file an updated list if he wishes to do so.

IT IS NOTED that publication of this judgment under the pseudonym Wasley & Wasley is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADC 1428 of 2008

MS WASLEY

Applicant

And

MR WASLEY

Respondent

EX-TEMPORE REASONS FOR JUDGMENT

1. This is an application in a case brought by the wife in property settlement proceedings.  The application by the wife, document 15, filed on 9 September 2009 seeks various orders, leave to issue subpoenas in relation to the National Bank and the Department of Immigration and Citizenship in relation to certain documents, and leave to be granted to the wife to file and serve an expert's report in relation to the valuation of one of the significant assets;  the valuation of the husband’s interest in the Wasley Family Trusts holding in a business known as S Business.

2. Consequently the wife also seeks orders that the first day scheduled for 21 September before me be vacated, the matter be listed for directions, and that the orders made on 4 August in relation to filing and serving of documents be discharged. 

3. The history of this matter is that the initial proceedings commenced in the Federal Magistrates Court in May of 2008 when the husband commenced property settlement proceedings. 

4. The matter proceeded in the Federal Magistrates Court with various orders being made, including an order made in relation to the preparation of a report.  FM Mead made an order on 16 September 2008 at paragraph 5:

   “That by consent the interests of the parties and the businesses of [the Y franchises] and [S Business] be valued by a licensed valuer at [E Accountants], Mr [M], or such other experts as the parties' solicitors agree at the joint and equal expense of the parties, but with the husband to pay such costs in the first instance and the wife's half share of such cost to be paid to the husband contemporaneously with the settlement of the parties' property dispute.”

5. The valuations were to be filed by 7 September 2008.  It transpired that the valuation by Mr M was completed and his valuation is annexed to the affidavit of the husband's solicitors which was filed on 27 April 2009.  That valuation, however, only deals with the valuation of the business known as S Business. 

6. The matter then proceeded with certain procedural orders being made.  In particular the order of FM Mead on 29 May 2009 transferred the matter to the Family Court of Australia. 

7. In the application before me the wife's counsel asserts that the report of Mr M is not, strictly speaking, a single expert report within the descriptions of the Federal Magistrates Court Rules 2001 (Cth). Nonetheless, it was a report prepared on the joint instructions of the solicitors for the parties and looks, at first glance, to be very similar to, if not exactly the same as, the sort of report that would have been prepared under the single expert rules. Any distinction to be drawn is therefore a minor one particularly when dealing with the questions which relate to the application in this Court of the Family Court of Australia's Rules in relation to permission for experts' evidence to be called.

8. When the matter was transferred from the Federal Magistrates Court it was the subject of a directions hearing before Registrar Paxton.  Regrettably, however, the wife was not present nor represented at that procedural hearing when various orders were made to prepare the matter for a first day of trial before me on 21 September 2009 at 10 o'clock.  I am now faced with the application of the wife seeking orders which would have the effect of delaying the first day of the trial necessitating as it would the issue of subpoenas and the preparation of another expert's report.

9. When considering the orders to be made the Court must take into account the provisions of the Family Law Rules 2004 (Cth) involving consideration of the specific rules in Chapter 15 dealing with experts' reports. The main purpose of the rules is to ensure that each case is resolved in a just and timely manner at a cost to the parties and the Court that is reasonable in the circumstances of the case. This is a case in which the Court will be required to determine what final orders in relation to financial matters are just and equitable in all the circumstances.

10. The specific provisions of Chapter 15 of the rules again refer to the principles behind obtaining one expert's opinion in relation to matters with a view to reducing the cost to the parties.  The specifics in relation to this matter which are particularly relevant are the provisions of rule 15.42 which says that:

    “The purpose of this Part is:

    (a)to ensure that the parties obtain expert evidence only in relation to a significant issue in dispute;

    (b)to restrict expert evidence to that which is necessary to resolve or determine a case;

    (c)to ensure that, if practicable and without compromising the interests of justice, expert evidence is given on an issue by a single expert witness;

    (d)to avoid unnecessary costs arising from the appointment of more than one expert witness;  and

    (e)to enable a party to apply for permission to tender a report or adduce evidence from an expert witness appointed by that party, if necessary in the interests of justice.”

11. Emphasis is placed upon the cost to the parties and the interests of justice.  It is my obligation, therefore, to consider all of the objects of 15.42 and balancing them taking into account the particular circumstances of this case.

12. The affidavit of the wife filed in support of her application refers to previous assertions of the business being in the range of a substantially greater sum than the $89,000 in Mr M’s report.  In her affidavit the wife asserts that a valuation carried out in 2007 indicated that the W interest, being the interest of the other party, was valued at something like $993,864.  As a result of that the wife appears to estimate the husband's half interest in the business at "least $1 million". 

13. This is substantially different from the $89,000 reached in the report of Mr M.  Mr Traianos for the husband appropriately refers to Mr M’s report being based upon a significant downturn in profit or business dealings in recent years.  However the report in section 3 sets out in several graphs in relation to annual sales and net profits.  I refer to paragraphs 3.32 and 3.39 of Mr M’s report which definitely shows a substantial increase in 03/04 which was not continued in subsequent years.  However, the gross profit graph figures in the graph do not show the significant glitch that appears in the sales figures. 

14. Of course the wife has the capacity to ask questions of Mr M and to have issues about the basis upon which the information was obtained without the necessity of at this stage being given leave necessarily to obtain another expert witness report and to file that report. 

15. The wife also seeks in her application leave to issue a subpoena in relation to the National Australia Bank concerning information that had recently been provided to the bank to enable the business to purchase a hotel known as the Q Hotel. Further information would also be available to the experts, both Mr M and any other expert, upon the production of the completed accounts for the year ended 30 June 2009. 

16. In relation to the Y franchises business valuations it appears that they have not been completed and that there is now a dispute between the franchisees about the possible sale of the wife's interest in the franchises.  There is likely to be a dispute at the trial as to whether the Court should take into account that business or the wife's interest in that business on the basis of the price paid on purchase of the business recently or on the basis of the likely sale price for the business. 

17. In giving consideration to the matters therefore I note that there are significant steps which have not yet been undertaken to complete what would normally have been a balance sheet.  On the face of it there are steps needed to be taken in relation to the production and inspection of documents in relation to the Y franchise and possible negotiations concerning the amounts which the Court should take into account when dealing with that asset. 

18. There are also steps which need to be taken to ensure that an up to date value of the business based upon figures as at the end of 30 June 2009 are available.  There appear to be other steps that need to be undertaken, namely the production and inspection of documents in relation to bank accounts and sale price of an item such as a motor vehicle which has been sold.

19. The steps which are proposed by the wife include preparation of a further export report and the capacity to rely upon that expert report.  I take into account the Full Court decision of Bass & Bass (2008) FLC 93-366 which emphasises that the reference in the rules dealing with expert evidence emphasise that the word "special" should not be overlooked but should be given its ordinary meaning. Rule 15.49(1) emphasises:

    “(1)If a single expert has been appointed to prepare a report or give evidence in relation to an issue, a party must not tender a report or adduce evidence from another expert on the same issue without the court's permission.”

20. I am treating these rules as applying to Mr M’s report.  It can be easily categorised as a single expert witness report having been obtained on the joint instructions of the parties.  The provisions of r 15.49(2) provide that:

    “(2)The Court may allow a party to tender a report or adduce evidence from another expert witness on the same issue if it is satisfied that:

    (a)there is a substantial body of opinion contrary to any opinion given by the single expert witness and that the contrary opinion is or may be necessary for determining the issue;  …”

21. That does not appear to arise directly in relation to this matter yet because the wife's expert has not completed the work in relation to the preparation of that report.  It is therefore not at this stage a basis upon which the Court might allow the party to rely upon or adduce evidence of that report. 

22. Sub-rule (b) provides that:

    “(b)another expert witness knows of matters, not known to the single expert witness that may be necessary for determining the issue;”

23. At this stage of course this is not necessarily the case.  It would be of assistance if both Mr M and the wife's expert had up to date information but that would not fall within the normal interpretation of sub-rule (b). 

24. Sub-rule (c) provides:

    “(c)there is another special reason for adducing evidence from another expert witness.”

25. The rules emphasise that the Court should not lightly give consideration to adducing evidence from another expert particularly where that is likely to increase the delay to the parties or the cost to the parties.  However, there is a discretion for the Court to exercise.  That discretion must be exercised taking into account the interests of justice.  It appears on the face of these proceedings that there is likely to be a significant issue in relation to the value of the business having deteriorated in recent times.

26. In relation to the question of unnecessary costs, any costs for the preparation of any further report would of course be at the expense of the wife although the husband would incur related costs in getting instructions and obtaining advice in relation to any further report. 

27. The other significant matter to be considered is any delay to be occasioned by the permission that might be given for the expert to prepare a report and for that to be relied upon by the wife. 

28. In this case the first day of trial has been fixed for 21 September, but on my understanding of the material in the recent affidavit material and in the balance sheet which is on the Court file (prepared as I understand it without the detailed participation of the wife's legal advisers) there are many issues which would have been raised by me on the first day of the trial which would probably have resulted in a lengthy adjournment of the first day of the trial rather than embarking upon listing the matter for conclusion.  This Court should not be expected to undertake a forensic examination of the books of account and other similar matters when those matters should more properly be attended to in the preparation of the matter for conclusion of the trial. 

29. It is likely that there would have been a delay in any event. 

30. I take into account the significant difference in the material before the Court in relation to the possible value of the husband's interest in the business and the significant issues which are raised in relation to the valuation of the interest in the business and conclude that this is one of those cases where there is a special reason for allowing the wife to adduce evidence from another expert. 

31. The subpoena to the National Bank seeks information provided by the husband's business to the bank to enable it to purchase a significant asset.  That information is information relating to the financial circumstances of the husband and is therefore clearly related to an issue to be determined in the financial proceedings in this Court.  It is appropriate therefore for the wife to be granted leave to issue that subpoena. 

32. Similarly in relation to the subpoena to the Department of Immigration and Citizenship the annexure to the wife's affidavit refers to movements of the husband or requests for movement records in relation to the husband concerning his travel.  One of the significant issues raised by the wife in her affidavit is the question of off-shore assets and the need to obtain information concerning the husband's travel related as it may be to his interest in other entities or the holding of other assets. 

33. Again an issue which will be necessary for the Court to determine, is the value of the husband's assets and financial resources wherever they are located, and therefore it is appropriate to grant leave for that subpoena to issue. 

34. Both subpoenas should not be subpoenas, as suggested, to produce the records to the Federal Magistrates Court, but the subpoenas should be in a form appropriate to the Family Court of Australia for the production of the documents to overcome any risk that they might be misplaced when produced. 

35. When considering the time frame of any delay it would appear that such a delay would be likely to involve a period of months to allow the production of documents in relation to the determination of the valuation of the Y franchise interest of the wife and to enable the completion of the report by the wife's chosen expert. 

36. I should interpose here to say that it is not necessary for the husband to obtain his own expert if he chooses to rely upon the evidence of Mr M.  Of course any application by the husband to obtain his own expert’s report would be considered by this Court after he has had an opportunity to obtain instructions upon any report prepared by the wife's expert.  In this case it may be that the Court consider the evidence of Mr M and the evidence of the wife's expert and determine after cross-examination of both experts the accurate value of the asset.

37. Having considered that the subpoenas should issue and the wife be given leave to rely upon her expert report, the first day hearing on 21 September 2009 is not a suitable date.  The first day available is 7 December at 10.00 am.  I will require that if the wife is to rely upon any expert report that the same be filed and served by 20 November 2009.  I discharge the date for the first day in September and fix 7 December 2009 at 10.00 am before me.

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe

Associate: 

Date:  28 September 2009