Westbrook and Westbrook

[2007] FamCA 504

FAMILY COURT OF AUSTRALIA

WESTBROOK & WESTBROOK [2007] FamCA 504

FAMILY LAW - EVIDENCE - Expert evidence - Appointment of single expert accountant

Family Law Act 1975 (Cth)

APPLICANT: Mrs Westbrook

RESPONDENT: Mr Westbrook

FILE NUMBER: SYF 3953 of 2006

DATE DELIVERED: 30 May 2007

PLACE DELIVERED: Sydney

JUDGMENT OF: Moore J

HEARING DATE: 11 May 2007

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Mr Burreket
Broun Abrahams Burreket

SOLICITOR FOR THE RESPONDENT: Mr Holmes
Slade Manwaring

Orders

1. Pursuant to Division 15.5.2 of the Family Law Rules Ms E of D Company be appointed a single expert witness as to the value of the following:

   (a)The shareholding of the husband and the wife, if any, in the following companies:

   (i)P Pty Limited;

   (ii)B Pty Limited;

   (iii)I Pty Limited

   (iv)N Pty Limited; and

   (v)F Pty Limited.

   (b)W Portfolio Pty Limited (a company of which the husband is allegedly not a shareholder);

   (c)W Family Trust (which will in turn require a determination of the value of the W and N Unit Trust); and

   (d)Any other company or trust in which the husband has a direct or indirect interest.

2. Pursuant to Division 15.5.2 of the Family Law Rules Mr B of E Company be appointed a single expert witness as to the value of the following real estate:

   (a)       PF (Folio Identifier … );

   (b)       LH (Folio Identifier … ); and

   (c)such other real estate as may be nominated by Ms E being real estate owned by an entity or trust which is to be valued pursuant to Order 1.

3. Pursuant to Division 15.5.2 of the Family Law Rules RB Company be appointed a single expert witness as to the value of the following real estate:

   (a)FS, Queensland (Title Reference … );

   (b)TM, Queensland (Title Reference … );

   (c)GT, Queensland;

   (d)CM, Queensland; and

   (e)such other real estate as may be nominated by Ms E being real estate owned by any entity or trust which is to be valued pursuant to Order 1.

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 3953  of 2006

Mrs Westbrook

Applicant

And

Mr Westbrook

Respondent

REASONS FOR JUDGMENT

1. Pending are proceedings for property settlement and other financial applications.  The course the matter has taken to this point since the proceedings were instituted in September last year is sufficiently set out in the wife’s affidavit filed 8 May.  It will suffice to say for present purposes that there is no agreement about the value of the parties’ property.  Nor, when the matter was mentioned on 16 March, was there any agreement about the appointment of a single expert accountant to value interests in certain companies or the appointment of a single expert to value real estate owned by the parties or related entities.  On that day counsel for the wife nominated three accountants and three real estate agents for the husband’s consideration and the question of appointment of experts was stood over generally, with the husband to respond within 14 days to the wife’s nominations. 

2. The professional resume of each of the three proposed accountants – Mr L, Mr M and Ms E - and their hourly charge rate was sent by the wife’s solicitor to the husband’s solicitor on 4 April.  [tab 10]  The professional resume of each of the three proposed real estate valuers – Mr O, Mr B, and Mr V – followed on 11 April [tab 11].  Their advice about their charges was sent on 27 April [tab 25] and 30 April [tab 29].  This did not result in any agreement. 

3. On 8 May the wife filed an application in a case seeking a raft of interim orders related to interim costs, exclusive occupation of the family home, spouse maintenance, child maintenance pursuant to s 66M of the Act, child support departure, and parenting arrangements.  Those interim applications were set for hearing before a Judicial Registrar.  The application also sought orders about the appointment of single experts; in particular, for the appointment of Ms E to value the parties’ interests in certain companies and a Trust and for Mr B to value two parcels of realty in New South Wales and TB Company to value four parcels of realty in Queensland.  This decision is related to that application. 

4. When the matter was mentioned, Mr Holmes, who acts for the husband, tendered a letter dated 10 May from HL, accountants, under the hand of Mr Q [exhibit 1].  This was in response to a fax from Mr Holmes of that same date [exhibit 3] advising there are a number of businesses relating to ladies retail fashion, shareholders vary in each company and include the husband, wife and others and valuations are required ‘taking into account the following financial structure’ of three named ‘currently active’ and three other ‘currently inactive’ companies as well as three ‘other entities that have been set up in the last 12 months and have no activity’.  Mr Q in his reply of 10 May gave a range for an estimate of fees as a guide only and enclosed a copy of his curriculum vitae.  He added the advice that he has specific experience in the garment industry ‘relevant to this matter’ and that X Pty Ltd is an audit client of his firm.  He further advises that in his capacity as partner he signs off on this audit and recently prepared a due diligence report in their acquisition of the Y and Morrissey labels.  He added that M Webster Holdings Pty Ltd also owns the J and Clabels and that he has also acted as both accountant and auditor for various fashion labels. 

5. As for the valuation of realty, Mr Holmes tendered [exhibit 2] a curriculum vitae of Mr U whose place of business is C.  Mr Holmes advised that his costs will be $1100 which is accepted though not apparent from exhibit 2. 

6. In the course of his address Mr Holmes tendered a letter from the Commonwealth Bank [exhibit 4] and a demand for payment by the Australian Taxation Office directed to one of the companies [exhibit 5] to support the submission that in the appointment of expert valuers in this case costs should be minimised.  Another point Mr Holmes made was that the application of the wife had not addressed the question of who pays.  On that topic Mr Holmes said he is instructed to say that if orders were to be made according to the husband’s proposition – the appointment of Mr Q and Mr U – then the husband is going to ‘endeavour to enquire as to his arrangements to meet those expenses at first instance’, with the wife’s half share to be by way of an advance to her.  As he went on to explain, that meant they would each be liable for the expense and her share would be advanced to her by the husband ‘repayable in conjunction with any section 79 orders’.  In his other brief submissions Mr Holmes drew attention to Mr U’s curriculum vitae to advance the proposition that he had experience as an expert witness in the New South Wales Land and Environment Court, the New South Wales Supreme Court and this Court.  As for the merit of Mr Q’s appointment, Mr Holmes drew attention to his favourable hourly rate, suggesting they are two- thirds of the rates proposed by the experts nominated by the wife. 

7. I do not recall ever having had the benefit of Mr U’s or Mr Q’s expertise in any case in this Court, but that is of no moment because there is no reason to question the fundamental expertise of either and without the benefit of any specific case being brought to my attention that recollection may be faulty in any event.  As for minimising cost, certainly any proposition to that effect has unquestionable merit, but of course it is also necessary to consider the likelihood of the appointment producing a fair and reliable result because that will be crucial to determining the total value of all assets to be distributed. 

8. In his submissions Mr Burrakeet makes the point that the letter from Mr Holmes’ office to Mr Q and Mr Q’s response refers to the valuation of ‘inactive entities’, yet there is no evidence those entities are inactive.  In fact, he submits that searches reveal one of the companies said to be inactive, P Pty Limited, has registered leases for many stores and it is ‘understood’ that there are stores trading with various of the nominated entities.  He otherwise points to Mr Q’s advice about his history of dealing with the garment industry which, he says, may be an advantage but may also be a disadvantage and he asserts that the three names nominated by the wife’s advisers have no apparent connection with the industry and therefore with the parties.  The three nominated valuers regularly appear as experts in this Court and given that almost two months was allowed for the husband to consider those nominated, to receive two days before the return date of the wife’s application an alternative with the apparently accepted suggestion that some companies are ‘inactive’ from a valuer who does work in the garment industry where the husband has many connections raises some concern in the wife’s mind.  As for the valuation of the realty, again an alternative suggestion came only two days before the return date of the wife’s application and he acknowledges the quote is less than half the amount quoted by the others.  However he says those nominated by the wife are highly reputable valuers who gave a quote for there services in close proximity and then there is presented a quote from an unknown valuer at less than half of that price.  In essence, it is submitted that the initial list should not be enlarged.  As for exhibit 5, related to P Pty Limited, requires something to be done within 21 days as the notice is dated 16 March 2007 and yet no indication has been given of whether or not the demand has been met.  As for the question of who pays, Mr Burrakeet says the wife seeks a specific order about the costs of engaging experts in the application related to interim costs and the wife is unable to pay costs and has addressed the issue. 

9. Making a decision about the appointment of an expert valuer is not easy when there is a dispute about who it should be, particularly when both sides of the argument are so thin, but absent agreement a decision has to be made on what is available.  In this case, after review of the arguments, I have decided the preferable course would be to appoint those nominated in the wife’s application.  Dealing first with the appointment of the expert accountant, the assertion picked up by Mr Q in his letter in response to the query from Mr Holmes’ office about certain entities being ‘active’ and others being ‘inactive’ tends to convey the impression that a fact has been assumed when that may very well not be the case and that in turn can tend to leave some uncertainty with the other party who has not any input into the provision of that factual information.  That is not to say anything improper has occurred or the assertion of fact may not be established in due course to be correct; it is more that if there is a level of disquiet about it in circumstances where the other party has not had any input in the factual information given to the valuer than that

10. In a finely balanced decision that tips the scales away from Mr Q.  Ms E is ultimately proposed of the three accountants nominated.  She is experienced and well able to carry out the task and I can see no reason she should not be appointed. 

11. As for the realty, this is located in both New South Wales and Queensland.  While Mr U’s fees are less than half of those of the others, their fees at around $3,000 are not exorbitant.  But more to the point the experience and expertise of the two valuers proposed is more suited to the particular properties to be valued in this case: Mr B in relation to the properties at PF and at LH and TB Company, with valuers in Queensland, to value the four parcels of realty in Queensland. 

12. As for the costs of the experts, Mr Burrakeet is correct in his submission that the responsibility for that forms part of the application related to interim costs and it would be expected that will be determined when the interim costs application is dealt with. 

13. For those reason, orders will be made as set out. 

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Moore

Associate: 

Date:  30 May 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as WESTBROOK & WESTBROOK