Father Seeks Discharge of Single Expert
Neales & Neales [2022] FedCFamC1A 41 (28 March 2022)
The husband filed an appeal from orders dismissing the husband’s application to discharge the single expert or in the alternative grant leave for an adversarial expert.
The husband sought to challenge the primary judge’s findings through contentions that the primary judge erred in failing to give sufficient reasons and in failing to properly consider the arguments advanced. The Court, in making its final orders, assessed the difference in value together with the other relevant matters such as the alternative methodologies used.
Facts:
The parties married in June 1981 and separated in April 2016. They have two adult children. The asset pool includes the husband’s one-third shareholding in three entities that hold commercial properties in and around City X. Almost all of the properties are subject to established leases, including options to renew.
On 24 May 2019, the husband commenced the proceedings. In late February 2020, the parties jointly instructed Mr B as a single expert to value the properties on the basis of: “Market Value (As Is) presuming a sale of the 100% Crown Leasehold interest/s subject to the existing lease agreements, or with vacant possession, as applicable” (Tender Bundle to the husband’s affidavit filed 31 March 2021, Annexure C).
Mr B valued the properties as at July 2020 between $33.835 million and $34.190 million. In October and November 2020, the husband submitted various questions seeking clarification of matters pursuant to the Family Law Rules 2004 (Cth) (“the old Rules”).
In March 2021, the husband instructed Mr D to comment on Mr B’s valuations and provide his opinion as to the value of the properties which was then valued in properties in March 2021 at $22.465 million.
On 31 March 2021, the husband filed an Application in a Case seeking to discharge Mr B as the single expert, leave to rely upon Mr D as another expert, and a conference of the experts. The hearing took place on 24 June 2021, and judgment was delivered on 21 July 2021 dismissing the application. The facts relied upon by the husband that are said to ground leave were asserted errors in failing to give sufficient reasons and failing to properly consider the arguments advanced.
Issue:
Whether or not the appeal should be granted.
Applicable law:
(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;
(b) another expert witness knows of matters, not known to the single expert witness, that may be necessary for determining the issue; or(c) there is another special reason for adducing evidence from another expert witness.
Analysis:
The primary judge identified the submissions of the husband that the single expert had not valued the properties based on the in-place leases, that he had ignored the leases, and that he had proceeded to value the properties based on market rent.
In so doing, it was contended that the single expert acted contrary to his instructions. The primary judge identified that the husband’s submission mischaracterised the single expert’s approach. The primary judge found that the single expert did not ignore the leases or the income derived from the leases.
The Summary of Argument contented that an adjournment may arise, and that the case may go part heard or a more lengthy trial may arise by a failure to either discharge the expert or permit another expert, or a combination of both.
The argument had the air of premature catastrophizing. No trial date has been set, the existing single expert evidence will in all likelihood need to be updated (the valuation date being July 2020), and further questions may be administered. It cannot confidently be asserted at this stage that any of these harbinger events may happen.
However, the primary judge did not consider these matters in aggregate in addressing r 15.49(2)(c) of the old Rules, but rather confined his consideration to the issue of differences in value.
Whilst recognising that the significant difference in value of over $11 million does not of itself warrant another expert, if it arises as a result of a difference in methodology and information, it warrants consideration as another special reason. In circumstances where the husband is a minority shareholder in the entities that hold the real estate, and given that the wife seeks a cash payment, it is the husband who will be left with the consequences of the findings as to value, such that given the substantial difference between the two positions, it constituted another special reason for the appointment of another expert.
Conclusion:
The Court is satisfied that the husband would suffer a substantial injustice if leave to appeal were not granted because there are different methodologies that have resulted in a substantial difference in value, which has the potential to more adversely impact the husband than the wife. The appeal is granted. Both parties sought a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) in the event that the appeal succeeded. Given that the appeal has succeeded on a question of law, such certificates are appropriate.
