Nassir & Nassir
[2025] FedCFamC2F 199
•23 January 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Nassir & Nassir [2025] FedCFamC2F 199
File number(s): MLC 4548 of 2022 Judgment of: JUDGE O'SHANNESSY Date of judgment: 23 January 2025 Catchwords: FAMILY LAW – Property – where the matter was listed for final hearing for three days – where after discussion with counsel, it was submitted that this matter could be a five or six day matter – where there was as issue of waiver from professional legal privilege with respondents previous solicitor – where there was a single expert witness appointed to undertake a valuation of the parties business – where the respondent seeks to admit further evidence of an adversarial witness of another valuation of the parties business – where there is discrepancy between both valuations – where the court ordered for both parties objections to be sent to chambers – where counsel was directed to email their revised objections and their response to these objections to chambers. Legislation: Federal Circuit and Family Court of Australia (Family Law) Rules 2021 rule 7.08 Cases cited: Antonescu & Antonescu [2024] FedCFamC1F 468
Neales & Neales [2022] FedCFamC1A 41
Division: Division 2 Family Law Number of paragraphs: 59 Date of last submission/s: 30 January 2025 Date of hearing: 22-23 January 2025 Place: Melbourne Counsel for the Applicant: Mr Goddard Solicitor for the Applicant: Pearsons Lawyers Pty Ltd Counsel for the Respondent: Mr Mellas Solicitor for the Respondent: Kyriacou Lawyers Pty Ltf ORDERS
MLC 4548 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS NASSIR
Applicant
AND: MR NASSIR
Respondent
ORDER MADE BY:
JUDGE O'SHANNESSY
DATE OF ORDER:
23 JANUARY 2025
THE COURT ORDERS BY CONSENT THAT:
1.On or before 7 February 2025 the Husband’s solicitors shall provide to the Wife’s solicitors and the single expert Ms M all documents that have been previously been provided to the Husband’s expert witness Mr C of D Law Firm.
2.Until further order each of the parties, their servants and agents shall be restrained by injunction from communicating with Mr C without the other party or their solicitor being party to such communications save and except the Husband’s counsel may confer with Mr C for the purposes of counsel’s preparation after the experts have provided their joint statement to the parties pursuant to order 3 hereof.
3.Ms M and Mr C (the experts) shall attend upon and engage in a conference on or before 28 February 2025 and produce a joint statement on or before 28 March 2025 in accordance with Rule 7.31(3) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (set out in Notation A below).
4.In such conference and joint statement the experts shall discuss any issues arising in their respective valuations of the Husband’s interest in the business E Pty Ltd including but not limited to matters raised in Ms M’s updated reported dated 22 November 2024 and Mr C’s report dated 17 December 2024.
AND THE COURT ORDERS THAT:
5.The Applicant’s solicitors shall inquire of Ms M in writing (and advise the Court) within 7 days of the end of the conference of experts as to whether she has any objection to her evidence being given by way of ‘hot-tubbing’ or by way of the adversarial witness and Ms M giving their evidence in the presence of the other.
6.The witnesses’ costs of compliance with orders 3-5 herein shall be borne by the Husband at first instance subject to the discretion of the presiding trial Judge to order otherwise at the conclusion of the trial.
7.Until further order the Husband be restrained by injunction from drawing down on, transferring or otherwise doing anything to reduce his superannuation interest held by Super Fund 1 to less than $110,000.
AND THE COURT FURTHER ORDERS BY CONSENT THAT:
8.Prior to the adjourned hearing date the parties shall not file any further affidavit material save and except insofar as such affidavits depose to events that take place after the date of these orders.
AND THE COURT FURTHER ORDERS THAT:
9.The parties revised objection to the other parties affidavit and the revised responses be provided to the Court on or before 30 January 2025 on the understanding the objections be considered in Chambers and not ruled at a further hearing.
Further hearing
10.The matter be adjourned to 18 August 2025 at 10.00am (for an estimated 5 days) with priority before Judge O’Shannessy in the Dandenong Registry.
11.Any further Outline of Case deemed necessary by any party is to be filed no later than 7 days prior to the above date.
12.The parties be at liberty to apply to Chambers as to any matter that may impede readiness of the trial.
AND THE COURT NOTES THAT:
A.Rule 7.31(3) provides:
(3)At the conference, the expert witnesses must:
(a) identify the issues that are agreed and not agreed; and
(b)if practicable, reach agreement on any outstanding issue; and
(c)identify the reason for disagreement on any issue; and
(d) identify what action (if any) may be taken to resolve any outstanding issues; and
(e) prepare a joint statement specifying the matters referred to in paragraphs (a) to (d) and deliver a copy of the statement to each party.
B.If in any proceedings there are allegations of family violence and the provisions of section 102NA of the Family Law Act 1975 apply (see attached Family Violence Information Sheet), any unrepresented party will not be permitted to personally cross-examine the other party/parties.
C.Affected unrepresented parties may apply to the court and then to the Commonwealth Family Violence and Cross-Examination of Parties Scheme (“the Scheme”) for representation but any such application must be made at least 12 weeks prior to the final hearing.
D.Further information about the legislation and the Scheme can be found at Part 4 of the attached Family Violence Information Sheet.
E.If s102NA applies and a party becomes unrepresented after trial directions have been made, that party is required to promptly advise the Court.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
Judge O’Shannessy:
These are the settled reasons of a judgment delivered ex tempore. These reasons were delivered orally. These settled reasons have been corrected from the transcript where appropriate to correct grammatical errors, to add citations, passages of authorities and evidence, and to attempt to make the orally delivered reasons easier to read. The substance is unchanged.
BACKGROUND
The matter of Nassir came on before me for final hearing and booked into my list on an estimate of a three-day hearing. After some discussion, it became common ground that the matter was not a three-day matter and was likely at least a five, or perhaps a sixth day. How long the case would take depended on some of my rulings.
In this case, both parties were represented by counsel. The broad background is that the parties are now aged 61 and 64 years. They have three adult children aged 35, 34 and 27. The parties married in Country F in 1988, and they finally separated in Australia in 2021. They were divorced in late 2022. The wife commenced these proceedings seeking property and maintenance orders in May of 2022. It is now the start of 2025.
Hence, it is clear that the parties have had the burden of waiting for a determination of their financial dispute after a long marriage of many years. When the matter came before me yesterday morning, I already had some circumspection about whether the matter would be able to be accommodated within three days.
PRELIMINARY ISSUES
Three issues were raised as preliminary matters:
(1)the issue of waiver in regard to what would otherwise be communications subject to legal professional privilege between the husband and his prior solicitor;
(2)the issue of whether an adversarial witness should be permitted to give evidence of the valuation of a business or be relied upon as sought by the husband; and
(3)the issue of objections that each party took to the other's material. The objections had not hitherto been brought to my attention.
Each of the husband and wife require the assistance of an interpreter, and each interpreter was duly sworn in and, I observed, undertaking simultaneous translation. This imposed upon counsel and me a necessary but sensible obligation to attempt to communicate “in chunks” that are more readily translatable in a simultaneous translation process. After discussion, it became apparent that it was common ground that the matter could not be accommodated in three days. Because other cases were listed before me, I did not have five of six days to hear the case.
Issue of waiver
After a luncheon adjournment (taken early for personal reasons), the issue of waiver was resolved by agreement and, I infer, discussion between counsel. The end result was that the husband no longer insisted upon legal professional privilege in regard to the communications with his prior solicitor. That issue arose in the context of the husband asserting that his previous solicitor's representation had been so deficient as to be perverse or equivalent to not being represented at all.
What turned on that issue was the wife's applications for enforcement of interim spousal maintenance orders (it was common ground had not been complied with) in the circumstances where the husband asserts that he never did consent to such an order or a subsequent order reinforcing the prior order and that, upon realisation of the deficiencies in his representation, he changed solicitors and only then learned of the consequences and nature of orders that had been made.
That waiver issue was said to be relevant as to the husband's knowledge of what he consented to which was, in turn, relevant to his own assessment of what he could actually pay in regard to the spousal maintenance issue. The other aspect of the waiver aspect matter was that the husband's solicitors, when requested to deliver their file to his current solicitors, had only provided documents that would otherwise be available to the wife, like court reports, affidavits, etc but letters as between himself and the solicitors and, more significantly, notes of communications or attendances, were not provided.
The matter is complicated because the prior solicitors allege a lien on remaining documents and they assert that they are owed a further $5,000, which the husband has not paid and, I infer, says he should not have to pay given the nature of his representation as he now sees it. To deal with that aspect, the wife foreshadowed that it was proposed to issue a subpoena to those solicitors to produce the entire file, including notes of communication. That raised the issue of waiver. It became common ground that if waiver existed, either by my ruling or by agreement, then a subpoena would need to be issued, documents would need to be obtained, examined and the case planned before this hearing could proceed. Hence it became common ground that the final hearing could not proceed as planned, even if it was to take only three days.
Adversarial witness issue
After discussion with counsel it was agreed that I would then proceed to hear the next contentious issue, being the adversarial witness issue. Argument concluded at about a quarter to five yesterday, and I adjourned the matter until 11am this morning, and then pushed back that hearing until 12 o'clock. The broad chronology of some of the procedural events said to be relevant to the issue of the adversarial witness issue are as follows.
(a)By court order on 2 June 2022, a single expert witness was appointed; then
(b)The husband now alleges that he had no role to the extent of having informed consent to that order, but nonetheless the order was made and it has not been set aside.; then
(c)The parties, as they were then represented, reached agreement that the witness, Ms M (‘the single expert witness’), should prepare a report valuing the business of the husband, or of the husband and wife, or of the husband and his son, as the case may be.
It is common ground that after immigrating to this country, the husband worked long and hard as a factory worker and ultimately started his own company or, rather, he and the wife started their own business, which became a partnership, which then became a company. Thereafter, the business conducted by the husband was conducted successfully and has expanded. It is now a substantial business on any account.
The first report of the single expert witness
Ms M prepared a draft report on 20 December 2022 and provided that to the parties for the purpose of confirming or correcting factual statements therein.
Soon after, with the efficiency for which they are known, the wife's solicitors on 18 January 2023 confirmed that from their point of view, the factual matters underlying the expert opinion were either correct or not disputed. It must be noted that the wife had no actual role in the business and, hence she says, had a limited knowledge of matters relating thereto.
The previous solicitors for the husband replied about a month later, on 22 February 2022, and took issue with only three factual matters underpinning that report. The report was then what could be called finalised or released on 23 March 2023 (‘the first report’). That report posited a value of the business of a little over $1.2 million to a little under $1.5 million as a range.
The matter came before the Chief Judge on 7 August 2024 for a Compliance and Readiness Hearing, but before that had happened, the husband had appointed new solicitors back in July of 2023. The Husband alerted the Wife that he took issue with the conclusions of the report soon after but, as pointed out by counsel for the wife, did not then press for further information or questions or any conference, as would be provided under the rules, to be undertaken. It must also be noted that the report, dated 23 March 2023, was not released until the day after 4 May 2023.
It is common ground that the existing orders required the husband to pay for the single expert report as a preliminary matter rather than the usual fifty/fifty. The husband did not pay. The matter came before the Court on 4 May 2023 and the husband says only then did he learn that he was expected to pay and, upon learning that, he paid the next day. Hence, in one sense, the first report can be regarded as a May 2023 report. The wife does not accept or does not accept necessarily, the allegation of perverse representation of the husband that would explain that on his account. The orders of 7 August 2024 - that is, roughly a year after the new solicitors were appointed for the husband - are significant.
The husband's position had been as stated in a communication in writing to the wife's solicitors, which asserted that another expert would be sought, but not at that moment, but at some point in the future because of an expressed concern about a report becoming dated or out of date. On 7 August 2024, the husband's current solicitor appeared before the Chief Judge and, in substance, made what was described as an oral application to appoint another single expert. That oral application, unsupported by evidence, unsurprisingly was not granted or accepted, but the Chief Judge nonetheless varied what would otherwise be the position under the rules and provided for orders that permitted questions to be provided and an updating report. The order was:
1.The parties jointly engage the following single experts to as outlined hereunder, and instruct the said experts to release their reports not less than 56 days prior to the commencement of the defended hearing, with the cost of the said reports to be paid from the approximate $12,000 held on trust on behalf of the parties by the conveyancer who had the carriage of the settled sale file:
a)[G Company] be jointly engaged to prepare an updated joint sworn valuation of the business [E Pty Ltd], and for the purposes of the valuation the Husband comply with all documents as requested by the valuer for the purpose of valuation
b)The respondent have leave within 60 days to provide a list of questions and information to the valuer as to why they consider the current valuation to be incorrect. Such information is to be taken into account in any updated valuation; and
c)[H Company] be engaged to expertly value the former matrimonial home at [J Street, Suburb K].
2.The costs associated with the single expert giving evidence at Trial be paid from the funds held in trust on behalf of the parties. In the event there are insufficient funds held in trust, the cost be shared equally by the parties.
Now, about three weeks after the compliance and readiness hearing orders of 7 August 2024, the firm of solicitors of D Law Firm were retained by the husband as, what is colloquially referred to, “a shadow expert”. The husband did not actually ask questions in the form of a question as provided in the 7 August 2024 orders. On one view, he went further. He retained D Law Firm, who provided a report that was in two parts:
(a)an actual valuation of the same business; and
(b)a critique of the May 2023 report.
That report, dated 17 September 2024, was provided to the single expert witness. To the credit of the single expert witness, that was very promptly responded to. The response, roughly six hours after it was delivered, was that the assertions in the 17 September 2020 report were disputed and that the reasons or detailed response would be provided in the updated report.
Draft report
The single expert witness then provided an updated report on 14 November 2024 to the parties in draft form, which allowed for comments of what the parties sought.
Dear all
Please find attached draft report for confirmation of facts (excluding the valuation). In order to ensure that the report is completed by the due date it would be appreciated if all comments re factually accuracy and/or material omissions are provided to me by the 19 November 2024.
Kind regards
[Single expert witness]
The wife's response to the opportunity to comment on the factual underpinnings was that she herself did not have a knowledge of the matters. The husband, by his solicitors, responded to the effect that he would not respond.
Dear […]
Until such time that we have received your full report, not a draft part version as submitted by you, including your comments that addresses the Orders of the Court italicised below, we will not be in a position to comment in part or at all, especially within the space of 1 or 2 business days as requested by you. This is, respectfully, simply unworkable.
“The respondent have leave within 60 days to provide a list of questions and information to the valuer as to why they consider the current valuation to be incorrect. Such information is to be taken into accent in any updated valuation” [emphasis added]
One again, we look forward to your full report by 27 November 2024. We shall review your report at that time pursuant to the Rules.
Regards
[Husband’s solicitor]
Single expert witness report in comparison to the adversarial witness
The report of 27 November 2024 updated earlier observations and was able to take into account the finalised financial statements for the financial year ending 30 June 2024 and, in addition, had available to the single expert witness the first quarter results ending on 30 September 2024 for the same business.
It appears uncontroversial that the first quarter results are effectively draft or in the form of the husband's records, rather than finalised and externally reconciled results. The single expert witness took into account that first quarter result:
Revenue however has since improved with an increase in revenue from other clients as discussed previously. The quarter to September 2024 demonstrates a significant uplift in earnings to $164,000, primarily related to the improved margins generated from other customers compared to that generated from [L Company].
However, it is clear that the first quarter results had an influence upon the conclusions reached by the single expert witness. It is clear enough that the first quarter results influenced the single expert witness' opinion as to the maintainable earnings figure (‘FME’), and the capitalisation or what was described as “the multiple” of FME to arrive at a value of the business.
The single expert witness also relied upon and took into account, at paragraph 88, in determining the multiple or capitalisation rate for the valuation exercise, advertisements for sale of what were described as similar businesses. The single expert witness, in conclusion, opined that the future maintainable earnings figure was in the range of $345,000 to $390,000 dollars and an average or median of that range would be $367,500. The adversarial witness in the valuation that is sought to be relied upon concluded that the future maintainable earnings figure should be regarded as $289,000.
The single expert witness determined that the future maintainable earnings figure should be capitalised at the rate or multiple of 2.5. The adversarial witness, sought to be relied upon, opined that the appropriate multiple or capitalisation rate was two. The adversarial witness took into account a number of factors including apparently published figures, known as “N” business valuations, of capitalisation of said to be similar businesses. The single expert witness then opined that the value of the business was then in the range of $863,000 to $975,000 but plus surplus assets of $467,000. The adversarial witness has opined that the value of the business was hence $578,000 but plus surplus assets of $159,000, leading to an overall value of $737,000.
A further adjustment is made by the proposed adversarial witness of deducting a loan account that appears uncontroversial of $125,000 that the husband owes the business that has been included as an asset in the surplus asset requirement. The single expert witness makes no such adjustment, nor was she asked to do so. She was simply asked to value the business, albeit it was clear that it was for family law purposes.
Parties son
Another controversy within the case is that it is common ground that after separation, the husband transferred 40 per cent of the shares of this business to the parties' youngest son, Mr B.
Mr B is a witness in the case. It is the husband's case, supported by Mr B's affidavit, that from 2019 he had worked long and hard in the business on the agreement or understanding that a substantial part of 40 per cent would be transferred to him. The wife disputes this. The husband then regards the value of the business for the purpose of this litigation as 40 per cent of the concluding value of the proposed adversarial expert witness, leading to a result of $317,200.
The context to that dispute about the value of the business is what proportion that business is of the parties' otherwise not insignificant assets but, essentially, it comes down to the value of the former matrimonial home, which is undisputed as $1.350 million, the proceeds of sale of other properties of $73,585, the wife's motorcar and the business. On the husband's case, plus superannuation - superannuation can be regarded as being about $400,000. On the non-superannuation assets, the disparity between the parties is hence $2,824,585 against $1,756,785.
The total assets
I note, given the ages of the parties it may well be appropriate at the end result to treat the superannuation as if it were an available asset, but I have not been addressed about that yet. Hence, on the single expert valuation, the end result including superannuation is that there is about $3.224 million of assets or $3.215 million. However, the disparity between the experts is not as great as comparing the figure of $1.386 million against $317,200. The $317,200 figure only takes into account 40 per cent of the business, not 100 per cent, and deducts the loan account which has not been deducted from the single expert figure.
I am satisfied that if asked, the single expert witness would be able to comment upon and likely agree that the loan account, counted as an asset and a surplus asset in the husband's hands, should be deducted from the notional value. Hence, the difference between the parties could be described as about $650,000 (if 100 per cent of the business is taken account of) or $125,000 less than that if the single expert witness was asked specifically to take account of the loan account.
Nonetheless, what is striking is that on the wife's case, she should retain essentially the matrimonial home, and the husband should retain the business. The husband's case is that he intends to retire, had long intended to have the business taken over by a family member, and that not only does he only own 60 percent, he intends upon his retirement to transfer the balance to the son, Mr B.
There is always significance in regard to an asset at stage 1 of the orthodox four stage process. However, in this case, because of the way those assets fall proportionately, that significance is larger. I will not recite all of the comments or differences between the experts but it is necessary I recite rule 7.08 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (‘the Rules’).
Rule 7.08 Appointing another expert witness
(1)If a single expert witness 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 witness on the same issue without the court's permission.
(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 the contrary opinion is or may be necessary for determining the issue; or
(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.
The husband's case is that the adversarial witness sought to be relied upon and the opinion provided is a substantial body of opinion contrary to the single expert witness opinion, and that contrary opinion is necessary for determining the issue, and that the circumstances of the multiple criticisms combined with the proportions to which I have referred are another special reason for accepting the single expert witness.
The law has much to say about whether permission for another expert witness should be granted or not. I was referred to the decision of Neales & Neales [2022] FedCFamC1A 41 (‘Neales’) and Antonescu & Antonescu [2024] FedCFamC1F 468 (‘Antonescu’).
In Neales it was observed:
[24]The husband also contended that the difference of approximately $11 million in value between the single expert and the husband’s expert, justified in part, the appointment of another expert, and that the husband’s expert was in possession of a substantial body of opinion contrary to that of the single expert. The primary judge identified the relevant Rules (as they were at the time) and made reference to Kent J’s decision in Tsoutsouvas & Tsoutsouvas [2012] FamCA 521 at [26], where his Honour observed:
44.…
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”.
…
[31]This contention presupposes that a trial judge accepts without question, in the absence of other expert evidence, the opinion of a single expert. As the Full Court in Georgeson and Georgeson (1995) FLC 92-618 reminds at 82,218–82,219:
Expert evidence may be adduced as to the proper method to be adopted, in the circumstances of a particular case, to assist the Court in forming an independent judgment on the issue of valuation by the application of the appropriate principles. Whilst an expert may thus suggest an approach as being appropriate in a particular case, before accepting it, the Court must come to its own conclusions as to whether that approach is appropriate in the circumstances.
…
[41]The husband argued before us that the following matters, which taken collectively, satisfied as another special reason:
(1) that the single expert and Mr D adopted alternative methodologies as found by the primary judge at [50];
(2) that matters were known to Mr D that were not known to the single expert. As the primary judge noted:
51.… it appears that there are matters relating to the lease status of some of the underlying properties the subject of the valuation. This was a matter, it appears, peculiarly in the knowledge of the husband, and within his ability to correct. While the additional information may technically bring the application within the rule, it is also a matter that can be dealt with by means of an application for directions pursuant to r 15.67A…
Singularly there may be force to the primary judge’s conclusions. However, in aggregate, we are of the view that it strengthens the husband’s argument;
(3) that 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; and
(4) 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.
…
[45]As to Grounds 3.1 and 3.2, each of the experts had regard to the rent payable under the leases and made various adjustments. The primary judge concluded that the husband’s expert was “an alternate opinion”. The primary judge identified:
50.… the evidence from him does not go so far as to establish that the alternate methodology constitutes a substantial body of opinion. … What he proffered was an alternate approach that he opined was superior. That is insufficient to meet the requirement of r 15.49(2)(a). What has been offered is a merely contrary opinion. Under that circumstance, despite the significantly different outcome reached by the experts, the rule does not authorise the reception of the additional expert evidence.
[46]As Kent J observed in Salmonand & Salmon [2020] FamCAFC 134 (Salmon) at [35]:
35.… the words “substantial body of opinion” in r 15.49(2) are to be given real meaning, as was the approach taken by the primary judge. The approach that the words have meaning of substance has been adopted, correctly in my view, in other decisions at first instance in this Court. The mere expression of an opinion as to value by another expert, no matter how substantially contrary it is to that of the single expert, does not in and of itself constitute “a substantial body of opinion” within the meaning of the rule. If such a contrary opinion is founded upon identified and accepted methodology recognised within the field, or some identified and recognised field of expertise different to that founding the single expert opinion, then the requirement of “a substantial body of opinion” will be fulfilled…
…
[52]… As Kent J observed in Salmon and as referred to earlier:
35.… The mere expression of an opinion as to value by another expert, no matter how substantially contrary it is to that of the single expert, does not in and of itself constitute “a substantial body of opinion” within the meaning of the rule…
[53]We agree with his Honour’s observation as far as the first limb of Ground 3.4 is concerned. A difference of opinion, even of this magnitude, does not simpliciter establish a basis for an adversarial expert.
…
[62]We are persuaded for the reasons given earlier, that leave should be granted and the appeal allowed.
[63]In the exercise of our discretion, we would permit the husband to rely upon another expert as it is established that there is another special reason for appointing another expert. Our reasons for finding that there is another special reason are:
(1) that as between the single expert and Mr D, they each have adopted an alternate methodology, which in part leads to a significantly different conclusion as to value;
(2) that there are matters known to Mr D that were not known to the single expert, which in part lead to a significantly different value; and
(3) that in circumstances where the wife seeks a cash payment and the husband will be left holding the properties, the consequences of the significant difference in value may more adversely impact the husband than the wife.
In Antonescu, permission to rely on a single expert witness was refused. It was there observed:
[13]Rule 7.02 of the Rules specifies the purpose of Pt 7.1. One purpose is to ensure that, if practical, and without compromising the interests of justice, expert evidence is given on an issue by one single expert witness (r 7.02(c)). Rule 7.02(e) records that another purpose of the Part is to enable a party to apply for permission to tender a report, or adduce evidence from, an expert witness appointed by that party if it is in the interests of justice to do so.
…
[15]In Simonsen & Simonsen [2009] FamCA 698, Murphy J referred to the decision of the Full Court in Bass & Bass (2008) FLC 93-366 (“Bass”) identifying the predecessor of the current rule, and said:
“12The general thrust of the Rules has been referred to by the Full Court in Bass & Bass (2008) FLC 93-366. As the court in that case made clear, the adducing of evidence from an additional expert, is not something which ought occur in the usual course, or simply by application made by a party. It simple terms, the word‘special’as used in rule 15.49 has real meaning.”
(Emphasis added)
[16]That said, the Full Court has consistently not read down the circumstances where there are genuine issues in the proceedings that warrant the adducing of probative expert evidence. As such, the view often taken is that the permission rule must not be applied in a way that results in what may be a significant issue in the proceedings being foreclosed from effective challenge, or in a way that would compromise the interests of justice in preventing potentially relevant evidence being placed before the court.
[17]Chapter 7 of the Rules provides for two preliminary avenues to address concerns that a party may have about the contents of a single expert's report. The first is a conference with the expert (r 7.25) and the second is by way of questions to the expert in writing (r 7.26). The Full Court in Bass identified that, notwithstanding those procedures may only be of limited assistance, they ought to have been attempted before the application was made to adduce expert evidence from another expert witness on the same issue as opined by a single expert. Only then, and, if necessary, should it be contemplated to apply for the appointment of another expert.
…
[33]The difference between the respective capitalisation rates of each expert, being a matter of professional subjective discretion (Salmon and Ors & Salmon [2020] FamCAFC 134 (“Salmon”) at [43] - [44]), are modest, being 3.5, as applied by Mr E in his updated valuation report, and 2.76, as applied by Mr L.
…
[41]The husband submitted that there are two “special reasons” by way of the rule in this case. The first, was that the impact of COVID-19 was an “unusual phenomenon, which is distinct and largely peculiar to this particular industry, of which [Mr L] has expertise and knowledge”. This is considered earlier in these reasons. The second is that this case falls within the special reason identified by Riethmuller J in Moretto & Cosola [2022] FedCFamC1F 433 (“Moretto & Cosola”):
“15In cases where the valuation is based upon the comparable sales method this distinction can be a fine one, however it must be recalled that the expertise of the valuer (which goes beyond a non-expert or real estate agent providing an appraisal) is in making a nuanced assessment of which sales are truly comparable and then forming a view as to a valuation after weighing the different comparable sale prices. Where the values for which each of the parties contend fall within the ambit of a broad range that the single expert identifies, cross-examination would ordinarily be a sufficient tool to avoid injustice. Where the value contended by the party challenging the single expert is outside of the range identified by the single expert (after making use of the right to send questions to the expert and a conference between experts) the interests of justice would tend to weigh in favour of allowing evidence from the other expert, provided that such evidence is not obviously flawed and the difference involved is not out of proportion to the likely additional costs of permitting the evidence to be adduced.”
…
[47]Single expert evidence is one part of the determination of the value of the property of the parties. Ultimately, the Court determines the value of an item of the property after all the evidence has concluded. The Court will make findings of fact on the evidence to ground a finding as to value, coming to its own conclusions by applications of established valuation principles (Salmon at [41] - [42]; Neales at [58] - [59]).
[48]The husband's failure to avail himself of the pathways in the Rules to address his concerns about the contents of the updated 2023 single expert's report, coupled with his filing of Mr L's affidavit prior to the single experts' updated opinion, demonstrates that he was fixed on a course of seeking to adduce Mr L's opinion, irrespective of the contents of the updated single expert opinion. As identified earlier in these reasons, the instructions for the updated second single expert 2023 report were markedly expanded from that grounding the first 2022 report.
Wife’s case
It is the wife's case in opposing the admission of the proposed adversarial witness, in the context of a case where it is alleged that the husband has been slow and difficult to make full and frank disclosure and failed to cooperate with the single expert witness, that the delays in the matter are entirely at the foot of the husband and that the husband has not availed himself of the opportunities to deal with the factual issue as invited to by the single expert witness. The history of the matter was asserted to be very important to the exercise of discretion in this matter. I accept that submission. However, I am not satisfied that it is determinative.
It is submitted that it is very late in the piece that the husband actually requests an adversarial witness. There is substance to that submission. It is submitted that what the husband has done in these proceedings is precisely what was intended to be avoided by the single expert rules. It is pointed out in the decision of Neales, where the adversarial witness was permitted, that the difference between the parties was that the relevant property was either $34 million or $22 million and that, in that case, one of the parties had made timely application for the appointment of a single expert witness and that, in that case, no trial date had been set.
I also infer that part of the context in Neales, given the size of the pool of assets, whether $34 million or $22 million, meant that the parties had more resources than would usually be available to members of the community to spend on legal fees and expert fees to get to the right result. It was also submitted that in Neales, the successful applicant for the adversarial witness had just squeaked in, and it was emphasised that a different opinion is not what would be, in the rules, a substantial body of opinion, and it is put that the husband has put obstacles in the way of the single expert witness and then complains about the manner in which the expert witness has carried out her task.
It is asserted that there is a fundamental imbalance and unfairness in permitting an adversarial witness. And, as discussed during the hearing, the single expert witness and the parties are bound by the rules that effectively limit a free flow of communication between the parties when there is no such limit in regard to the single expert witness. It was complained that the letter of instruction had not been provided. It was complained that rather than ask questions as provided in the rules and as ordered by the 7 August 2024 orders, the husband had “jumped the gun” and provided a critique of the report instead of questions.
It was asserted, not unreasonably, that to accept the single expert witness would likely increase the costs, and the issue of the costs and the fundamental imbalance and unfairness created a forensic disadvantage to the wife, and that the husband's failure to follow the rules as he could have and should have, countered significantly against him and, in that regard, the comments in Antonescu were relied upon. There are many criticisms in the adversarial report that of themselves, in my view, would likely ordinarily be dealt with by way of questions or a conference as provided by the rules.
The different adjustments to the finalised statements that are customarily made by valuers of business in a future maintainable earnings exercise are disagreed. Matters like: the method of ascertaining the value of the motorcars; and proper rent to be paid are matters that, in my opinion, are a difference of opinion rather than a substantial body of opinion contrary to the opinion. They are matters that, in my view, the rules provide to be dealt with.
Fundamental and substantial difference
However, the fundamental and substantial difference between the two experts is the reliance upon the 2019 results, which one expert says is an outlier and, as a matter of accounting theory, should not be relied upon. I place little weight on that “outlier” aspect. The most substantial difference of opinion is the use of the September 2024 quarter results.
It is inevitable that when a single expert witness is being asked to update a report in November 2024, that the single expert witness would turn his or her mind to how the business has been going since the finalised statements. The issue in this case is whether it was appropriate, or proper to refer to them at all why they are “unreconciled”, and then the weight that is placed upon them.
The single expert witness took the results of the September quarter and then extrapolated them to the whole of the financial year ending 30 June 2025. That is at the heart of the controversy between the two experts. In the overall scheme of the case or in accounting theory the inclusion of the September quarter figures (alleged to be unreconciled) and the extrapolation thereof may be or end up as a minor matter. In this case because of the significant allegations of the alleged actual September quarter results, and final opinions as to value, I am satisfied that controversy involves is a substantial body of opinion contrary to the other (or where the experts are opposed). I am satisfied that that contrary opinion of the proposed adversarial expert may be necessary in determining the dispute as to value.
The circumstances that the experts disagree to such an extent about the manner in which the apparently unreconciled September quarter results could be used, and whether that can be used at all, and when used, the effect that it had, is a substantial body of contrary opinion such as to fall within Rule 7.08(2)(a) of the Rules in this case.
I am not satisfied that the adversarial witness knows of matters not known to the single expert witness, or at least matters that could not be properly brought to the attention of the single expert witness, to the extent there is matters known by one against the other. At this point in time, I am not critical in any way of the single expert report. Upon a reading of it, to my mind, and not being an expert, it is a textbook analysis of the business, doing the best the expert could. Nonetheless, it is clear that the September quarter results and the extrapolation for the full year was a significant matter in the ascertainment of the future maintainable earnings figure, and the multiple to be determined.
“N” records or advertised for sale
Before I go to special reason, I want to deal with another aspect that I raised with counsel. In determining the multiple, one expert has taken into account, to some extent, businesses being advertised for sale, and reached conclusions from that. The other expert has relied upon, to some extent, of what was described as the “N” business valuations. The M business valuations presumably could be obtained, but were not before me. There is controversy or issues in law of either offers to purchase or offers to sell being relied upon as evidence of value.
The further matter that is a substantial body of opinion, contrary to the other expert, is the issue of reliance upon advertisements for sale of businesses, as opposed to the publicly available, or at least available, “N” business valuations or analysis. I am satisfied that is a substantial body of opinion in the circumstances of this case.
The proposed “fall” of assets: a special reason?
The proportion that the parties dispute the value of the business, and the circumstance that, on the wife's case, the husband will be left with his interest in the business, essentially while she retains the other asset, being the matrimonial home, of substantial value, of which there is no dispute, is a significant matter to me. I am satisfied this is a “special reason” within the Rules.
I am also troubled, or at least take into account on the final hearing, the issue of a lacuna in the event that the single expert witness' opinion is not accepted. It is the law, and indeed, common ground, that the single expert witness will be available to be cross-examined. It may be that that cross-examination falls entirely flat. It may be that it is successful. I take into account, that then, I would have the privilege, but also the burden, of then myself determining what that value is.
I do also take account of, and am burdened by, the significant financial cost of resolving this dispute, and the valid point made by counsel for the wife of the increase in costs.
I take into account that it is likely to be necessary for a conference of experts, and that would have delayed the matter in any event, but that the matter is going to be delayed because of the circumstances relating to the waiver issue, in any event.
I am satisfied that those two matters of the September quarter figures issue and the “N” or sales issue are a substantial body of contrary opinion within the meaning of Rule 7.08(2)(a). I note that I take into account those matters in combination, as well, rather than only individually.
Conclusion
Nonetheless, taking all of the above into account, I am satisfied that it is in the interests of justice that the adversarial report be accepted into evidence.
POST SCRIPT
After delivering my reasons, I requested the assistance of counsel to confer and draft orders to give effect to my decisions contained within the reasons and consequential orders. Helpfully, counsel conferred and brought in an agreed minute of orders that gave effect to my decision and consequential orders.
I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of Judge O'Shannessy. Associate:
Dated: 18 February 2025
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