Dent & Dent [2025] FedCFamC2F 623 (16 May 2025)

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).

1. The parties in this matter, Mr Dent ("the husband") and Ms Dent ("the wife") are involved in a property dispute which is listed for a five-day final hearing before this court in October 2025.
2. This interim defended hearing concerned the husband's application to rely on an adversarial expert valuer of his business.

1. The husband and his business partner, Mr C, are equal shareholders and co-directors of D Pty Ltd ("D Pty Ltd"). D Pty Ltd operates E which is described as a "marketing platform" to promote businesses.
2. The parties appointed a joint single expert, Mr F of G Company ("Mr F") to value D Pty Ltd pursuant to orders of this court dated 22 May 2024.
3. Mr F prepared a valuation report of D Pty Ltd which was dated 23 August 2024. Mr F valued the husband's share of D Pty Ltd at between $6.809 million and $7.464 million. The husband's evidence is that upon receiving that report, he identified three main concerns of the report being:

(a) the lack of the single expert to properly consider the Covid period and impact on D Pty Ltd's value;

(b) the lack of the single expert to forecast the business into the future and the expected future contraction; and

(c) the lack of enquiry and research into the industry by the single expert in determining the multiple used.[1]

1. Consequently, the husband instructed his solicitors to appoint Mr B ("Mr B") of H Firm to review that report. As a result of that review, the husband's solicitors wrote to Mr F questioning his approach.
2. In an email sent on 12 September 2024 to the husband's solicitors, Mr F stood by his methodology and his estimate of capitalised future maintainable earnings.[2]
3. Not satisfied with that response, the husband sought an adversarial report be prepared by Mr B ("the adversarial report"). That adversarial report puts the value of the husband's share of D Pty Ltd at a lower value, between $3,150,045 and $3,504,434.
4. The husband is now seeking permission of the court to rely upon that adversarial report at the final hearing in October 2025.

1. The Federal Circuit and Family Court of Australia (Family Law) Rules 2021 ("the Rules") at Rule 7.08 state as follows:

(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.

Permission for expert's reports and evidence

(1) A party must apply for the court's permission to tender a report or adduce evidence at a hearing or trial from an expert witness, other than a single expert witness.

1. The husband puts his case based on Rule 7.08(c) of the Rules, that the cumulative effect of six factors constitute a "special reason" as to why he ought to be able to rely on that valuation.

1. The difference between the value of the husband's interest in D Pty Ltd in the two valuations is about $3,658,000 at the low end, and nearly $4,000,000 at the upper end.
2. I note that the judges at first instance appear to disagree as to the approach to be taken where the value of the contended party is outside the range of the single expert, with Justice Riethmuller in Moretto & Cosola [2022] FedCFamC1F 433 ("Moretto") at [15] stating that:

the interests of justice would tend to weigh in favour of allowing evidence from the other expert.

(Emphasis added)

1. Whilst alternatively, Justice Strum in the case of Artinos & Artinos (No 2) [2023] FedCFamC1F 37 was of the view that the interests of justice "may" tend to weigh in favour of same.
2. Furthermore, authorities such as Keevers & Keevers [2021] FedCFamC1F 338 state that a substantial difference in valuation alone should not be the basis for the court to allow dualling experts.
3. However, pursuant to cases such as Neales & Neales [2022] FedCFamC1A 41, it is evident that such a disparity may form part of an accumulation of factors which make up a "special reason" for the purposes of Rule 7.08(c), as was noted by Justices Aldrige, Tree and Schonell at [41(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;

(As per original)

1. The second basis asserted for the husband is that the experts have used different methodologies, or as was put by the husband's counsel, different "sub-methodologies." It was argued that whilst both valuers used the capitalisation of future maintainable earnings methodology - their approach within that methodology resulted in substantially different outcomes. The two main differences was the data relied upon and the multiple applied (although, Mr B also applied a different discount due to the husband's non-controlling interest, however, neither party placed a significant emphasis on this in their oral submissions).
2. In regard to the data used, Mr F relied upon four years of financial records for D Pty Ltd, from 2020 to 2024, whereas Mr B dismissed 2020 and 2021, in essence, for being too old. Mr B additionally left out the earnings for the covid years entirely because, in his opinion, these were an anomaly whereas Mr F included them, subject to different weighting.
3. In relation to the multiple, Mr F conducted an assessment of like companies, however, the husband argues that Mr F provides no explanation as to how he selected those companies. Furthermore, the husband says that Mr F, having assessed the range of multiples for those companies to be between 2.0 to 14.2, did not explain why he ultimately concluded the multiple for D Pty Ltd should be between 5.25 and 5.75.
4. Despite the lack of research and what Mr B described as a "shallow" approach to the selection of the multiple, in his initial review of Mr F's report, Mr B was prepared to accept the median multiple of 5.5 as being "not unreasonable."[3] He did however take issue with the data used by Mr F in his calculation of capitalised future maintainable earnings.
5. Mr B therefore helpfully constructed a question to be put to Mr F pursuant to Rule 7.26 of the Rules. The question was framed as follows:

The following question relates to the single expert report ("the report") dated 23 August 2024 prepared by [G Company] in connection with the [Dent] family law matter.

Future Maintainable Earnings

In Appendices 3.1 and 3.2 of the report a weighted average of EBITDA over five years has been adopted as the normalised EBITDA for valuation purposes. The calculation is ($ 000's):

The total weighted normalised EBITDA from the above is $2,760.

In the assessment of Future Maintainable Earnings it is generally accepted that consideration should be given to the financial performance of the years under review that best represents the likely future maintainable performance of the business.

Paragraph 2.2 of the report states the following:

"We understand that during Covid, given the remote work environment of the business, [D Pty Ltd]'s sales were not impacted by lockdowns, in fact they grew significantly (the number of customers doubled). Post Covid, the number of customers has purportedly normalised back to 4,300 customers (falling monthly since the end of the 2021 calendar year).

It is noted from the above the reference to normalisation post Covid. Therefore, it is strongly implied that the period covered by Covid (FY21, FY22 and FY23) must have been abnormal. Periods of abnormal financial performance should clearly be excluded from any calculation of "Normalised EBITDA". It follows that the most current and best representation of future maintainable performance is FY24, which is a post Covid year. It is also relevant to note that the Normalised EBITDA in FY24 of $2,060 is relatively close to the Normalised financial performance in FY20 of $1,810 which was the last full year before the onset of Covid.

Question:

Based on the above, do you agree that the financial performance of FY24 is the most reliable and most relevant indicator of Normalised future maintainable performance of [D Pty Ltd]?[4]

(Emphasis as per original)

1. The husband's solicitors duly put that question to Mr F who responded in an email dated 12 September 2024 as follows:
   1. I did apply a weighted average EBITDA to estimate Future Maintainable Earnings of $2.76 million;
   2. Whilst I acknowledge that the business achieved strong performance in FY 22 and FY23, this does not mean it was abnormal performance. It indicates its earnings capacity in a strong trading year/years;
   3. Normalised EBITDA in FY 24 was however the primary basis of my FME calculation (ie 50% of that year's result formed the basis of my FME calculations); and
   4. On the basis of the above, I am satisfied that my FME calculation remains appropriate.[5]

1. The husband was criticised for not raising all of his original concerns with Mr F including that Mr F did not include an appendix of his research which formed the basis for the multiple, which he now asserts should be a reason to rely upon the adversarial report. I note that this is a valid point and one which I take into consideration.

Difference of opinion between experts rather than a matter of fact

1. The husband argues that the difference in the valuation of D Pty Ltd between the two valuers is not a matter which can be easily resolved by way of cross-examination, as it involves a difference of opinion, not fact.
2. The primary area of dispute is how to treat the income prior to 2024, whether it should be included at all, and, if included, what weight should be attached. Mr F, in essence, views the covid years as strong performing years to be given less weight than the "normalised EBITDA" in 2024 rather than anomalies to be entirely excluded.
3. However, I do not accept the argument of the husband that cross-examination of Mr F would necessarily have been insufficient to resolve this issue. As such this factor alone would not justify the court to permit an adversarial expert.

1. It is evident that Mr B had information not provided to Mr F, at the time of his assessment. Whilst this included financial documents not yet in existence when Mr F did his report it also included a letter from the husband's accountants.[6]
2. I do not accept that this is a reason to justify an adversarial expert. It is readily apparent that all of this information could simply have been provided to Mr F so he could prepare an updated report. This is consistent with the authorities such as Tsoutsouvas & Tsoutsouvas and Ors [2012] FamCA 521 ("Tsoutsouvas"). It also seems likely there will be another year of financial records available by the time of the five-day trial in October 2025, so Mr F would have been required to update his report in any event.
3. Whilst the wife also argues that Mr B fell into error because he was provided with the post-June 2024 financial records, this did not form a substantial basis for the wife's argument at this interim hearing.

The husband is the only party prejudiced by the single expert report

1. It was argued for the husband that, as it is common ground that he is to retain his interest in D Pty Ltd, he is the only one in this matter prejudiced by the value of same. In support of this, it was submitted for the husband that the parties have now each particularised their cases and each proposes the husband is to retain the business and pay out the wife.
2. The wife argues that although she proposes the husband keep the business, she is not in fact bothered either way. I however accept that this is a very convenient argument for the purposes of this application and in reality, there is no real dispute the husband will retain his interest in D Pty Ltd.
3. This is a significant factor favouring the granting of the husband's application, which I shall return to in due course.

1. The husband argues that if Mr F is the only expert valuer and is discredited in cross-examination that there will be a substantial lacuna in the evidence.
2. On one view, this is a risk that all parties face where they have a single expert. However, in this case the husband points to deficits in the report of Mr F to support the assertion that this is more than a hypothetical possibility. These includes Mr F's failure to thoroughly research comparable companies for the purpose of the multiple and to explain the weight accorded to the data included in his calculations.
3. The husband refers to a first instance decision of Justice Watts of IABH & HRBH [2009] FamCA 1131 ("IABH") at [8] where his Honour states:

As I indicated in discussions, it was my view that the purpose of subrule 15.49(2)(c) FLR was, inter alia, to catch cases such as the current one where there appears to be a genuine difference between the opinions of experts in respect of the appropriate values to be used in a formulae to be applied to ascertain the value a commercial property. As I discussed with senior counsel for the wife, it could be the case that senior counsel for the husband is able to demonstrate during the cross examination of Mr DD that the values that Mr DD has used in the formula he has applied to value the property cannot be relied upon. If that happened and alternate expert opinion was not available, then it might be that a vacuum in the evidence would be created. There would be no other evidence the court could rely upon in those circumstances. The fact that that is not an unrealistic possibility in this case is a "special reason" for allowing the husband to adduce evidence from Mr SQ.

(Emphasis added)

1. The wife argues that the parties' case should be distinguished because unlike IABH the values of income for each year are not actually in dispute. She also distinguishes this case from the facts in Moretto where the court had to grapple with how to deal with comparable sales. She notes the observations of Justice Riethmuller in Moretto at [39]:

Striking a value by reference to comparable sales is not so simple as making a finding that can be mathematically factored into the methodology of the expert, such as adopting a multiplier or minority shareholding discount rate in a business valuation case (see, for example, the discussion in Salmon), or making a finding of fact as to the actual revenue of a business.

(Emphasis added)

1. It was argued for the wife that should Mr F's evidence be rejected that unlike in Moretto, the court is not required to make assessments of what may constitute a comparable sale, which would in of itself require expert knowledge. Rather, it was argued that if the court rejected Mr F's approach to the years to be included in the formula, the court could simply exclude those years and recalculate the value without the need for other evidence. In support of this, the wife relies also on the case of Giacobetti & Giacobetti (No 2) [2023] FedCFamC1F 1091 in which it was held that the court should not allow another valuation merely on the basis that there is a risk the single expert's value may be rejected. The wife refers to that judgment in which the court states as follows at [43]:

It is for the Court to determine, being free to form its own view as to the value of the property, having regard to all of the evidence, by the proper application of established principles of valuation (see Commonwealth v Milledge [1953] HCA 6; (1953) 90 CLR 157).

1. However, I do not accept that this would necessarily be the case. The court may still be left without satisfactory evidence as to which years ought to be included and if so, what weight should be accorded to them. In addition, the court may be left without any credible evidence as to the appropriate multiple.

1. The wife's primary argument is that this application in a proceeding filed by the husband is premature as the husband did not make full use of the provisions set out in Rules 7.25 and 7.26 before bringing his application. Those Rules provide as follows:

(1) Within 21 days after receiving the report of a single expert witness, the parties may enter into a written agreement about conferring with the expert witness for the purpose of clarifying the report.

(2) The agreement may provide for the parties, or for one or more of them, to confer with the expert witness.

(3) Without limiting the scope of the conference, the parties must agree on arrangements for the conference.

(4) It is intended that the parties should be free to make any arrangements for the conference that are consistent with this Division.

Note: For example, arrangements for a conference might include the attendance of another expert, or the provision of a supplementary report.

(5) Before participating in the conference, the expert witness must be informed of arrangements for the conference.

(6) In seeking to clarify the report of the expert witness, the parties must not interrogate the expert witness.

(7) If the parties do not agree about conferring with a single expert witness, the court, on application by a party, may order that a conference be held in accordance with any conditions the court determines.

(1) A party seeking to clarify the report of a single expert witness may ask questions of the single expert witness under this rule:

(a) within 7 days after a conference (if any) is held under rule 7.25; or

(b) if no conference is held under that rule - within 21 days after the party received the single expert witness's report.

(a) be in writing and be put once only; and

(b) be only for the purpose of clarifying the single expert witness's report; and

(c) not be vexatious or oppressive, or require the single expert witness to undertake an unreasonable amount of work to answer.

(3) The party must give a copy of any questions to each other party.

1. The wife argues the husband only asked one question of Mr F, whether the 2024 financial year "is the most reliable and most relevant indicator of Normalised future maintainable performance of [D Pty Ltd]?"[7] and did not ask Mr F to specifically explain why he included the other years in the calculation.
2. However, the submission that the husband only asked one simple question is misleading. It is evident from the question itself, which commences with "based on the above" that the question is premised on a number of preceding propositions, including that "it is strongly implied that the period covered by Covid (FY21, FY22 and FY23) must have been abnormal. Periods of abnormal financial performance should clearly be excluded from any calculation of "Normalised EBITDA."[8] It is also evident from Mr F's answer that he understood that to be the basis for the question.[9]
3. As already discussed, it was also argued, and I accept, that the husband never sought to challenge the multiple prior to bringing this application and ought to have done so.
4. The wife also argues that pursuant to Rule 7.25 the husband ought to have arranged a conference with the single expert, including his expert, prior to issuing these proceedings.
5. The wife relies on Justice Riethmuller's comments in Moretto in which he makes reference to the "making use of the right to send questions to the expert and a conference between experts."[10]
6. The wife additionally refers to the case of Bass & Bass [2008] FamCAFC 67 ("Bass") as authority for the requirements for such a process to be followed. Although, I note the court in that case said, "that procedure ought to have been attempted before the application was made" (my emphasis) but unlike this case, in Bass, no efforts had been made to do so.[11]
7. Whilst I accept the husband ought to have made better use of the questioning process, I do not accept his failure to do so, nor his failure to arrange a conference with the expert, is fatal to his application to rely on the adversarial report.

1. It was submitted for the wife that Mr B, having earlier accepted the multiple selected by Mr F, changed his view in his adversarial report (along with his assessment of the discount to be applied due to lack of control associated with the husband's 50 per cent ownership) and ultimately reduced his valuation of the business by almost 40 per cent in five weeks.
2. It was argued that this occurred after Mr B was unilaterally provided with information by the husband, including material from his accountant which advocates for the position ultimately adopted by Mr B and that as such his report should be seen as biased.
3. The wife also complains that the husband did not disclose some of this additional information nor annex it to his affidavit for the purposes of this application.
4. The husband says that the provision of such information is not inappropriate and to the contrary is to be expected when obtaining a business valuation. I accept this to be the case in terms of updated financial records, however, it is arguable the letter from the accountant went further than just providing information. However, I accept the argument put by the husband that consistent with the approach taken by the full court in Bass at [50] and by the court in Moretto at [23] that this is a trial issue, and not one that I should or even could factor into my decision for the purposes of this application.

Cross-examination of Mr B will add to length of the trial

1. Further to this, the wife argues that due to the question of bias, that cross-examination of Mr B is expected to take at least half a day, which will further extend the length and cost of the matter already listed for a five-day trial.
2. Whilst this is a possibility, I do not accept that it is inevitable given the relatively discrete issue. It is also likely that if Mr B's report is not permitted into evidence that the husband would take up substantial time cross-examining Mr F. It is arguable this could be avoided if both reports are allowed in and the experts given the opportunity to confer prior to trial.

Mr B's report does not contain "a substantial body of opinion" not known to Mr F

1. The wife appeared to be under the impression that the husband's case was at least based in part on Rule 7.08(2)(a), that there was a substantial body of opinion which supported Mr B's approach in his valuation as opposed to that of Mr F.
2. Somewhat ironically, the wife sought to rely upon a report from a third "expert" in support of the argument the husband should not rely on the second expert. The wife obtained a report from the financial advisory service J Company, which I was told would support the argument that there was no such "substantial body of opinion" contained within Mr B's report.
3. I did not however permit the wife to rely upon the report of the "third expert" for the following reasons:
   • it appeared to be an expert report but not a single expert report;
   • there was no application before the court for the wife to rely upon that report;
   • the report was only provided to the husband the week before the hearing; and
   • the report was not on affidavit but attached to an outline of case.
4. However, I am of the view that such a report would not have taken the matter any further. The wife argues, pursuant to Salmon and Ors & Salmon [2020] FamCAFC 134 at [35] that:

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.

1. I accept the two experts adopted the same methodology but had a difference of opinion about what data to include and what weight to be accorded to it. There is no evidence that either valuer was in possession of a "substantial body of opinion" not known to the other valuer. In any event, I do not understand that to be how the husband put his case.

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".

1. It is evident from this that the court should give careful consideration before allowing an adversarial expert so as to avoid creating an injustice between the parties. In this case, however, I am persuaded that the cumulative impact of the factors argued by the husband constitute a special reason such that he ought be permitted to rely on Mr B's evidence. In particular, there is a substantial difference between the valuations and the husband is the one who is solely prejudiced by that difference.
2. I am also satisfied that given the financial resources available in the parties' property pool, on either parties' case, that the cost to the parties of an adversarial expert is not unjustified in the circumstance.
3. Finally, I will make the order sought by the applicant, reserving the applicant's costs. This is made without prejudice to any future argument raised by the respondent that no order should be made.
4. For all these reasons, I make the orders as set out at the commencement of this judgment herein.

I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jenkins.

[1] Husband's affidavit filed 17 January 2025 ("Husband's affidavit") at [5].

[3] Letter from Mr B dated 5 September 2024 annexed to Husband's affidavit at [140].

[11] The applicable rule at the time of Bass was division 15.5.6 of the Family Law Rules 2004 (Cth) but is in very similar terms to the rules applicable to this case being both 7.25 and 7.26 of the Rules.