Keywords

In Brief

The Full Court has dismissed a husband's appeal against orders equally dividing a property pool of more than $128 million, the bulk of which consisted of his shares and options in a United States technology company he had co-founded. The husband argued the company's “stratospheric” increase in value after separation was his doing alone and should not be shared equally, and that he had been denied a fair opportunity to contest evidence about US securities law. The Full Court rejected both arguments, confirming that unvested or restricted founder shares remain “property” under the Family Law Act, and that a large post-separation increase in an asset's value does not, by itself, revive the discredited doctrine of “special contributions”.

In the Judge's Words

Summary

The parties cohabited from 2005 and separated in 2022 after a 17-year relationship. The husband was a co-founder, CEO, president and chair of a US company incorporated in 2015 to build what its founders described as the world's first quantum computer. He held 2.5 million shares (valued by the primary judge at approximately AUD75.7 million) and 1.725 million options in the company. At trial, the parties' valuations of the total asset pool were remarkably close in total (around $128 million each) but wildly divergent in composition, reflecting a fundamental dispute over whether the husband's shares and options could be transferred at all.

The primary judge found that the shares and options were transferable, notwithstanding restrictions said to arise under the Securities Act of 1933 (US), and were therefore “property” for the purposes of section 79 of the Family Law Act 1975 (Cth). Her Honour ordered an equal division of the property, rejecting the husband's contention that his post-separation efforts in growing the company's value justified departing from equality.

On appeal, the husband raised three main grounds. First, he argued he had been denied procedural fairness when the primary judge refused two adjournment applications and excluded parts of the jointly engaged expert's evidence on US securities law, leaving him unable to properly contest whether his shares could lawfully be transferred. The Full Court held that the primary judge had properly weighed the lateness of the application and its impact on the trial, consistent with the High Court's guidance in Aon Risk Services Australia Ltd v Australian National University. Critically, the Full Court confirmed that where a party fails to adduce adequate expert evidence of foreign law, a court is entitled to construe the foreign statute itself and apply it as if it were Australian legislation, applying the principle in Neilson v Overseas Projects Corporation of Victoria Ltd that findings about foreign law are findings of fact for the trial judge to make on the evidence available.

Second, the husband argued the primary judge's assessment of contributions as equal was unjust, given his post-separation contributions and the “stratospheric increase” in the company's value after separation. The Full Court rejected this, holding that both parties had continued to make comparable contributions after separation (the husband financially, the respondent through the care of the children), that the post-separation period was short relative to the length of the relationship, and that treating a large increase in the value of one party's post-separation efforts as justifying an unequal division would effectively resurrect the “special contributions” approach the Full Court disavowed in Fields & Smith.

Third, the husband raised several further grounds concerning the characterisation of his options as property despite their non-transferability, the machinery provisions ordered to give effect to the transfer of his shares, and the treatment of loans he had drawn down for living expenses. All were dismissed. The Full Court found the primary judge's approach to be orthodox and open on the evidence, including the practical solution of requiring the husband, as founder, CEO and chair of the company, to use his position to facilitate the transfer or exercise of the relevant shares and options.

The appeal was dismissed in its entirety, and the husband was ordered to pay the respondent's costs of the appeal fixed at $91,371.53.

Key Takeaways

• 1Restricted shares are still “property”. Shares and options are choses in action and fall within the section 79 property pool regardless of contractual or statutory restrictions on their transfer; alienability affects how an asset is dealt with, not whether it is property.
• 2“Special contributions” remains dead letter. A dramatic, post-separation increase in the value of a business or shareholding that one party continued to grow does not, without more, justify an unequal division. Courts will look at the whole of the relationship and both parties' contributions, financial and non-financial, over that period.
• 3Foreign law is proved as fact, but gaps don't stall the case. Where expert evidence on foreign law is incomplete, excluded, or simply not led, the court can and will construe the foreign statute itself and apply the law of the forum, rather than leave the point undetermined.
• 4Adjournment refusals need to bite on the outcome. An unsuccessful adjournment application will not found an appeal unless the party can show a real, outcome-affecting loss of opportunity, not merely that further or better evidence might, in theory, have been available.
• 5Founders in family law property disputes. Practitioners acting for founders, executives or early employees holding equity in high-growth private companies should expect courts to look past claimed transfer restrictions and treat that equity as property, valued and divided like any other asset.

Legislation Referenced

Full Decision

Appeal from: Charis & Charis [2025] FedCFamC1F 762.