By Jennifer Zekirovska – Senior Associate
Expert reports in various fields are often needed in family law negotiations or litigation. The most common of those is an expert valuation report.
The first step to finalise a property or financial settlement after separation, is to identify and value the assets. Asset valuations are needed to reach agreement by negotiation or mediation. They are also needed in family law litigation, if you cannot reach agreement and have o start court proceedings.
The assets to be valued may include a home, investment property, motor vehicles, shares, or an interest in a business.
Appointing a single expert valuer
It is common to be able to agree on the value of a car or other straight forward asset. It is usually better to get an expert to value more complex or valuable assets. The usual process is for both parties to jointly engage an independent expert to assess the value and prepare a formal valuation report. The single expert valuer prepares the valuation report on behalf of both parties.
Normally, one party suggests three valuers and the other chooses one. A joint letter of instruction is sent to the valuer, providing relevant information about the asset to be valued.
When valuing a house or other property such as a factory or office, the valuer needs to physically inspect the property. Relevant documents like title searches and leases are also provided.
Information needed to value a business is more complex. It includes financial statements, tax returns and budgets as a starting point. The valuer meets with the party operating the business to get information about the nature and operation of the business and will often request a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats). The valuer also gives the other party an opportunity to provide input. All information provided to the valuer must be provided to the other parties.
The single expert valuer prepares a report stating their opinion of the value of the asset and the reasons for that value.
What if a party doesn’t agree with the single expert report?
Sometimes one, or even both parties disagree with the single expert’s opinion of the business valuation or property valuation. The reason the Federal Circuit and Family Court of Australia (Family Law) Rules require both parties to appoint a single expert valuer, is to try to avoid valuation disputes. There are avenues available to deal with a valuation dispute, but it is not as simple as just getting another valuation on your own.
If a party disputes the single expert report, there are some options:
- Conference with the expert
Pursuant to Rule 7.25 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, within 21 days of receiving the report, the parties can agree for one or both of them to have a conference with the expert to clarify the report.
- Written questions to the valuer
Pursuant to Rule 7.26 of the Rules, a party can put written questions to the valuer, to clarify matters in the report. For instance, for a property valuation, a party might identify recent sales of comparable properties and that were not considered by the valuer, and ask if those comparable sales affect the valuation. The questions to the valuer must be put:
- Within 7 days of a conference with the expert.
- If no conference is held, within 21 days after receiving the report.
As with all information put to the single expert, the questions must also be given to the other party. The questions can only be put once and are only for the purpose of clarifying the report. They cannot be oppressive, vexatious or expect the expert to engage in a substantial amount of work to respond to the questions. The expert can charge a fee for responding to the questions.
- A report by a shadow expert or adversarial expert
A party may obtain a separate valuation from their own expert along the way. The separate expert can help decide what questions to put to the single expert, generally critiquing the single expert report and helping decide whether it is worthwhile challenging the single expert valuation.
If the separate valuer is assisting one party in the background and the other party is not aware of the separate valuer, it is usually referred to as a “shadow valuation”. If the party decides to formally challenge the single expert valuation report, and wants to use their separate valuation report as evidence, it is then usually referred as an “adversarial valuation”.
- Court permission is needed to rely on an adversarial expert
- Pursuant to Rule 7.08, if a single expert has been appointed to a prepare a report or give evidence in relation to an issue, a party must not produce evidence from another expert on the same issue without the Court’s permission.
- The parties must go through the conference and written questions processes before applying to the Court to rely on an adversarial expert. In the matter of Salmon and Ors & Salmon [2020] FamCAFC 134, the Full Court held that before making an application to the Court seeking permission to present an adversarial expert report as evidence, they must use the processes set out in the Court Rules first.
- Rule 7.08, limits the circumstances when the Court will allow a party to rely on an adversarial expert. It is not enough for the single expert and adversarial expert to have a different opinion. The Court must be satisfied of one of the following:
- There is a substantial body of opinion contrary to any opinion given by the single expert and the contrary opinion is or may be necessary for determining the issue; or
- Another expert knows of matters, not known to the single expert, that may be necessary for determining the issue; or
- There is another special reason for adducing evidence from another expert.
- There is a substantial body of opinion contrary to any opinion given by the single expert and the contrary opinion is or may be necessary for determining the issue; or
- If the Court allows a party to rely on evidence from an adversarial expert, Rule 7.31 requires the experts to have a conference to
- identify issues that are agreed and not agreed; and
- if possible, agree on outstanding issues; and
- identify the reasons for disagreement on issues; and
- identify action that may be taken to resolve outstanding issues; and
- prepare a joint statement specifying the above matters.
- identify issues that are agreed and not agreed; and
The joint statement prepared at the conference may be tendered as evidence of matters agreed on and not agreed. If the experts reach agreement on an issue, the parties are not bound by that agreement, unless the parties expressly agree to be bound by it. If there is no agreement, the valuation or other issue in dispute will ultimately be determined by the Judge at Trial after considering all evidence.
Conclusion
Disputing an expert valuation can be challenging. It is important to obtain legal advice so that you can act promptly and in accordance with the Rules.
If would you like advice about valuations, valuation disputes, or any other family law issues, please contact us on (03) 8672 5222 to arrange an appointment with one of our experienced family lawyers.
