In a property settlement dispute, it is not uncommon that parties are unable to agree upon the value of an asset, and an independent valuation is required. Read on to learn what you can do if you don’t agree with a valuation of a single expert.
What is a single expert report?
If the parties are unable to agree upon the value of an asset, whether it be real property, chattels or an interest in a company, the parties can agree to appoint an independent expert, known as a single expert, to prepare a formal valuation of the asset.
The parties will need to agree upon a valuer first. Normally, a panel of three valuers is proposed by one party and the other party elects one of the valuer’s on that panel to prepare the valuation.
A letter to valuer is then signed by both parties, appointing them as a single expert and instructing them to value the asset as well as any instructions necessary for the valuation to take place.
Where the valuation relates to a real property or chattels, an inspection of the property/chattels is subsequently arranged.
Where the valuation relates to a company, the single expert will request the provision of various disclosure to enable them to perform the valuation, for example, the financial statements, tax returns and other financial documents of the company. The valuer will have questions for the person who operates and/or has an interest in the company, and may seek clarification in relation to issues relevant to the completion of their valuation.
What are my options if I do not agree with a valuation of a single expert?
If a single expert report has been prepared and you do not agree with the valuation provided, you have three options.
Option 1: Agreement to confer with the single expert witness
The parties may agree to confer with the single expert witness at a conference, to clarify the report. This must be done within 21 days of receiving the expert’s report: Rule 7.25 Family Law Rules.
This conference can include attendance by any adversarial expert that either party has engaged.
Option 2: Questions can be put to the single expert
Rule 7.26 of the Family Law Rules provides that a party can write to the expert and ask questions of the single expert witness to clarify the single expert report.
There are strict timelines for asking questions following receipt of a single expert report.
The questions must be put:
- within 7 days of a conference with the single expert;
- if no conference is held, within 21 days after receiving the single expert’s report.
The questions must be in writing, be put once only, be for the purpose of clarifying the single expert’s report and not be vexatious or oppressive or require the single expert to undertake an unreasonable amount of work to answer the questions. A copy of these questions must be given to the other party/the other party should be cc’d in the correspondence.
The single expert is entitled to charge further fees to respond to questions put to them to clarify their single expert report.
Option 3: Obtain another Report known as a ‘shadow expert report’
This is an option of last resort.
The Full Court has held that the above processes should be utilised prior to making an application to the Court to obtain permission to tender another report or adduce evidence from another expert witness (a shadow report): Salmon and Ors & Salmon [2020] FamCAFC 134.
In Gristwood & Gristwood [2022] FedCFamC1F 725, there was a difference of opinion in relation to the valuation of a call option. Whilst the Judge agreed to allow the Wife to rely upon the shadow expert report, he preferred the evidence of the single expert, and was critical of the Wife due to her failure to arrange a conference between the managing director of the business and the single expert.
If after making use of the processes available pursuant to the Rules, an application to adduce evidence from another expert is to be used, parties should take into account the following matters:
- The commercial benefit – does the difference between the expert’s opinion justify the direct and indirect cost of allowing evidence from multiple experts?
- Is there a basis to allow the evidence from another expert witness on the same issue.
For the Court to allow a party to rely upon the evidence of another expert witness, the Court must be satisfied, under rule 7.08 of the following:
- 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
- another expert witness knows of matters, not known to the single expert witness, that may be necessary for determining the issue; or
- there is another special reason for adducing evidence from another expert witness.
The Court in Salmon held that a ‘substantial body of opinion to the contrary’ means more than a mere difference in opinion between experts.
In MacVean & Manton [2022] FedCFamC1F 376, there was a disagreement in relation to the value of the Husband’s business interests. The Wife’s application to adduce further evidence was refused as none of the three exceptions above were satisfied, and the Wife had not sought to put questions to the single expert that were put to the shadow expert, nor was there notice given to the single expert and an opportunity given for the single expert to consider the matter further.
The most common reason for a Court allowing a person to rely upon the opinion of another expert witness, is the third reason.
In Neales & Neales [2022] FedCFamC1A 41 the single expert report valuation of a portfolio of properties differed by $11,000,000 from the shadow expert report. The Husband’s application to adduce further evidence from the shadow expert was refused.
On appeal, the Husband argued that there were a number of matters that collectively constituted a special reason for allowing the Husband to adduce an adversarial report.
The Full Court held on appeal that the difference of $11,000,000 in opinion was not sufficient on its own for an adversarial report, however, the Trial Judge was in error and there was a special reason for adducing evidence from another expert witness. Those collective matters included:
- The single expert and shadow expert adopted alternative methodologies;
- Matters were known to the shadow expert that were not known to the single expert;
- If the difference of $11,000,000 arises as a result of a different methodology, all of the information relied upon, that warrants consideration as another special reason;
- Given the sale of the properties was not sought as a final order and so the Husband would be left holding the properties post settlement, the consequences of the significant difference in value may more adversely impact the Husband than the Wife.
The Full Court held the primary judge fell into error by not considering the above reasons in aggregate in determining that there was collectively a special reason for adducing evidence from another expert witness.
In Moretto & Cosola [2022] FedCFamC1F 433, the single expert report and shadow expert report differed by $750,000 in relation to the valuation of real property owned by the Applicant. The Respondent sought to adduce evidence from his shadow expert.
The primary judge held that the difference in expert opinions arose not only from the difference in opinion as to which sales were comparable, but the weight to be placed upon that sales information. He was concerned that if the single expert was successfully cross examined by the Respondent and his evidence sufficiently weakened, there was a real risk that there would be an evidentiary vacuum if the Respondent was not permitted to adduce evidence from the shadow expert witness. The Judge was satisfied that there was a special reason as there was a real risk that the Respondent would not be able to put her case as to the value of the Applicant’s property if she was limited to cross-examination of the single expert only.
If you are successful in an application to adduce evidence from another expert witness, Rule 7.31 of the Family Law Rules provides that the parties must arrange for the expert witnesses to attend a compulsory conference at least 28 days prior to Trial.
The purpose of the conference is to:
- identify the issues that are agreed and not agreed; and
- if practicable, reach agreement on any outstanding issue; and
- identify the reason for disagreement on any issue; and
- identify what action (if any) may be taken to resolve any outstanding issues; and
- prepare a joint statement specifying the matters referred to above and deliver a copy of the statement to each party.
If an agreement is reached between the expert witnesses on an issue, the agreement does not bind the parties unless the parties expressly agree to be bound by it.
The expert witnesses must prepare a statement which addresses the above 5 issues.
If an agreement is not reached, the Trial Judge will need to make a determination based on all the available evidence.
Don’t agree with a valuation of a single expert?
Contact one of our experienced Brisbane Family Lawyers urgently to discuss your individual circumstances, so that questions can be put to the valuer, within the strict time frames required by the Rules.
