The Federal Circuit and Family Court of Australia has the power to determine the distribution of assets and liabilities between parties in a manner which is just and equitable. The Court will exercise its discretion in family law disputes with a particular focus on the parties’ financial and non-financial contributions (including in their capacity as parents and with respect to their engagement in home duties) as well as considering the future needs of each party.
There are a number of factors that parties should consider in finalising a property settlement. Obtaining valuations for significant assets owned by the parties, either jointly or individually, is an important and often necessary step when it comes to establishing the property pool available for division.
Assets which commonly require an expert valuation include real property, businesses, motor vehicles and antiques.
If the value of an asset can be agreed upon between the parties for the purpose of negotiations, there is no need for that asset to be valued by an expert. The cost-effective option exists for parties to research recent sales of comparable properties, motor vehicles and other valuable assets in the hope of reaching agreement as to value. Appraisals from real estate agents or motor vehicle traders may also be sought. However, if there is no agreement as to the value of an asset, obtaining an expert valuation may be a crucial next step in resolving the matter.
If a matter is to proceed via litigation and the parties are unable to agree on the value of a significant asset, the Court will expect the parties to produce evidence prepared by a qualified valuer, known as a single expert, to advise the Court what the asset in question is worth. The single expert will need to prepare a report which complies with the requirements of Chapter 7 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021.
The requirements for single experts was adopted 18 years ago to avoid adversarial experts being appointed by both parties which served to prolong litigation at great expense to both parties.
The Court Rules require parties to jointly appoint an expert however if a joint valuation is obtained, the cost is often shared equally between the parties.
It may be the case that parties do not agree on a valuer or do not agree to obtaining a valuation in the first instance. In this case, the parties can seek orders for a valuer to be appointed by the Court. It should be noted that there is no compulsion for a party to adopt a value for a particular asset if the valuer was appointed by only one party.
After a single expert report has been prepared and provided to all parties, the option exists for a party to put questions to the expert valuer to clarify their findings within 21 days of receiving the report. If a party still disputes the outcome of the valuation, that party may choose to appoint a different expert to prepare a “shadow” valuation. However, that party cannot tender a report from a shadow expert if a single expert has been appointed to adduce evidence on the same issue, without first seeking the permission of the Court to do so. It is usually the case that when this occurs, there is dispute about the methodology adopted by the single expert and or the assumptions used to justify the single expert’s conclusions.
In cases where each party is seeking to admit evidence from a different expert valuer, the Court may order that the experts attend a conference to try to agree to a compromised value and or prepare a joint report outlining the issues discussed and any issues which remain in dispute.
Importantly, any valuation relied upon for the purposes of reaching agreement should be as current as possible. Given that negotiations and or litigation may take time to finalise, it may be necessary to obtain a number of updated valuations during the resolution phase of a case.
Ultimately, the valuation of significant asserts is critical to the resolution of a property dispute. To minimise disputes about the value of an asset in question, parties should consider engaging an expert valuer.