Single Expert Business Valuations in Family Law

When a business has to be valued for family law proceedings, the parties often do not each engage their own valuer. Instead one valuer is appointed to value the business for both sides. That valuer is a single expert. This article explains, in general terms, what that means and what the parties can expect. Whether a single expert is required in a particular matter, and the procedure that applies, are questions for the parties' lawyers and the Court.

What a single expert is

A single expert is a valuer appointed jointly by the parties, or by order of the Court, to give expert evidence on an issue, here the value of a business or an interest in it, for both parties rather than for one. The expert is instructed jointly, receives documents from both sides, and delivers one report to both. The parties share one opinion instead of exchanging two.

The purpose is practical. Two competing valuations tend to produce two competing sets of assumptions and a dispute about the valuer as well as the value. One independent opinion, prepared on agreed instructions, narrows the argument to the facts that actually matter.

How a single expert comes to be appointed

There are broadly two routes. The parties may agree between themselves, usually through their lawyers, that a particular valuer will be appointed and on what instructions. Or the Court may order that the evidence on the value of the business be given by a single expert, and may settle who is appointed and what the instructions say if the parties cannot agree.

The rules governing single experts, the form of the instructions, the procedure for asking questions of the expert and whether a party may later rely on another expert differ between courts and can change. Your lawyer will advise on what applies. A valuer works within the instructions the parties and the Court settle; the valuer does not decide the procedure.

The duty to the Court

The single expert's overriding duty is to the Court. That duty prevails over any obligation to the person or people paying the fee, and it does not change according to who first made contact or who is more forthcoming with documents. The expert does not act as an advocate for either party and will not shape an opinion to suit one side.

For the parties this cuts both ways. Neither can direct the expert towards a preferred figure. Both can rely on the expert to reach a conclusion from the evidence and to explain it. An expert who could be steered by one side would be of no use to the other, and of no use to the Court.

The instructions

A single expert works from a written letter of instruction, usually agreed between the lawyers. It typically identifies the entity and the interest to be valued, the valuation date or dates, the basis of value, any assumptions the expert is to adopt, the documents to be provided and the questions the expert is asked to answer. Where the parties disagree about a fact that affects the value, the instructions may ask the expert to value the business on each set of assumptions so that the effect of the disagreement can be seen.

We review proposed instructions before engagement. If a question cannot properly be answered by a valuer, or the interest and date are not clearly defined, we say so at that stage. That is not legal advice on the instructions; it is what a valuer needs in order to do the work.

What both parties provide

The expert needs the business documents: financial statements, tax returns, management accounts, the ownership documents, and information about the owner's role, related-party arrangements, debt and contracts. In a joint engagement the documents are usually provided through the instructing lawyers so that both sides know what the expert has received. Where a document is held by one party and not produced, the expert cannot conjure it; the report records what was and was not available and how any gap was treated. Obtaining disclosure from the other party is a matter for the lawyers.

What the expert does

The analysis is the same as for any business valuation, done to the standard that evidence requires. The expert reviews the structure, normalises the earnings, considers the risks and the sources of goodwill, selects and explains a method, values the business and then the interest, and prepares supporting schedules. The report includes a declaration of independence and is prepared to address the applicable expert-evidence requirements in the specific engagement. It is signed by the appointed expert, who is identified in the engagement together with their qualifications and experience.

After the report

Reasonable written clarification following delivery is part of the engagement. Beyond that, the procedure for questions to the expert, conferences of experts, supplementary reports and attendance at a hearing is set by the rules that apply to the matter and by the Court, and that work is separately charged and quoted as it arises. If a party disagrees with the report, what they may do about it is a question for their lawyer.

Fees, and who pays

A Court Expert Valuation is quoted from $8,995 + GST. The final scope and fee depend on the business, the entity structure, the quality of the records and the issues in dispute, and are confirmed in writing after conflict checking and scope review, before work begins. Court attendance, cross-examination, expert conferences, supplementary reports, forensic accounting and material additional document review are separately charged. How the fee is shared between the parties is set by their agreement or by the Court's orders; we invoice according to the arrangement confirmed in the engagement.

What the single expert does not do

The expert does not advise either party, does not negotiate, does not decide which party's account of the facts is true and does not tell the Court how the property should be divided. The expert values the business and explains the valuation. Everything else belongs to the lawyers and the Court.

Where to from here

If a single expert has been agreed or ordered, or your lawyer expects that one will be, request an Expert Valuation. We complete a conflict check first, then review the proposed instructions and confirm the scope, the fee and the appointed expert in writing. Referring professionals can read more on how to instruct us.

This is general information about single expert business valuations. It is not legal advice, and it does not describe the rules of any particular court. The procedure that applies to your matter is a question for your lawyer.