In a family law matter whether it be in a lengthy litigation battle or attempting to settle matters outside of court, the most frequent issue that arises is not a question of law but of fact. Specifically, how much is a particular asset or liability worth. A valuation may then be required to resolve the dispute regarding the value of the item.
Why is value an issue?
One of the first steps in a family law matter is to identify all the assets and liabilities owned by the parties (“the net asset pool”). Rule 13.04 of the Family Law Rules 2004 states that “A party to a financial case must make full and frank disclosure of the party's financial circumstances”.
However even though each party must disclose their financial position, that is not to say that there is not room to make your position more favourable. Simple assets like cash and bank accounts are easy to value as bank statements are usually a reliable source document. However other more complex assets such as company shares and real property may reasonably be worth $1,000,000 or $900,000 or anywhere in between.
If you are the usual owner of that asset and you intend to keep it, you may wish for it to be worth less, so that you are able to claim a larger portion of any other asset in the net asset pool. However, if it is your partner who is the usual owner of that asset, then you would wish for it to be worth as much as possible.
Valuation issues can mean the difference of a few dollars or in some circumstances a few million dollars.
When do you get a valuer?
A valuer is only required where the parties do not agree on a value. This may be while the parties are completing their disclosure or it may be just prior to a final hearing. Valuations are time sensitive, and certain assets must be revalued regularly. This means you must consider timing when obtaining a valuation, otherwise you may need to obtain a further valuation at a later point and then again at a further later point.
If resolving the dispute between the parties is held up due to an issue of valuation, then it is prudent to obtain a valuation. This may resolve the issue and allow the parties to save the costs and time of lengthy litigation that will in all likelihood require them to value the item in any event.
Why a Family Law valuation?
Valuations that do not comply with the Family Law rules, may not be helpful to you or your clients. This is because Family Law valuations are more persuasive to your opponent, they are accepted by the court and are in an acceptable form, and they have been valued with the family law dispute in mind.
Any expert required to give evidence must comply with Part 15.5 of the Family Law Rules 2004. This is the form expected by the Court. A valuation that is provided without consideration of these rules may be thrown out by the Court or more easily overturned by your opponent.
In addition, a family law valuation is designed to obtain the current value of an item if it were to be sold now. In essence - its real value. While this may seem obvious many other valuations such as a market appraisal or bank valuation have an ulterior motive. A market appraisal is done by a real estate agent who would like to inform you of the highest amount your real property could sell for. This may mean their market appraisal is higher than its true value. A bank valuation is concerned about the worst-case scenario, and so this may mean their valuation is lower than the true value of the item. At the end of the day, these other values may be indicative of the value of the item but may not be the true or real value.
Choosing the valuer is also an important step. Your family law valuer must be prepared to argue in the witness box why their valuation is correct. The valuer must be experienced at cross examination and knowledgeable in the expectations of the Court. Furthermore the valuer must know which methodology to use when valuing an item in any given context (read more here about different valuation methodologies).
Take Home Message
A valuation can be essential in resolving a family law dispute. Care must be had however when considering when to obtain a valuation, what type of valuation and which expert to choose.
If you have further questions about valuations, please contact Andrea Harrold at aharrold@franklaw.com.au.
This is not legal advice.
