Using Expert Witnesses in Family Law Property Proceedings
In order to reach an agreement on how to divide property between parties in a Family Law property settlement, it may be beneficial to appoint an Expert Witness who is qualified to determine the value of certain assets in the property pool. It’s important to consider when it may be appropriate to appoint an expert witness, whether it’s to value a financial interest in “property” or to seek an expert opinion in relation to an issue or issues in dispute between parties.
Types of Experts
There are three types of Experts who can be appointed during the course of Family Court proceedings:
- Expert Witness
- Single Expert Witness
- Court Expert
An Expert Witness is a witness instructed and called by only one party to the proceedings, to lead evidence for the benefit of that party.
A Single Expert Witness is a witness instructed and called jointly by the parties, to be engaged by providing assistance in resolving a significant issue in dispute.
A Court Expert is an expert appointed exclusively by the Court to lead evidence independent of the parties (for example, if the Court deems it necessary to consider a range of opinions on a particular issue).
Identifying the Asset Pool
In Family Law property matters, the asset pool available for division must be identified. To this end, each party has a duty to disclose all property in which they hold an interest.
“Property” is given a broad interpretation and may take the form of real estate, shares, household goods, cars, mechanical equipment (such as trucks and farm machinery), businesses or other entities, superannuation – basically, anything that has a value belonging to the parties and any company/business they might own part of.
In identifying the asset pool, the value of each item of property must be established. During Family Court proceedings, and prior to the first Court date, the parties are required to provide an opinion as to the value of any property in which either of them holds an interest, together with “vouching” documents (i.e. written proof) where appropriate. This remains an ongoing obligation of both parties until the proceedings are concluded.
The value of property is often resolved by agreement, either on the face of disclosure documents provided by either party, or based on a compromise where the parties decide not to incur further costs. The value of cars, for example, can often be resolved on the basis of an online ‘Redbook’ valuation. However, if the value of a vintage car is in issue, it may become necessary to engage an appropriately qualified Expert.
Real Estate Expert Witness
Market appraisals from registered real estate agents often assist in the parties reaching an agreement as to the market value of real estate. However, the problem with appraisals tends to be that they provide a “range” and do not give a precise figure. Often, therefore, a licensed valuer may need to be appointed to provide a definitive dollar value. These will generally cost $800 to $1,200 plus GST for basic residential properties.
Where the value of property is not agreed, it may become necessary to obtain independent evidence. If the parties agree on the expert to be appointed, this can be done by adducing evidence from a Single Expert Witness, usually involving a court affidavit with the expert’s report attached.
Other Financial Expert Witnesses
In valuing a party’s interest in a business, corporate entity or Family Trust, consideration of the relevant financial statements and taxation returns may be all that is required to agree on value. However, in some cases, it will be necessary to engage an independent valuer to identify the assets and liabilities and to value the interest in the entity (which may or may not include “goodwill’).
Quite separate to the determination of value, there may be questions surrounding various transactions which may or may not have been intended to deplete the property available for division. In some cases, an accountant or forensic accountant may need to be appointed as a Single Expert Witness to consider the veracity or propriety of various transactions.
A party’s interest in a superannuation scheme may also require expert valuation. For a standard “Accumulation Interest Scheme” a statement balance will usually suffice in providing evidence as to the current value of this interest. In contrast, a “Defined Benefit Interest” will usually require an Expert valuation. In some instances, the superannuation fund itself will adopt a “scheme specific” valuation method such that there is then no need for the parties to separately engage an Actuary to value the interest. Other Defined Benefit interests may require valuation by an actuary, who may be jointly appointed by the parties as a Single Expert Witness.
The Process of Appointing a Single Expert Witness
The parties must first obtain the consent of the proposed Single Expert Witness before the Family Court is able to appoint them. This is usually done by way of the parties signing and filing a Minute of Consent Orders, effectively providing joint instructions to the Single Expert Witness detailing the issues upon which their opinion is sought. This list of questions or issues is commonly referred to as the “Terms of Reference”.
Depending on the purpose of the Single Expert Witness’ engagement, a report will generally be prepared to confirm the item’s value, to set out the methodology adopted for the valuation, and to identify and address questions raised by either party. Once complete, the Single Expert Witness will attach their report to an Affidavit and file this in the Family Court, providing copies to the parties.
The Single Expert remains a witness in the Family Court proceedings and must adhere to the Family Law Rules. When engaging a Single Expert Witness a copy of the relevant Rules should be provided to them, so that their report and conduct is in accordance with those Rules.
If either party has any questions arising from the Single Expert Witness’ report, that party must ask these questions in writing within 21 days following receipt of the report (or within 7 days of a conference subsequently convened by the parties alone or together with the Expert and must provide a copy of these questions to the other party. The Single Expert will then have a further 21 days to respond to the questions in writing. The party asking the questions must pay any additional costs incurred by the Expert in replying, as these will not be covered in the initial estimate/quote.
There will almost always be a cost associated with engaging a Single Expert Witness to prepare a valuation report, or to provide a report to address the agreed “Terms of Reference”. The parties will usually first obtain an estimate of fees, or in some instances, a specific quote and will then be equally liable for the reasonable fees and expenses associated with appointing the Single Expert Witness.
The parties may otherwise agree that one party is to meet all of the costs associated with the Single Expert (eg. if there is a substantial imbalance in the parties’ incomes and consequent abilities to pay). In some cases, the Court may order that one party is to meet the costs, without any contribution from the other party.
At Bateman Battersby we have a number of experienced Lawyers who specialise in Family Law Property Settlement matters. If you need help with any issue when your marriage or relationship breaks down, please call Oliver Hagen or Ken Gray on (02) 4731 5899 or email us at firstname.lastname@example.org