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12 February 2021

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Family Law
Federal

Asked

Business – Failure to reach agreement on valuing the family business

This matter is in relation to a family law property settlement and is proceeding to mediation. The main argument concerns the cost of obtaining a valuation of the family business. The client is not willing to share the excessive cost of the expert valuer nominated by the other side. The other side is adamant about their choice of expert because they are highly regarded and the perfect fit for the valuation required. This suggests possible bias.

Please advise as to the best approach moving forward for the client.

Answered

Thank you for the question.

If the parties cannot agree on a single expert and there are no proceedings on foot and no order for a single expert to be appointed, both parties can proceed with their own valuer and then deal with any differences in valuation via a conference of experts. However, this is quite a costly approach as both parties would be paying for valuation fees.

The common approach in choosing a joint expert is that one party proposes three alternatives and the other party picks one from that list. It can be beneficial to engage a valuer who is experienced in the family law jurisdiction. A valuer merely having such experience is no basis for an allegation of bias.

Another option would be for the client to agree to the valuer the other party has proposed, but on the basis that they only pay the amount they are happy to pay, with the ultimate responsibility for the costs of the valuer being left to trial or mediation, which may result in the client having to repay the difference to the other party later. The client could also still engage their preferred valuer, not to undertake the valuation from scratch, but as a shadow expert, to provide guidance and a review of the report from the agreed valuer.

Ultimately, if both parties cannot agree on a single expert, the court may make orders for a single expert and the parties would be liable for the cost.

Regards

Mentor