Family law and disputes

The rules impose duties that an appraisal does not carry. Under the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, an expert witness's duty to the court prevails over the obligation to the person instructing or paying them. The report must state the reasons for the conclusions, include a statement about the methodology used, and set out the expert's qualifications, the material used, the relevant facts, matters and assumptions, any range of opinion and any limits on the expert's expertise. It is verified by an affidavit that includes a statement that the opinions expressed are independent and impartial.

The analysis is the same, but the reporting obligations differ. In the Federal Circuit and Family Court of Australia, a private professional preparing a report for the Court on behalf of both parties may be referred to as a single expert, and property valuers and financial consultants are among the expert types the Court identifies. Where a practice's earnings depend on the continuing personal exertion of a practitioner, the transferable component is often small, and the report should say so and show the working.

Usually more, and it usually extends beyond the operating entity. The duty of disclosure in the Federal Circuit and Family Court of Australia requires a party to disclose their total direct and indirect financial circumstances, including earnings, income, property and other financial resources, whether held directly or through corporations, trusts or similar structures, and information about property disposals made in the year before separation or since that may affect, defeat or deplete a claim. Practically, that means related entities, trust deeds, loan accounts and distributions are commonly in scope even where the valuation itself concerns only the practice.

Yes. In family law property matters a business is commonly valued by a single expert: the Federal Circuit and Family Court of Australia describes a single expert as a private professional preparing a report for the Court on behalf of both parties, and lists property valuers and financial consultants among the expert types used. Part 7.1 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 covers appointment by the parties jointly or by court order, the duty owed to the court, the contents of the report and how a single expert may be questioned. See family law valuations.

The valuation stops being about a sale and becomes the price at which one owner buys the other out, and its basis becomes the argument. Where a shareholders or partnership agreement exists, the first job is to read what it actually says: which valuer, appointed by whom, on what basis of value, at what date, and whether an outgoing minority interest is valued as a straight proportion of the whole or with an allowance for the fact that a minority cannot direct the business. Those choices move the figure more than the underlying analysis does. Where the agreement is silent or there is none, the parties negotiate, jointly appoint a single expert, or one of them applies to the court. What a valuer contributes is a reasoned, independent figure that both sides and a court can test. That is frequently what breaks the deadlock, because most of these disputes turn on whether the number is fair rather than on whether an exit should happen at all.

Less than the reported earnings suggest, where the practice depends on both of you and only one is staying. The valuation has to ask what the business earns once every working owner is paid a commercial salary for the work they actually do, and in a couple-run practice that adjustment is often large: one spouse may have been treating patients and the other managing the practice for nothing, or for a figure set by the accountant rather than by the market. Replacing both costs real money, and normalising for it can reduce maintainable earnings materially. The harder question is whether the earnings survive the separation at all. If the departing spouse held the referral relationships or a distinct part of the patient base, the goodwill may not transfer to the remaining owner in the way the accounts imply. The report values the interest at the date the court is concerned with and states what it has assumed about each party's continued involvement. How the figure is then treated is for your lawyer.

The parties choose jointly, or the court appoints the expert if they cannot agree. Under rule 7.03 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 the parties may agree to appoint a single expert witness, under rule 7.04 the court may order that expert evidence be given by a single expert witness, and under rule 7.05 the court may make orders about the appointment and instruction of that expert. Unless the parties agree otherwise or the court orders otherwise, the parties are equally liable for the expert's reasonable fees and expenses of preparing the report, and the expert is not required to start work until those fees are paid or secured (rule 7.06). A party who requires the expert to attend for cross-examination generally pays the reasonable fees and expenses of that attendance (rule 7.09).

The Rules provide three routes. Within 21 days of receiving the report the parties may agree to confer with the expert to clarify it (rule 7.25). A party may put written questions, once only and only for the purpose of clarifying the report (rule 7.26), which the expert answers in writing (rule 7.27). A party may also seek the court's permission under rule 7.08 to tender a report or adduce evidence from another expert on the same issue, which the court may allow where it is satisfied that there is a substantial body of contrary opinion that may be necessary for determining the issue, that another expert knows of matters not known to the single expert, or that there is another special reason. HPNA can act as the shadow expert who reviews the report and helps frame the questions.

A single expert's evidence in chief is the report, any notice of a change of opinion and the written answers to questions (rules 7.20 and 7.27). A party who wants to cross-examine the expert must tell the expert in writing at least 14 days before the date fixed for the hearing or trial that attendance is required, and the court may limit the nature and length of the cross-examination (rule 7.09). Attendance for cross-examination, a conference with the parties or a conference of experts is scoped when the engagement is confirmed. The timetable is set by the court's orders and the instructing lawyers, and HPNA confirms whether it can be met before accepting an appointment.

Yes, and it is often the least adversarial route. HPNA can be jointly instructed, or appointed as the expert determiner named in the agreement, in which case the parties put their evidence to a neutral person and agree to accept the determination. The process is symmetrical: both parties receive the same information request, see the same assumptions and receive the same draft, each has the chance to answer what the other has put, and neither party can instruct us privately. The report is prepared on the same footing as a report for one side, with the same statement of the facts, assumptions and reasons.

The parties may jointly appoint a single expert witness where they agree that expert evidence will help resolve a substantial issue (rule 7.03 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021), and the court may order that the evidence be given by a single expert (rule 7.04). The court can also require the parties to confer on who is appointed, to give the court a list of experts who have consented and the fee each will accept, or to settle the instructions itself (rule 7.05). Unless the parties agree or the court orders otherwise, the parties are equally liable for the single expert's reasonable fees and expenses, and the expert is not required to start work until those fees are paid or secured (rule 7.06).

Not as of right. Where a single expert has been appointed on an issue, a party must not tender a report or adduce evidence from another expert on the same issue without the court's permission (rule 7.08). The court may allow it where there is a substantial body of contrary opinion that may be necessary to determine the issue, where another expert knows of matters not known to the single expert, or where there is another special reason. Before that point, the Rules allow a conference to clarify the report and one set of written clarification questions.

Because the court identifies the existing rights, interests and liabilities in property, and the matter is run off a balance sheet settled shortly before trial. Under the standard trial directions in Schedule B to the FCFCOA's Central Practice Direction, the applicant serves a joint draft balance sheet no later than 28 days before the trial date, it is amended once any single expert valuation is complete, and a final settled version is filed no later than 7 days before trial. Values at an earlier date, including separation, may still be relevant to the assessment of contributions, and lawyers can instruct more than one date. The choice of date is a legal question for the instructing lawyers.

The agreement often fixes it: the trigger event, the last balance date or the date of a notice. Where a court fixes the price there is no fixed rule. The NSW Court of Appeal has restated that the date at which shares are valued in oppression cases varies having regard to all the relevant circumstances and must be fair to both parties. The date matters in a practice because a practitioner's departure, a lost contract or a change to funding can alter earnings between the trigger and the hearing. Where the date is contested, we value at each candidate date so the difference is visible.

That is a legal question for the instructing lawyers, not a choice for the valuer. In practice a date close to the hearing or to settlement negotiations is common, because the court identifies the parties' existing rights, interests and liabilities and the joint balance sheet is settled shortly before trial. Lawyers sometimes also instruct a value at separation to inform the assessment of contributions. Where more than one date is instructed, the report should explain what changed in the practice between them, such as a practitioner leaving, a change in the owner's clinical hours or a lease coming up for renewal.

A valuation can be prepared on the available evidence, but the report will disclose what was missing and how the opinion is qualified. At the time of writing the duty of full and frank disclosure of financial circumstances is in the Family Law Act 1975 (sections 71B and 90RI) and in Chapter 6 of the Rules. Rule 6.06(7) requires a party, before the first court date, to serve the three most recent financial statements and the last four business activity statements of any partnership, trust or company in which they have an interest. Where a party does not comply, the court may take the failure into account, exclude the undisclosed material or make costs orders. Our information request goes through the lawyers, and an expert may seek procedural orders under rule 7.19.

We say so in the report and qualify the conclusion. In a dispute one party usually controls the practice management system and the accounts. We ask first through the instructing lawyer, and where proceedings or an expert determination are on foot the lawyer may seek directions for production. Until the material arrives we value on the evidence available, list what is missing and state how the conclusion could change. A conclusion built on withheld information is exactly what the other side will attack, so we would rather qualify it than guess.

A valuation can be prepared on the available material, but the report must disclose the gaps. Each party to a financial or property proceeding has a duty under the Family Law Act 1975 to give full and frank disclosure, in a timely manner, of relevant information and documents, and rule 6.06 lists what that covers for entities, trusts and financial resources. Rule 6.17 sets out the consequences of non-disclosure, including that the document may not be used at a hearing without permission, and that costs orders or a stay or dismissal may follow.

The valuation proceeds on what is available and says so. A conclusion reached without access to the underlying records is materially weaker than one supported by source documents, and the report identifies which figures could not be tested and what assumption was made instead. Where the matter is before a court or governed by a shareholder or partnership agreement, the release of information is usually dealt with under that process rather than by the valuer, and that is a question for your lawyer. See valuing a healthcare business for a shareholder exit.

Market value is what a willing but not anxious buyer and seller, both fully informed and dealing at arm's length, would agree at the valuation date, and it ignores value that is special to one particular owner. Fair value depends on context. In accounting it is a defined measurement basis. In a dispute it is usually taken to mean a price that is fair between these parties in these circumstances, which need not match what the shares would fetch on the open market. If your agreement uses either term without defining it, the meaning is worth confirming with your lawyer before the valuation starts, because the answer can change the result.

Sometimes, and only if the scope allows it. A valuation prepared for a negotiated internal buy-out is instructed for that purpose and may rely on management information without independent verification. A valuation prepared for a contested matter is usually subject to different requirements about independence, disclosure and the evidence relied on. The Australian Taxation Office notes that difficulties are likely to arise where a valuation prepared for one purpose is relied on for another, and expects the current report to explain the relevance of the earlier one. The practical answer is to settle the purpose before the work starts.

It can change both the value and the range around it. Disputes consume management time, delay decisions and often sit alongside unsigned agreements, disputed drawings or a partner who has reduced clinical work while retaining equity. A buyer prices the risk it inherits. Where the valuation is for an exit or a dispute rather than a sale, the shareholders or partnership agreement may also govern the basis of value, so the document is read before the analysis begins.