Written by Brett Hartley, 6 April 2023
In a typical family law matter, we need to obtain valuations. The main valuations we need to obtain are those of real estate property and in some cases, shares and business valuations.
Single expert evidence is the rule in family law matters for the receipt of expert evidence on such issues. The parties usually jointly agree to appoint an expert, or if not, the Court has the power to order a single expert. Long gone are the days of dualling experts, although it can happen in some instances.
In relation to property valuations, it is always important to brief a well-regarded registered valuer who has a good understanding of current market conditions.
We are finding, in most property valuations, that the good valuers are placing caveats on their valuations, advising of the necessity to review such valuations within a short period.
In family law, this can present problems as often matters move slowly towards mediation and trial and as such, a valuation may need to be updated several times. This causes angst amongst clients and understandably so, because of the added expense.
However, in our experience, during economic uncertainty it is important to update valuations and to ensure valuers are engaged who stay abreast of the current economic conditions and climate.
The same can generally be said about business valuations. Obviously with these valuations, it is important to make available up to date data on the business performance, through management accounts so that the business valuer is able to form a current view as to the more recent performance of the business.
If there are substantial delays between a trial and delivery of Judgement, during uncertain economic times, a good family lawyer needs to consider whether any significant change in values, since the trial, should be brought to the attention of the Court prior to the delivery of Judgement.
Generally, we are finding business valuations have been improving since the covid restrictions were lifted, although some businesses are still struggling with substantial debt.
In family law matters, it is not only important to obtain high quality expert independent evidence when valuing business, but also it is important to have an overall picture of eventual outcomes and always be cautious where there is a high level of debt. It is important to help clients by crafting a solution that allows a business to continue to operate, but at the same time not put the business in further jeopardy due to further debt and economic uncertainty.
We often have a phrase for our clients that “cash is king” and often in some circumstances, it is better to take a lessor percentage if the payment of an amount can be in a more certain form (such as cash or public shares) and that it can be received quickly and risk free, as opposed to waiting over time for a larger payment.
In summary, during harsh economic times, it is very important for us as family lawyers to help work out solutions for our clients (often with the help of their other advisors) that do everything to avoid loss of assets (such as the loss of the family home or business) and still provide a fair and equitable outcome to enable our clients to move on with respect and dignity.