11th Aug 2020

Property valuations for Family Law Court - the importance of specialist expertise

In the task of undertaking property valuations that are to be included as evidence within the Family Law Court, or in fact in any Court jurisdiction, requires critical understanding and expertise of this specialised process.  In our experience, there are a number of points worth highlighting:

•    What is it that the Valuer actually does in assisting the Court process?
•    What information and knowledge do they require to ensure the process is completed correctly?
•    What does the Valuer produce for the parties involved?
•    What are the issues that can trip them up?
•    How can the legal fraternity and their clients’ best assist the Valuer to make this a smooth, cost effective process for all parties?

A property Valuer effectively gathers as much information as possible in order to form a professional opinion on ‘Market Value’ for a wide range of potential properties – be it residential, commercial, industrial and rural or even something a little more left-of-field such as signage, telephone towers, wet dock areas in harbours etc.

There are a variety of valuation methodologies to ascertain a Market Value including but not limited to:

•    Direct comparison to recent sales evidence;
•    A yield analysis such as the capitalisation approach whereby income yields/returns are analysed;
•    Several different methods of hypothetical development approaches whereby the costs and returns of development are considered in ascertaining a current Market Value for a development site; and
•    A summation approach whereby a depreciated replacement cost of improvements is summated to an underlying land component.

In all of these cases, information is gathered and utilised in forming an opinion on Market Value.  Whilst it is true that the more detailed information that is received assists in an accurate assessment of the property’s Market Value, the Valuers are very much aware that in Family Law Court valuations, this can be a topic fraught with pitfalls and can prove challenging.

Every Valuer conducting Family Law Court reporting on a regular basis would no doubt have had the person occupying the property either pointing out all the glowing features or the real (or possibly imagined) faults, depending upon that particular occupant’s perspective.  Valuers are very aware of their obligations as the expert and do not enter into discussions or be influenced by either party about issues pertaining to the property or the value.

Given that the quality of information sourced and received by the Valuer is vital to the accuracy and quality of the end product, most Valuers would highly recommend that all information relating to the property is made available to all parties, including the Valuer, at the very beginning of proceedings. Our experience shows that this can speed up the process considerably.

An example of this would include a Valuer arriving to inspect a residence and discovering it is only half constructed, having not been informed of this previously.  The Valuer is then required to source relevant quotes to provide an indication of ‘cost to complete’ or ‘cost spent to date’, and the provision of this information then must be approved by both parties.  If information such as this was provided to the Valuer at the time of instruction this would potentially save significant time and cost.   Similarly, information such as relevant lease documents on commercial properties, development applications underway for subdivisible properties or any non conforming use approvals granted by local municipalities should also be provided at the outset.

Valuers are aware that the very nature of undertaking this type of work requires empathy and understanding towards all parties as this part of the Court process evokes strong emotions (sometimes hostile) and involves fractured relationships, with people feeling vulnerable and uncertain.  Valuers will show sensitivity at the time of inspection whilst upholding their professional independence to ensure the quality and accuracy of the valuation report.

A property Valuer will at all times provide an independent viewpoint no matter which party has engaged them. Most will agree however that the relatively new process of a ‘Single Expert Witness’ does remove what was previously a somewhat adversarial process of multiple expert witnesses being appointed by each of the parties involved (whereby to some extent it did allow for experts to act as Advocates).  The single expert witness procedure does appear to have led to fewer disputes and hence, time and cost savings for all concerned.

The correct avenues for disputing a valuation report, including a conference with the Valuer and/or further questions within specific timeframes to clarify the report content allows for fine tuning of the information gathered and hence the conclusions of the Valuer and this is generally taken in a positive light.

Valuers practice in full accordance with the ‘Code of Ethics’ set by the Australian Property Institute (API) and perform their professional duty in line with the ‘API Valuation and Property Standards’ and ‘API Rules of Conduct’.  Any actual or potential ‘Conflict of Interest’ is identified and disclosed at the outset to all parties.  It is the Valuers professional responsibility to remain completely independent and impartial throughout the process and always conduct themselves with honesty, integrity, fairness and honour.     

All Valuers carrying out this field of work are aware of legal requirements within Family Law Court documentation and can provide an Affidavit to that effect as part of the valuation report if the report is entered as evidence to the Family Court.  As with every valuation performed for any purpose, the Valuer is always an impartial unbiased expert who provides a legally binding document giving the best possible indication of what a property would sell for without the parties actually physically having to go through the sale process to determine this.

A common situation is that a client will contact us and request a valuation on their property, stating that the report is to be used for the purpose of separation/divorce proceedings however insisting that the matter will not proceed to Court.  It is our responsibility to clearly point out that there are various levels of reporting available and that the ‘standard’ finance valuation report format will not satisfy the requirements of the Family Court.  We advise them that under our obligation to act in accordance with the Family Court rules, if the Valuer was to provide them with a report that was not specifically tailored to Court compliance, the valuation may not be deemed as evidence and could be disputed and dis-credited.  This type of situation could result in additional stress and prolong proceedings which will have impact on all parties involved.    

As well as correctly determining the exact purpose and intended use of the valuation at the outset, the initial instructions to the Valuer are of great importance.  This is where all relevant issues that are required to be addressed should be clearly and transparently stated and the Valuer will undertake the work on the information provided within this instruction.

The Valuer is always aware that the business and the Valuer are liable for the valuation figures they provide (be it high or low) and as such, make their very best endeavours to achieve an accurate opinion by demonstrating due process and care.  In doing so, the more information pertaining to the property that the client or their Counsel can provide and the clearer the initial instructions are, the better the outcome for all concerned.

The Valuer is acutely aware that at some point in time they may be required to stand in the ‘Witness Box’ and endure a detailed and rigorous cross-examination.  As this is often a fairly stressful experience to most, it is critical for Valuers to exercise every care and caution in undertaking Court work and throughout the course of their task, ensure every criteria is met so that there would be no cause for dispute.  Valuers experienced in this specialist field will know the importance of maintaining calm and fairness and communicating with all relevant parties to keep everyone fully informed throughout the process.