Court Cases & Orders

Should Court Trust the Expert Opinion of Asset Valuators?

Stack of change

In the course of making its various determinations in your divorce proceeding, including how to divide up your former home and assets, the judge will usually have to put a dollar-figure on those items.

Naturally, this will not involve the presiding judge actually examining and putting a value that awful antique vase you inherited from Aunt Millie; instead, the judge will receive the input from independent expert valuators.

But how truly “neutral” and “independent” are these valuators, really?

Some Ontario courts have commented on the ostensible – and perhaps questionable – impartiality of such expert valuators.  In Plese v. Herjavec, for example, the court was faced with vastly-different figures offered by each of the valuators hired in a case where the high-net-worth former couple had many assets to divide.  In the course of determining their respective Net Family Property values, the court heard expert evidence on the value of husband’s business interests on valuation day.

The wife’s expert valuator put a mid-point value on the business at $52.5 million, while the husband’s own expert pegged it with a value of just over $24 million, but then discounted that figure further, claiming that the true value was only 90% of that, because of what were called “phantom options”.   There was a similarly large gap in the values given by each expert in connection with the former couple’s matrimonial home.

About the glaring disparity in the figures and the apparent partiality of these valuators, the court said:

The valuators disagreed on both the values of both [the matrimonial home at] High Point Road and [the husband’s business].  In each case, each valuator, supposedly acting entirely independently, suggested values that benefitted the position of the party who had hired him.   Similarly, when it came to expert opinion on [the husband’s] income, [the husband’s] expert, in particular, seemed particularly aligned with [the husband’s] position.   Sadly, this is often the case.

As an aside, the court added that it might be better if the spouses agreed to jointly hire a single trusted expert to provide the court with one conclusive set of valuation amounts:

I have always been tempted to ask valuators whether their opinions would have been the same had the other party retained them.  I have never given in to that temptation, but merely make the observation.   It seems to me that in order to provide the court with truly independent, unbiased and reliable opinions, it would be preferable to require the parties to jointly retain a single expert, or, perhaps, to require the parties to fund an expert who would be retained by the court, at the parties’ expense. 

Indeed, courts will take active steps in this direction, by ordering that the spouses to jointly retain a valuator of their mutual choosing. However, this does not solve the problem of a spouse being unwilling to cooperate with the expert even if he or she helped to choose them.

This was illustrated in recent case called Rezai v. Gibbons, where the court expressly ordered the couple to hire a joint valuator, only to learn that the husband refused to cooperate.  In particular, he failed or refused to provide the valuator with nine key documents that were needed to assess the husband’s income, and in the court’s words this rendered the valuator’s resulting report “virtually useless”.

The court responded by re-apportioning responsibility for valuator’s fees, and requiring the husband to pay the wife’s full share of the $32,000 in fees that the valuator charged for the services.

For the full text of the decisions, see:

Plese v. Herjavec, 2018 

Rezai v. Gibbons, 2019 

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders.  For more information, visit us at RussellAlexander.com