In Persson & Marchand [2024] FedCFamC1F 758 at [51], Schonell J sagely observed that “the choice of expert is very much a lottery” and that “it is for that reason that the Rules permit[s] a party to seek leave to tender and/or adduce evidence from another expert.” So, what options are available when your client loses the single expert witness lottery?
Any challenges to the expert’s opinion must firstly be framed through questions put to the expert under r 7.26. If these fail to resolve the issue and force a concession, r 7.08(2) provides three grounds for adducing adversarial expert evidence: where there is a substantial body of opinion contrary to the single expert’s view; where another expert knows of matters not known to the single expert; or where there is a special reason. Persuading the court to permit a second expert’s opinion requires building an argument around one (or more) of these avenues. In exceptional circumstances involving the valuation of an unusual asset and where the court would benefit from a range of opinion, a third option is available under r 7.04(2)(e).
Whether the door to adversarial evidence is barely ajar (or swinging wide open) turns on the facts. The governing principle is that the application must be in the interests of justice. Where the divergence in expert opinions is substantial and the costs proportionate, leave is more readily granted. Conversely, where the gap is narrower, the argument under r 7.08(2) must be more precisely framed. This article outlines the available avenues, common pitfalls, and the factors the court will consider when deciding whether to let your client purchase another ticket for the valuation expert lottery.
The first step: r 7.26 questions
The difference between a ‘shadow’ and adversarial expert
In Forsburg & Stubbs [2019] FCCA 1884, Betts J refused the applicant wife’s application to adduce adversarial evidence. At [45], Betts J held that “what the wife should have done was pose specific questions to the single expert before bringing an application to call adversarial evidence.” At [46], it was noted that “the wife […] wants with respect, to have her cake and eat it too. [The wife] wants to engage an expert in a partisan way as a shadow expert and then call them as an adversarial expert. But a shadow expert and an adversarial are two very different experts.” Care should be taken to ensure that the independence and impartiality of an adversarial expert is protected, as they must still comply with r 7.18.
Getting the most out of r 7.26 questions
Whilst r 7.26 prescribes that questions serve only to clarify the single expert’s report, they should also serve a strategic function. When properly deployed, they can highlight errors, expose flawed assumptions, and lay the groundwork for a later application under r 7.08(2). In addition to merely clarifying a single expert’s opinion, practitioners and shadow experts should be mindful that the opportunity to pose questions should be taken advantage of in the following ways:
To ensure the questions are maximally utilised, it is prudent to engage a shadow expert witness – particularly when the valuation dispute involves complex or specialised assets. Business interests, commercial properties, and special-purpose real estate often require rigid application of prescribed valuation methodologies and approaches. In these cases, it is considerably easier to mount a credible technical challenge, provided that there is appropriate expert support from the outset.
The second step: the available avenues for adducing and tendering adversarial expert evidence
In circumstances where a single expert’s responses to the questions put to them are unsatisfactory, r 7.08(2) allows a party to seek to tender a report or adduce evidence from another expert if they are able to satisfy the court or one (or more) of the following grounds for challenge:
(a) there is a substantial body of opinion contrary to any opinion given by the single expert witness and the contrary opinion is or may be necessary for determining the issue; or
(b) another expert witness knows of matters, not known to the single expert witness, that may be necessary for determining the issue; or
(c)there is another special reason for adducing evidence from another expert witness.
Wilson J explained at [27] in Minke & Minke (No 2) [2024] FedCFamC1F 157 that the appointment of a single expert is primarily focussed on case management, and that the objective is to ensure “efficient and expeditious determination of litigation”. Where possible, the single expert’s evidence should be the only evidence in front of the court, as this reduces the issues in dispute and contains experts’ costs. However, Wilson J goes on to note that ultimately, case management must be “subordinated to the attainment of the justice in the circumstances of the case”.
Rule 7.08(2)(a): a substantial body of opinion
Rule 7.08(2)(a) allows for adversarial evidence to be adduced or tendered if the single expert’s opinion is contrary to a substantial body of opinion. As Kent J observed in Salmon and Ors & Salmon [2020] FamCAFC 134 at [35], this hurdle can only be cleared when “a contrary opinion is founded upon identified and accepted methodology recognised within the field, or some identified and recognised field of expertise different to that founding the expert single opinion”. It was further clarified at [27] that “a mere difference of opinion, particularly in the area of valuation, would not ordinarily be sufficient to engage the discretion to permit expert evidence other than the jointly appointed single expert.” An adversarial expert must point to an authoritative source of valuation theory or practice. In circumstances where the boundary between valuation methodology and legal principle is blurred (such as when a business valuation expert must consider the concept of “value to owner”), it should be considered whether a reference to legal authority may suffice.
Wilson J further clarified in Keevers & Keevers [2021] FedCFamC1F 338 at [39] that “the precise issue in respect of which contrary opinion exists must be identified”. For this reason, care must be taken to dissect the disagreement between experts into precise, specific technical and factual issues.
Rule 7.08(2)(b): matters not known to the single expert
Rule 7.08(2)(b) provides a basis of adversarial evidence to be tendered when “another expert witness knows of matters, not known to the single expert witness, that may be necessary for determining the issue”. It most commonly applies where the single expert overlooks a key comparable sale, misses a relevant characteristic of the asset that is being valued, or makes assumptions outside their qualifications and expertise; for example, a business valuation expert opining on renumeration or specialist taxation issues.
In Bergman & Bergman [2022] FedCFamC2F 1313, O’Shannessy J considered whether an adversarial expert’s knowledge of the ranking of series and dams – information not known to the single expert – was a sufficient basis to admit adversarial evidence. Whilst noting at [31] that the ranking may be “immaterial and of little weight,” the application was ultimately granted on the basis that it may be necessary to determine value.
Similarly, in Valentina & Malley [2023] FedCFamC2F 1167, five comparable sales relied upon by the adversarial expert but omitted by the single expert were found to engage r 7.08(2)(b).
Although O’Shannessy J queried whether cross-examination alone could resolve the issue, his Honour ultimately held it was not efficient for the single expert to learn of these matters for the first time during cross-examination. Bergman and Valentina both affirm that care should be taken to carefully brief a single expert, as any omissions of information that would affect value can be capitalised on to allow to a second opinion.
Rule 7.08(2)(c): a special reason
Rule 7.08(2)(b) permits adversarial evidence to be adduced or tendered where there is a special reason. What constitutes a special reason is not exhaustively defined and will turn on the circumstances of the case. However, existing case law indicates that the court may be persuaded where there is a risk of an evidentiary vacuum, where multiple factors cumulatively support the application (that is, an aggregate of various reasons), and/or where doing so would serve the interests of justice.
The risk of an evidentiary vacuum
In Moretto & Cosola [2022] FedCFamC1F 433 at [30], Riethmuller J accepted the wife’s application to tender adversarial evidence on the basis that “it [was] difficult to avoid the conclusion that there is a real risk of an “evidentiary” vacuum arising in [the] case if the [wife’s] contentions as to value [were] correct”. This was because “the value contended by the [wife] was well outside the range ascribed by the single expert”. The difference between the expert opinions was $750k, with the total assets assessed as being at least over $3m. Riethmuller J further noted at [31] that he was persuaded that the wife established a special reason given that there was “a real risk that she will be unable to effectively put her case to the value of the [husband’s] property if she is limited to cross-examination of the single expert”, reasoning that this point was “reasonably arguable” and “involves an amount so great that the additional litigation costs are not disproportionate”.
It should be noted that in Moretto, reference was given by Riethmuller J to a range of values ascribed by the single expert. In circumstances where cross-examination can move the single expert up and down within the ‘range’ of their comparable sales evidence and/or the range of inputs within their valuation report, it can be arguable that there is no need for adversarial evidence to be put before the court.
When the interests of justice are compromised and the differences are vast: discretion is broader, and an aggregate of reasons can be considered
As Kent J explains in Salmon and Ors & Salmon [2020] FamCAFC 134 at [27], “a mere difference of opinion, particularly in the area of valuation, would ordinarily not be sufficient to engage the discretion to permit expert evidence other than the jointly appointed single expert.” However, as the Full Court accepted in Neales & Neales [2022] FedCFamC1A 41 at [40], the “cumulative aspect” of several complaints together combined with a significant divergence between the opinions of two valuers can form the basis for a special reason. In other words, the overall thrust of the argument must be considered, in addition to the individual grounds argued pursuant to r 7.08(2). As Schonell J recently held in Persson at [53], “the Rules are not to be construed as a straitjacket restricting the interests of justice”. Where the interests of justice are at stake, an application for adversarial evidence should be accepted.
In Sarka & Sarka [2024] FedC1FamC1F 804 at [37], Schonell J explained that:
“[…] r 7.08 cannot be read in isolation and must be read with r 7.02 and in particular r 7.02(c), which specifically provides:
to ensure that, if practicable and without compromising the interests of justice, expert evidence is given on an issue by a single expert witness.”
When it comes to wide interpretation of a special reason, size matters
As Wilson J states in Minke & Minke (No 3) [2024] FedCFamC1F 860 at [14], “the size of discrepancies and the amounts the subject of expert evidence is one issue pointing to the existence of a special reason”. Several recent decisions illustrate that significant discrepancies in value, particularly in high-value property pools, have tipped the scales in favour of leave. In each, proportionality has played a crucial role:
A significant difference in values was also seen in Persson, where the single expert valued one of the properties at $8m on an ‘as is’ basis, and between $75m and $90m on the assumption that it could be rezoned and subdivided. The adversarial expert subsequently valued the same property at $13.7m on the ‘as is’ basis, and $126.5m assuming the “as if” basis.
In short: the greater the difference, the more likely it is that excluding adversarial evidence will compromise the interests of justice.
A third option: where it is necessary for the court to have a range of opinion
In Woodcock & Woodcock (No 5) [2023] FedCFamC1F 894, an argument was mounted by the wife’s solicitors that an adversarial expert’s opinion should be tendered for the valuation of a beneficiary’s right to due consideration, pursuant to r 7.04(2)(e). At [2], a summary of the arguments advanced included:
(a)that it was a novel asset;
(b) that there is no Australian valuation authority on the issue;
(c)that there are no comparable sales available;
(d) that the discretionary trusts in issue are “very idiosyncratic”, and that it is for this very reason that a value must be assigned to the husband’s rights as a beneficiary;
(e)that the valuation of a right may not be “beyond the actuarial arts”;
(f) that the beneficiary’s right to due consideration is “property” for the purposes of the Family Law Act 1975;
(g)that no presumption exists that a single (or adversarial) expert should be ordered to provide evidence of such a right; and
(h) as opposed to the evidence adduced from a single expert, evidence adduced from one or more adversarial witnesses would allow for the “range of opinion” detailed in r 7.04(2)(e).
At [23] Wilson J ultimately agreed and held that “despite the desirability of such an approach when valuing say, a home, shares, or a company, this case is novel … it is not amenable to a standard single expert.” At [8], it was held that on a practical level, there would no disruption to the trial, as the two experts would confer in a conclave and concurrently give evidence in a hot tub.
Key takeaways
