P ro p e r t y s e t t l e m e n t a n d v a l u a t i o n – F a m i l y L a w A c t

by PaulSANT

Did you know it is possible to get a valuation for a minority shareholding in a property that is subject of a family law proceeding?

Many cases have dealt with the valuation of properties in family law matters Cases like Spencer v The Commonwealth, Hull v Hull, Mallet v Mallet and Reynolds v Reynolds have dealt with methods and approaches to valuation Different valuers may propose various methods for valuing properties

The court has cautioned parties and practitioners on the importance of considering an array of factors in property valuation, taking into consideration exceptional circumstances or unique factors as may be present for any particular valuation.

Whilst any property owned or in the control of a husband or Wife is subject to inclusion in the property pool available for division in Family Law Act 1975 proceedings seeking alteration of property interests pursuant to section 79, it may be that the remaining interest is owned by other entities not party to the case.

In situations where, for example, either the husband or wife holds say one third of a property, with third parties holding the remaining two thirds, or possibly even only a fraction of an interest in a property (for example as an entity in which other third parties are shareholders), how can only that portion of the property be valued?

Are you a third party with an interest in a property that requires valuation for the purpose of property settlement in a family law matter?

Applicable to married parties and de facto parties

The same rules regarding interests in property, whether held in one’s own name, jointly with the former partner, or jointly with third parties, apply to both married spouses and de facto spouses

All interests in property are subject to disclosure, inclusion in the property pool, and expert valuations (if a value cannot be agreed).

How the court will decide to divide the property pool is determined by a contributions assessment followed by assessment of the party’s future needs

That is to say, owning a property with third parties will not keep it out of section 79 proceedings, but depending on the length of the relationship, and contributions made to the acquisition, maintenance and improvement of the relevant property, there may be an argument to be made to the court to do an asset by asset approach, or multi-pool approach

Can my interest in jointly held property be affected if co-owner ’s relationship breaks down?

If you are a third party with an interest in a property, which is subject to a property settlement matter, you do not have to worry: there is no way property settlements can be finalised in a manner that would effect your interest Orders may only be made about property owned by parties to proceedings.

If you have been notified of, or invited to join proceedings in this context, obtain legal advice Section 90AE of the Family Law Act provides for Orders that the court can make binding a third party, and factors the court must consider in determining whether to make an order binding a third party.

It is possible to value a fraction of the shares of a person who is a party to property settlement proceedings

In the case of Pittman & Pittman [2010], the parties separated following the irretrievable breakdown of their marriage, meaning the property pool had to be identified and values attributed

The husband was a beneficiary of the Pittman Family Trust (PFT) – a discretionary trust in which the husband had a twenty-five percent share (25%), or one quarter (1/4)

The court had to consider the value of the husband’s portion of properties, and specifically, the valuation of the husband’s one-fourth interest in the family trust. Other family members of the husband owned the remaining shares

KPMG was engaged as Expert to complete a valuation of the husband’s onefourth interest in the trust They determined this by valuing the whole of the trust on a pre-tax basis, and then dividing that amount by four (4), on the basis of the husband’s interest being one quarter and therefore equal to one quarter of the total value.

The trust was valued by KPMG to have a net value of $251 million A one-quarter share of that would be $62 750 million

The Judge accepted the expert report valuations from KPMG and did not require any further explanation in relation to the method of valuation for the husband’s onequarter interest.

Conclusion

So, it is quite possible to have the interest or the minority shares in a particular property assessed by a valuer to be able to get your fair share of the property It does not make a difference whether you are married or in a de facto relationship

If you have any questions arising from the above, please contact our office.