ARTICLE · 13 JULY 2025

The importance of reality testing valuation reports in Family Law

Barry Nilsson

This case serves as a helpful reminder to litigants and practitioners to carefully consider whether a valuation report is reflective of, and appropriately takes into account, the realities of running a business.

AustraliaLitigation, Mediation & Arbitration

Matt Hempstead

Sydney Gale

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The controversy in this appeal was whether the primary judge should have found that the value of a business included goodwill.

A determinative factor for the primary judge's consideration was that the lease of the premises used by the business was due to expire and was being renewed at a higher rent, which had a material impact on the future maintainable earnings and net asset value of the business.

The evidence

At first instance, the evidence of the single expert valuer was that:

I have attached a revised calculation of the estimated future maintainable earnings, enterprise value and goodwill of the business as at 30 June 2023, adopting an ongoing base rent expense in respect of [AQ Street, Suburb U], of $2,670,312 exclusive of GST per annum, reduced by an annual incentive of $333,789 exclusive of GST over the initial three year lease term.

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The importance of reality testing valuation reports in Family Law

The evidence

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