Land valuations differed by $4.9mil

Property – Valuations of rural acreage differed by $4,900,000 – Leave granted to adduce adversarial evidence where single expert applied comparative sales method and adversarial expert adopted a summation method

In Henschel & Sartre (No. 3) [2023] FedCFamC1F 1081 (15 December 2023), Berman J heard countervailing interim applications in respect of valuation issues. 

A single expert (“Mr LL”) had valued an interest in rural acreage (“the Town O property”) via a comparative sales method at $7,750,000.

The husband had engaged an adversarial expert (“Mr MM”) who adopted a “summation method” which “focused on differing land types and the dollar value per hectare” and said the property was worth $12,650,000 ([48] & [58]).

The husband sought leave to adduce the adversarial report as evidence.

Berman J said (from [15]):

“Separate adversarial evidence can only be called with the Court’s permission subject to three exceptions to the tendering of further evidence from another expert witness on an issue already addressed by a single expert witness, namely:

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• If there is a substantial body of opinion contrary to any opinion given by the single expert witness …
• If another expert witness knows of matters not known to the single expert witness … necessary for determining the issue.
• If there is another special reason for adducing evidence from another expert witness. ( … )

[19] It is not suggested that Mr MM provides his valuation report on the basis of a substantial body of opinion contrary to the opinion given by Mr LL. ( … )

[58] … [I]n the exercise of valuing the Town O property Mr LL considered that a comparison or comparable sales methodology was best suited to the exercise, whilst Mr MM … adopted a summation method …

[59] The result is that two appropriately qualified experts … have given emphasis to alternate valuation methodologies, resulting in a difference of $4,900,000. ( … )

[62] Bringing to account the different approaches adopted by … the valuers and the outcome representing a substantial difference …, it is appropriate that leave be given … to call separate adversarial evidence from Mr MM.”