How does an inaccurate property valuation affect settlement in separation proceedings?
Property settlement after separation can be complex, especially when significant assets are involved. Valuations of property, whether real property or otherwise, play an important role in family law property disputes and inform settlements.
In Perna & Perna [2024] FedCFamC1A 183, the Federal Circuit and Family Court of Australia overturned final property orders because the trial judge relied on inaccurate and inadmissible evidence to assess property value.
This case highlights a key point: detail matters in family law property cases. It is important to get expert advice from an accredited family law specialist about any aspect of your family law property case.
Rowan Skinner is a highly experienced property dispute lawyer and family law specialist. Consult with Rowan Skinner for expert family law legal advice and help navigating family law and property disputes.
Why are property valuations relevant to separation proceedings?
Mr and Ms Perna married for nearly 30 years before separating in 2019. During their marriage, they built a substantial farming operation and accumulated assets worth over $12 million, including two rural properties.
These properties were originally connected to the wife’s family and were partly purchased through loans and vendor finance from her parents.
A key point of dispute involved the 2009 purchase of one of the properties. The wife claimed her parents sold it to her and her siblings at a 20% discount below market value as a sign of generosity. The husband disagreed, saying no evidence supported this claim.
How does one party receiving significant gifts during the relationship affect the division of property during separation?
At trial, the judge accepted the wife’s position. He concluded her parents’ financial generosity, including the discounted sale, counted as a substantial contribution in her favour. As a result, the wife received:
- 54% of the assets acquired during the marriage, and
- 100% of the post-separation assets, including her inheritance.
The husband received a minor 1% adjustment for his future needs. Overall, he received significantly less — a difference of nearly $950,000.
How important are the sources of property valuations in separation proceedings?
The husband appealed, arguing the trial judge made a material factual error. He claimed the judge wrongly concluded the property sold at a 20% discount without proper valuation evidence.
The appellate court agreed. It found the trial judge had relied on lay opinion (statements from the parties and some conveyancing correspondence) rather than evidence from a qualified valuation expert.
What is the law on expert evidence when it comes to property valuations?
Under the Evidence Act 1995 (Cth), courts generally cannot accept opinion evidence unless an expert with specialised knowledge provides it. This rule is especially important in property matters, where market value helps determine settlements.
In this case, the wife needed to prove the property was worth more than the purchase price to support her 20% discount claim. She relied only on statements from the homeowner (her father) and herself. The court did not consider them experts.
Without an expert valuer, she could not prove the property’s value. Therefore, the judge’s finding was legally unsound.
Section 76 of the Evidence Act 1995 (Cth) provides that, unless an exception applies, “evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed”. This includes opinions on real estate value.
A relevant exception appears in section 79. It allows expert opinion if:
- The witness has specialised knowledge based on training, study or experience; and
- The opinion is wholly or substantially based on that knowledge.
What is a relevant exception?
In Watton v Mac Taggart [2020] NSWSC 1233, Ward CJ in Eq held that evidence on real estate value is inadmissible unless an appropriately qualified expert provides it.
Cases such as Dasreef and Honeysett reinforce that specialised knowledge must exceed subjective belief or personal experience. Expert evidence must:
- Explain how specialised knowledge applies to the case facts;
- Be based on admissible or properly assumed facts;
- Provide a clear intellectual or scientific foundation.
Why was this case not a relevant exception?
In the Perna case, McClelland DCJ found:
- Mere property ownership does not give a homeowner specialised knowledge of property values.
- Searching to buy property in an area does not amount to expert valuation knowledge.
- The plaintiff’s daughter’s evidence lacked impartiality and objectivity, so the court did not accept it as expert evidence.
The evidence failed to meet the Makita test for admissible expert opinion.
How are factual errors by trial judges dealt with by the Family Court?
The Court ruled the trial judge made a significant error. Not every mistake requires an appeal, but here the error affected the outcome. The Court:
- Set aside the property settlement orders,
- Sent the case back for a new hearing before a different judge, and
- Granted the husband a costs certificate for the appeal.
What this means for you
If you are separating and dividing assets, especially in high-value or complex cases involving businesses, family contributions, or inherited property, you should:
- Get proper expert valuations early; avoid estimates or informal advice;
- Work with a lawyer who understands evidentiary rules and case presentation;
- Be aware that errors in evidence can lead to costly appeals and delays.
How we can help
At Rowan Skinner and Associates Lawyers, we understand how stressful and complicated property settlements can be, especially when family relationships and significant assets are involved.
If you are struggling, call our team at (03) 9995 9155 for a non-obligation discussion.
We service clients in Melbourne, Melbourne Northern Suburbs (Northcote, Alphington, Carlton, Fitzroy, North Fitzroy, Kew and Heidelberg), as well as South Melbourne and South Yarra.
Case: Perna & Perna [2024] FedCFamC1A 183 (15 October 2024)
Rowan Skinner is a highly skilled family lawyer with over 35 years of experience across various legal roles and jurisdictions. Rowan specialises in resolving family law disputes such as divorce, financial settlements, child custody and domestic violence cases. Through his diverse and extensive experience, Rowan has a deep understanding of the complexities and nuances involved in family law. Rowan is a skilled negotiator and litigator who follows a compassionate and client-focused approach which prioritises helping you navigate what can be an emotional and challenging time.