Divorce proceedings often involve complex financial issues that may require the input of an expert. When parties seek to instruct an expert to prepare a report for the court, they must follow a specific procedure to obtain permission to use the expert’s evidence. A “Part 25 Application” (made under Part 25 of the Family Procedure Rules) is concerned with the use of expert evidence in Family proceedings.
Why might I need to instruct an expert in financial proceedings?
People may need to instruct an expert in divorce proceedings in England and Wales in various situations where specialised knowledge or assessments are needed to resolve specific issues or disputes. Many financial investments (such as pensions) are complex and it is crucial to ensure that you are aware of their true value, and the potential effect of any orders that the court may make.
Experts that are used in financial proceedings include:
Property valuers: It is common for the parties to save the expense of commissioning an expert report when valuing the family home by agreeing the value based on an informal valuation by one or more estate agents. However, in cases where the value of property is in dispute, it is often necessary to instruct an RICS registered (chartered surveyor) valuer to prepare a formal valuation. This is common in cases where there are multiple properties or where there is a material difference of opinion as to a property’s value.
Pension experts: All parties will obtain the CETV (Cash Estimated Transfer Value) of their pension at the initial point of financial disclosure, but this figure does not indicate how much a pension is likely to pay out in terms of income in the future, nor the effect of a pension sharing order. In cases where parties have a combination of pensions, or final salary pensions it is usually advisable to instruct a Pensions On Divorce Expert (PoDE) to get a clear picture of the benefits that are likely to be received and the effect of pension sharing. It is likely that you will need to instruct a PoDE if one or both of you are retired, as the pension benefits will be a central issue in the case.
Forensic Accountants and other financial experts: These experts can be instructed for a number of reasons, including:
- Hidden Assets: When separation becomes imminent, some people move assets in order to avoid having to disclose them in order to gain a more favourable settlement. A forensic accountant can be instructed to examine the finances to ensure that the movement of such assets do not go undetected.
- Businesses: Cases involving business assets can be complex because the asset is also the means of providing an income. A forensic accountant can be used to value how much a business might sell for, an assessment of the potential cashflow or how much individual business assets are worth.
- High value cases: In cases that involve a lot of diverse assets, such as share schemes, overseas investments, multiple properties and intellectual property. A forensic accountant can be used to trace assets, ensuring that all relevant assets are presented to the court, they can assess lifestyle and expenses to ensure that any periodic payments accurately reflect the needs of the party receiving them.
- Tax implications: Divorce can come with many tax implications, such as Capital Gains Tax, Stamp Duty or income tax liabilities. An expert can identify the correct timing for disposal of an asset to ensure that the tax liabilities are kept to a minimum or calculate the likely tax liabilities which may influence the eventual settlement that is reached, as it may be preferable to transfer assets that will incur lower liabilities.
When should an Expert be instructed?
You can seek the assistance of an expert in financial proceedings without the permission of the court, but you cannot use the evidence unless you have made a successful application under part 25 of the Family Procedure Rules. This application should be made no later than the First Appointment.
How do I obtain permission to adduce expert evidence?
Your solicitor will make an application to the court under part 25. The application must state:
- The field in which the expert evidence is required;
- Where practicable, the name of the proposed expert;
- The issues to which the expert evidence is to relate;
- Whether the expert evidence could be obtained from a single joint expert.
Expert evidence adds expense and delay to proceedings, so the court must be satisfied that the evidence is “necessary” to assist the court to resolve the proceedings. The question of what “necessary” means was considered in the case of Re H-L  2 FLR 1434, when Sir James Munby ruled that it was:
lying somewhere between ‘indispensable’ on the one hand and ‘useful’, ‘reasonable’ or ‘desirable’ on the other hand”, having “the connotation of the imperative, what is demanded rather than what is merely optional or reasonable or desirable.
Therefore, it is not enough to say that it would be helpful to have the evidence. It needs to be highly relevant to a material issue in your case that would be very difficult to resolve without the assistance of the expert. As above, there are numerous examples of when an expert’s evidence will be necessary. An experienced solicitor will be able to advise you on this point.
How is an expert instructed and who pays for the report?
Wherever possible, the court will order that expert evidence should be obtained from a “Single Joint Expert”; that is, one expert jointly instructed by the parties. The cost of the report is therefore split between the parties in most cases. The reason for this rule is to ensure that costs are kept to a minimum and to avoid delays, as obtaining expert evidence extends the time that a case will take to reach its conclusion. It is important to note that any expert that is instructed has an overriding duty to the court to be impartial, so instructing your own expert rather than a Single Joint Expert ought not to be an advantage.
Parties should try to agree who the expert should be between themselves. In cases where this is not possible, the court can choose the expert from a list or set out a procedure through which an expert will be selected.
The party responsible for instructing the expert will then prepare a letter of instruction within 5 business days. This will set out why the report is being sought, the questions that the expert should answer and the documents that the expert should consider (the full rules for the letter can be found at Practice Direction 25D, paragraph 4.1)
How will the evidence be presented to the court?
Expert evidence is usually presented in written form unless it is necessary for the expert to attend. This would normally only be in cases where there are significant areas of disagreement with the contents of the report.
What should I do if I don’t agree with the report of the Single Joint Expert?
Both parties have the right to ask questions of the expert in order to clear up any disagreements. These questions are initially done in written form, but the expert can be required to attend court to answer any questions that you may have.
It is also possible to make an application to the court to rely on the evidence of your own expert. Such applications are not granted solely on the basis that you do not agree however. The leading case of Daniels v Walker  1 WLR 1382 states that these applications should not be “fanciful”. In other words, there needs to be a good reason for the court to grant such an application. In practice, this will often mean that you will need to pay for further expert evidence and demonstrate that there is a material difference of opinion between the experts. Such a course of action is not without risk, as the second report may come to a similar conclusion to the first one, and you would also end up paying the costs of an unsuccessful application to adduce the evidence if the court does not grant it. You should talk to your solicitor about whether it will be worth taking this course rather than just asking questions of the existing expert.
How will I know whether I need expert evidence in my case?
You should obtain legal advice at the earliest opportunity if you are getting divorced in order to ensure that you are fully advised of the legal framework regarding potential financial proceedings. Obtaining advice at an early stage will allow you to have more time to ensure that you have all the information that you need to gain a favourable settlement. As above, the court is always concerned to remove delays to the eventual settlement of cases, so identifying issues at an early stage will work in your favour. An experienced solicitor will be able to identify them for you and advise you as to whether obtaining expert evidence is appropriate in your case.