The short answer, explained
A letter of instruction does two jobs. It satisfies the Rules, which set out what written instructions to an expert must contain. And it frames the valuation, because the expert can only answer the question asked, on the facts and documents supplied. Later arguments about a business valuation in a property matter often trace back to an instruction that did not fix the interest, the date or the basis, or that left a disputed fact for the expert to resolve.
This page is a working checklist for that letter, in proceedings under the Federal Circuit and Family Court of Australia (Family Law) Rules 2021. For how the single expert process works and the expert's role, Family Law Valuations, the Valuo practice for family law matters, explains it in single expert business valuations in family law. For what to do once the report arrives, see how to review a valuation report prepared for the other side.
What rule 7.13 requires for written instructions to an expert (single expert extras last)
Before instructing (r7.13(2))
- Give the expert the current Divisions 7.1.4, 7.1.5 and 7.1.6 and make sure they have read them
- Obtain a written report
In the instructions (r7.13(3))
- A request for a written report
- Advice that the report may be used in an anticipated or actual proceeding
- The issues on which the opinion is sought
- A description of any matter to be investigated or issue to be reported on
- Full and frank disclosure of information and documents that will help the expert
For a single expert (r7.13(4) and (5))
- An agreed statement of facts, or if not agreed, each party's statement unless the court directs otherwise
The Rules that shape the letter
Beyond rule 7.13, several rules affect how the letter is written and used:
- Communications. Under rule 7.03, where the parties jointly appoint a single expert witness, a party must not communicate unilaterally with the expert, except as the Rules permit, and any communication must go to all parties engaging the expert at the same time. The letter is usually the main communication, so it should be complete.
- The court's role. Rule 7.05 allows the court to order the parties to confer on an agreed letter, submit a draft for settling, or settle the instructions itself, and to decide a disputed issue so that clear instructions can be given.
- Fees. Rule 7.06 makes the parties equally liable for a single expert's reasonable fees unless they agree or the court orders otherwise, and the expert need not start work until fees are paid or secured.
- The report attaches the instructions. Rule 7.21 requires the report to attach a summary of the instructions and a list of documents relied on. The letter will be read by the court and the other side.
- The expert's duties. Rule 7.18 sets duties including an objective, unbiased opinion and consideration of all material facts, including those that detract from the opinion. Instructions that steer the expert work against those duties.
The Federal Court's Expert Evidence Practice Note (GPN-EXPT) and the Harmonised Expert Witness Code of Conduct in Annexure A deal with what a party should give an expert and how questions and assumptions should be framed. It is written for proceedings in the Federal Court of Australia, not for family law proceedings in the FCFCOA, but it is a useful drafting standard.
The valuation checklist
| No. | Item | What to state | Why it matters |
|---|---|---|---|
| 1 | Entity | The full legal name, ABN and structure (company, trust, partnership, sole trader) of each entity | The expert values a defined entity, not "the business" |
| 2 | Interest | The shares, units or partnership interest held by each party, their class and rights | A party's 50% may be valued as a proportion of the whole or as a parcel. See business, shares or units |
| 3 | Valuation date | The date, or dates, at which value is required | Value can change; an unstated date invites dispute |
| 4 | Standard of value | The basis, for example market value between a willing but not anxious buyer and seller. See market value, fair value and special value | Different bases give different answers for the same holding |
| 5 | Specific questions | Each question as a separate numbered item, for example the value of the shares, the value of a loan account, the value of any asset outside the business | The expert answers the questions asked |
| 6 | Assumptions and alternatives | Facts the expert is to assume, and alternative assumptions where facts are disputed | The court can see the value on each version of the facts |
| 7 | Items the lawyers need separated | Any component the legal case requires to be shown separately, such as amounts owed between a party and the business, or any value the lawyers consider attaches to a party personally | The expert does not decide legal questions; the letter asks for the figures the legal argument needs |
| 8 | Tax | Whether to report any tax that would arise on a notional sale, as a separate figure | Keeps the valuation and any tax argument apart |
| 9 | Documents | A numbered list of documents provided, and how further documents will be provided to all parties | The report must list documents relied on |
| 10 | Access | Access to premises, the accountant and management, and how any meeting is arranged so both parties are treated equally | Rule 7.03 restricts unilateral communication with a jointly appointed single expert |
| 11 | Timetable | Dates for documents, any draft, and the final report | Keeps the matter on its timetable |
| 12 | Fees | The fee estimate and how fees are shared and secured | Rule 7.06 default is equal sharing |
| 13 | Clarifying questions | The process and time limits for questions after the report | Rule 7.26 limits questions to one round, in writing, within set times |
| 14 | Discounts and premiums | Whether a minority or marketability discount, or a control premium, is to be considered | The basis for a 50% or minority holding is often the main dispute |
| 15 | Surplus assets and loan accounts | Treatment of cash, related-party and Division 7A loans | Avoids double counting between the business and the parties' other property |
Worked example: why disputed facts should become alternatives
This example is hypothetical. The figures are round numbers chosen to show the arithmetic, not evidence of value or of any market salary.
The parties disagree about the cost of replacing a party who works in the business. One says $150,000 a year including super, the other $100,000. Earnings before that party's salary are $550,000, and assume the expert applies a multiple of 3.0 in either case.
The disputed salary changes maintainable earnings by $50,000
Version A
Replacement salary of $150,000
- Earnings before the working party's salary+$550,000
- Replacement salary−$150,000
Maintainable earnings$400,000
Version B
Replacement salary of $100,000
- Earnings before the working party's salary+$550,000
- Replacement salary−$100,000
Maintainable earnings$450,000
At a multiple of 3.0 the two versions are $150,000 apart
- Version A: $400,000 x 3.0$1,200,000
- Version B: $450,000 x 3.0$1,350,000
Check: $550,000 less $150,000 is $400,000; $550,000 less $100,000 is $450,000; $400,000 x 3.0 is $1,200,000; $450,000 x 3.0 is $1,350,000; the difference is $150,000, which is the $50,000 salary difference multiplied by 3.0.
If the letter asks for a value on each version, the court can resolve the factual dispute and read off the corresponding value. If the letter is silent, the expert must choose, and the dispute moves to the expert's choice. Our guide to normalising a working owner's salary explains how the salary itself is assessed, and the capitalised earnings sensitivity table shows how other inputs move the result.
Limitations
- This checklist refers to the FCFCOA (Family Law) Rules 2021 as compiled at 10 June 2025. Other courts and other kinds of proceedings have their own rules and practice notes.
- It addresses business valuation instructions only. Instructions for property, superannuation or other experts raise different questions.
- It is not legal advice. Whether a component of value is legally relevant, and how disputed facts are framed, are matters for the instructing lawyers.
- A clear letter improves the report's usefulness; it does not determine the expert's opinion, which must remain independent under rule 7.18.
Next steps
- Draft the letter against the rule 7.13 checklist and the valuation table, numbering each question.
- Agree the statement of facts with the other side, or prepare your client's statement if agreement is not possible.
- Assemble the document list using the business valuation preparation pack and provide documents to all parties at the same time.
- Diarise the rule 7.26 time limits for clarifying questions once the report is received.
Questions
Can the court settle the letter if the parties cannot agree it?
Yes. Rule 7.05 allows the court to order the parties to confer and submit a draft letter of instructions for settling, to settle the instructions itself, and to determine a disputed issue so that clear instructions can be given.
Can I phone the single expert to explain my client's position?
Not on your own. Under rule 7.03, where the parties jointly appoint a single expert witness, a party must not communicate unilaterally with the expert, except as the Rules permit, and any communication must be provided to all other parties engaging the expert at the same time.
Does a market appraisal for a conference need a full letter of instruction?
Rule 7.12 says Division 7.1.4, which includes the instruction requirements, does not apply to a market appraisal or opinion as to value in relation to property obtained for a procedural hearing or conference. A report intended as evidence is different.
What if the facts about the business are disputed?
Where the parties do not agree a statement of facts, each party gives the expert its own statement unless the court directs otherwise. The letter can then ask the expert to value on each set of facts, so the court can see the effect of the dispute.
Sources
- Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Compilation No. 4, 10 June 2025), Federal Register of Legislation. Part 7.1: r7.03 joint appointment and communications; r7.05 orders about instructions; r7.06 fees; r7.12 scope of Division 7.1.4; r7.13 content of instructions and statement of facts; r7.18 duties; r7.21 and r7.22 form and contents of report; r7.26 written questions.
- Expert Evidence Practice Note (GPN-EXPT), 25 October 2016, Federal Court of Australia. Deals with what a party should give an expert and how questions and assumptions should be framed; the Harmonised Expert Witness Code of Conduct is in Annexure A.
- Market valuation for tax purposes, Australian Taxation Office (Legal database). Ordinary meaning of market value; where the asset is an interest, the report should specify the interest and associated rights being valued.
Cite or reuse this page
Valuo Insights team (2026). Letter of instruction for a business valuation expert: a checklist. Valuo. https://valuo.com.au/insights/business-valuation-letter-of-instruction-checklist/ (updated 14 November 2026).
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General educational information, not financial, tax or legal advice. Worked examples are hypothetical and do not value a real business. A valuation depends on its purpose, the evidence and the agreed scope.