Why Independent Business Valuation is Critical in Litigation 

When personal or business relationships break down, whether through divorce, shareholder disputes, or commercial litigation, financial clarity becomes essential. In Alberta, as in the rest of Canada, determining the fair market value of a business interest is often central to resolving these financial parts of the disputes. 

In high-stakes litigation, a credible, independent, and defensible business valuation isn’t just helpful, it’s indispensable.
 

The Role of Business Valuation in Legal Disputes

In both family and corporate litigation, a business interest is frequently one of the most significant assets in question. A well-supported valuation can directly influence: 

• Division of family property under the Family Law Act 
• Settlement negotiations in shareholder or partnership disputes 
• Quantification of damages/loss in commercial litigation 

Courts, counsel, and opposing parties rely on independent expert reports to guide fair outcomes. In Alberta, an expert’s duty is owed to the court, not to the party who retains them—even though the client or their lawyer usually pays the fees. 

Under the Alberta Rules of Court, expert reports must disclose assumptions, methodology, and sources. Case law reinforces that experts must be impartial and objective; advocacy or bias can result in reports being excluded or given little weight. 

Joint retainers common in family law can be efficient and cost-effective. However, they require careful structuring to avoid conflicts of interest.  

 

What Makes a Valuation Defensible in Court? 

To be accepted in litigation or family court, a business valuation must be: 

• Objective: Performed by an independent third party with no vested interest in the outcome. 
• Comprehensive: Incorporates financial statements, industry data, market conditions, and risk factors. 
• Methodologically sound: Uses recognized approaches (e.g., income, market, and asset-based methods) 
• Independent: the report must be prepared in an independent capacity and state so in the report.  
• Credentialed: must be prepared by a recognized expert in the relevant area of expertise.
   

Business Valuation in Divorce/Family Law: Clarity in Complex Divisions 

In Alberta, business interests are generally considered family property under the Family Property Act and may be subject to division upon separation. Whether the business is incorporated or unincorporated, its value, particularly any increase accrued during the relationship, can significantly affect the financial outcome for both spouses or adult interdependent partners.
 

A professional business valuation helps: 

• Establish fair market value at the relevant valuation date (often the date of separation or trial) 
• Support equitable distribution of family property, including shares in private corporations 
• Reduce conflict by providing objective evidence to counter inflated or undervalued claims 

 

We work closely with legal counsel to ensure our reports align with legal standards and are prepared to withstand scrutiny in both negotiation and litigation. 

 

Shareholder and Partnership Disputes 

When shareholders or partners part ways due to a buyout, loss of trust, or allegations of oppression, a valuation provides the clarity needed to resolve the dispute.
 

Common triggers for valuation include: 

• Forced buyouts or share redemptions 
• Claims of shareholder oppression, mismanagement, or breach of fiduciary duty 
• Disputes over profit distribution, compensation, or strategic direction 

An independent valuation clarifies each party’s economic interest and can facilitate resolution before litigation escalates. Where disputes proceed, a defensible valuation supports claims under the Business Corporations Act and related actions.  

Valuation for Commercial Litigation 

In civil litigation involving economic loss such as breach of contract, business interruption, or loss of opportunity a business valuation can be instrumental in quantifying damages. 

Our valuation services support claims involving: 

• Lost profits due to wrongful acts or breaches 
• Diminished business value following reputational harm or operational disruption 
• Quantification of loss of how specific events impacted business performance
   

A well-supported valuation report can be a decisive factor in settlement negotiations or trial, especially when paired with expert testimony.
 

Author: Malahat Valuation Group specializes in business valuation and real estate appraisals to owners of privately owned companies and their professional advisors. An now also helping with business succession planning. When owners need to leverage, sell or reorganize their assets, we answer the age-old question "What is it worth?".

We provide our clients and their advisors peace of mind by preparing professional valuations that stand up to scrutiny from lenders, the Courts, and the Canada Revenue Agency.

www.malahatvaluationgroup.com | spencer@malahatvaluationgroup.com | (780)-387-5552