How Canadian Courts Assess Competing Expert Evidence

1. Qualifications and Relevant Experience

2. Clarity of the Mandate

3. Quality and Completeness of Information

4. Support for Significant Assumptions

A key assumption should be supported by evidence, not simply accepted because it benefits the retaining party. Courts may be skeptical when an expert adopts management forecasts without testing them, ignores contradictory documents, or uses a risk premium without explaining its components.

5. Appropriateness of the Methodology

The court assesses whether the method fits the business and is applied consistently. A discounted cash flow model may look sophisticated, but its output is unreliable if the forecast is speculative. A market multiple may be unpersuasive if the comparable bear little resemblance to the subject company.

6. Independence and Objectivity

7. Responsiveness Under Cross-Examination

Credibility is often tested through the expert’s ability to explain choices, acknowledge limitations, and respond to reasonable alternatives. An expert who is transparent about uncertainty may be more persuasive than one who presents a complex valuation as unquestionably precise

8. Internal Consistency and Reasonableness Checks

Courts may compare the conclusion with actual transactions, prior valuations, offers to purchase, financing records, industry metrics, and the company’s economic performance. These indicators are not always determinative, but unexplained inconsistencies can weaken an opinion.

Independence Does Not Mean the Experts Must Agree

An independent CBV can legitimately reach a different conclusion from another independent CBV. Independence concerns the expert’s process and state of mind—not whether the result falls at the midpoint of the parties’ positions.

The expert should be willing to:

• consider information that cuts against the retaining party’s case;
• revise a view when better evidence becomes available;
• disclose significant assumptions and limitations;
• distinguish facts from professional judgments;
• explain reasonable ranges or sensitivity where appropriate; and
• avoid offering legal opinions outside the expert’s expertise.

CBV Institute’s current practice standards set minimum requirements for credible, properly supported valuation conclusions. Separate standards apply to independent valuation engagements, advisory work, expert reports in litigation or disputes, and limited critique reports. Selecting the proper engagement type helps clarify whether independence is required and what work the reader may reasonably expect.

How Can the Parties Narrow a Valuation Dispute?

A valuation dispute does not always require a full trial. The parties and their counsel can often reduce the disagreement by isolating the assumptions that drive the gap.

Useful steps include:

• preparing a side-by-side comparison of both reports;
• confirming that both experts use the same valuation date and ownership interest;
• exchanging the material financial information relied upon;
• identifying numerical differences caused by facts versus professional judgment;
• asking each expert to quantify sensitivity to the disputed assumptions;
• obtaining a limited critique instead of commissioning an entirely new valuation;
• arranging an expert meeting to identify areas of agreement and disagreement; and
• considering a jointly retained neutral CBV where appropriate.

A reconciliation table can be especially effective. If one report concludes at $2 million and the other at $3 million, the table may show that $700,000 of the difference relates to maintainable earnings, $200,000 to tax, and $100,000 to redundant assets. This turns an abstract million-dollar disagreement into specific issues that can be negotiated or decided.

Common Mistakes in Competing-Expert Cases

Parties can weaken their own valuation evidence by:

• withholding records from one expert;
• giving experts materially different legal instructions;
• commissioning a report with a scope too narrow for litigation;
• treating every judgment difference as evidence of bias;
• focusing on credentials instead of the analysis;
• using hindsight inconsistently;
• ignoring an expert’s stated limitations; or
• retaining a new expert repeatedly in search of a preferred result.

The strongest valuation case is usually the one that is transparent, well-documented, and focused on material issues rather than the number of criticisms raised.

Frequently Asked Questions

Must the court accept one expert’s valuation?

No. The court may accept, adjust, combine, or reject the expert opinions.

Does the court choose the midpoint?

Not automatically. The court considers the evidence and reasoning supporting each conclusion.

Does a large valuation difference prove bias?

No. Independent experts may reasonably disagree on significant assumptions and professional judgments.

Can the dispute be resolved without trial?

Often, yes. Critique reports, reconciliation tables, expert meetings, mediation, and neutral valuations may narrow or resolve the issues.

Bottom Line

Canadian courts generally favour expert valuation evidence that is independent, transparent, well-supported, and based on an appropriate methodology. Identifying the assumptions behind the valuation gap can make the dispute easier to negotiate or decide.

Need Help with a Business Valuation Dispute?

Contact Troy Valuations to discuss reviewing a CBV report, obtaining a limited critique, retaining an independent valuator, or narrowing the issues in dispute.

This article provides general information and does not constitute legal, tax, accounting, or valuation advice.