LUNAR and LUNAR
[2019] FCWA 259
•5 DECEMBER 2019
JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA
ACT: FAMILY LAW ACT 1975
LOCATION: PERTH
CITATION: LUNAR and LUNAR [2019] FCWA 259
CORAM: O'BRIEN J
HEARD: 21, 22, 23 & 24 OCTOBER 2019
DELIVERED : 5 DECEMBER 2019
FILE NO/S: PTW 6809 of 2017
BETWEEN: MS LUNAR
Applicant
AND
MR LUNAR
Respondent
Catchwords:
PROPERTY - Where parties agree equal division of property and superannuation - Where there is a significant dispute as to the value of a property which the wife seeks to retain - Where the husband proposes subdivision and sale of that property - Where parties each engaged valuers - Where ascertainment of value by judicial process is so uncertain as to risk significant injustice - Turns on its own facts.
Legislation:
Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)
Income Tax Assessment Act 1997 (Cth)
Category: Not Reportable
Representation:
Counsel:
| Applicant | : | Mr Hooper SC and Mr Fahey |
| Respondent | : | Mr Dowding SC and Ms Hynes |
Solicitors:
| Applicant | : | Fahey Mwenda D'Adamo Legal |
| Respondent | : | DCH Legal Group |
Case(s) referred to in decision(s):
Chorn & Hopkins (2004) FLC 93-204
Commonwealth v Milledge (1953) 90 CLR 157
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122
GWR & VAR (2006) 36 Fam LR 237
In the Marriage of Boriello (1989) FLC 92-049
In the Marriage of Little (1990) FLC 92-147
Lunar & Lunar [2019] FCWA 122
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia & Ors (1998) 195 CLR 1
Redland Bricks Ltd v Morris [1969] 2 All ER 576
Smith & Smith (1991) FLC 92-261
Spencer v The Commonwealth of Australia (1907) 5 CLR 418
Trevi & Trevi [2018] FamCAFC 173
W & W, Re; Abuse Allegations; Expert Evidence (2001) FLC 93-085
WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT – PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED
IT IS NOTED that publication of this judgment by this Court under the pseudonym Lunar and Lunar has been approved by the Family Court of Western Australia pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
1[Ms Lunar] (“the wife”) and [Mr Lunar] (“the husband”) have been unable to agree the division of their property following the breakdown of their long marriage.
2As will appear, to their credit the parties were able to agree a significant number of matters including, fundamentally, that an equal division of property and superannuation between them would represent a just and equitable outcome. Their inability to fully resolve their dispute by agreement arose primarily, but not exclusively, because of issues as to the value of a significant landholding which the wife sought to retain and which the husband proposed should be subdivided and sold.
Background
3The husband was born in 1949. He [graduated with an accounting degree] shortly after the parties married in 1973, and worked in that [field] until [late-1985] when he retired from the [accounting] firm at which he was a partner. From that point, he focused his attention on [other] business activities, working with various business associates including a friend of both parties, [Mr G].
4The wife was born in 1953. She was studying [environmental engineering] at the [University B] when the parties were married, finishing her degree in 1975 and thereafter taking on full-time work as an [environmental engineer].
5The parties have two children, [F] born in 1983, and [K] born in 1987. After K’s birth, the wife did not return to paid employment.
6The parties separated in [late-2015]. Over the course of the marriage, they and entities controlled by them accumulated significant property. It is helpful to set out at this point an overview of that property, and the entities in which the parties are involved, to give context to what follows.
7The wife is the sole registered proprietor of a home at [Suburb A] (“the Suburb A home”) in which the husband presently lives.
8The parties each hold one of the two issued shares in [Company A] and with F are the directors of that company. Company A is the trustee of the [Lunar] Family Trust (“the family trust”).
9The family trust owns property at [Street A, Suburb B] (“the Suburb B block”) and at [Street B, Suburb B] (“the farm”). The wife lives on the farm.
10Company A is the sole shareholder in [Company B]. The parties and F are the directors.
11Company A owns one of the two issued shares in [Company C]. The other share is owned by [Company D], a company controlled by Mr G and in which the parties have no interest. The husband, F, Mr G and his son [H] are the directors of Company C.
12Company C owns development land in [Suburb C].
13The husband is the sole shareholder of [Company E]. The parties and F are the directors.
14Company C is the sole shareholder in [Company F]. The husband, F, Mr G and H are the directors. Company F owns development land in [Suburb D].
15The parties each hold one of the two issued shares in [Company G]. Company G owns a number of [livestock] and associated equipment, and is the entity through which the wife operates a business known as [Company H] from the farm.
16The husband is one of three directors of [Company I], which is a publicly listed company. Company B owns shares in that company.
17The parties each hold one ordinary share in [Company J], and are directors of that company. The company is the trustee of the [Superannuation Fund A], of which the parties, F and K are the only members.
18The husband and Company A are plaintiffs in pending litigation in [another jurisdiction] in which the defendants are the executors of the estates of the husband’s late brother and his mother (“the estate litigation”). There are two elements to the litigation; the husband claims a personal entitlement, and Company A seeks to recover a debt asserted to be owed to it by the husband’s brother at the time of his death.
The proceedings
19The present proceedings were commenced by the wife in October 2017, and were initially listed for a trial to commence in June 2019. That trial was vacated on the application of the husband in the circumstances described in my Reasons for Judgment given extemporaneously on 21 May 2019.[1] It is unnecessary for present purposes to set out in detail the circumstances which led to the trial being vacated; it is sufficient to note that very significant valuation issues were addressed too late to permit confidence that the trial could be ready to proceed as scheduled, and that further issues arose by virtue of the late amendment of the relief sought by the husband in particular.
[1] [Lunar & Lunar] [2019] FCWA 122.
20The matter then proceeded to trial as quickly as that could be accommodated by the Court.
21During the course of the proceedings, the parties participated in privately funded mediation. On 21 May 2019 I made an order dispensing with the requirement of a Conciliation Conference.
Matters not in issue
22Both parties sought orders altering their interests in property, agreeing that in circumstances where they have been separated since November 2015 the making of such orders is just and equitable.
23The parties also agreed that the required holistic assessment of their respective contributions over the course of the very long relationship leads to a conclusion that those contributions were equal. I find that agreed position to be amply supported by the evidence.
24The parties also agreed that the required consideration of the matters set out in s 79(4)(d) to (g) inclusive of the Family Law Act 1975 (Cth) (“the Act”), including the required consideration of the matters set out in s 75(2) so far as they are relevant, leads to a conclusion that no adjustment in favour of either party to what would otherwise be the contributions based division of their property is required or appropriate. Again, I find that agreed position to be amply supported by the evidence.
25Earlier in the proceedings, potential issues were identified in relation to the valuation of the development land in Suburb C owned by Company C, and the development land owned by Company F at Suburb D. The parties agreed to address that issue with the cooperation of Mr G and Company D, by taking the necessary steps to have two additional shares in Company C issued, whereupon Company A will transfer one of those shares to the wife. In that way, the existing interest of Company A in Company C will effectively be divided equally between the parties.
26Mr G swore an affidavit which was filed on behalf of the wife. He confirmed that “provided there are no tax implications for [Company D], and either the Court Orders or [the parties] agree”, he and his wife as the directors of Company D have no objection to the steps proposed by the parties to have additional shares in Company C issued, and for each of the parties or their entities to thereafter retain a 25 per cent interest in it.
27I raised with counsel for the parties my concern at the conditional nature of that consent by reference to possible tax implications for Company D, and required that they address the question of whether in those circumstances the orders sought could appropriately be made. The matter was addressed in two ways; firstly, on the basis of written advice obtained during trial and tendered into evidence by consent, it was the common position of the parties that the proposed “splitting” of the existing shares in Company C would not give rise to a CGT event,[2] and that accordingly the share split would not trigger any CGT liability for either existing shareholder, including Company D. Secondly, as that agreed position as between the parties could not of course bind Mr G or Company D, the parties both acknowledged that the proposed orders should still be expressed as being subject to the consent of Company D. They acknowledged further that in the event that consent could not be secured the proposed order would be rendered impracticable for the purposes of s 79A(1)(b) of the Act.
[2] Income Tax Assessment Act 1997 (Cth), ss 112-25(2)-(3).
28Those acknowledgements having been made, and notice of the proposed orders having been given to Company D as earlier set out, any perceived obstacle to the making of the agreed orders was removed.
29In a related matter, at the commencement of trial there remained a dispute between the parties as to their ongoing involvement and that of F in the administration of Company C and Company F following the restructuring of the shareholdings. At that point, the wife sought orders compelling the husband to vote in favour of any resolution put by her or any other person to remove F as a director of either or both of those entities, and/or to appoint the wife as a director.
30By the conclusion of the trial that matter had been resolved. The parties jointly proposed an order requiring the husband to refrain from causing Company A to vote against a shareholders’ resolution to appoint the wife, or remove F, as a director of either Company C or Company F. In agreeing that course, they effectively acknowledged that the decision in that regard, if the matter was pressed by the wife, would fall to the directors of Company D. The parties agreed that a further order should be made in any event requiring the husband, while a director of either company, to take certain specified steps to ensure that the wife received all necessary and relevant information.
31The parties agreed to sell the Suburb B block, and divide the proceeds equally. At the time of trial, a conditional contract had been executed for the sale.
32They also agreed that the wife would transfer the Suburb A home to the husband.
33Earlier in the proceedings, there were significant disputes between the parties in relation to amounts which the wife asserted should be notionally added back as if property still held by the husband, for the purpose of calculating the agreed equal overall division. Those disputes were resolved by an agreement that from his share of the proceeds of sale of the Suburb B block the husband would pay an amount of $600,000 into the self-managed superannuation fund, following which the necessary sequential steps would be taken in the form of superannuation splitting orders to equally divide the member entitlements of the parties in that fund. The parties agreed further that after the completion of that process the wife would roll out her entitlements into a separate fund of her choosing, and resign from the self-managed fund, leaving the husband, F and K as its only members.
34I raised with the parties the question of whether the trust deed for the superannuation fund empowered the trustee to create non-member interests, noting that the fund had been established in 1989 prior to the amendments to the Act which introduced superannuation splitting. During the course of the trial the trust deed was produced and tendered into evidence by consent. The deed contains the necessary provisions to enable superannuation splitting orders to be implemented.
35The parties also agreed that the husband will, after the relevant transactions are completed, retain control of the family trust, Company A, Company B, Company E and [Company K], with the wife resigning from any relevant positions and transferring any relevant shareholdings.
36At the commencement of the trial there was a dispute between the parties as to the appropriate treatment of paid legal fees and other litigation related expenses. The wife asserted that the husband’s expenditure in that regard significantly exceeded hers, and that all such expenditure, regardless of its source, should be added back. The husband argued that certain of his expenditure was met from income generated by him post-separation and accordingly should not be added back.[3]
[3] Trevi & Trevi [2018] FamCAFC 173; see also Chorn & Hopkins (2004) FLC 93-204.
37Again, over the course of the trial that matter was resolved. The parties agreed that an amount of $100,000 should be notionally added back for the purposes of calculation, as if still retained by the husband, and that no other amount should be notionally added back to reflect any litigation related expenditure by either party.
38The parties agreed that they would do all things necessary to transfer to the husband the various livestock and associated equipment owned by Company G. Thereafter, the husband will resign as a director of Company G and transfer his share in it to the wife.
39The parties agreed that from 30 June 2019 they will equally contribute towards the costs of the estate litigation. They agreed to further orders with the effect that the wife will share equally in the net proceeds if any of that litigation.
40There were also disputes earlier in the proceedings regarding the valuation and division of chattel property. Sensibly, the parties reached an agreement prior to trial in relation to the in specie division of almost all of their chattel property. To the extent some minor matters could not be agreed, they agreed a further process to take place after the publication of this judgment. Only very specific disputes in relation to the stock and chattels associated with Company H were left unresolved, as outlined further below.
41Late in the trial I was advised that the parties also agreed that neither would seek any order for costs against the other.
Matters in dispute
The value of the farm and associated issues
42As already noted, the central matter in dispute between the parties was the value of the farm.
43The parties had, at an early stage, each engaged their own valuers, apparently without due regard to the Family Law Rules 2004 (Cth) (“the Rules”). When agreement could not be reached as to the value of the farm, an interlocutory dispute in that regard was heard by a magistrate on 18 February 2019. By that stage, the matter was listed in the callover scheduled for 22 February 2019 for the allocation of a trial date. In his judgment delivered on 26 February 2019,[4] his Honour determined that it was then “too late and inappropriate” to make orders proposed by the wife for the appointment of a single expert witness in relation to the farm in the event that, after conferral, the valuers already engaged by the parties could not agree.[5] His Honour accordingly made the agreed orders for conferral, concluding that “beyond that, the parties will have to call their own experts and have their evidence tested at trial”.[6]
[4] Lunar & Lunar [2019] FCWAM 19.
[5] Ibid, [48].
[6] Ibid, [49].
44The valuer engaged by the husband is [Ms J]. The valuer engaged by the wife is [Mr L]. Each produced reports outlined in more detail later in these reasons, reaching significantly different conclusions. Their subsequent conferral led to limited agreement in relation to a number of issues, but not in relation to value. Each expressed opinions as to the value of the farm “as is”, and its value if subdivided.
45Ms J valued the farm “as is” at $6.1 million. Mr L valued the farm “as is” at $3.95 million.
46The highest value attributed to the property by Mr L by the time of trial was $4.65 million on a subdivision into two blocks. The highest values attributed to the property by Ms J by the time of trial were $7.7 million on a subdivision into three blocks, or $7 million on a subdivision into two blocks.
47In short, the wife sought to retain the farm intact. She accepted that she could not seek orders directly permitting her to do so unless I determined that the farm’s value was that contended for by Mr L without subdivision, or at worst a slightly higher figure. In the event that she could not retain the farm, her primary position was that it should be sold intact, with each party having the opportunity to bid at auction in the event that a sale by private treaty is not achieved in a relatively short time frame. In the event that a subdivision is ordered, she would not seek to retain either block and would agree that both should be sold.
48The husband’s proposal was based on the opinion of Ms J to the effect that subdivision would achieve the highest and best value for the farm. He sought orders requiring the parties to take all necessary steps to subdivide the farm into two separate blocks, and thereafter sell those blocks and divide the proceeds of sale. Having earlier sought orders for the subdivision of the farm into three blocks, he did not pursue that at trial.
49The parties were able to agree that, if the farm is to be sold, they will engage [Mr A] as the selling agent.
Company H
50The financial statements of Company G as at 30 June 2019 showed a value for stock on hand in Company H of $66,717. The husband sought that amount be brought to account as property retained by the wife for the purpose of the calculation of the agreed overall equal division. The wife contended that the value of stock on hand was by its nature variable over short periods of time, and that in any event if orders are made requiring the sale of the farm, the stock will simply be sold down providing ongoing, albeit modest, income for her.
51There was also a minor dispute related to a truck, tractor and utility owned by Company G and used primarily by the wife for the operation of Company H, but occasionally by the husband in his care of the livestock. It was common ground that the wife should retain those items if she retains the farm, and that they should be sold either separately or together with the farm if she does not. The issue, such as it was, was therefore limited to the question of what value should be attributed to those items in the hands of the wife if she is to retain them.
Tax consequences arising from any sale of the farm
52In the event that the farm is sold, there will be tax consequences. The parties agreed that, provided they each comply with their proposed mutual undertakings to take all appropriate permissible steps to legitimately minimise those tax consequences, the amount payable may be in the range of $150,000-$250,000. They could not agree as to what orders should be made in that regard. The wife proposed that orders be made to ensure that any tax payable was equalised between the parties; the husband proposed that each bear their own tax burden, and have the opportunity to take advantage of any individual legitimate tax planning options available to them.
53It may be seen from that summary that the most significant dispute is as to the value of the farm, with all other relevant consequences flowing from the determination or otherwise of that dispute.
The valuation evidence
Mr L’s first valuation
54Mr L completed his first valuation of the farm on 1 February 2018. The valuation was exhibited to his affidavit sworn on 20 May 2019 and filed pursuant to leave given at a hearing the following day.
55In the report, Mr L described the farm as “a unique parcel of land located within the exclusive ‘[Suburb B]’ area”. He noted various features of the property including the dwelling which he described as “being of good quality fit out and presentation”.
56He summarised his valuation approach as being “Direct Comparison supported by Summation”.
57Mr L recorded a number of assumptions, limitations and qualifications in his report, before confirming that “the primary valuation methodology used by [his valuation company] in valuing the subject property is the direct comparison approach with sales”, noting that the valuation was “fully dependent upon the accuracy of information provided to [him] and to market derived assumptions obtained from analysed transactions”, with the “most relevant transactions” being detailed in the report.
58He confirmed that the property was subject to [a Local Planning Scheme], and that he was not aware of any proposed zoning changes or development approvals or applications.
59Under the heading “Market Commentary”, his report included a “General Market overview” of Perth’s residential property market, as distinct from the locality of the farm. Similarly, his “Local Economy Impact Risk Comments” made reference to the Western Australian economy broadly, with specific reference to infrastructure projects in the Perth metropolitan area. That said, he made the following observations under the heading “Market Segment Conditions Risk Comments” and “Local Market Overview”:
“The relatively high value of the subject property limits the number of potential purchasers within the [Suburb B] housing market. This market sector is thinly traded. Properties of this nature can experience listing periods of up to 12 months in order to secure a sale under current economic and market conditions. Our Risk Rating adopted within the Valuation reflects Market Segment Conditions within the price sector and location of the subject property.
The overall property market within the [Suburb B area] of Western Australia has fallen slightly over the past 2-3 years. This has been due to numerous reasons, including the recent completion of the mining expansion phase within [Western Australia] and general flat economic conditions within the State. The local market can be described as flat. [Suburb B] is an exclusive location with a limited number of properties, which are often tightly held.”
60He went on to say that:
“The top end market (properties in excess of $2 million) has seen a significant reduction in demand over the past 5 years. In the current market investors are requiring beach frontage and/or ocean views and spending $2 million or more. Although the subject property doesn’t have the ocean views, it is well located with a short drive (3 kms) to [the beach] and is a substantial parcel of large, which is rare given the close proximity to beaches.” (sic).
61He noted further that under the current zoning the property “has a variety of potential uses, subject to Shire approval and other restrictions such as environmental conditions. Subdivision may be possible into 2 lots (although a minimum of 80 hectares is required). The Shire advised that horticultural pursuits would be required and that it would be at the Shire discretion relevant to the subdivision application.”
62It may fairly be observed at this point that under cross-examination Mr L acknowledged that he was unaware that the farm was subject to [a biodiversity scheme] until that was drawn to his attention by Ms J in their conferral. He acknowledged that the farm’s inclusion in the biodiversity scheme would have relevance to its highest and best use and the process by which it might be subdivided, but did not amend his initial opinion as to its value when that inclusion was brought to his attention.
63Mr L then listed a number of property sales in Suburb B, [and the surrounding suburbs]. He stated that in arriving at his opinion he had “considered relevant general and economic factors and in particular [had] investigated recent sales of comparable properties.” He stated that the “primary method” in assessing the market value of the farm was “by the direct comparison approach” and that he had “also undertaken a secondary check of [his] assessment, utilising the Summation approach.”
64Fairly limited detail as to the basis for his assessment of the comparability of various properties was included in the report. No detail of the secondary check utilising the summation approach was included.
65Mr L also expressed the view that “[h]aving regard to all characteristics of the subject property and the prevailing market conditions” he would “envisage a likely selling period for the subject property of 6 - 12 months to be appropriate, assuming the implementation of a professional marketing campaign by real estate sales operatives active and experienced in the sale of property similar to the subject in the locality.”
66Mr L concluded that the value of the farm at 1 February 2018 was $3.9 million.
Ms J’s first valuation
67Ms J first inspected the farm for the purposes of a valuation on 3 May 2018. In circumstances outlined in more detail below, she subsequently completed a report on 20 October 2018 expressing her opinion as to the farm’s value at the date of inspection, and her opinion that the value had not changed in the interim. That report was exhibited to an affidavit sworn by her on 14 February 2019 and filed the same day.
68In that affidavit, Ms J said that after she had made enquiries with local authorities and inspected the farm she told the husband that, based on her enquiries, the farm is subdivisible. She said that the husband responded by asking her to include in her valuation her opinion of the farm’s value “in view of its subdivisibility”, saying also that had he known the farm was subdivisible he would have pursued the necessary application and approvals. She recounted him saying words to the effect that he intended to obtain planning advice about the subdivisibility of the property, and that if that potential was identified he would then make the necessary application and provide the relevant information to her. On that basis, he requested that she provide “the end-lot market values as if the land had already been subdivided, in addition to its market value as-is at the date of valuation.”
69The husband confirmed those instructions in a letter to Ms J dated 25 June 2018 and attached to her report. With that letter he provided an email from [City A] to his advisor, [Mr D], dated 15 June 2018 regarding a meeting held with the relevant Shire officer on 13 June 2018, and providing detail of a rezoning which would be required to include the property in the biodiversity scheme. The email implied but did not expressly state that a subdivision of the farm into three lots (which the relevant officer understood to be the outcome the husband was seeking) was likely possible under the biodiversity scheme, while a “conservation based subdivision outcome, in accordance with [the existing Development Control Policy]” would “only allow a lot yield of 2 lots.”
70The husband’s instructions to Ms J required her to express her opinion as to the value of the farm “as is”, and the value of each individual lot after completion of a subdivision into three lots.
71Ms J summarised her valuation methodology as follows:
“The best method of assessing the value of the land is by the application of comparable sales evidence. Summation of the value of the land and improvements has been used as a check method.”
72Importantly in context, she noted that the farm was “identified within the City’s [biodiversity scheme] document as having bushland worthy of conservation, which gives rise to its potential for subdivision with the bush areas covenanted for protection”. She noted further that the biodiversity scheme had been introduced in [the early 2000s] and revised in [the mid-2010s]. She confirmed having been advised by the City that the farm had been “identified as a property which meets the [specific criteria] and as such, the [biodiversity scheme]’ Subdivision Incentive would apply to it, and as it is a lot of 60ha or greater, it can be subdivided into minimum sized 20ha lots with a maximum 3 lot yield”.
73That said, she noted that the land was not the subject of an approved subdivision at the date of inspection. She regarded her role as being to “consider the potential of the land under the planning framework, taking into account any expert advice provided on the matter, and/or advice/information generally available under due diligence, having regard to what would be the market’s viewpoint as to that advice, in considering development of the land which would achieve the highest and best economic use obtainable, subject to due planning processes.”
74Like Mr L, Ms J made general market comments, noting that the rural residential market had been declining in the metropolitan and Suburb B regions since the global financial crisis, and that her research into the subject market in the [Suburb A] and adjoining areas indicated that it had “behaved in a similar manner”, albeit with “a steadying of activity which has seen some markets behave more optimistically.”
75She noted a wide variety, although relatively limited supply, of lifestyle lot opportunities from 2 hectares and upwards in the region. She expressed the view that:
“The entry price points for these types of lots is similar to that of close- suburban rural- residential locations around the Perth Metropolitan Area. They also exhibit a similar price range, the parameters of which reflect more the presence or not of key location benefits rather than size of the holding, with the area of the holding not being a major factor where no further subdivision is allowed.
The most influential factor is a close proximity to waterfront and/or obtaining ocean/bay views.
Given the range of influencing factors, it is not surprising that there is a significant difference in value levels between properties in the [Suburb A] area.”
76More specifically to the farm, she observed that the two bases of valuation “essentially have different purchaser markets”. She considered that the number of potential buyers for the farm as a single improved lot without any identified further subdivision potential was likely to be limited. In contrast, she took the view that both the number and type of potential buyers would be significantly increased if the farm subdivision into three subdivided and individually titled lots was completed, and that if such lots were individually released on the current market they “would be fairly readily saleable”.
77She went further to express the view that “an owner of the subject land would have been likely to secure a subdivision as a means of protecting the capital asset, if that option had been confirmed as available. That is particularly so as the market for the land as one lot with the potential for future subdivision is unlikely to have paid much, if anything, more than its value as a single large holding, due to the cautious nature of potential purchasers when considering planning uncertainties and their effect on values.”
78In proceeding to consider comparable sales, she noted the limited sales activity in the immediate area and that accordingly she had considered some older sales as a guide to market expectations. Similarly, more recent sales in similar locations to the south of the main Suburb A were also considered as a guide to the market.
79In reviewing the various specific sales to which she referred, only one of which was common to those referred to by Mr L, she expressed the view that there “were no directly comparable property sales for either of the two valuation bases”, while the sales evidence was more comparable to a consideration of the value of three smaller lots as individual properties post subdivision.
80I note at this point that when cross-examined, Ms J explained her methodology. In circumstances where a directly comparable sale is identified, that clearly and directly informs the valuation of the subject property. In circumstances where sales are comparable, but not regarded by the valuer as directly comparable, analysis is drawn from the comparable sale but adjustments are then made to reflect relevant differences, and the summation method is applied as a check. In broad terms, heavier reliance is placed on the summation method the less comparable are the identified sales.
81Ms J concluded that the value of the farm “as is” as at 3 May 2018 was $6.45 million. If a subdivision into three lots had been completed by that date, she regarded those separate blocks as having a combined value of $8 million.
The first conferral
82The valuers conferred in person on 21 March 2019. They eventually produced a joint statement arising from that conferral after considerable email exchanges about the content of that document. The joint statement was signed on 7 May 2019.
83While the valuers had inspected the property some months apart in early 2018, and their conferral occurred in early 2019, they agreed that the market was flat during the relevant period and that no adjustment to either valuation was necessary.
84The valuers agreed also that the farm’s “highest and best value would lie in its potential to gain approval for a three lot subdivision as indicated under the [biodiversity scheme]”. They agreed that “[o]n the basis that the market would be made aware of the property’s identification and potential for a 3-lot subdivision under the [biodiversity scheme], it would regard it as more valuable than as one large holding which was not subdivisible”, and that “[w]ere the property to be offered for sale as three individually titled holdings… it would be attractive to a much wider market, have a greater aggregate value and be more readily saleable.”
85They also agreed a number of general observations regarding the property itself, and the market.
86They agreed further that the appropriate valuation methodology was Direct Comparison (comparable sales evidence) and Summation. That said, they were unable to agree as to the appropriate application of that methodology. Ms J did not agree that particular sales relied upon by Mr L were sufficiently comparable to inform the valuation; Mr L did not agree with the calculations undertaken by Ms J in the Summation Approach. They disagreed also on the fundamental nature of the second element of Ms J’s valuation; Mr L appeared to interpret that as an “englobo” valuation taking into account the potential for a three lot subdivision, where Ms J stated clearly that the second element of the valuation was based on an assumption that the subdivision had been completed prior to the individual blocks being marketed.
87Notwithstanding the recorded agreement as to the highest and best use of the land, the conferral note recorded that Mr L would seek to confirm the information obtained by Ms J to the effect that the farm was included in the area stated by City A in its biodiversity scheme report as having the potential for subdivision under the biodiversity scheme. The conferral note recorded further that, at that stage at least, the information was contrary to the advice Mr L had received.
88Otherwise, the valuers agreed to review their respective summation calculations, in light of the comments made by each of them.
89Closer to trial, both valuers prepared updated reports. By that time, the husband no longer pursued a subdivision of the farm into three blocks, but did pursue a subdivision into two blocks.
Mr L’s updated reports
90Mr L prepared two updated reports for the purposes of trial, each expressing his opinion as to the value of the farm as at 26 September 2019. Both were tendered into evidence by consent.
91The first of those reports (“the advisory report”) set out his opinion as to the current market value of the farm “as is”.
92The “local market overview” included in that report differed from the market overview in his first report, in that it did not refer to factors more relevant to the Perth metropolitan region. He expressed the view that while the overall property market in Suburb A has fallen slightly over the past four to five years, it appeared to have steadied in the past six to nine months. He described the local market as “stable”.
93Having described the improvements on the property in his first report as having been in “good” condition, he described the same improvements as being in “fair” condition in the advisory report. That difference was not explored in cross-examination.
94He expressed the view that “in the current market, investors are requiring beach frontage and/or ocean views when spending $2 million or more”, while noting that the farm (which does not have ocean views) is well located with a short drive to Suburb B and is an uncommonly substantial parcel of land given its proximity to beaches.
95He referred to six property sales which he would regard as comparable. Four of those sales had occurred after the date of his first valuation. Of the other two sales, one had been referenced in his first valuation and the other had not.
96He confirmed that his primary method in assessing the market value of the farm was the Direct Comparison approach. He recorded that he had undertaken a “secondary check” of his assessment utilising the Summation approach.
97He referred in the body of his report to enquiries he had made as to the sub-divisibility of the farm, stating that “[f]urther discussions with a strategic planner have advised [sic] that it would likely be possible for subdivision potential [sic] into 2 lots under the [biodiversity scheme]” while noting that “[n]umerous conditions” would need to be met and approval would be required.
98He concluded that the “current market value of the property for Family Law purposes” was $3.95 million. There was no specific explanation in his report for the increase of $50,000 over his earlier valuation.
99The second of the updated reports (“the supplementary report”) addressed the question of the value of the farm if a subdivision into two individually titled lots with bushland covenants had been completed. He noted that “a subdivision proposal has been in discussion with the local Shire subject to conditions relevant to the [biodiversity scheme]” and that the relevant zoning may change if a development approval under the biodiversity scheme is granted.
100While expressing the view that each property would be “considered more marketable” due to a number of factors including “being a more affordable asset” and “smaller landholdings [being] slightly easier to manage”, he also thought it important to mention that discussions with local agents indicated reduced marketability for properties with bushland protection or conservation zoning.
101He went on to assess the underlying land value of the proposed northern block at $60,000 - $65,000 per hectare, equating to $1.8 million to $2.1 million for the holding. He assessed an added value of the improvements on the northern block at $700,000, to reach a total value of $2.8 million.
102He took a similar approach in relation to the proposed southern lot, assessing an underlying land value of $45,000 - $50,000 per hectare, equating to $1.8 million - $2 million for the landholding. He adopted the lower end of that range and assessed an added value of improvements of $50,000 to reach a total value for the southern block of $1.85 million. Again he described that assessment as being supported by sales evidence.
Ms J’s updated report
103Ms J produced an updated report dated 9 October 2019. That report was exhibited to an affidavit sworn by her on 14 October 2019. Also exhibited to that affidavit were various email exchanges with the husband’s lawyers, and email exchanges between various consultants regarding steps required to progress towards a subdivision of the farm, and email exchanges with a relevant officer at the City A.
104Those exhibits included a document recording a meeting between the husband and officers of the City A on 21 April 2019, at which two options for the subdivision of the farm into either three conservation lots or two conservation lots were discussed. The husband was recorded as suggesting “that the 2 lot subdivision proposal seemed to be more attractive based on personal considerations and the simplified planning process involved in respect to those bushfire planning, management and access issues raised.”
105Ms J described her updated report as providing a current review of her first valuation, and a current assessment as to an alternative two lot subdivision, assessing the value of the property as if that subdivision had been completed.
106She expressed the view that there had been little or no change in the value levels in the relevant market over the past five years, but that activity appeared to have increased during the past year with the time taken to achieve a sale generally seeming to have lessened, indicating an increase in demand albeit without any overt sign from sales evidence that value levels had changed. She said there had been “no properties of a similar nature offered on the market”.
107Ms J annexed to her report a schedule of sales which had occurred before and since her previous valuation, while expressing the view that none of those sales was “sufficiently comparable to be used for a direct comparison with the subject land on either basis of valuation”. Nevertheless, she regarded the sales as providing “good evidence that the subject market has not declined since the earlier valuation date” and also as supporting her “previous analysis of there being a greater underlying land value for the ‘[Suburb B]’ property”.
108She noted that nothing in her first conferral with Mr L caused her to make any adjustments in relation to sales evidence and associated analysis. She did, however, consider it necessary to review the added value she had attributed to the residence and bunkhouse buildings on the farm, reducing their added values by total of $300,000 with a corresponding adjustment to her summation assessments.
109The basis of her summation methodology, and its interaction with available sales evidence, was explained in some detail and, commonly with her first report, her calculations were shown.
110She assessed the value of the farm as a single large site “as is” as $6.1 million.
111She assessed the total value of the farm based on a three lot subdivision being completed as $7.7 million assessed from comparable sales and supported by assessment by summation.
112She assessed the total value of the farm based on the two lot subdivision presently being proposed by the husband, and on the basis of that subdivision having been completed, as $7 million. She explained that “[d]ue to the size of these two lots and the absence of any more recent comparable current sales evidence [she had] adopted the summation assessment, based on [her] analysis of the land value for the [entire lot] and the land values for the smaller three lot subdivision, and extrapolated accordingly.”
The second conferral
113Mr L and Ms J conferred by telephone on 21 October 2019 following the publication of their respective updated reports. They issued a joint statement which was tendered into evidence by consent. In short, they agreed to disagree.
114Mr L expressed the view that the building costs referred to by Ms J were too high, and questioned her determination of added value from dams and water supplies. He did not regard a number of the sales referred to in her report as being comparable, and said that she had “significantly exaggerated the underlying land value” of the farm and “ignore[d] recent comparable sales within the nearby area of similar sized properties”. He was also critical of her methodology, saying that she had assessed the value of the farm on a summation method and had not “compared her final assessed value to on a direct comparison sales method” (sic).
115Ms J noted what she regarded as Mr L’s “failure to recognize the difference in underlying land values in the [Suburb B] area, irrespective of availability of ocean views, compared with other nearby localities”. She regarded certain of his comments as to the market as being inapplicable to the subject property, and disputed the relevance of sales from different areas upon which he relied. She was “[u]nable to assess from the analyses provided as to where, what and how adjustments have been made to compare the sales to the subject property to arrive at an appropriate land value”, and disputed his summated values of improvements.
116By the conclusion of that process, the expert evidence as to the value of the farm was:
(a)that the farm’s value “as is” is $3.95 million (Mr L);
(b)that the farm’s value “as is” is $6.1 million (Ms J);
(c)that the farm’s value on completion of a subdivision into two blocks is $4.65 million (Mr L); and
(d)that the farm’s value on completion of a subdivision into two blocks is $7 million (Ms J).
Relevant legal principles – the valuation dispute
Market value and highest and best use
117The articulation of “market value” has its origins in the test formulated by the High Court and articulated by Isaacs J as follows:
“To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.”[7]
[7] Spencer v The Commonwealthof Australia (1907) 5 CLR 418, 441.
118The principle of “valuation for highest and best use” was considered by the Full Court in GWR & VAR,[8] where the court cited with approval the following explanation:
“Recognition of the willing–selling–willing–buyer concept necessarily involves valuation for the highest and best use for which the land is adapted. The prudent and well-informed vendor (whose existence must be assumed) would not willingly part with his land for a price less than that appropriate to its highest and best use; and the well-informed buyer would not expect to be able to purchase it for less. Each party would take into account ‘not only the present purpose to which the land is applied, but also any more beneficial purpose to which, in the course of events at no remote period it may be applied, just as an owner might do if he were bargaining with a purchaser in the market. This is the mode in which the land would be valued’[9]“.[10] (Citation added).
[8] (2006) 36 Fam LR 237, 247 [52].
[9] Spencer v The Commonwealthof Australia (1907) 5 CLR 418, 441.
[10] R.O. Rost & H.G. Collins, Land Valuation and Compensation in Australia (Australian Institute of Valuers, 3rd ed, 1984) 90.
119The court also cited with approval the following succinct statement of the principle by Pullin J in the Supreme Court of Western Australia:
“The test of market value is well known. It is what the hypothetical purchaser desiring to purchase the land would have had to pay for it on the date of resumption to a hypothetical vendor willing to sell it for a fair price but not desirous to sell.
Regard must be had to every element of value which the lands possess. Every such element must be taken into consideration insofar as they increase the value to the owner of the land. In short, regard should be had to the highest and best use of the subject land, meaning the most advantageous use of the subject land having regard to planning and all other relevant factors affecting its present and future potential”.[11] (Citations omitted)
[11] Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122,
120In GWR & VAR,[12] the Full Court dealt with an appeal against a decision where, at first instance, the husband proposed the sale of the former matrimonial home and the wife sought to retain it. It was common ground that the value of the home if the property was not subdivided was $270,000. The evidence established that the property could be subdivided promptly, and at very modest cost, whereupon its value would be $375,000. The primary judge, noting that the wife did not intend to subdivide the property, adopted the lower value. His Honour regarded the issue as being “analogous to the issue of whether Capital Gains Tax is to be taken into account in property proceedings” and was found by the Full Court to have been “clearly influenced by the wife’s absence of intention to subdivide the property”.[13]
[12] (2006) 36 Fam LR 237.
[13] Ibid, 246 [50]-[51].
121The primary judge was found to be in error. Relevantly for present purposes, the Full Court found that the wife’s intention in relation to the property was irrelevant to the matter the primary judge was required to determine, being the property’s value.[14] In re-exercising the discretion to adopt the higher value, the Full Court relevantly noted the necessity for the highest and best use in question to be “legally possible”, and for the subdivision to be able to proceed “at no remote period”.[15]
The independence and expertise of the valuers
[14] Ibid, 247 [52].
[15] Ibid, 248 [55].
122In the course of cross-examination of each of Mr L and Ms J, questions were directed towards both their expertise and their independence. It is convenient to note at this point the relevant principles as summarised by Heydon JA in Makita:[16]
“In short, if evidence tendered as expert opinion evidence is to be admissible, it must be agreed or demonstrated that there is a field of "specialised knowledge"; there must be an identified aspect of that field in which the witness demonstrates that by reason of specified training, study or experience, the witness has become an expert; the opinion proffered must be "wholly or substantially based on the witness's expert knowledge"; so far as the opinion is based on facts "observed" by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on "assumed" or "accepted" facts, they must be identified and proved in some other way; it must be established that the facts on which the opinion is based form a proper foundation for it; and the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached: that is, the expert's evidence must explain how the field of "specialised knowledge" in which the witness is expert by reason of "training, study or experience", and on which the opinion is "wholly or substantially based", applies to the facts assumed or observed so as to produce the opinion propounded.”
Uncertainty and the risk of injustice
[16] Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 743 [85].
123Given the extent of the differences between the opinions of the valuers, and the amounts involved, the potential for an injustice to a party arising from an acceptance of the opinion of one valuer and a rejection of the opinion of the other clearly arises.
124That potential is not ameliorated by the observation that I am not required to simply choose between the valuers, but rather to consider all the material before the Court and to satisfy myself by a common sense endeavour and the application of proper principles that I have arrived at the value of the property on the relevant date, whether or not that value happens to coincide with that ascribed by either valuer.[17]
[17] Commonwealth v Milledge (1953) 90 CLR 157, 161-162; see also In the Marriage ofBoriello (1989) FLC 92-049.
125While a trial judge should determine a disputed valuation issue where the evidence permits such a determination, there is no obligation to do so irrespective of the state of the evidence.[18]
[18] In the Marriage of Little (1990) FLC 92-147.
126In Little, the Full Court observed that in a case where a determination is not possible, “as in a case where there is a very considerable disparity in the valuation evidence and other evidence indicates that the actual ascertainment of the true value is difficult and complex, the proper solution as between the parties may be to order a sale”.[19]
[19] Ibid, 152.
127The Full Court in the later case of Smith went further, saying that “where the state of the evidence makes the process of valuation hazardous or uncertain, or where there are wide differences between legitimate valuations because of a volatile market or peculiarities relating to the specific property or otherwise, the ascertainment of value by judicial process may become too uncertain and the preferable course is to order the sale of the property so that its real value can be revealed by market forces” (emphasis added).[20]
Assessment of the evidence of the valuers
[20] Smith & Smith (1991) FLC 92-261, 78,759.
128Both Mr L and Ms J were cross-examined extensively at trial. By agreement between counsel, and with my approval, they gave evidence concurrently. That process facilitated prompt responses by each to assertions by the other, and an exploration of the differences in their approaches and opinions.
129Both valuers were criticised by counsel for the party by whom they had not been engaged. It is convenient to assess those criticisms, and their evidence, by reference to certain common threads.
Experience and expertise
130Mr L has been in his present employment with [Valuation Company A] as a valuer since 2016. Prior to that, he was employed for nearly seven years as a valuer with another valuation firm, working in [another area] of Western Australia. He had previously worked for another firm between 2005 and 2008 as a valuer, working in what he described as “a diverse area [in regional WA]”. His previous employment as an assistant valuer was for the period 1997 to 2000.
131At various times over his working life Mr L has worked in other occupations. While some questions were put to him in cross‑examination about his level of experience, and whether he had worked “full-time” as a valuer, it was not seriously suggested that he did not have the relevant expertise to conduct a valuation of the farm.
132Ms J achieved her first qualification as a valuer in 1972. She has worked virtually continuously as a valuer since that time, and was a member of the Land Valuers’ Licensing Board between 1996 and 2005. She has served at various times as a lecturer or tutor in valuation at what is now [University A]. It was accepted on behalf of the wife that she “has a lot of experience in valuing properties in the context of compensation and/or compulsory acquisition proceedings” and that she is “an experienced litigation support valuer”. While there appeared to be some suggestion on behalf of the wife that valuation for compensation purposes differs somehow from valuation for the present purposes, involving a heavier reliance on the summation method of valuation rather than reference to comparable sales, that was expressly denied by Ms J in an explanation I found to be credible.
133While it may fairly be noted that Ms J is a more experienced valuer than Mr L, I nevertheless readily conclude that both have the appropriate experience and expertise to express expert opinion as to the value of the farm.
Independence and credibility
134It is trite that independence is fundamental to the utility of expert evidence, such that the opinion proffered is "wholly or substantially based on the expert’s specialised knowledge",[21] free from external influence.[22] The importance of that principle is simply reinforced by the express provisions of rule 15.59.
[21] Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705, 744 [85].
[22] W & W, Re; Abuse Allegations; Expert Evidence (2001) FLC 93-085.
135The independence of each valuer was challenged by counsel for the party by whom that valuer had not been engaged. Considerable time and emphasis during cross-examination was directed to those challenges.
136Mr L was cross-examined at length by counsel for the husband. That cross-examination explored the extent to which his written opinions, and the alterations which he insisted be made to the joint statement produced by the experts following their first conferral and initially drafted by Ms J (“the conferral note”), represented exclusively his own work.
137What emerged was that a number of different people within Valuation Company A had input into not only Mr L’s initial valuation, the advisory report and the supplementary report, but also into the conferral note.
138The additional input into the initial valuation was entirely transparent. The documents were co-signed by a director of Valuation Company A with an express notation referring to the company’s internal quality assurance procedures and certifying that the co-signatory had “reviewed the valuation methodology and calculations with [Mr L] however the opinion of value expressed…. [was] arrived at by [Mr L] alone”.
139Mr L’s explanation of that co-signatory process, and his employer’s requirement that all valuations be co-signed by a director, was credible and I accept it.
140His explanation of the process by which the conferral note went through a series of reviews and changes, after an initial draft had been prepared by Ms J, was less satisfactory.
141Self-evidently, the obligation to prepare a joint statement following conferral is solely that of the experts who confer.[23] The process by which the conferral note in this case was finalised within Valuation Company A went beyond the co-signatory process described in relation to the finalisation of the valuation, advisory report and supplementary report.
Proposed orders
237Subject to any submissions as to form, and noting the undertaking of each of the parties to do all acts and sign all documents necessary to carry out those orders in the most tax effective manner lawfully possible on advice from their duly qualified legal and accounting advisers, I propose to make the orders set out below. The orders contained in paragraphs 1 – 29 inclusive, and paragraphs 34 – 36, are made by consent. The orders contained in paragraphs 7, 20 and 31 have been amended in form only to reflect my decision that the farm must be offered for sale, and my inability to determine its value.
[Company G]
1.Within 30 days, the parties in their capacities as directors of [Company G] do all acts and sign all documents necessary to transfer to the husband all interest held by [Company G] in the [livestock] and any equipment associated with the [livestock] including the [work related] equipment.
2.Within 30 days, the husband do all acts and sign all documents necessary to:
(a)Resign from any offices or positions he holds in [Company G]; and
(b)Transfer to the wife his shares in [Company G].
3.Monies recorded in the schedule attached called ‘assets and liabilities and superannuation’ as being the asset or liability of [Company G] shall remain the asset or liability of [Company G], and neither the husband, nor any entity he controls, shall seek to recover or enforce, any other debt owed by [Company G]. Contemporaneously with the husband's compliance with the preceding paragraph, the wife do all acts and sign all documents necessary to:
(a)Secure the husband's release from any guarantees or other obligations given or made by him in his capacity as a director and shareholder of [Company G]; and
(b)Thereafter pay and indemnify the husband, and keep him indemnified, against any liabilities arising from, or in relation to, his involvement in [Company G], including but not limited to any amounts listed as owing to [Company G] by the husband or any entities he controls.
The wife's Other Property
4.From the date of these orders any right, title or interest the husband may have in the following do vest with the wife absolutely:
(a)Any funds standing to the wife's credit with any bank, building society or financial institution;
(b)Any motor vehicles registered in the wife's name:
(c)Any shares in publicly listed companies currently held in the wife's name, or in the name of any entity of which she has control;
(d)Any right, claim or chose in action the wife may have, including any entitlement in any trust or testamentary estate;
(e)The furniture, chattels, plant and equipment and artwork as identified in the schedule agreed between the parties on 16 October 2019 and tendered in Court, save for those items still to be divided and chattels in the tool shed and gates stored at the premises, and noting that values are yet to be obtained and agreed regarding the truck, ute and tractor;
(f)Any clothing, jewellery and personal items in the wife's possession or control;
(g)Subject to these orders, any member entitlements held in the wife's name with any superannuation provider.
The husband's Other Property
5.From the date of these orders, any right, title or interest the wife may have in the following do vest with the husband absolutely:
(a)Any funds standing to the husband's credit with any bank, building society or financial institution;
(b)Any motor vehicles registered in the husband's name;
(c)Any shares in publicly listed companies currently held in the husband's name or in the name of any entity of which he has control;
(d)Subject to these orders, any right, claim or chose in action the husband may have, including any entitlement in any trust or testamentary estate;
(e)Any clothing, jewellery and personal items in the husband's possession or control;
(f)The furniture, chattels, plant and equipment and artwork as identified in the schedule agreed between the parties on 16 October 2019 and tendered in Court, save for those items still to be divided and chattels in the tool shed and gates stored at the premises, and noting that values are yet to be obtained and agreed regarding the truck, ute and tractor;
(g)Subject to these orders, any superannuation member entitlements held by the husband with any superannuation provider.
6.The parties shall, within 28 days of final orders, collect any furniture, chattels or artwork to which the party is entitled pursuant to the orders and which is in the other’s possession.
7.In respect of plant and equipment and [livestock], the husband shall remove the [livestock], plant and equipment to which he is entitled pursuant to these orders within 28 days of the sale of the farm, whether to a third party or to the wife.
The Claim against the Estate of [the husband’s brother] and/or [the husband’s mother]
8.From 30 June 2019, the parties shall equally contribute toward the costs of the estate litigation.
9.Within 28 days of any receipt by the husband or any entity he controls of any funds arising from, or in relation to, the claims currently being made by the husband and/or the Family Trust against the estate of the husbands' brother and/or mother, the husband do pay or cause to be paid to the wife an amount equal to 50 per cent of such payments less any legal fees reasonably incurred after 30 June 2019 in pursuit of such funds and not recoverable from the other party or parties to the litigation, and to which the wife has not already contributed.
10.For the purposes of the preceding paragraph, the husband forthwith irrevocably authorise and instruct any solicitors or barristers he has engaged, or may in the future engage, in relation to the above litigation, to communicate with the wife or her representatives and provide her with copies of such documents she may reasonably request in relation to the said litigation.
The Entities
11.Forthwith upon perfection of the transfer of the share in [Company C] referred to below, and at the husband's cost, the wife do all acts and sign all documents necessary to:
(a)Resign from any offices or positions she holds in the Family Trust and:
(i)[Company A];
(ii)[Company B];
(iii)[Company E];
(iv)[Company K];
(v)[Company J] (provided the superannuation split has occurred, failing which the wife resign forthwith upon that occurring);
hereinafter collectively referred to as “the companies”;
(b)Transfer to the husband any shares the wife holds in any of the Companies; and
(c)Relinquish any interest she may have as a beneficiary of the Family Trust.
11A. Monies recorded in the schedule attached called ‘assets and liabilities and superannuation’ as being the asset or liability of the Family Trust, and/or the companies shall remain the asset or liability of those entities, and neither the wife, nor any entity she controls, shall seek to recover or enforce, any other debt owed by any of entities.
12.Forthwith upon compliance by the wife with the preceding paragraph, the husband do all acts and sign all documents necessary to:
(a)Secure the wife's release from any guarantees given by her in relation to the Family Trust, or the Companies; and
(b)Thereafter pay and indemnify the wife against any and all actions, claims, debts or liabilities arising from or in relation to her involvement in the entities referred to in the preceding paragraph, including but not limited to any amounts owed by the wife to the said entities, but excluding any tax arising from the distribution of the sale proceeds of [Street A] or the farm (if sold) to her or her nominee.
[Street A, Suburb B] Block
13.The parties as directors of [Company A] as trustee for the Family Trust cause a sale of the [Suburb B] block, and a division of the net proceeds of sale equally between them.
The [Suburb A] Property
14.The wife do forthwith transfer to the husband her right, title and interest in the [Suburb A] Property, currently registered in the wife's sole name, ( "the [Suburb A] property ").
[Company C] and [Company F]
15.The husband as a director of [Company C] propose and support a resolution, with the consent of [F], [Mr G] and [H], to split the two existing shares in [Company C] into four shares.
16.On the passage of such resolution, the parties forthwith thereupon cause [Company A] to transfer to the wife one of [Company A]’s two shares in [Company C].
17.The parties share equally in any costs, duty or tax arising from the preceding paragraph.
18.After the transfer of the one share in [Company C] from [Company A] to the wife, the husband refrain from causing [Company A] to vote against a shareholders’ resolution to appoint the wife, or remove F, as a director of either [Company C] or [Company F].
19.The husband, while a director of [Company F] and [Company C], do all other necessary acts to:
(a)Authorise and instruct any accountants or other directors of [Company F] or [Company C] to provide the wife with such documents and information as she may reasonably request from time to time at her cost; and
(b)Cause the wife to be provided with copies of any minutes of meetings or resolutions of directors of [Company C] and/or [Company F] as soon as practicable after the same are received or produced.
Other
20.From the share each party is to retain from the proceeds of the [Street A] property, and/or the proceeds of the Farm (if a sale occurs), the parties make such payment between themselves as is required to achieve an equal division of the net assets of the parties (excluding superannuation and the payment in paragraph 21), as per the schedule attached hereto with:
(a)The value of the farm as determined by the sale price; and
(b)No add backs, other than as expressly noted on the schedule.
21.The parties divide by agreement:
(a)The contents of the tool shed and failing agreement on a pick for pick basis;
(b)The [pet birds] as agreed; and
(c)Noting the husband is to retain some of the gates in the storage area of the farm as agreed.
Superannuation Orders
22.Within 28 days of the settlement of any sale of the [Suburb B] Block:
(a)The husband pay or cause to be paid, from his share of the [Suburb B] Block sale proceeds, $600,000 to [Company J] as trustee for the Superannuation Fund;
(b)Subject to these orders, the parties be restrained by injunction from redrawing of the accounts of the Superannuation Fund pending the superannuation split provided for in the following paragraphs of these orders; and
(c)For the avoidance of doubt, there be no recognition of the above payments in calculating the overall equal division of the parties’ net assets in accordance with paragraph 20 hereof.
23.As soon as practicable after the contract for the [Suburb B] Block becoming unconditional:
(a)The parties in their capacities as directors of [Company J] as trustee for the Superannuation Fund:
(i)Instruct [Mr X] and [Mr F], or such other accountants as they may agree upon, to confer with a view to finalising the financial statements for the Fund for the 2016, 2017, 2018 and 2019 financial years;
(ii)Instruct [Mr X] and [Mr F], or such other accountants as they may agree upon, to confer with a view to preparing and finalising special purpose accounts up to the end of the quarter immediately
following receipt of the proceeds from the [Suburb B] Block (“the cut off quarter”) so as to ensure that the Superannuation Fund is, at least at that point, compliant with the relevant legislation and regulations; and
(iii)Call such meetings, vote in favour of such resolutions, and sign such documents as are necessary to cause the fund financial statements and returns for the 2016, 2017, 2018, 2019 and 2020 (up to the cut off quarter) years to be accepted, audited and lodged by the Fund.
24.For the purposes of the preceding two paragraphs, if and to the extent that the payment made by the husband into the fund exceeds any amount owed by one or other of the parties to the Fund, the husband cause such amount or portions of that amount to be treated as a contribution by him to the Fund.
25.Upon the Court noting that the parties and their two adult children, [F] and [K], are the directors of [Company J], which is the trustee for the [Lunar] Superannuation Fund (“the Fund”), in accordance with section 90XT(1)(b) of the Family Law Act 1975:
(a)The husband is entitled to be paid 100 percent out of the wife’s interest in the Fund and the wife’s entitlement be correspondingly reduced to nil by force of this order;
(b)The wife is entitled to be paid 50 per cent of the husband’s interest in the Fund, and the husband’s entitlement be correspondingly reduced by force of this order; and
(c)The preceding two sub-paragraphs operate sequentially, and for that purpose, the operative time for sub-paragraph (b) is immediately following sub-paragraph (a) hereof.
26.For the purposes of sub-paragraph (a) of the preceding paragraph, the operative time is the last day of the cut off quarter.
27.The Trustee of the fund do all such acts and things and sign all such documents as may be necessary to:
(a)Calculate, in accordance with the requirements of the Family Law Act 1975 the entitlement awarded to the wife pursuant to paragraph 24 of these orders; and
(b)Pay the entitlement whenever the trustee makes a splittable payment from husband’s interest in the Fund.
28.The parties in their capacity as directors of the trustee of the Fund sign all documents and vote in favour of any resolutions necessary to cause the superannuation split pursuant to these orders to be satisfied from cash.
29.Upon payment of the superannuation split pursuant to these orders, the wife do all acts and sign all documents necessary to:
(a)Cause her member entitlement in the Fund to be rolled out into a compliant fund of her choice, and the husband do all acts and things necessary to facilitate this; and
(b)Thereafter resign as a director of, and relinquish her shareholding in, [Company J].
30.Forthwith upon compliance by the wife with paragraph 11 of these orders, the husband cause the benefit of the loans owed by [Company G] to the Family Trust, [Trust B], and the parties jointly as reflected in the financial statements of the relevant entities to be transferred or assigned to the wife and noted that the relevant entities shall write off such loans other than [Company G].
The Farm
31.The parties in their capacities as directors of [Company A] as trustee for the [Lunar] Family Trust forthwith list on the market for sale and thereafter cause the sale and settlement of the Farm, [Company H] plant, equipment and stock and for that purpose, the following provisions apply:
(a)The parties appoint such agent as they shall agree upon within 14 days and failing agreement such agent who may be nominated by the president by the president of the Real Estate Institute of Western Australia (“the Agent”);
(b)The parties cause the property to be listed for sale by private treaty with the listing price being the “as is” valuation by [Ms J], or such other value as the parties may agree upon advice from the Agent;
(c)Subject to any contrary advice from the appointed agent, if the property has not sold within 90 days of being listed, the parties cause the property to be sold by public auction, and for the avoidance of doubt, the parties or their nominees be at liberty to bid at the auction;
(d)Upon settlement of the property the proceeds of sale be applied as follows:
(i)In payment of the Agent’s fees and commissions (or reimbursement to any party who has paid them in advance);
(ii)In payment of any adjustments for rates and taxes; and
(iii)The balance be divided in such a manner as is necessary to achieve an overall equal division of the parties’ nett assets and liabilities (excluding any liability of either party for tax payable on any distribution following the sale) by reference to the schedule attached to these orders, and the operation of them.
32.Notwithstanding the provision of order 2A, the stock of [Company H], the tractor, the truck and the utility be offered for sale with the farm, and the proceeds of sale of those items if separate from the sale price of the farm be divided equally.
33.If the tractor, truck and/or the utility are not sold with the farm, in the absence of agreement to the contrary, the parties sell them at auction and divide the proceeds equally, with the parties and their nominees being at liberty to bid.
34.The parties have liberty to apply in relation to the implementation of these orders, and the terms and conditions of sale of the farm.
35.All existing orders otherwise be and are hereby discharged.
36.There be no order as to costs.
37.All documents produced by named persons pursuant to subpoena be returned or destroyed in accordance with the request from the named person on the expiration of 42 days from this order.
38.In relation to material tendered as an exhibit into evidence in these proceedings:
(a)all parties must collect the exhibits tendered by them (“their exhibits”), from the Chambers of Justice O’Brien, at least 28 days, and no later than 42 days, from the date hereof;
(b)all parties must contact the Chambers of Justice O’Brien to arrange the collection of their exhibits; and
(c)in default of compliance with subparagraph (a), all material tendered as an exhibit, save and except for material produced pursuant to subpoena, will be destroyed by the Court without notice to the parties.
39.In the event of an appeal being lodged prior to the expiration period of 42 days, paragraphs 37 and 38 above do not apply.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.
KM
Associate5 DECEMBER 2019
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