ROONEY and ROONEY

[2014] FCWA 39

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: ROONEY and ROONEY [2014] FCWA 39

CORAM: CRISFORD J

HEARD: 27, 28 AUGUST 2013, 11 DECEMBER 2013 AND

9, 10 & 11 JUNE 2014

DELIVERED : 27 JUNE 2014

FILE NO/S: PTW 2645 of 2010

BETWEEN: Ms ROONEY

Applicant

AND

Mr ROONEY
Respondent

Catchwords:

PROPERTY SETTLEMENT - Where it is just and equitable to alter the parties' rights and interests in their property - where both parties agree that during the marriage their contributions were equal - where the wife seeks an adjustment of at least 10 per cent on a consideration of s 75(2) factors, particularly s 75(2)(o) - where the husband accepts the wife should receive an adjustment of 8.5 per cent - where both parties are of a similar age - where the husband has a greater earning capacity than the wife - where the husband failed, on a number of occasions, to make full, frank and complete disclosure of all relevant financial circumstances in a timely fashion - where the wife receives an adjustment of 10 per cent in her favour

Legislation:

Family Law Act 1975 (Cth) - s 75, s 79

Category: Not Reportable

Representation:

Counsel:

Applicant: Mr R Bannerman

Respondent: Self Represented Litigant

Solicitors:

Applicant: Bannerman Solicitors

Respondent: Self Represented Litigant

Case(s) referred to in judgment(s):

Bevan v Bevan (2013) FLC 93-545

Black and Kellner (1992) FLC 92-287

Brandi v Mingot (1976) 12 ALF 551

Briese and Briese (1986) FLC 91-713

Kannis and Kannis (2003) FLC 93-135

Luciano v Luciano [2000] FamCA 1712

Oriolo and Oriolo (1985) FLC 91-653

Stanford v Stanford (2012) 247 CLR 108

Tate and Tate (2000) FLC 93-047

Weir and Weir (1993) FLC 92-338

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL
JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN

CHANGED

1I am required to determine an application for the division of property of [Ms Rooney] (“the wife”) and [Mr Rooney] (“the husband”), following their marriage of 26 years.

2Despite the length of the trial, a considerable number of issues were agreed. The outstanding matters revolve around the valuation and operation of a [scrap] business operated by the parties.

The parties and their relationship

3The wife was born [in] August 1960 and is presently aged 53 years. She works as a [instructor] and also has some casual employment as a parcel sorter at Australia Post.

4The husband was born [in] June 1961 and is 52 years. He describes himself as a company director. He completed a Bachelor of Business degree at Curtin University in 1988, during the marriage.

5The parties commenced cohabitation [in] January 1982 and separated in early August 2008. Their divorce order became final [in] January 2011.

6The parties have four children, all of whom are over the age of 18. Their youngest child is aged 20 years. The husband remarried on 11 June 2011 to [Kalinda Rooney].

Brief financial history

7In June 1992 Sunshine Pty Ltd (“[Sunshine]”) was registered as a company by the parties. It commenced operating from leased premises in [Cockburn]. The business was principally that of scrap dealers and merchants.

8The directors of the company were the husband and the wife and they each had a 50 per cent shareholding.

9The company operated under three business names, “[A]”, “[B]” and “[C]”. The B business commenced operating in March 2000. In June 2002 and March 2003 the company acquired the two businesses known as C and A. These businesses were collectively engaged in collection and export of scrap.

10The company generated income from both national and international sources.

11In March 2005 Sunshine, in its capacity as Trustee for the [Rooney Family Trust], purchased land at [Coolings Drive, Geraldton] (“[Geraldton]”). In December 2005 it purchased land at [R Road], [Flannigan] (“[Flannigan”). Sunshine operated from both properties.

12The wife started court proceedings in May 2010.

13In June 2012 the husband registered a new company, [BR Pty Ltd] (“[BR]”) in his sole name. Since July 2012 the business formerly conducted by Sunshine has been conducted by both Sunshine and BR. BR operates, in the main, from the Flannigan premises. The husband is the sole director and shareholder of BR. The wife was unaware of the change in business arrangements until 24 October 2012.

14[Shimmer] Holdings Pty Ltd (“[Shimmer]”) is an entity in which the husband says he has a 50 per cent interest. He is the sole director and secretary and his former employer holds the other 50 per cent of shares. The husband deposed that the entity is utilised on an ad hoc basis for management, consulting and supervising work outside of Sunshine, but within the scrap industry.

15A Single Expert Witness, Susanne Delbridge, produced two valuation reports of the interests held by the husband and wife in the various entities. She was not asked to value Shimmer. The parties’ joint instructions to Ms Delbridge, together with an order made on 22 April 2013, facilitated this process. The first report was produced on 12 August 2013 just before trial. The trial was subsequently adjourned after three hearing days. An updated report was provided for the purpose of the adjourned trial and that report is dated 27 May 2014. In the meantime the husband had issued questions to Ms Delbridge on 10 September 2013. These were answered on 24 October 2013.

Applicable law

16The High Court has reviewed the principles applicable to the determination of property settlements under the Family Law Act 1975 (Cth) (“the Act”) in Stanford v Stanford (2012) 247 CLR 108.

17The Full Court of the Family Court (per Bryant CJ and Thackray J) has summarised three fundamental propositions which will provide useful guidance to trial judges in approaching the task under s 79 of the Act. These were set out in Bevan v Bevan (2013) FLC 93-545 as:

1.Determination of a just and equitable outcome of an application for property settlement begins with the identification of existing property interests (as determined by common law and equity);

2.The discretion conferred by the statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties’ interests in the property are or should be different from those determined by common law and equity;

3.A determination that a party has a right to a division of property fixed by reference only to the matters in s 79(4), and without separate consideration of s 79(2), would erroneously conflate what are distinct statutory requirements. (original emphasis)

18The last of the propositions demands a dual consideration of issues arising under s 79(2) and s 79(4). The issues are intertwined, although they are very different.

19There is the preliminary question of whether it is just and equitable to make any orders altering the property interests of the parties. This involves an exercise of discretion. If the answer to that preliminary question is yes, then it is necessary to consider the manner in, and the extent to, which it should be done. This requires an evaluation of the matters to ascertain what particular order should be made.

What are the existing interests?

20I find the parties’ present interests in property to be:

Description	Ownership	Value
(or to retain)
Partial property settlement 22 August 2013	Wife	350,000
11 June 2014	Wife	325,000
Superannuation owed to wife from Sunshine Pty Ltd	Wife	1,890
[RK] Financial Services Ltd shares (2000 shares)	Wife	1,600
BankWest Feesaver Standard Account	Wife	1,515
BankWest Goldcash Management Account	Wife	2,560
NAB Flexi	Wife	325
Travelex Prepaid Foreign Currency Card US	Wife	204
Travelex Prepaid Foreign Currency Card EURO	Wife	96
Total – wife	$683,190
20 [Farmers Road], [South Harbour] (50 per cent interest)	Husband	49,000
Sunshine Pty Ltd	Husband	260,000
[BR] Pty Ltd	Husband	2,236,000
Rooney Family Trust	Husband	957,000
Annual leave entitlements	Husband	16,000
Long service leave entitlements	Husband	20,796
Superannuation owed to husband from Sunshine Pty Ltd	Husband	4,500
Seadoo Jetski	Husband	8,000
Furniture and contents	Husband	10,000
NAB Classic Account	Husband	641
Westpac Classic Account	Husband	2,922
Total - husband	$3,564,859
Total	$4,248,049
Superannuation
Australian Super	Wife	23,680
The Rooney Superannuation Fund, NAB Business Cash Maximiser Account	Husband	95,813
The Rooney Superannuation Fund NAB Business Cheque Account	Husband	193
Total superannuation	$119,686
All property including superannuation	$4,367,735
Liabilities
Woolworths Everyday Reward Mastercard	Wife	57
NAB Qantas Gold Card	Wife	3,385
Loan payable to the Rooney Family Trust	Wife	94,570
Loan payable to the Rooney Family Trust	Husband	153,825
Total Liabilities	$251,837
Total Net Property	$4,115,898

21I will explain my findings on the value of any item not agreed by the parties. A number of matters in dispute are dealt with by the s 75(2) considerations set out later in the judgment.

•20 Farmers Road, South Harbour

22This property is owned by the husband’s present wife. It is accepted the husband has a half share in the property due to the financial contribution he made to its acquisition. It is presently rented to Mrs K Rooney’s daughter.

23The wife says the husband’s interest is valued at $49,000 and the husband says it is $40,000. The value of the property forming the basis of the calculation is agreed. The difference in the net value of the husband’s interest is what the husband says is a proportion of any likely sale costs that would need to be paid on a sale of that property. He estimates these will be $9,000. The wife says there is no evidence the house will be sold.

24I am required to ascertain the parties’ existing interests in property. There is no real evidence to suggest that the husband will be realising his interest in the property in which, until recently, he and his present wife lived. It is inappropriate to include those costs in the present balance sheet. The husband’s present net interest of $49,000 will be reflected as the value.

•Valuation of BR

25Early in the court proceedings the parties agreed that the cut-off point for any valuation of the business Sunshine would be 30 June 2011. The progress of the matter to trial was slow, commencing in late August 2013. It became inevitable that the trial would be adjourned after hearing some evidence to allow the then outdated valuation to be redone. This was due to the change in the entity operating the scrap business and the need to identify and value the parties’ current interest in their property.

26At the end of the resumed trial it became apparent the husband did not dispute most of the values attributed to the minor entities. However, there was disagreement about Ms Delbridge’s value of BR.

27The first report dated 12 August 2013 valued the interests held by the husband and the wife in the entities as at 30 June 2011. In the valuation a total value of $2,510,000 was attributed to Sunshine. In the second report of 27 May 2014, the value of BR was $1,486,000 and Sunshine $260,000.

28In each report Ms Delbridge utilised the valuation methodology of the capitalisation of future maintainable earnings. She considered this appropriate as the company was conducting an actively trading business. She gave reasons for adopting this methodology which were not the subject of successful challenge. In each valuation she adopted a multiplier of 3.5. She considered this appropriate in both valuations in order to provide the best snapshot of the true value, taking into account this particular business and any associated risks.

29At the conclusion of Ms Delbridge’s evidence she was provided with a possible revised valuation which included an additional year of the business’ operation. The first report had dealt with the financial years of 2009, 2010 and 2011. Her second report had dealt with the financial years in 2010, 2011, 2012 and 2013. Counsel for the wife had suggested revising her valuation on the basis of the inclusion of the financial year 2009 in the second report as in the first report. On this revision the value of BR is $2,236,000.

30Ms Delbridge accepted that the inclusion of the 2009 revenue was a reasonable and appropriate way to approach the valuation. The revenue in that year was revenue which had subsequently been achieved by the business and was not abnormal in any sense.

31The incorporation of the 2009 financial year increased the goodwill figure of the business. There were no other changes made. During the course of evidence it was clear that there had been significant cut-off issues which were not resolved in a satisfactory manner prior to the final report. There were also likely accounting errors. Ms Delbridge said that the business ran its accounting section in a somewhat loose manner. I also accept that Ms Delbridge was not provided with all the information she requested of the husband. I will deal with some further issues of disclosure later in my judgment.

32Ms Delbridge said there were risks in ascertaining a correct value of the entities given these uncertainties. To increase the period of time over which the valuation was drawn provided the best snapshot of a true value. She agreed that it was appropriate to include the additional 2009 financial year.

33The husband’s position was simply that it was unfair to make such a revision at this late stage.

34I intend to include the revised business value of Ms Delbridge. This figure is reflected in the balance sheet.

Is it just and equitable to make any orders?

35This has been a very long marriage. The parties’ finances have been inextricably mixed. The joint business of Sunshine has, since the middle of 2012, been operated by BR, the sole director of which is the husband. He holds 50 per cent of the shares and the wife has no legal interest in it at all. It is just and equitable to make orders to ensure that the wife receives her appropriate entitlements.

Contributions

36Both parties agree that during the marriage their contributions were equal. Each says that any adjustment that should be made to that position of equality has a basis in matters set out in s 75(2) of the Act.

37Neither party addressed the issue of contribution to the superannuation assets separately or suggested any position other than that of equality.

38I agree that during this long marriage the contributions of the parties were equal

Section 75(2) matters

39On the basis of certain matters set out in s 75(2), in particular, s 75(2)(o) the wife says that an adjustment of at least 10 per cent in her favour is appropriate.

40The husband accepts that the wife should receive some adjustment because of his greater income earning capacity. However, he says there are certain matters that favour him also. Overall, he accepts the wife has an entitlement of 58.5 per cent of the value of the present property.

41The husband concedes that he has a greater earning capacity than the wife. The wife’s income is approximately $57,200 annually. This varies with any overtime she is allocated. Her income, given her age and lack of qualifications, is unlikely to ever increase substantially. This was a long marriage and the parties have four children. Her role as the primary caregiver has and will have a continuing effect on her income earning capacity.

42The husband’s present income on an annual basis is $131,000. Ms Delbridge, taking into account salary surveys published by the Australian Institute of Management, says the notional salary package for the husband as managing director in 2013 should be $216,000. Both amounts include superannuation.

43The husband said he agreed with Ms Delbridge’s figures on the basis it is a salary he will likely earn in the future. The husband has an established business. Despite the stress upon him generated by the proceedings, he has exhibited considerable ingenuity in running a scrap enterprise.

44In relation to the husband’s salary the wife also says that the difference of $85,000 in what the husband currently earns and the amount Ms Delbridge has attributed as a salary package can be seen as a resource he retains. Ms Delbridge agreed with this.

45Apart from this disparity in income, the wife says there are other matters which should also be taken into account. The most obvious of these is the husband’s failure to disclose relevant documents.

46There is a clear obligation under the Family Law Rules 2004 (Cth) to make a full, frank and complete disclosure of all relevant financial circumstances in a timely fashion. The need for parties to make such disclosure in financial matters is not in doubt. This fundamental obligation is owed to both the Court and the other party (See Oriolo and Oriolo (1985) FLC 91-653; Black and Kellner (1992) FLC 92-287; Weir and Weir (1993) FLC 92-338; Tate and Tate (2000) FLC 93-047 and Kannis and Kannis (2003) FLC 93-135). Smithers J in a seminal passage in Briese and Briese (1986) FLC 91-713 – 75,181 at 75,180 said:

… I believe that a person in the position of the husband in this case has a positive obligation to set out at an early stage his financial position in a clear and comprehensive manner. The Regulations, and now the Rules, are not intended as a vehicle to mask the true position, or as an aid to confusion, complexity or uncertainty. They are not intended as the outer limits of the obligation of financial disclosure, but as providing avenues towards disclosure. The need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance. Unless each party adopts a positive approach in this regard delays will ensue with the consequent escalation of legal, accounting and other expenses, always assuming that a party has the strength to continue the struggle for information and understanding.

…

In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred. Livesey v Jenkins makes it clear that mere compliance with rules of court or practice directions does not alter the basic principle of the need for full and frank disclosure by the parties.

…

47In relation to non-disclosure of assets, the Full Court in Weir (supra) stated at 79,593 as follows:

… once it has been established that there has been a deliberate non‑disclosure … then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.

48From the commencement of trial the wife made complaints about the general failure of the husband to comply with his obligation. In particular, this related to the timely provision of financial information to Ms Delbridge.

49The most telling example of this failure to disclose prior to the start of the trial was the fact the husband started to operate the scrap business, originally styled Sunshine, as another entity styled BR. The parties were co-directors and equal shareholders of Sunshine. The husband is sole director of, and the wife has no shares in, BR. The change took place in July 2012 after the start of court proceedings. It was not until 24 October 2012, the day before a court event, that the wife’s solicitors were notified of the change. Ms Delbridge had valued Sunshine as at 30 June 2011. By the time the matter came to trial the husband was operating a completely different entity. That entity had not been valued or even considered by Ms Delbridge.

50Despite the clear and consistent complaint about this failure to disclose by the wife’s solicitors in the first two days of trial, the husband's failure continued. A few days before the trial resumed in June 2014, the husband’s accounts department provided an electronic update of his disclosure.

•Shimmer

51Included in the disclosure were the financial statements for the entity Shimmer for the years ending 30 June 2011, 2012 and 2013. They had not previously been disclosed. The husband had previously deposed that this entity generally ran at a loss.

52These documents showed that during the 2012 financial year Shimmer received a gross income of $712,359. Ms Delbridge had previously identified an anomaly in the gross profit margin of Sunshine for that year. The husband gave her no explanation for it, and did not mention income received by Shimmer. Ms Delbridge, however, adjusted the reported gross margin of 2012 for Sunshine to a level consistent with the average margin achieved in the other years upon which she based her valuation.

53Although the husband suggested that the wife could have independent access to Shimmer, he conceded that she was not involved in that entity, either as a director of shareholder. He then said he thought that the relevant documents had been produced by his office at an earlier stage. They had not. He did not consider it relevant given that Shimmer was utilised for what he termed “non-core business”. He explained the gross receipts of $712,359 as a “windfall” at a time when he was also suggesting that Sunshine was likely to “go under”.

•[P Hire] Pty Ltd

54It was common ground that in the middle of 2011 the husband was agitating to replace several items of machinery required by Sunshine to operate its business. There had been correspondence between solicitors then acting for each party without any resolution. The husband said he needed to arrange finance to purchase the equipment. The wife did not immediately agree to this course. The wife’s solicitors wanted more detail of the need for such replacement with reference to a depreciation schedule. The husband was keen to simply replace the equipment immediately.

55Two of the items of machinery that the husband needed to run Sunshine were a baler worth approximately $70,000 and a generator worth approximately $30,000.

56On 15 September 2011, the husband’s present wife registered a business in her sole name, P Hire Pty Ltd (“P Hire”). The husband accepted he had input into this enterprise and he injected money into it.

57The husband, via Shimmer, lent his present wife approximately $100,000 and Easy Hire purchased a [generator] set for around $20,000 in October 2011. A baler was purchased in March 2012 for approximately $88,000. These items were then hired to Sunshine at what can only be described as a non-commercial rate. The cost of hiring the generator from P Hire in the first five month period alone was enough to recoup the purchase price. The equipment was depreciated by P Hire at 20 per cent per annum.

58Ms Delbridge said this arrangement gave P Hire a spectacular return. It was an unusual arrangement.

59It was suggested to the husband that it would have been a better economic approach for Sunshine to purchase the equipment outright. It would avoid the exorbitant hire charge and the business would own the equipment. The husband said this did not fit with his business model. He accepted that, in isolation, it was not economic. He did not accept that it was a deliberate ploy to remove money from the asset pool by using a different corporate vehicle to gain a profit.

60The husband agreed that Shimmer was owed the $100,000 by P Hire. He said that none of that amount had been paid and no interest on the amount had been considered. On the other hand, his present wife said some amounts to repay the $100,000 had already been made. These repayments started in January 2014.

61The husband’s present wife produced bank statements for P Hire. She was asked about its business. She said that the business had only ever bought two items, being the generator and baler. When queried about a deposit of $17,000 into her bank account on 24 January 2012 from a [Mr C] she said he had bought a cement truck she owned. She explained that originally she had bought the cement truck from a client for about $4,000 and had, after repairing it, sold it to Mr C for $17,000. Mr C was a business associate of the husband.

62In the P Hire bank statements the husband’s present wife identified the transaction for the purchase of the cement truck on 25 January 2012 for $4,400. Without any explanation she then identified the transaction for the sale of the same cement truck for $17,000 on 24 January 2012, the day before the apparent purchase. The same cement truck had been repaired on 16 January 2012 even before its purchase.

63The husband’s present wife had little appreciation of the inconsistency in this history and, most importantly, the need to identify with precision the financial circumstances of P Hire.

64The husband’s explanation for his failure to disclose was, variously, he and his accountant did not consider certain information relevant to the proceedings. He said he was very busy and stressed. Although unrepresented at trial, the husband had a number of different solicitors between 2010 and late 2012. His financial position was the nub of the whole case.

65The failure to disclose undermines the whole process of adjudication (Luciano v Luciano [2000] FamCA 1712).

66The husband’s conduct in this case did not reflect well on him. I accept in his closing he apologised to the Court and the other party, but the damage had been done.

67There were a number of other matters relating to the manner in which the businesses BR and Sunshine were operated by the husband. The wife says they need to be taken into account here.

•[XYZ] Holdings Pty Ltd

68One such issue revolves around scrap that was to be purchased by Sunshine in conjunction with another company XYZ Holdings Pty Ltd (“[XYZ]”) in early 2012. Sunshine, in a joint venture with XYZ, was the successful tenderer for the disposal of scrap owned by [a company]. An amount of $155,270 was paid to a company for the scrap. Sunshine was unable to collect the scrap due to what the husband says was inadequate or inappropriate machinery. He says the wife prevented him from acquiring new machinery. The scrap eventually had to be disposed of by the company through another party. As a result of the failure to complete the project, XYZ was out of pocket for the funds it originally paid, $155,270, for the scrap. XYZ, given the circumstances, considered that amount to be owed to it by Sunshine. The husband was adamant that all this money was lost as a result of his failure to remove the scrap from the company’s yard. He said that the relevant trading agreement was with XYZ rather than Sunshine. The transaction was originally recorded as an asset of Sunshine, but given the ultimate failure to fulfil the tender, this would need to now be written off.

69The wife alleges the husband has failed to accept ownership of certain Steel Manganese Alloy (“SMA”) stock stored in his yard. The husband says it is stock owned by XYZ. He said it was a “spot deal” and joint venture with XYZ and, at present, had no accurate quantifiable value. In total there is 336 tonnes of SMA. When it is eventually sold the husband may get about $20,000 as his share of the profit. Ms Delbridge did not have sufficient information to assess whether any adjustment was required in respect of the value of the stock. She does note, however, that any adjustment would not change the valuation outcome.

70The wife also complains about the husband’s relationship with [Mr X], a longstanding business associate, who runs XYZ. At the time the husband was channelling funds into P Hire for some pieces of equipment he also, apparently, entered into a hiring arrangement with XYZ for more substantial pieces of machinery. The agreement involved an amount of money in the vicinity of $1 million. Detail of the hire agreement was never really explained. Full disclosure was not provided.

71The wife calls into question the truth of all this. She points out that Mr X was not called to give evidence in relation to the debt. Therefore the Court should draw an adverse inference against the husband on this issue. Ms Delbridge had reduced the value of the company payment to nil dollars in her valuation, but the wife says it should be taken into account as money either had, or at least recoverable, by Sunshine.

72Whilst I found the husband to be backwards in providing the Court with information in a timely fashion, I did not consider his explanations on these issues to be necessarily incredible. I accept that Mr X did not give evidence, but this does not automatically assume that the evidence would have been positively adverse or unfavourable (Brandi v Mingot (1976) 12 ALF 551). Any adverse inference that the Court can draw extends to the limit that, if adduced, the evidence of Mr X may not have assisted Mr Rooney.

73The wife also calls upon the Court to take certain money it says that is owing to Shimmer into account. This includes the $100,000 advanced to P Hire. There was conflicting evidence about exactly how much of that amount was still outstanding, although it would appear, at the very least, the bulk of it is. There is also a loan from Sunshine identified by Ms Delbridge. The wife’s position is that Shimmer should be treated as an asset having a value of $267,785. There are many unknowns about Shimmer. I do not know exactly what is owed by P Hire, there are two shareholders of Shimmer, one of whom is an independent third party, although apparently bankrupt. Ms Delbridge appears to have taken into account what might otherwise have been income of Sunshine, although it appears to have been received by Shimmer, in her valuation.

74The Court does not have a full picture of the husband’s financial circumstances and, in particular, the operation of Shimmer. I intend to take it into account in a general sense.

75It was up to the husband to provide information about these issues. They were longstanding issues and he had every opportunity to provide documents, witnesses and credible explanations. These uncertainties, to a degree, have been taken into account in Ms Delbridge’s revised valuation.

76I take into account there has been action of the husband over and above the uncertainties which predicated the change in valuation and give those weight to that extent here. I do not accept it is possible to allocate any particular dollar value to the issues raised.

77The husband says that there are factors in his favour which include business risks. The husband argues that likely future expenses make his interest in the company tenuous.

•Worksafe issue

78A worker of Sunshine was badly injured at the Geraldton operations of the business in January 2013. The husband asserts that the potential fine from Worksafe as a result of this near-death incident is an immediate risk associated with the business.

79It is common ground that in April 2014 Worksafe completed their investigations into the incident. The report is currently in the hands of the Worksafe legal department awaiting determination on whether there will be a prosecution of the business. The limitation period in relation to this particular matter expires in January 2016. The Court received no admissible evidence in relation to the possible prosecution, the exact nature of the injury or circumstances in which it was incurred or any potential outcome after prosecution.

80I find this is an ongoing risk associated with the industry in which the husband has operated for many years. It was known to Ms Delbridge when she undertook her valuation.

81I do not consider it warrants any special adjustment here.

•[The Local Authority]

82In 2009 Sunshine was required by the [local authority] to ensure it erected metal screens or walls around the Flannigan property in order to hide unsightly scrap piles and to reduce the noise emanating from the property. Certain landscaping requirements were also to be completed.

83In October 2011 the business received a final warning notice from the local authority. Sunshine received a Prosecution Notice from the local authority in May 2012.

84The business received a fine of $125,000 with about $6,000 in costs. These were included by Ms Delbridge as a liability in the valuation. The walls have not yet been erected.

85On 10 May 2013, by consent, orders were made in the following terms:

…

3. The parties do all things necessary and sign all necessary documents to enable [Sunshine] Pty Ltd to obtain finance with National Australia Bank in the grant of $300,000 for the purpose of the [local authority] work order wall and associated landscaping.

86For a number of reasons this facility of $300,000 has only recently been obtained. Despite the fact the husband has not yet drawn down on that amount or obtained final quotes for the work, I accept it is work that needs to be done. It has been a matter of which both parties have been aware for a considerable period of time. It is an amount owing and I will take it into account here.

•Flannigan contamination

87The husband's position is that if the Flannigan property is sold he will have to pay the cost of rectifying extensive site contamination during the time the business has occupied the property. This was a process he had to undertake when he surrendered a lease he had over land in Cockburn. Ms Delbridge factored this into the valuation as a one-off and non-recurring expenditure on the leased land.

88Whilst the husband acknowledges that Ms Delbridge’s report adds back the remediation cost for the Cockbrun property, he asserts that the report has failed to acknowledge that if the Flannigan property is to be sold significant remediation costs will need to be paid. He says the costs will be substantial given the size of the Flannigan property. He estimates them to be $2 million. He says the cost of disposing of contaminated soil has increased since 2008. The husband deposes that the remediation costs are a clear business risk and he submits that all scrap yards must remove any contamination from the land if it is to be sold.

89He argues that any transfer between him and the wife will trigger the need for this work to be undertaken. Given the manner in which the land is held by the Rooney Family Trust I am not satisfied that this is correct. It will, however, be triggered if and when there is a sale or transfer of the property to an independent party.

90The wife’s position is that if the business is sold only then will there be an issue of remediation. This will require evaluation of the cost at the time.

91Ms Delbridge proffered the view that it would have been prudent business practice to make allowance on an annual basis for such expense if, indeed, it was something anticipated in the short to medium term. It is clear the husband has made no provision for it and there is no evidence at all of a sale of the Flannigan property in the short term or at all. She assumed that given the nature of the business this type of expense is incurred in the ordinary course of business.

92The husband says the Geraldton property is in the same position. However, given the smaller size of the land, the husband estimated that such remediation would be in the vicinity of around $500,000. At the end of his closing address the husband raised a possibility of having to sell the Geraldton property depending on the outcome after my judgment. I do not intend to take remediation of this property into account for the reasons just stated in relation to Flannigan.

•ARA Development scheme payment for re-zoning of Flannigan

93The Forrestdale property was purchased in December 2005. It was a condition of purchase of the Flannigan property by the Flannigan Business Park in which the property is situated that each owner contribute to a development scheme. Originally a total of $1,369,779 was owed by Sunshine pursuant to the scheme. Such payments are used to enhance the Park’s infrastructure. Payments have been made to reduce that amount and as at 3 November 2013 an amount of $345,000 is outstanding.

94The husband says that within 12 months of the purchase of Flannigan a two acre portion at the front of the property was re-zoned from general industrial to commercial use. He says that he had no prior notice of this re-zoning.

95The effect of the re-zoning is that the front can now only be used for the construction of showrooms. BR has no use for such a facility, but requires the land for general industrial use. In order to have the property re-zoned back to general industrial, the amount of $345,000 will become payable. The husband says that this is an ongoing issue. It presents an immediate risk to the business and its ongoing ability to use the property as it needs to.

96He deposes that the amount is only due if he seeks to re-zone that part of the property. He has not applied for any approval to re-zone the front two acres. I do not consider it an immediate risk as there is nothing to say it will ever be done.

97The husband sought to include two credit card liabilities in the parties’ balance sheet. These are:

•NAB Visa Premium. $15,668

•Westpac Altitude Platinum Card. $36,861

98The husband said that the debt owing on the two cards had been accumulated post-separation. However, I accept that these are debts that do need to be paid by the husband.

99A number of other items in the balance sheet relate to assets that have been disposed of and thus no longer exist. The husband retained the proceeds of sale of some gold nuggets ($13,293), and the proceeds of sale of a Seadoo Wakestar and Stacer boat ($53,000). The wife received the proceeds of sale of jointly owned furniture and contents ($2,630).

100When I take into account the above matters I consider the most significant issues to be the husband's greater income earning capacity and his failure to disclose his financial position in a timely manner. I have also acknowledged some matters in the husband’s favour.

101I will make an adjustment of 10 per cent in the wife’s favour.

Final outcome - just and equitable

102On the basis of the adjustment I have made the wife will be entitled to 60 per cent of the property. She currently has $608,858 in value and thus a payment to her by the husband of $1,860,681 is required. The amount the wife presently retains represents, in the main, the cash proceeds of sale of a property the parties owned. She accepted this amount as a partial property settlement.

103The husband will retain 40 per cent of the property and he presently holds $3,507,040 worth of its value. He will need to pay to the wife the substantial amount set out above.

104I consider the wife will be able to rehouse and also invest some money if she so wishes given the outcome I have arrived at. This will give her the potential to increase her income stream.

105The husband will be left with considerable debt. The husband presented as an intelligent and a very personable man. He was extremely dedicated to his business and said that he would always do what was best for it. He said if there were obstacles placed in his way he would always find a way around them. I have no doubt that this is the case. It has happened here already. Despite his painting a picture of gloom and doom, I consider that he has the drive and ability to operate the business successfully well into the future. He has strong contacts in the scrap industry and has a sense of the economy that helps him produce a profit even when times are difficult. Despite this, I do not underestimate the significant financial impost on him in the short to medium term.

106The husband will need to take immediate steps to obtain the substantial amount of money. In his closing he made oblique reference to the possible sale of assets. However, this was never clearly articulated by him. Now that the property of the parties has been identified and valued it is a matter the husband can address.

107Ms Delbridge made it clear she had not considered the effect of future capital gains tax, income tax or goods and services tax on the realisation of the assets of the entities or the parties’ interests in the entities. She said that if assets were to be sold or transferred between the parties as a consequence of these proceedings, the tax consequences and any other realisation costs must be considered prior to the finalisation of any orders.

108I have considered the practical outcome of my orders and find the division proposed just and equitable.

Orders

109I will hear from counsel for the wife and the husband about the form of orders I should make. However, I note the wife needs to have the benefits of the judgment as soon as possible.

I certify that the preceding [109] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate