Ken entered into a contract to purchase two retail store premises in June 2003. The cost of
each was $300,000, with stamp duty of $20,000 each. Settlement was during August 2003.
He used these retail premises (which had been previously unoccupied) to commence a
business that sold furniture to the public.
During the time that Ken owned the store, they each had an annual aggregated turnover of
approximately $3 million.
During November 2019, Ken, who was 53 at the time, wanted to have more spare time and
not carry on a business anymore. He had found that although his turnover was high, after
costs his profits were very modest. As a result, he entered into the following contract with
Jane:
• The first of the two furniture premises was to be sold to Jane for $1,200,000, and
the goodwill attached to it sold to Jane for $400,000.
• The second store was to be rented to Jane for a two year lease (with an option to
renew for another two year period). Rent was set at $2,000 a month, with an
upfront lease premium of $25,000 payable.
• Jane was to pay Ken $200,000 to not compete with her for the following 3 years.
At the time of the November 2019 contract, Ken owned the following assets:
• Full ownership of a main residence in Hawthorn, worth $3 million.
• 42% ownership of a company called PI Pty Ltd, which invests in rural properties. The
total market value of PI Pty Ltd was $300,000.
• 80% share on an investment property (Ken’s cousin owns the other 20%). The total
value of the property was $500,000. It had a $300,000 mortgage over it.
• Superannuation worth $1.5 million.
• Shares in BHP worth $200,000.
• An apartment in Kew (see below)