Hertwig & Hertwig
[2022] FedCFamC1F 385
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Hertwig & Hertwig [2022] FedCFamC1F 385
File number(s): BRC 2437 of 2016 Judgment of: HOGAN J Date of judgment: 27 May 2022 Catchwords: FAMILY LAW – PROPERTY SETTLEMENT – INTERIM PROPERTY ORDERS – Where orders are sought on an interim basis for the sale of real property and distribution of the funds realised from the same – Where the property is the sole remaining asset of value.
FAMILY LAW – CORPORATIONS LAW – DEREGISTRATION OF COMPANIES – Where ASIC deregistered a number of companies – Where orders for the reinstatement of the registrations of companies are sought.
Legislation: Corporations Act 2001 (Cth)
Family Law Act 1975 (Cth)
Cases cited: Reid v Action Insulation Engineers Pty Ltd [2009] NSWSC 1182
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466; [2009] FamCAFC 499
Zschokke & Zschokke (1996) FLC 92-693; [1996] FamCA 79
Division: Division 1 First Instance Number of paragraphs: 31 Date of hearing: 3 November 2021 Place: Brisbane (via telephone) The Applicant: Self-represented The Respondent: Self-represented ORDERS
BRC 2437 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR HERTWIG
Applicant
AND: MS HERTWIG
Respondent
ORDER MADE BY:
HOGAN J
DATE OF ORDER:
27 MAY 2022
IT IS ORDERED THAT:
1.The Amended Application in a Case filed 26 October 2021 is dismissed.
2.The Response to Application in a Case filed 18 August 2021 is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Hertwig & Hertwig has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HOGAN J:
By Amended Application in a Case filed 26 October 2021, Ms Hertwig sought an interim order for the sale of real property situated at M Street, N City (“the property”). She also sought orders be made so that:
(a)she is solely responsible for the sale of the property; and
(b)the reserve price for the sale of the property is set at no less than $270,000.00; and
(c)the funds obtained from the sale of the property are applied to meet any taxes payable, legal and real estate costs, outstanding Council fees, outstanding ASIC fees and that she then be paid $5,000.00 to reimburse her for the costs of preparing the property for sale – before the balance of the sale proceeds then remaining are paid into, and held on trust for the parties, in a solicitor’s trust account; and
(d)upon production of any invoices relating to expenses for the children for the period from 1 October 2021 to the conclusion of trial, payments be made from the funds held in trust to her to reimburse her for the same; and
(e)save for payments made to her to reimburse her for the children’s expenses, neither party be permitted to seek further orders regarding the use of the funds held in trust pending the final hearing of the proceedings for final property orders.
Ms Hertwig’s primary purposes in seeking the orders that she did was to enable her to meet the children’s expenses – she sought that any payment of funds from the nett sale proceeds of the property (if sold) be regarded as “as a joint contribution to the children from both of us from the matrimonial pool”.
Mr Hertwig opposed the sale of the property. Further, by his Response to an Application in a Case filed 18 August 2021, he also sought orders permitting the property to be rented out and to enable him to facilitate improvements to the property in anticipation of a future prospective sale. He sought to be responsible for such processes to the exclusion of Ms Hertwig. His submissions opposing the relief sought by Ms Hertwig included that her application was akin to an application for child support. Mr Hertwig also sought that orders be made for the reinstatement by ASIC of the registration of various companies.
The material relied upon by each of the parties was voluminous; however, the relief sought was as noted. Whilst each party asserted that the other had failed to comply with the duty of disclosure and had depleted the property available to be considered in the extant property settlement proceedings, such issues are, clearly, a matter for trial.
Brief background
The parties commenced cohabitation in late 1999, married in 2003, separated in either late 2014 or early 2015 and divorced in 2017. They have three children now aged 16, 14 and 11.
Ms Hertwig commenced proceedings on 18 March 2016, seeking only parenting orders. In August 2018, Mr Hertwig was granted leave to commence property settlement proceedings out of time.
On 28 May 2019, the parties entered into final parenting orders by consent. These orders provided, by way of broad summary, that they have equal shared parental responsibility; for the children to live in Country B; that, in the event Mr Hertwig lived in Country B, the children live with their parents on a week-about basis; or, if Mr Hertwig did not live in Country B, the children spend substantial school holiday time with him.
It seems the parties subsequently entered into further parenting orders in November 2020 –these were made by the Family Court in Country B (“the Country B orders”).[1] Ms Hertwig asserted that an effect of the Country B orders is that, whilst she has sole parental responsibility for the children,[2] Mr Hertwig is not relieved of his financial obligations in relation to them.[3] However, Mr Hertwig asserted that the effect of the Country B orders is that Ms Hertwig is “solely responsible for the costs of maintaining the children” as she “sought to have [his] parenting rights withdrawn”.[4] This is but one of many disputes between these parties.
[1] Affidavit of Ms Hertwig filed 5 October 2021, Annexure “2”.
[2] Affidavit of Ms Hertwig filed 5 October 2021, paragraph 6.
[3] Affidavit of Ms Hertwig filed 5 October 2021, paragraphs 9–10.
[4] Affidavit of Mr Hertwig filed 24 October 2021, paragraph 216.
Ms Hertwig and children live in Country B, as they have done since prior to the parental separation.[5] Mr Hertwig lives in Australia and has done so from, it would seem, at least May 2020. His evidence includes that, as at October 2021, he was in receipt of Job Seeker payments whilst awaiting processing for a Disability Support Pension. He said that, if he left Australia for “any significant period” (which he estimates at between two and six weeks), he will not receive these payments or other financial support to which he has access in Australia.[6]
Matters relevant to the consideration of the application for orders that the property is sold and the proceeds applied as contended for by Ms Hertwig
[5] Affidavit of Ms Hertwig filed 5 October 2021, paragraph 5.
[6] Affidavit of Mr Hertwig filed 24 October 2021, paragraphs 144–148.
According to a title search,[7] the property is owned by P Pty Ltd as trustee for the Q Trust.[8] Mr Hertwig and Ms Hertwig are both directors of P Pty Ltd – each holds one ordinary share in the company.[9]
[7] Affidavit of Mr Hertwig filed 20 September 2021, Annexure “4”.
[8] Affidavit of Mr Hertwig filed 20 September 2021, paragraph 6; Ms Hertwig’s Case Outline filed 5 October 2021, paragraph 28.
[9] Affidavit of Mr Hertwig filed 20 September 2021, paragraph 10.
The parties agree that the property, which, on Ms Hertwig’s evidence, is unencumbered,[10] is the only remaining asset of value to be considered in the property settlement proceedings between them.[11] Each asserts that a final hearing of these proceedings is unable to occur in the near future because, according to Ms Hertwig “the final trial is going to be way off” as Mr Hertwig is alleged to have failed to update “his income disclosure for years”[12] and, according to Mr Hertwig, “the issue of disclosure still needs to be dealt with” and he will apparently seek to join Ms Hertwig’s parents as parties to the property settlement proceedings.[13]
[10] Affidavit of Ms Hertwig filed 5 October 2021, paragraph 28.
[11] Affidavit of Ms Hertwig filed 5 October 2021, paragraph 2; Affidavit of Mr Hertwig filed
[12] Affidavit of Ms Hertwig filed 5 October 2021, paragraph 3.
[13] Affidavit of Mr Hertwig filed 24 October 2021, paragraph 140.
As noted earlier, Ms Hertwig’s primary reason for seeking the sale of the property is to enable her to access funds to assist her to meet the children’s expenses, for which she says she has been solely responsible since the parental separation.[14] Her evidence included that: the business she operates in Country B has been affected (presumably negatively) by the onset of the COVID-19 pandemic;[15] her straitened financial circumstances resulted her moving with the children in March 2021 from D Town to R City (which is more affordable);[16] she has been unable to afford to enrol the children in school in R City (which, because they are “expats”, involves fees);[17] and that she has been unable to afford to pay for many of the children’s needs or provide them with various required educational supports, meet insurance premiums or have necessary dental and orthodontic work completed.[18]
[14] Affidavit of Ms Hertwig filed 5 October 2021, paragraphs 7–8; Ms Hertwig’s Case Outline filed 5 October 2021, paragraph 4.
[15] Affidavit of Ms Hertwig filed 5 October 2021, paragraph 20.
[16] Affidavit of Ms Hertwig filed 5 October 2021, paragraphs 14 and 18.
[17] Affidavit of Ms Hertwig filed 5 October 2021, paragraph 15.
[18] Affidavit of Ms Hertwig filed 5 October 2021, paragraphs 46–54.
Ms Hertwig has filed two Financial Statements – the first on 5 August 2021 and the second on 2 November 2021. In her August 2021 Financial Statement she asserted that her average weekly income was $955.00 and her average weekly personal expenditure was $3,131.00.[19] In her November 2021 Financial Statement, she asserted that her average weekly income was $250.00 and her average weekly personal expenditure was $357.00.[20] On either, her asserted income was insufficient to defray her asserted expenses.
[19] Financial Statement filed 5 August 2021.
[20] Financial Statement filed 2 November 2021.
Mr Hertwig’s submissions in opposing an order for the sale of the property included that Ms Hertwig had not provided any evidence to substantiate that the children were at risk and that she was merely seeking access to funds to fund the lifestyle she wanted to live – something described as being an “unreasonable expectation of lifestyle”. Whether that is the case or not is, it seems to me, quite irrelevant to the consideration of whether it is just and equitable on an interim basis, to require the sale of the only asset of value in the extant property settlement proceedings between these parties.
Mr Hertwig’s evidence included that the cost of the repairs and maintenance needed to put the property into a state where it can be rented out is $2,000.00 to $4,000.00. [21] Ms Hertwig’s evidence included that the property is “derelict”,[22] “in disrepair”,[23] “a wreck”,[24] “overgrown, uninsured and not rentable”[25] and has not been lived in since 2016.[26] Ms Hertwig’s opinion was that the costs of ensuring that the property is safe and in an appropriate state to be rented out are in the vicinity of $20,000.00 to $25,000.00.[27]
[21] Affidavit of Mr Hertwig filed 24 October 2021, paragraph 37.
[22] Affidavit of Ms Hertwig filed 5 October 2021, paragraph 65.
[23] Affidavit of Ms Hertwig filed 5 October 2021, paragraph 86.
[24] Affidavit of Ms Hertwig filed 5 October 2021, paragraph 104.
[25] Affidavit of Ms Hertwig filed 5 October 2021, paragraph 76.
[26] Affidavit of Ms Hertwig filed 5 October 2021, paragraph 110.
[27] Affidavit of Ms Hertwig filed 5 October 2021, paragraph 125.
Mr Hertwig’s evidence included that members of his family had offered to complete the work he said was needed to make the property suitable for rental and agreed be paid from the rent received from it or, if Ms Hertwig did not agree with that course, loan him the money necessary to pay for half of the costs of meeting the repairs.[28] Clearly, the latter aspect of this proposal does not address how Ms Hertwig would contribute the balance of funds needed to ensure that the property was in a fit state to be rented out.
[28] Affidavit of Mr Hertwig filed 24 October 2021, paragraphs 38–39.
Mr Hertwig’s evidence included that he had been advised that the property would be able to be leased for between $310.00 and $330.00 (presumably per week),[29] and that, after payment of real estate fees and other expenses, the balance of the rent received would be sufficient to repay the members of his family within about three months.[30] Ms Hertwig’s evidence included that letting agents “have valued the property at $1,200 per month”. She also asserted that the local council had “formally demanded $640 per month for their debt”[31] – a reference, on her account, to the outstanding rates in the amount of $8,500.00.
[29] Affidavit of Mr Hertwig filed 24 October 2021, paragraph 36.
[30] Affidavit of Mr Hertwig filed 24 October 2021, paragraph 41.
[31] Affidavit of Ms Hertwig filed 5 October 2021, paragraph 93.
On a final basis, Mr Hertwig seeks orders that would see him and Ms Hertwig receive an equal share of the net assets of the parties (to be particularised after he receives disclosure from Ms Hertwig) and that each of them contribute a one third share of the assets they retain “for costs associated with looking after the children”.[32] His position now is that the property should not be sold given what he says are recent increases in property value: his concerns include that, if the property is sold now, the parties may miss out on the benefit of any future increases in its value which may occur between now and trial.
[32] Third Amended Response filed 22 October 2019.
Ms Hertwig seeks, on a final basis, that the property is sold and the proceeds are used to reimburse the expenses of the children for the previous years and then, exclusively, to meet expenses relating to the children – her position is that, if any funds remain after the youngest child attains the age of 18, they should be divided equally amongst the children.[33] While Ms Hertwig also proposes orders to ensure that the debts of the parties are divided equally, she seeks to be at liberty to further particularise the orders she seeks with respect to an adjustment of the parties’ interests once she has received further disclosure from Mr Hertwig.
[33] Reply to Response filed 13 November 2019.
Whether Mr Hertwig is able, in the future and despite his current poor credit rating and asserted inability to borrow funds,[34] to borrow funds from some source if he wishes to retain the property as part of whatever entitlement to property it is found to be just and equitable that he receive on a final basis remains to be seen. One obvious aspect of the consideration of that issue is the value of the property itself – whilst Ms Hertwig asserts that the property was valued at $200,000.00 in about 2019, her assertion that it is now valued at between $270,000.00 and $300,000.00 is made without the support of expert evidence about its current value. The position is the same insofar as Mr Hertwig is concerned – whilst he asserts that the property has a value of $350,000, that assertion is also unsupported by expert evidence.
[34] Affidavit of Mr Hertwig filed 18 August 2021, paragraph 25.
As was made clear by the Full Court in Strahan & Strahan (Interim Property Orders),[35] there is only one exercise of power under s 79 of the Family Law Act 1975 (Cth) (“the Act”) and it is preferable that the exercise of the same occur on a final basis. However, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act, to make an interim property order, the “overarching consideration” is the interests of justice – all that is required is that, in the circumstances, it is appropriate to exercise the power. If a determination is made to exercise the power, there must be evidence to satisfy the necessary requirements of s 79 of the Act.
[35] (2011) FLC 93-466.
This was a marriage of fairly lengthy duration, productive of three children; it is highly likely that there are many and varied contributions and other matters to be considered in determining, on a final basis, those orders which are just and equitable.
Given:
(a)Mr Hertwig’s opposition to the sale of the property now on the basis that to do so would deny the parties the potential to benefit from any increase in value between now and the finalisation of the property settlement proceedings between them; and
(b)that Mr Hertwig’s position about the fate of the property on a final basis is unclear; and
(c)that, despite Mr Hertwig’s current parlous financial circumstances, I consider that I cannot definitely conclude that, at a trial, the only order which would be just and equitable would be one requiring the sale of the property (as opposed to orders permitting Mr Hertwig – or Ms Hertwig if her position changes – the opportunity to attempt to raise the funds necessary to acquire it); and
(d)that the sale of the property would not be capable of being remedied, in the sense that, obviously, the same would deny either party the opportunity to seek to receive it in specie as part of whatever orders are found to be just and equitable and appropriate to determine the property settlement proceedings between them,
I am not persuaded that it is just and equitable to order the sale of the property now.
Given the dispute between the parties about the extent of the repairs required before it is ready and safe to be placed onto the rental market and that it seems that neither can afford to pay for these and that I am unclear about the manner in which any rental monies would be applied on an ongoing basis (given the ownership of the property), I am not persuaded that it is appropriate at this stage to make those orders sought by Mr Hertwig in relation to the property being rented out prior to trial.
Other orders sought by Mr Hertwig
Mr Hertwig also sought, by his Response to an Application in a Case filed 18 August 2021, that a number of companies which had been struck off by the Australia Securities and Investments Commission (“ASIC”) be reinstated.
He sought further orders once they were reinstated.
Mr Hertwig relied on s 601AH(2)(a)(i) of the Corporations Act 2001 (Cth), which provides that the Court[36] may make an order that ASIC reinstate the registration of a company if the Court is satisfied that it is just that the company’s registration be reinstated. The result of the orders sought by Mr Hertwig would be that any company reinstated would be taken as if it had continued in existence and not been deregistered.[37]
[36] Which, pursuant to s 58AA(1) of the Corporations Act 2001 (Cth), includes the Federal Circuit and Family Court of Australia (Division 1).
[37] Corporations Act 2001 (Cth) s 601AH(5).
Ms Hertwig opposed those orders being made.
While Mr Hertwig helpfully set out the relevant requirements for his application (sourced from Regulatory Guide 83 issued by ASIC in March 2018), he did not advance any evidence – other than bare assertions by himself[38] – to establish, for example: whether the company names remained available; that any of the companies would be solvent if their registration was reinstated; or that all directors at the time of deregistration had been notified of his application.
[38] Affidavit of Mr Hertwig filed 24 October 2021, paragraph 192.
Additionally, he provided no evidence that a copy of his application (contained in his Response to an Application in a Case filed 18 August 2021) had been served on ASIC, whose position ought be ascertained given that any order under s 601AH(2)(i) is an order directed to ASIC.[39]
[39] Reid v Action Insulation Engineers Pty Ltd [2009] NSWSC 1182 at [9].
Given these matters, which include the lack of evidence adduced by Mr Hertwig to support his application, I decline to accede to his application and it will be dismissed.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hogan. Associate:
Dated: 27 May 2022
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