ANDROM Pty Ltd v Shakibaee
[2012] WASC 379
•10 OCTOBER 2012
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: ANDROM PTY LTD -v- SHAKIBAEE [2012] WASC 379
CORAM: MASTER SANDERSON
HEARD: 4 OCTOBER 2012
DELIVERED : 10 OCTOBER 2012
FILE NO/S: CIV 3356 of 2011
BETWEEN: ANDROM PTY LTD as Trustee for the K N BUCKINGHAM FAMILY TRUST t/as BUCKINGHAM REDEVELOPMENT COMPANY
Plaintiff
AND
ARASH SHAKIBAEE
POYA SHAKIBAEE
Defendants
Catchwords:
Practice and procedure - Application to stay property seizure and sale order - Application for approval to sell at below market value - Whether order should be made
Legislation:
Civil Judgments Enforcement Act 2004 (WA)
Result:
Application for stay of property seizure and sale order dismissed
Approval for sale below valuation approved
Category: A
Representation:
Counsel:
Plaintiff: Mr D K Skender
Defendants: Mr K A Dundo
Solicitors:
Plaintiff: Tolson & Co
Defendants: Q Legal
Case(s) referred to in judgment(s):
Boase v Asica Developments Pty Ltd [2009] WASC 183
New Resource Holdings Pty Ltd v Lunt [No 3] [2008] WASC 221
MASTER SANDERSON: On 9 December 2011 the plaintiff issued proceedings against the defendants claiming just over $900,000. The defendants did not enter an appearance and on 20 December 2011 the plaintiff obtained default judgment in an amount of $914,247.35. As a means of enforcing the judgment the plaintiff then issued a property seizure and sale order (PSSO). Pursuant to the PSSO the sheriff seized a property in the name of the defendants in Money Street, Perth. He took steps to auction the property. On 19 April 2012 the plaintiff provided the sheriff with a valuation of the property saying a fair value was $1,750,000. On 29 June 2012 the defendants provided a valuation report saying a fair value was $2,470,000.
The sheriff undertook an auction on 13 July 2012. The highest bid at the auction was $1,550,000. The sheriff declined to accept that bid and advised the plaintiff accordingly. Between 19 July and 26 July 2012 the plaintiff received various offers for the property ranging between $1,480,000 and $1,551,000. Of course pursuant to the PSSO the plaintiff was not in a position to direct the sheriff to accept any of these offers.
On 7 August 2012 the plaintiff issued an application under the Civil Judgments Enforcement Act 2004 (WA) seeking to vary the manner of sale under the PSSO. The plaintiff sought to have the court authorise the sheriff to accept an offer for the property in an amount of $1,500,000 or greater.
On 20 August 2012 the defendants issued proceedings against the plaintiff (CIV 2411 of 2012) (the defendants' proceedings). The defendants' proceedings appear on the fact of it to relate to matters which could have been raised by the defendants in the proceedings issued by the plaintiff and in which they obtained default judgment. On 11 September 2012 the defendants issued a chamber summons in these proceedings effectively seeking to have the enforcement of the PSSO suspended pending determination of their action against the plaintiff. Both the plaintiff's application and the defendants' application were heard together with the defendants' application heard first. At the conclusion of argument I indicated I would dismiss the defendants' application and grant the plaintiff's application. I said I would publish reasons for that decision. These are those reasons.
The precise form of the orders sought by the defendants in their summons was as follows:
1.If, within 14 business days of this order, the Defendants pay into Court, in the manner outlined in order 2 below, the amount due under the property seizure and sale order (L866911) (PSSO) which was lodged against the title of 4 Money Street, Northbridge (volume 2648, folio 452) (Property) on 24 February 2012 then this action be stayed pending the outcome of Supreme Court of Western Australia proceedings CIV 2411 of 2012.
2.The Plaintiff must provide the Defendants with withdrawals of the PSSO and the Plaintiff's caveat (L555108) (Caveat), upon the Defendants' finance provider providing a Registrar of the Supreme Court of Western Australia with the following two bank cheques:
(a)a bank cheque payable to the Supreme Court of Western Australia in the amount of the judgment sum and accrued interest; and
(b)a bank cheque payable to the Sheriff for the amount due under the PSSO less the judgment sum and accrued interest.
3.Upon the plaintiff providing the Defendants with withdrawals of the PSSO and the Caveat, the bank cheque referred to in order 2(b) is to be released to the plaintiff.
Under s 15 of the Civil Judgments Enforcement Act a party can apply for a suspension order. The section is in the following terms:
(1)A person against whom a judgment is given may apply for an order suspending the enforcement of all or part of the judgment to -
(a)the court that gave the judgment; or
(b)a court that is dealing with an appeal against the judgment.
(2)The court may deal with such an application in the absence of the person entitled to the benefit of the judgment if it is just to do so.
(3)On such an application, the court may only make such an order if there are special circumstances that justify doing so.
(4)A suspension order may be made for any period (including an indefinite period) and may be made on terms as to costs or otherwise.
(5)When or after making a suspension order the court may make any necessary ancillary or consequential order including an order -
(a)that a means inquiry, default inquiry or interpleader proceedings be adjourned;
(b)that a means inquiry or default inquiry not be held for such period as the court specifies;
(c)as to the operation or effect of any order that has been made under Part 4 or 5 or section 101;
(d)that a person imprisoned under section 90 or 98 for a contempt of court be released from prison for such period and on any terms that the court specifies;
(e)that prohibits or restricts dealings with a judgment debtor’s property, or the payment of debts owed to a judgment debtor, while the suspension order has effect.
Although it was not entirely clear from the defendants' written and oral submissions it would seem the ancillary orders the defendants were seeking were to be made under the wide powers s 15(5) appear to confer. During the course of his submissions counsel for the defendants suggested the orders he was making could be made within the inherent jurisdiction of the court.
Assuming, without deciding, it might be possible to make orders as sought by the defendants it is first necessary for the defendants to establish there are 'special circumstances' which would justify the making of a suspension order. In New Resource Holdings Pty Ltd v Lunt [No 3] [2008] WASC 221, Templeman J identified a number of factors to be considered in determining whether there were special circumstances when other proceedings were on foot. Both parties relied upon this decision and I will deal with each of the matters raised by his Honour as they apply in this case.
First there is the nature of the claim in the defendants' proceedings. The plaintiff's claim in this action arose from the defendants failure to make progress payments under a building contract. Judgment was entered in default of appearance. No application has been made to set the judgment aside. This means the defendants concede the plaintiff's claim was unanswerable. The defendants' proceedings relate to the same building contract. The defendants say the plaintiff breached the contract by not completing the works or not completing the works properly. There is a large measure of overlap between the two actions. This is a factor in support of granting the suspension order.
Second there is the question of the extent of the identity between the parties. The defendants point out there is complete identity between the parties to these proceedings and the parties in the defendants' proceedings. Of course that may give rise to an estoppel issue. However, so far as it goes, this is a factor in favour of granting the suspension.
Third there is the interrelationship of the respective claims. The claims in both actions relate to a building contract entered into by the plaintiff and the defendants. However in this case the judgment and the cross‑claim involve the same parties and the proceedings which led to the judgment are not a necessary step in pursuing the relief sought in the cross‑claim. That suggests special circumstances will not exist: see Boase v Asica Developments Pty Ltd [2009] WASC 183 [20] ‑ [21]. In the present case the proceedings which led to the judgment concern amounts due and payable on account of work already done under the contract. The determination of those claims is not a necessary step in the relief sought by the defendants in the defendants' proceedings. The defendants' proceedings concern the performance of additional work under the contract or the failure to perform that additional work. This is a factor strongly against a suspension order being granted.
Fourth, some consideration must be given to the strength of the defendants' proceedings. At the first case management conference held in relation to the defendants' proceedings the present plaintiff foreshadowed a summary judgment application. During the course of argument I was advised the basis of the application would be estoppel - the defendants' proceedings raise matters which could have been raised in this action. That argument seems to me to have some merit. Perhaps all that can be said is the defendants have issued proceedings but it is yet to be determined how strong the case might be. At best this is a neutral point.
Fifthly there is the size of the claim in the defendants' proceedings relative to the plaintiff's claim. As yet the defendants have not quantified the claim in the defendants' proceedings. It would appear to be somewhat less than the judgment. Certainly the amount of the claim is not overwhelming to the extent this is a factor in the defendants favour.
Sixthly there is the likely delay before the merits of the defendants' proceedings will be adjudicated. Assuming the present plaintiff does not obtain summary judgment in the defendants' proceedings it is likely to be years before the defendants' proceedings are determined. This is a construction dispute and there are allegations that work which should have been done has not been done. Such claims invariably require expert evidence, detailed provision of particulars and perhaps the preparation of a Scott Schedule. Even an optimist would not expect the matter to be resolved before the end of 2013.
Seventh there is the question of prejudice to the plaintiff if it is denied the fruits of its judgment. What has not been paid by the defendants are progress claims. Presumably the plaintiff has paid its sub‑contractors. However, there is no direct evidence on this question and prejudice to the plaintiff could not be a factor in determining there were no special circumstances.
Finally, there is the risk of prejudice to the defendants if they make payment to the plaintiff. Again there is no evidence on this question and I could not be satisfied such prejudice exists.
Weighing all of these factors in the balance I was not satisfied this was a case where there were special circumstances. As a starting point a plaintiff who has obtained a judgment is entitled to the fruits of that judgment. That is particularly so where the defendants do not contest they owe the amount claimed. Taking into account all other matters to which I have referred above it seems to me there is nothing to take this case out of the ordinary. Accordingly there is no warrant for determining there are special circumstances and no grounds upon which a suspension order could be made.
For these reasons I dismiss the defendants' summons.
By its summons the plaintiff sought the following orders:
1.The saleable interest of the defendants in the real property known as 4 Money Street, Perth be sold by the Sheriff by public tender or by private agreement.
2.The saleable interest of the defendants in the real property known as 4 Money Street, Perth may be sold for an amount that is less than a fair value of the interest, provided that the saleable interest shall not be sold for less than the amount of $1,500,000.00
3.The plaintiff's costs of this application be taxed (if not agreed) and paid out by the defendants forthwith.
This application was brought under s 69(2) of the Civil Judgments Enforcement Act. That section is in the following terms:
(2)The Sheriff or the judgment creditor may apply to the court that made a property (seizure and sale) order for an order as to any or all of the following in relation to a saleable interest to which the order applies
(a)that the interest may be sold by public tender;
(b)that the interest may be sold by private agreement;
(c)that the interest may be sold for an amount that is less than a fair value of the interest.
After the plaintiff issued its chamber summons both parties filed affidavit evidence as to the proper value of the Money Street property. Initially it was the parties intention to call the valuers to establish what the proper value of the Money Street property was. However the plaintiff, correctly in my view, decided this question was irrelevant to the outcome of the proceedings. For the purpose of this application the plaintiff conceded the amount of $1,500,000 was less than the property was worth. Nonetheless the plaintiff moved for the orders sought.
On behalf of the defendants it was pointed out there had been a number of offers for the Money Street property at more than $1,500,000. The defendants relied on an affidavit of Arash Shakibaee sworn on 3 October 2012. Appearing as annexures AS‑14 and AS‑15 were two offers for the Money Street property. An examination of each of these offers reveals that they were conditional. It is not necessary for me to detail those conditions. It is enough if I say neither could be accepted immediately without certain further steps being taken. In my view neither provide the basis for settling on a reserved price.
There is at present no authority as to when an order under s 69(2) ought be made. The Civil Judgments Enforcement Act did away with the old enforcement procedure which had at its heart a Writ of Fieri Facias (universally known as a 'fi fa'). If the sheriff was unable to sell a property pursuant to the fi fa then it was open to the court to issue another writ in aid of a writ of execution. When a party wished to sell a property without reserve it could seek a Writ of Venditioni Exponas. This writ could only be issued after the sheriff had made a return that he had seized goods under a Writ of Fi Fa which he had not sold or had not been able to sell 'for want of buyers'. The writ itself read as follows:
Whereas by our writ we lately commanded you that of the goods and chattels of CD (here recite the writ of fieri facias to the end) and on _____ day of _____ 2000, you endorsed the said writ of fieri facias with the statement of the manner in which you have executed it to the effect that by virtue of the said writ you directed you had taken goods and chattels of the said CD to the value of the money and interest aforesaid, which said goods and chattels remain in your hands unsold for want of buyers. Therefore we, being desirous that the said AB should be satisfied his money and interest aforesaid, command you that you expose to sale and sell, or cause to be sold, the goods and chattels of the said CD by you in former foresaid taken and every part thereof, for the best price that can be obtained for the same, and that you pay AB the money arising from such sale.
So whether it be disposal pursuant to a Writ of Venditioni Exponas or pursuant to s 69(2) the effect is the same. Property of a judgment debtor which cannot be sold for a reserved price can, by the order of the court, be sold for what can be obtained. The position here is slightly different. The plaintiff has specified a reserved price as is permissible under s 69(2). Under the Writ of Venditioni Exponas there was no capacity to put on any reserve price. The goods were simply sold for whatever price could be obtained for them.
In my view there was no good reason not to order sale of the Money Street property largely in the terms sought by the plaintiff. The sheriff had tried to sell the property at public auction and had been unsuccessful. It is all well and good for expert valuers to offer an opinion as to the proper market price of the property; the real test is what will be paid on the open market. There is nothing in the evidence which suggests a figure higher than $1,500,000 will be paid at auction and no basis upon which any higher reserve can be set. Accordingly it seems to me it was proper to order the property be sold with the reserve set as specified in the order.
However I did make one adjustment to par 1 of the orders sought by the plaintiff. I ordered the property be sold by public tender but not by private treaty. What the evidence does disclose is some interest in the purchase of the property. The way to get the best possible price is by public auction. To have the property sold privately by the sheriff may not achieve an optimum result. Of course if the property is not sold at public auction at the reserve then further directions can be made.
Accordingly with some adjustment to the final form of the orders I will make orders in favour of the sale of the property largely in terms sought by the plaintiff.
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