AXA Asia Pacific Holdings Limited v Manoharan

[2014] VCC 106

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST
GENERAL DIVISION

Case No. CI-12-00206

AXA ASIA PACIFIC HOLDINGS LIMITED & ANOR	Plaintiffs
v.
RAJIV MANOHARAN	Defendant

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	18 February 2014
DATE OF JUDGMENT:	18 February 2014 (revised 19 February 2014)
CASE MAY BE CITED AS:	AXA Asia Pacific Holdings Limited & Anor v. Manoharan
MEDIUM NEUTRAL CITATION:	[2014] VCC 106

REASONS FOR JUDGMENT

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Catchwords:              Practice and procedure – Application for payment of judgment by instalments – Hearing de novo after objection to instalment order made by Deputy Registrar – Judgment debtor’s affidavit as to his financial situation inadequate – Instalment order made by Deputy Registrar cancelled – Judgment Debt Recovery Act 1984 (Vic).             

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr A. Silver	Turks Legal
For the Defendant	Mr I. Upjohn	Lewenberg & Lewenberg

HIS HONOUR:

1This is a hearing de novo of an application for the payment of a judgment debt by instalments. The judgment was entered on 30 May 2013 in the total sum of $101,876.93 including interest and costs. At present, the sum is slightly more because of further interest which has accrued.

2Application was made by the judgment debtor to pay the debt by 24 monthly instalments of $5,000 commencing 1 December 2013. On 18 November 2013, a Deputy Registrar of the Court made an order to that effect. The judgment creditor on 29 November 2013 filed a Notice of Objection in respect of the order.

3Pursuant to s.6(7)(b) of the Judgment Debt Recovery Act 1984 (Vic) (“the Act”), I may “confirm, vary or cancel the order” of the Deputy Registrar.

4By s.9 of the Act, “Whilst an instalment order is in force and is being complied with, the instalment order shall operate as a stay of enforcement or execution of the judgment in respect of which the instalment order was made”.

5Rule 61.02 requires an applicant for an instalment order to complete an application form, and by sub-rule (3)(a)(i), to “file an affidavit of his or her financial situation which gives the information required by Form 72C”.

6The judgment debtor, pursuant to the order of the Deputy Registrar, paid the first instalment of $5,000 on 1 December 2013 and the further sum of $15,000 on 15 December 2013.

7The judgment debtor was served with a Bankruptcy Notice dated 3 June 2013 in respect of the judgment debt. He failed to comply with the Notice. On 19 September 2013, a creditor’s petition was filed in the Federal Circuit Court returnable on 31 October 2013. The hearing of the petition was adjourned for further hearing before Deputy District Registrar Allaway on 21 January 2014. That hearing has been adjourned to 8 April 2014.

8The hearing before me commenced on 4 February 2014. I refused an application by the judgment debtor’s counsel for an adjournment to enable the judgment debtor to file further affidavit material. However, the hearing was not concluded that day and was adjourned to today. This has enabled the judgment debtor and the judgment creditors to file further affidavits.

9There is a considerable volume of affidavit material filed in the present application. This includes the exhibiting of the material filed in relation to the creditors’ petition in the Federal Circuit Court.

10The judgment creditors commenced the present proceeding by Writ dated 17 January 2012. The action was compromised by a “Release Agreement” on 10 October 2012. The judgment debtor, whilst denying the allegations made in the proceeding, agreed to pay to the judgment creditors the sum of $100,000. This sum was to be paid:

a.by an initial payment of $50,000 on or before 29 March 2013;

b.by ten further instalments of $5,000 on or before 29 March each year from 2014 to 2023.

11The judgment debtor made one payment of $1,000 but otherwise defaulted under the Release Agreement. The judgment debtor’s explanation for the default was that when he entered into the agreement, he “expected to be in a position to apply the sum of $50,000 from the net proceeds of sale of my property located at … Elwood. However, as the sale price obtained was below what I had anticipated I received far less than this amount and was unable to fulfil my expectation”.

12A statement of affairs was filed by the judgment debtor in the Federal Circuit Court on 10 January 2014 pursuant to an order of Registrar Allaway. In the statement, which was exhibited to an affidavit, the judgment debtor disclosed that:

a.the Elwood property was sold on 8 December 2012;

b.in January 2013, a “debt was created”. A person, identified in a later affidavit as a relative of the judgment debtor, owed him the sum of $50,000.

13It appears, therefore, that the judgment debtor may have had the capacity to have complied with the Release Agreement, but chose to lend the money to a relative. The judgment debtor has stated that he does not expect that the debt will be repaid in the foreseeable future.

14The material filed by the judgment debtor, both in support of the present application and in relation to the creditors’ petition in the Federal Circuit Court, and the oral evidence given by him before Registrar Allaway at the hearing on 21 January 2014, is contradictory and generally fails to provide an adequate basis for the present application. The judgment debtor has filed material on at least four occasions. Each time, the material rather than clarifying the judgment debtor’s financial position, raises grave doubts as to the veracity of the statements previously made and those being made in the further material.

15These matters have been highlighted in affidavits filed by the judgment creditors’ solicitor. At times, those affidavits go beyond the simple collection of material filed in the Federal Circuit Court and constitute an analysis of the facts deposed to by the judgment debtor. I have taken account of these matters, although at times the material is more in the nature of analysis and submission.

16The principal matters in respect of his financial affairs upon which the judgment debtor has failed to provide any satisfactory information relate to his sources of income, his personal taxation liability and the financial resources of his company. I refer specifically to the following matters:

a.the judgment debtor says in an affidavit sworn 13 February 2014 that he has “over the past 18 months…been building and developing a successful finance and investment business through my company Samsara Capital Pty Ltd…to date, the profits from the company have been allocated to me in the form of a salary”;

b.to explain why the company had not deducted tax on a PAYG basis, his counsel Mr Upjohn asserted that this was because the judgment debtor received the income as “dividends”, or on some other basis which made the taxation payable by him;

c.the judgment debtor received a Notice of Assessment in respect of his personal taxation liability on 20 November 2013. This required payment of the sum of $96,690.70 on 21 March 2014. The assessment covers an earlier taxation period and does not purport to cover the judgment debtor’s liability for the current year;

d.in the hearing in the Federal Circuit Court on 21 January 2014, the judgment debtor told the Court that he received “another document from the taxation office which I wasn’t able to bring today…stating that I am able to pay it in quarterly payments”. No such document has been produced;

e.in his affidavit sworn 13 February 2014, the judgment debtor states that, at the time of the hearing on 21 January he “believed that there was a letter from the ATO offering a payment plan under which I would pay off my tax assessment by quarterly instalments. However, due to improved cash flow I have been advised by my accountants that they will seek to negotiate a plan under which I will pay 30% of my tax assessment upfront and the remainder by monthly instalments over 12 months. I will be in a position to confirm this arrangement following the due date for my income tax as I am informed and verily believe that this is when my accountants expect to negotiate the new arrangement with the ATO”;

f.previously, the judgment debtor stated that his accountants had prepared a financial statement for Samsara Capital as at 31 December 2013. The statement was available on the morning of 21 January 2014, prior to the hearing in the Federal Circuit Court. The document was not produced at that hearing and has not been produced since;

g.at the hearing on 21 January 2014 during his oral evidence, the judgment debtor said in relation to the payment of his personal taxation liability and referring to the financial statement prepared by his accountants in respect of the company, “as of the most recent financial statement, we’ve got about $180,000 of net operating profit so it will be paid out of that”. During further questioning, the judgment debtor referred to the sum of $180,000 as “cash on hand” and “capital for trading”. He stated that the company had no debts or liabilities besides “just general expenses” and agreed with the proposition that, “This $180,000 that you say is sitting in the company is cash in the trading account, that’s your money?”;

h.in his affidavit sworn 13 February 2014, the judgment debtor states that from his examination of the draft financial statement prepared by his accountants, prior to the hearing on 21 January 2014, he had “hastily concluded that as Samsara Capital had an operating profit of $180,000 that this amount could be appropriated by me in the form of wages or a loan from the company which could be used to pay my tax bill. However, I failed to appreciate that this amount did not represent cash on hand but merely a surplus of assets over liabilities. It is now clear to me that I will not be able to pay my tax bill from an amount of $180,000 that is sitting in a trade account of the company, but that I will however be able to pay it off by instalments as and when I withdraw profits from the company”.

17Mr Upjohn submitted that the taxation liability is not yet due for payment and that the judgment debtor had proved his bona fides by making payments totalling $20,000 in December 2013. However, despite many opportunities to do so, the material filed by the judgment debtor in relation to his financial position remains confusing. It is presently impossible to understand how the judgment debtor will meet his taxation liability for the previous financial year or what is the financial position of the company which provides his sole source of income. The Court is therefore unable to conclude that the instalment order proposed by the judgment debtor is an appropriate order to make in the circumstances, particularly where the making of that order would operate as a stay and prevent further execution upon the judgment so long as the instalment order were complied with.

18Accordingly, the orders I will make are as follows:

1.The instalment order made by the Deputy Registrar on 18 November 2013 is cancelled.    

2.The judgment debtor must pay the judgment creditors’ costs of the Notice of Objection dated 29 November 2013, including the hearings on 4 February 2014 and today, to be assessed by the Costs Court in default of agreement.

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Certificate

I certify that these 5 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 18 February 2014 and revised on 19 February 2014

Dated: 19 February 2014

Catherine Kusiak 

Associate to His Honour Judge Anderson