Bendigo and Adelaide Bank Ltd v Young

[2012] VCC 55

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST
BANKING & FINANCE DIVISION

Case No. CI-11-02552

BENDIGO & ADELAIDE BANK LTD and GREAT SOUTHERN FINANCE PTY LTD	Plaintiffs
v.
DAVID WILLIAM YOUNG	Defendant

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	1 March 2012
DATE OF JUDGMENT:	1 March 2012
CASE MAY BE CITED AS:	Bendigo & Adelaide Bank Ltd & Anor v. Young
MEDIUM NEUTRAL CITATION:	[2012] VCC 55

REASONS FOR JUDGMENT

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Catchwords:             Practice and procedure – Review of instalment order made by Registrar – Hearing de novo – Instalments to be paid by judgment debtor’s earnings from the company of which he was sole director and shareholder – Sufficiency of affidavit material concerning the company – Supplemented by oral evidence from the judgment debtor – Judgment Recovery Act 1986.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A. Silver	Turks Legal
For the Defendant	Mr Z. Partos	Macpherson & Kelley

HIS HONOUR:

1The judgment creditor obtained judgment against the judgment debtor, Mr David Young in default of defence on 19 October 2011 in the sum of $100,088.08. An order was made by the Registrar on 14 December 2011 for the payment of the balance of the judgment debt by instalments of $4,300 per month. The judgment creditor, by filing a Notice of Objection dated 20 December 2011, is entitled to have the instalments application heard de novo before a judge. I have the power to confirm, vary or cancel the order made by the Registrar.

2The order was made pursuant to the Judgment Debt Recovery Act 1984. The operation of the Act was considered by Young CJ in Cahill v Howe [1986] VR 630. The Chief Justice at p.632, examined the purpose of the Act, as set out in its provisions and in the Parliamentary debates, and concluded that the limited guidance provided appeared to indicate that the Act was intended to assist the recovery or payment of judgment debts. The similar legislation in NSW has recently been considered in two cases to which I was referred by counsel for the judgment creditor, Mr Silver. Firstly, a decision of Chint Australiasia v Cosmoluce Pty Ltd [2008] NSWSC 1054, a decision of Einstein J and Hellier Capital Pty Ltd v Albarram [2009] NSWSC 403, a decision of MacDougall J. In each of those cases, the court was dealing with judgments in substantial commercial litigation and Einstein J indicated that, absent special circumstances, “prima facie a party having succeeded in obtaining substantial success in major commercial litigation is obviously entitled to the fruits of its success” (Chint, paragraph 15). MacDougall J in Hellier suggested that the approach taken by Einstein J in Chint should not necessarily be confined to “major commercial litigation”. At paragraph 19 he said, “There is a real public interest in enabling parties who have litigated their disputes to enforce the victory that they have achieved”.

3The application before the Registrar was supported by an affidavit by Mr Young, sworn 9 November 2011. In the affidavit, Mr Young summarised his financial situation as follows:

a.he described himself as self-employed by a company, Container Forwarding Services Pty Ltd, from which his average pre-tax earnings for the previous 12 months were $145,080;

b.he had $3,000 in a savings account and household furniture and personal items valued at $2,000, but no other property, including “shares”;

c.his household expenses were $810 per month and he had a credit card debt which he was paying off at the rate of $3,000 per month.

4The judgment debt at that time was $96,457.52, as some payments had been made. The debt will continue to incur interest. Mr Silver was unable to inform me as to the interest rate under the original loan advanced by his client, however, under the Penalty Interests Rates Act, it is likely that if the judgment debt were paid at the rate of $4,300 per month that, in addition to the judgment debt, there may also be a further amount of about $20,000 in interest that would need to be paid. It is therefore likely that if the debt were paid by instalments of $4,300 per month it would take over two years to repay the judgment debt.

5The judgment debtor has made payments of $4,300 per month for the months of August, September, October, November and December 2011, and January and February 2012, although apparently some of those payments have been made later than the dates set out in the instalments order made by the Registrar. The judgment debtor, through his Counsel, Mr Partos, has reaffirmed an earlier offer that if direct debit details were provided by the judgment creditor, he would ensure regular payments by adopting that means of payment.

6The judgment creditor relies on two affidavits of Mr Silver which have been filed subsequently on 22 and 29 February 2012. Mr Young has also filed a further affidavit, sworn 29 February 2012. Mr Silver has exhibited to his affidavit, the application made to his client on 18 February 2004 by the judgment debtor which set out his assets at that time as including land at Kilmore with an estimated valued of $220,000, shares in listed companies of $100,500, self-managed funds of $160,000 and equity in his own business of $800,000. The business was described as Container Forwarding Services, from which, at that time, he derived a gross salary of $120,000 per annum.

7A company search of Container Forwarding Services Pty Ltd indicates that Mr Young has been the sole director and shareholder since the company was registered in August 2002. Mr Silver also exhibited to one of his affidavits a series of company searches, which show that Mr Young is currently a director of four other companies and a shareholder in three of them. Mr Young, in his further affidavit material, has reaffirmed that the sum of $4,300 per month is “the maximum amount I can afford to pay the Bank” and that “in the event the instalment order is cancelled and the Bank enforces the judgment by way of bankruptcy, the bank will not receive the amounts otherwise payable to it pursuant to the instalment order”. The instalment payments that have been made have each been made by cheques drawn on Container Forwarding Services Pty Ltd.

8Mr Silver has submitted that the instalment order made by the Registrar should be cancelled and the judgment creditor should be permitted to enforce the judgment as it sees fit. The submission was made on two bases:

a.Mr Young had not established on the evidence that he did not have the capacity to pay the judgment debt in full;

b.the monthly commitments deposed to by Mr Young, together with the taxation that would be ordinarily payable on the earnings disclosed by the judgment debtor would not permit regular payment of $4,300.

9In the face of these submissions, Mr Partos took up my suggestion that he call Mr Young to give evidence explaining the assets listed in the 2004 bank application and the present position in relation to the Company which employs him and his statement that he could only afford to make instalments each month of $4,300. A summary of that evidence is as follows:

a.the land at Kilmore had been sold some years ago and the net proceeds invested in the business;

b.the shares in listed companies had also been sold some years ago and the proceeds invested in the business;

c.the self-managed superannuation fund had limited assets apart from shares in a company, Centro, which shareholding was currently frozen.

d.the business conducted by Container Forwarding Services Pty Ltd involved the import and export of produce. The business is presently conducted at Joseph Road, Footscray and consists of cool stores with refrigeration and fumigation equipment necessary to satisfy Australian quarantine standards. The lease for those premises will expire in 2013. To ensure continuity with the business, the company has taken a lease for 15 years of alternative premises in Olivia Street, Tottenham, where it will be necessary to build similar infrastructure and to obtain Australian quarantine approvals before the business can relocate to the new premises. The process of relocation including the necessary works at the new premises and the obtaining of the required approvals will take approximately two years. Mr Young said he hoped that once the relocation was completed, the business would be worth more than the $800,000 at which he valued his equity in 2004;

e.in respect of each of the companies of which he was a director, one was the trustee of the Super Fund, one had operated a clothing store in Richmond but had ceased to trade recently, one had not traded and the final company had a debt due to it which was unlikely to be covered. Mr Young’s assessment was that the shares in each of these companies did not have any value.

10I am satisfied, from the totality of the evidence, including the affidavit material and the oral evidence of Mr Young, that:

a.until the business of Container Forwarding Services Pty Ltd has re-established itself at the new premises, the company’s position is likely to be precarious and the shares are not an asset that Mr Young would be able to realise in the short term;

b.it is likely that, the company, which appears to meet a substantial part of the personal living expenses of Mr Young, will continue to meet instalment payments to the judgment creditor;

c.that, in the absence of evidence to the contrary and any real challenge in the cross-examination of Mr Young, that $4,300 per month is the limit of what Mr Young, through his company, could pay to meet the judgment debt;

d.if Mr Young were made bankrupt, his ability to conduct the business of Container Forwarding Services Pty Ltd would be severely affected and in those circumstances, it would be unlikely that he would have the capacity, particularly in the short term, to make any payments to the judgment creditor.

11If the purpose of the legislation is primarily to ensure the payment of judgment debts, I consider that this is best achieved by confirming the instalment order previously made by the Registrar. It is likely that this will result in the payment of the judgment debt over a period of approximately two years. The Act seems to be a fairly complicated piece of legislation, not particularly well suited to the circumstances of the present judgment creditor and judgment debtor. If there were default in the making of payments, the judgment creditor must make further application to the Court. A separate section of the Act makes provision for further action to be taken by the judgment creditor in the event of “persistent wilful default”.

12The Act is unclear as to whether the Court has power to attach conditions in respect of any instalment order, for example, a usual condition of instalment agreements reached between parties would provide that if default were made in the payment of an instalment and that default continues for a limited period, the balance of the amount then outstanding would become due. I  consider that where there is a statutory scheme which provides for what is to occur in the event of default in the payment of instalments or “persistent wilful default” that it would not be appropriate for the Court to impose such a condition.

13An instalment order is required by s.5(2) of the Act to “specify the amount of each instalment payable and the times at which the instalments shall be paid”. I consider that the requirement that the payments be made by direct debit to the account of the judgment creditor is something which the Court has power to order, in a similar way the Registrar’s order provided for payment to be made to the judgment creditor’s solicitors.

14In the circumstances, the order I will make is as follows:

1The order of the Registrar, dated 14 December 2011, for the payment of the judgment debt by instalments is varied to provide that the judgment debt will be paid by instalments as follows:

a.instalments of $4,300 to be paid monthly;

b.the first instalment following this order is to be paid on 15 March 2012;

c.instalments are to be paid to a bank account of the judgment creditor, to be nominated in writing by the judgment creditor’s solicitors to the Court and to the judgment debtor on or before 4pm on 7 March 2012 and such instalments are to be paid until the judgment debt and penalty interest are fully paid.

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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 1 March 2012 and revised on 2 March 2012.

Dated: 2 March 2012

Caroline Dawes

Associate to His Honour Judge Anderson