Cianiup Pty Ltd v O'Rourke
[2007] WADC 19
•9 MARCH 2007
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: CIANIUP PTY LTD & ANOR -v- O'ROURKE & ORS [2007] WADC 19
CORAM: COMMISSIONER ARCHER
HEARD: 6 & 22 DECEMBER 2006
DELIVERED : 9 MARCH 2007
FILE NO/S: CIV 2900 of 1997
BETWEEN: CIANIUP PTY LTD
First Named Plaintiff
SHIRLEY LYNETTE SCANLAN
Second Named Plaintiff (Appellant)AND
BARRY DANIEL O'ROURKE
First Named DefendantOLIVER DOUGLAS
Second Named DefendantLAWRENCE JOHN SCANLAN
Third Named Defendant
ON APPEAL FROM:
For File No : CIV 2900 of 1997
Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA
Coram :DEPUTY REGISTRAR HARMAN
Citation :CIANIUP PTY LTD -v- O'ROURKE & ORS [2006] WADC 122
File No :CIV 2900 of 1997
Catchwords:
Application for leave to enforce a judgment - Assignment of judgment - Jurisdiction of Deputy Registrar - Review or Appeal - Fresh application for leave after previous grant of leave set aside - Whether appeal or fresh application appropriate - Whether proceedings to enforce a judgment are interlocutory - Novation - Consideration - Estoppel - Delay
Legislation:
Civil Judgment Enforcement Act 2004, s 9, s 13
District Court Rules 2005, r 15, r 63, r 64
Property Law Act 1969, s 20
Rules of the Supreme Court 1971, O 47 r 3
Supreme Court Act 1935, s 141
Result:
Leave to enforce judgment granted
Representation:
Counsel:
First Named Plaintiff : No appearance
Second Named Plaintiff (Appellant) : Mr G Cobby
First Named Defendant : No appearance
Second Named Defendant : Mr M Levitan
Third Named Defendant : No appearance
Solicitors:
First Named Plaintiff : Not applicable
Second Named Plaintiff (Appellant) : Christensen Vaughan
First Named Defendant : Not applicable
Second Named Defendant : Melvyn Levitan
Third Named Defendant : Not applicable
Case(s) referred to in judgment(s):
Argyll Park Thoroughbreds Pty Ltd v Glen Pacific Pty Ltd (1993) 11 ACSR 1
Commonwealth of Australia v Albany Port Authority [2006] WASCA 185
DA Christie Pty Ltd v Baker [1996] 2 VR 582
Dennehy v Reasonable Endeavours Pty Ltd [2001] VSC 447
Eff Limited v Mygid Pty Ltd [2004] WASC 174
Hazard Pty Ltd v Rademaker (1993) 11 WAR 26
Liebherr-Australia Pty Ltd v Bloomfield [2006] WASCA 128
Nominal Defendant (NSW) v Manning (2000) 50 NSWLR 139
Olsson v Dyson (1969) 120 CLR 365
Scarf v Jardine (1882) 7 App Cas 345
Wigan v Edwards (1973) 1 ALR 497
WT Lamb & Sons v Rider [1948] 2 KB 331
Case(s) also cited:
Briggs v Glentham Pty Ltd (1992) 8 WAR 339
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194
Duer v Frazer [2001] 1 All ER 249
Gracechurch Holdings Pty Ltd v Breeze (1992) 7 WAR 518
Harris v Caladine (1991) 172 CLR 84
Hunt v Knabe (No 2) (1992) 8 WAR 96
Kendall & Ors v Hamilton (1879) 4 App Cas 504
Killyer v Roberts (1990) 26 VLR 155
Levy v Sale (1877) 37 LT 709
Lockett v A & M Charles Ltd [1938] 4 All ER 170
National Westminster Bank plc v Powney [1991] Ch 339
Orwell Steel (Erection and Fabrication) Ltd v Asphalt and Tarmac (UK) Ltd [1985] 3 All ER 747
Patrick Stevedores Operations (No 2) Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30
Pinnel's case [1558-1774] All ER Rep 612
Ray Wolmershausen (1890) 62 LT 541
Re EWA [1901] 2 KB 642
Richards v Heather (1817) 1 B & Ald 29, (1817) 106 ER 11
Roberts v Hong Kong Bank of Australia Limited (1993) 35 AILR 231
Thiess Watkins White Construction Limited (in liq) v Witan Nominees (1985) Pty Ltd [1992] 2 Qd R 452
Van Lynn Developments v Pelias Construction Co Ltd [1969] 1 QB 607
Walker v Bowry (1934) 35 CLR 48
COMMISSIONER ARCHER:
Introduction
This is an appeal from a decision of Deputy Registrar Harman delivered on 16 August 2006. In that decision, the Deputy Registrar refused to give Ms Scanlan leave to enforce a judgment under s 13(1)(a) and (1)(d) of the Civil Judgments Enforcement Act2004 ("the Act").
This matter has an unhappy history.
On 7 October 1997, judgment was entered against three defendants in the sum of $73,312.47, with interest up to that date in the sum of $6,434.70 (a total of $79,747.17) with costs. One of the defendants was Mr Douglas. Another was Mr Scanlan. The plaintiff was Cianiup Pty Ltd.
On 27 July 1998, the plaintiff, Ms Scanlan and the judgment debtors signed a deed of assignment, which assigned the judgment debt to Ms Scanlan for the price of $80,000. While there was initially some suggestion that there was no assignment, throughout the multiple affidavits of Mr Douglas, Mr Douglas conceded that there was an assignment of the judgment debt from the plaintiff to Ms Scanlan (for example par 9 of Mr Douglas' affidavit in support of his application to set aside a bankruptcy notice, which in turn is annexure OD‑A1 to his affidavit filed in these proceedings sworn 5 December 2005 (and which will be referred to as "OD‑A1")). During the course of argument, his counsel confirmed it was not disputed that there was an assignment.
It appears that Ms Scanlan took out a loan in order to pay the purchase price.
What occurred subsequently is a matter of some dispute between the parties. However, Ms Scanlan's counsel argued that, even if Mr Douglas' version of events is true, leave to execute should be granted. For the reasons which follow, I accept that submission. Accordingly, it is not necessary to resolve conflicts in the evidence.
Applications for leave to execute
On 15 September 2004 an ex parte motion was lodged on behalf of Ms Scanlan seeking leave to execute the judgment under s 141 of the Supreme Court Act1935. On 24 September 2004, leave was granted.
On 5 December 2005, Mr Douglas made an application to set aside that order. It became apparent to Ms Scanlan's solicitors that there had been "a technical defect" in the ex parte application which was not due to any fault on the part of Ms Scanlan. The "technical defect" was a failure to disclose certain matters. Accordingly, on or about 7 February 2006, Ms Scanlan filed a second application for leave, presumably anticipating that the order granting leave would be set aside. By that time, the Act had come into operation, so this second application was made under the Act. However, shortly afterwards, the second application was dismissed as being premature.
On 27 February 2006, the ex parte orders were set aside ("the setting aside order").
On or about 31 March 2006, Ms Scanlan filed a fresh application for leave ("the third application") under the Act. That application was heard by Deputy Registrar Harman on 29 May 2006 and dismissed on or about 25 August 2006. It is that decision which is the subject of the appeal.
After hearing the parties' arguments on the appeal, I reserved my decision. I subsequently bought the matter back on in order to discuss with the parties the fact that the Deputy Registrar did not have jurisdiction to deal with an application for leave under s 13(1)(d) of the Act. It appears that had been overlooked by both parties.
Section 9(3) of the Act relevantly provides that the District Court Rules 2005 ("the District Court Rules") may prescribe applications that, when made to the District Court under the Act, may be dealt with by an officer of the District Court, other than an officer who may constitute the Court, who is prescribed by the Rules for that purpose. Rule 63 of the District Court Rules relevantly provides that an application for leave under s 13(1)(a) of the Act may be dealt with by a Registrar. The Rules do not permit a Registrar to deal with an application under s 13(1)(d).
In this case, leave was being sought to enforce a judgment which fell under both section 13(1)(a) and (d). Accordingly, s 9(3) of the Act did not give a Registrar jurisdiction to deal with the application.
The lack of jurisdiction also answers a further submission made by counsel for Mr Douglas. He argued that the appropriate way to challenge the Deputy Registrar’s decision was by a "review" under s 9(4) of the Act, rather than an appeal. However, that process applies when a person is dissatisfied by a decision made by an officer prescribed under subsection (3). In this case, the Deputy Registrar was not prescribed under subsection (3), and accordingly, the review process was not available. Ms Scanlan correctly challenged the decision by way of an appeal under the District Court Rules.
In any event, both an appeal and a review are dealt with by way of a new hearing (r 15(6) of the District Court Rules and s 9(7) of the Act). In a review, Part II Division 3 of the District Court Rules applies with any necessary changes (r 64 District Court Rules).
While it is unusual for a matter to be aired for the first time after a decision has been reserved, it is clearly permissible, and indeed often necessary in order to give the parties an opportunity to be heard. Both parties have now had the opportunity to provide written submissions on the jurisdiction issue. Further, there has been no prejudice to Mr Douglas due to the manner in which this issue arose. It is not a matter about which further evidence could have been led. Nor does any issue arise as to whether leave should be granted to add a new ground of appeal. Counsel for Ms Scanlan pointed out that no grounds of appeal had been filed, nor is there a requirement that a notice of appeal under the District Court Rules contain grounds of appeal (r 15(3) of the District Court Rules).
However, counsel for Mr Douglas argued that the Court should dismiss the appeal on the ground that, because the Deputy Registrar did not have jurisdiction to deal with the application, "there is no valid application before [the Court] to consider de novo." I do not accept that submission.
An appeal from a Registrar is to be treated by a District Court Judge as if the application which lead to the order under appeal was before the Court for the first time (save that the party appeals opens – Hazard Pty Ltd v Rademaker (1993) 11 WAR 26 per Malcolm CJ at 28). In Liebherr-Australia Pty Ltd v Bloomfield [2006] WASCA 128, McLure JA, with whom Steytler P agreed, was considering an appeal to a District Court Judge from a refusal to grant leave under the Workers' Compensation (Common Law Proceedings) Act2004 (WA) ("CLP Act"). Her Honour said "When considered as a matter of substance rather than form, the matter before the District Court Judge was an application for leave to commence proceedings; the decision maker is starting with a clean slate entirely unfettered by the earlier decision of the Registrar. Matters of substance should govern the categorisation of the matter. Accordingly, the "appeal" to the District Court Judge is an application for leave falling within s 7(1)(a) of the CLP Act." While those remarks were made in a different context, in my view, they apply equally in this case.
I would further note, that if I was to dismiss the appeal on the ground suggested, Ms Scanlan would be entitled to file a fresh application for leave to be listed before a judge of the District Court. Alternatively, given that the dismissal of the previous applications were without jurisdiction, Ms Scanlan could simply ask for either the second or third application to be re‑listed before a Judge. Another Judge would then be required to deal with the issues that have already been argued before me. That is obviously not in the interests of either party, nor in the interests of the efficient administration of justice. Accordingly, I have concluded that I should deal with this matter as if it was a fresh application for leave.
Power to make fresh application
Counsel for Mr Douglas submitted that, after the setting aside order was made, the only option available to Ms Scanlan was to appeal that order. He argued that, as applications seeking leave to enforce a judgment are not interlocutory, once a decision has been made, a further application cannot be brought.
Before dealing with the merits of that submission, I note that it assumes that the Deputy Registrar had the jurisdiction to make the setting aside order. As mentioned earlier, that order was made under s 141 of the Supreme Court Act1935. Counsel for Ms Scanlan did not seek to argue that the assumption was incorrect, and indeed submitted that the Deputy Registrar did have jurisdiction to make the setting aside order. I have not considered the correctness of that submission, as, for the reasons which follow, it would make no difference to the outcome.
Firstly, I do not accept the submission of counsel for Mr Douglas that an application for leave to enforce a judgment is not interlocutory. In my view, it clearly is (see WT Lamb & Sons v Rider [1948] 2 KB 331 at 334, and Seaman's Civil Procedure at [23.100.20] and [3890.160]).
However, merely because a fresh application may be made on an interlocutory matter doesn't mean it will inevitably be considered on its merits. Indeed, if it is merely a repetition of the previous application, it is likely to be dismissed as an abuse of process (DA Christie Pty Ltd v Baker [1996] 2 VR 582 ("Christie") and see Commonwealth of Australia v Albany Port Authority [2006] WASCA 185).
In Nominal Defendant (NSW) v Manning (2000) 50 NSWLR 139 ("Manning"), Heydon JA said at [72]:
" … a litigant bringing a second application where circumstances have not changed on evidence available earlier is facing serious and self‑created risks of an adverse exercise of judicial discretion. The real evils to which Hayne JA referred to in Christie [supra] – the risk of conflicting decisions, the unnecessary vexing of respondents, judge shopping and a diminution of certainty in the conduct by respondents of their affairs – and others – damaging public confidence in the integrity of judicial decisions, expending time and money on litigation unnecessarily – are evils which each court in its individual discretion will rightly strain to avoid."
Counsel for Ms Scanlan conceded that there was no substantive material additional to the material that was before the Deputy Registrar on the application to set aside. The only additional evidence was that Ms Scanlan was now seeking leave to enforce the judgment against Mr Scanlan as well as Mr Douglas. However, counsel for Ms Scanlan submitted that none of the "real evils" applied in this case. In my view, whether or not that is so depends on why the Deputy Registrar made the setting aside order. That is because the Deputy Registrar had a discretion to continue the order granting leave or make a new order, even if it was found that there had been material non‑disclosure in the ex parte application.
I was advised by counsel for Mr Douglas that the Deputy Registrar's decision was made after a full consideration of the merits of the matter. Counsel for Ms Scanlan had asserted the contrary in his written submissions.
Unfortunately, no evidence was led by either party on this issue, nor was the court directed to the Deputy Registrar's reasons. Accordingly, when the matter was re‑listed to discuss the jurisdictional problem, I also gave the parties leave to address this issue. Both subsequently did so.
In my view, the Deputy Registrar's reasons indicate that he set aside the order because there had been material non‑disclosure in the ex parte application. In those circumstances, a further application for leave does not give rise to many of the potential "evils" of multiple applications. In this case, there is no risk of conflicting decisions, judge shopping or damaging public confidence. While there has been some unnecessary expenditure of time and money on litigation, it is not a case where multiple decisions are being made on the merits. Further, to some extent, the unnecessary expenditure has been addressed by the award of costs. It is true that, in a sense, the respondent would be "vexed" by a further application. However, I do not consider that to be a significant factor in the circumstances, particularly where the matter has not yet been determined on the merits. Nor do I consider the "diminution of certainty in the conduct by respondents of their affairs" to be a significant factor in this case. There is no evidence to suggest that the respondent has changed his position in any way since the setting aside order. That is reinforced by Mr Douglas' responses to the requests for payment.
In those circumstances, it is appropriate to consider the merits of the application.
Section 13 of the Act: Criteria for leave
Leave of the court to enforce the judgment is required under s 13(1) of the Act. A court may give leave if it satisfied that the person seeking to enforce the judgment is entitled to do so and that the person against whom the order is sought is liable to satisfy the judgment (s 13(2)).
Entitled
In this case, there was a valid judgment (annexed at p 41 of OD‑A1). The judgment debt was assigned to Ms Scanlan. Mr Douglas had express notice in writing of the assignment, as is apparent from his evidence that he signed the assignment deed (annexed at p 34‑44 of OD‑A1). However, counsel for Mr Douglas argued that Ms Scanlan is not entitled to enforce the judgment as there was a valid oral agreement entered into between her and the judgment debtor.
Oral agreement
Mr Douglas stated that he only signed the deed of assignment because Mr Scanlan told him that he would be required to repay only one-third of the total amount, and would only be required to make payments when he had the money to do so. His counsel submitted this was an oral agreement entered with Ms Scanlan, via her agent, Mr Scanlan ("the oral agreement").
Counsel for Mr Douglas contended that the fact that the parties entered into the oral agreement "novated" the liability to pay under the judgment, and cited Scarf v Jardine (1882) 7 App Cas 345.
The concept of novation has no application to this case. Novation is where one contract is entered into in substitution for another contract (Olsson v Dyson (1969) 120 CLR 365, at 388 per Windeyer J). Here, the judgment debtor's obligations existed as a result of a judgment of the court. In any event, an agreement could not novate a previous obligation unless there was consideration.
This was ultimately conceded by counsel for Mr Douglas. Counsel for Mr Douglas further conceded that if there was no consideration for the oral agreement, the judgment debt would stand and would be enforceable by Ms Scanlan, subject to the leave of the court. However, he argued that there was consideration.
Consideration
Counsel for Mr Douglas argued that Mr Douglas had provided consideration by signing the deed of assignment, by paying $500 to the plaintiff for the assignment, by agreeing to pay more than the judgment debt, and by making the agreement itself. Each of those matters will be considered in turn.
Signing Deed
Counsel for Ms Scanlan pointed out that it was not necessary for a judgment debtor to sign the deed of assignment. All that s 20 of the Property Law Act 1969 requires is that express written notice be given to the debtor. Mr Douglas was given such notice. The deed had effect, irrespective of whether he signed it.
Accordingly, the signing could not constitute consideration.
Payment of $500
Mr Douglas annexed a letter he had received from solicitors acting for the plaintiff (at p 46 of OD‑A1). In that letter, the solicitors wrote "Mrs S L Scanlan has offered to purchase the debt from our client for a sum of $80,000 to be paid today and you have requested that our client accept Ms Scanlan's offer. Our client is prepared to accept Ms Scanlan's offer subject to three cheques each in the sum of $500 previously tendered to our client being banked by our client and honoured upon first presentation." It is clear from the rest of the letter that there was a $500 cheque from each of the judgment debtors.
Mr Douglas arranged for the necessary funds to be in his account so that the cheque would clear in accordance with that letter. His counsel argued that that was consideration for the oral agreement.
However, Mr Douglas took that action so that the plaintiff would assign the debt to Ms Scanlan. In other words, at most, it was consideration given to the plaintiff in exchange for the plaintiff taking that action. It was not consideration to Ms Scanlan for making the oral agreement, nor did she request that payment to be made. It could not, therefore, be consideration for the oral agreement.
In any event, there is no evidence as to why the plaintiff had those cheques in the first place. Further, it is not even accurate to say that Mr Douglas paid the plaintiff $500 so that the plaintiff would assign the debt. Rather, he merely arranged for sufficient funds to be in his account, so that a cheque he had already given to the plaintiff would clear.
Oral agreement to pay $80,000
Mr Levitan faintly submitted that the oral agreement was to repay more than the judgment debt, as the oral agreement was for an amount of $80,000. However, the deed of assignment was made on the basis that the debt owed under the judgment was not less than the amount of the purchase price of $80,000 (cl 7.2). In any event, as at the date of judgment, the amount awarded plus interest to that date was $253.83 less than $80,000. There was also an order made as to costs, and interest would have accrued on the judgment debt. I am satisfied that the amount owed under the judgment was not less than $80,000, and was probably substantially more.
The making of the oral agreement
Counsel for Mr Douglas argued that the making of the agreement itself constituted consideration. Counsel for Ms Scanlan argued it was not, as it was an agreement to pay one third of what Mr Douglas was then obliged to pay, or, at the very least, to pay no more than he was already obliged to pay.
Counsel for Mr Douglas argued that this was not an agreement to pay one third of what Mr Douglas owed under the judgment as, he argued, the liability was joint, but not several. I do not accept that submission. Mr Douglas was a joint judgment debtor, and was therefore liable under the judgment for the entire amount of the judgment debt. His agreement to pay one third of what he was then obliged to pay could not constitute consideration.
However, even if he was only obliged to pay one third under the judgment debt, his agreement to pay that could not constitute consideration.
This was not a case where the debt owed was in dispute. In such a case, an agreement to pay the amount claimed, or some lesser sum, can constitute sufficient consideration. However, in this case, the quantum of the debt was the subject of a judgment. A promise to pay what was due under that judgment would be illusory consideration (see Wigan v Edwards (1973) 1 ALR 497, per Mason J, with whom Walsh agreed, at 512).
Further, in this case, the oral agreement was that Mr Douglas would pay a third of the judgment debt when he had the money to do so: "When you can pay it, you've got to pay it" (par 11, p 9 of annexure OD‑A1). Such a promise may be so vague as to make it impossible to enforce. If so, that would also render the consideration illusory. Whether or not the promise in this case was of that character may depend on whether the time for repayment can be determined objectively or whether Mr Douglas was able to subjectively determine when, if ever, he would repay the money (see Argyll Park Thoroughbreds Pty Ltd v Glen Pacific Pty Ltd (1993) 11 ACSR 1, and the discussion of Master Newnes in Eff Limited v Mygid Pty Ltd [2004] WASC 174 at [21] to [32]). As I have found that the consideration was illusory in any event, it is unnecessary to determine this issue. However, I am inclined to the view that the promise is too vague.
Fees and interest?
Ms Scanlan appeared to have claimed, from the judgment debtors, fees and interest arising under her loan. However, counsel for Mr Douglas was emphatic that the oral agreement did not include an obligation to pay those fees and interest. Accordingly, he did not suggest that there was an agreement to pay the fees and interest, so that could not have constituted consideration for the oral agreement.
Estoppel
Accordingly, I find that there was no valid oral agreement. However, Ms Scanlan may have lost her entitlement to proceed to execution if the oral agreement would make it "inequitable or unjust for execution to issue". The onus of showing it would be inequitable or unjust is borne by Mr Douglas (Dennehy v Reasonable Endeavours Pty Ltd [2001] VSC 447 at [17] ("Dennehy")).
In my view, Mr Douglas has failed to prove that. I am not satisfied that he altered his position in any way in reliance upon the oral agreement. The only action Mr Douglas took was to sign the deed. That was an unnecessary act, as the assignment was effective in any event. Further, the signing of the deed didn't change the nature of his liability, only who held it against him.
Accordingly, I find that it would not be inequitable or unjust for Ms Scanlan to execute the judgment. In my view, she is entitled to do so.
Liable
It is clear that no payment has been made, and accordingly Mr Douglas is liable to satisfy the judgment.
Delay
Counsel for Ms Scanlan conceded that delay on the part of the judgment creditor is relevant in the exercise of the court's discretion under s 13(2), even though that is not an express requirement of the subsection.
Shortly after the assignment, Ms Scanlan issued invoices for fees and interest payable on the loan. No payment was made (p 49 to 57 of annexure OD5 to OD‑A1).
On two occasions in 2002, Ms Scanlan wrote to Mr Douglas requesting payment (p 65 and 62 of OD6 of OD‑A1). Mr Douglas responded that he could not pay (p 64 and 61 of OD6 of OD‑A1). His attitude was summed up in the latter letter in which he said "I will definitely be defending this to the bitter end and I and my solicitor are prepared for a long legal scrap. As I have mentioned before I do not have the means to pay even if I was liable and if you do win, this will probably end up being heard in the Federal Bankruptcy Court probably along with other plaintiffs."
Ms Scanlan deposed that she believed what Mr Douglas said in his letters and therefore did not take any action to execute the judgment. However, some time after 10 June 2004, she saw an article in the West Australian that indicated his financial position had changed. She deposed that it was that that prompted her to take steps to execute the judgment against him (affidavit of Ms Scanlan, sworn 17 February 2006).
I am satisfied that the delay has been satisfactorily explained and that it was not due to an abandonment of, or indifference to, rights (Dennehy (supra) at [11]). Further, the delay has not caused any prejudice to Mr Douglas. In addition, it is clear from Ms Scanlan's invoices and letters that Mr Douglas knew she intended to enforce the judgment shortly after the assignment, and throughout 2002.
I note there was a suggestion that Mr Douglas' rights of contribution had changed as a result of the bankruptcy of one of the other judgment debtors, Mr O'Rourke. However, it was common ground that Mr O'Rourke had become bankrupt during the six years following the judgment taking effect. In addition, there is no evidence that Mr Douglas had changed his position as a result of the bankruptcy.
In all the circumstances, I am persuaded that I should exercise my discretion to grant Ms Scanlan leave to enforce the judgment.
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