D and Nguyen Pty Ltd v Le's Enterprises INC - [2011] FMCA 344

FEDERAL MAGISTRATES COURT OF AUSTRALIA

D & NGUYEN PTY LTD v LE’S ENTERPRISES INC & ANOR

[2011] FMCA 344

PRACTICE & PROCEDURE – Enforcement – application for “garnishee order” – not satisfied that specified debt certainly exists.

Federal Magistrates Act 1999, s.78
Uniform Civil Procedures Rules 1999 (Qld), rr.840, 840(1), 840(2), 840(3)

Relwood Pty Ltd v Manning Homes Pty Ltd (No. 2) [1992] 2 QdR 197
MC Projects Pty Ltd v Nigel Farah Trading as The Tiling Crew & Ors [2009] QDC 288

Applicant:

D & NGUYEN PTY LTD ACN 123 801 721

First Respondent:

LE'S ENTERPRISES INC

Second Respondent:

TONY LE

File Number:

ADG 234 of 2009

Judgment of:

Jarrett FM

Hearing date:

21 April 2011

Date of Last Submission:

21 April 2011

Delivered at:

Brisbane

Delivered on:

13 May 2011

REPRESENTATION

Counsel for the Applicant:

Mr Lazarevich

Solicitors for the Applicant:

Mai Lawyers

Counsel for the Respondent:

No appearance

ORDERS

The application in a case filed on 28 March, 2011 is dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT BRISBANE

ADG 234 of 2009

D & NGUYEN PTY LTD ACN 123 801 721

Applicant

And

LE'S ENTERPRISES INC

First Respondent

TONY LE

Second Respondent

REASONS FOR JUDGMENT

On 12 July, 2010 I gave judgment for the applicant against the respondents for $365,000 together with costs to be assessed. The judgment remains unsatisfied.
This is an application for the issue of orders, described in argument as garnishee orders, to assist the applicant to have the judgment satisfied. The orders sought are set out in the application as follows:
1.    That the payments of licence fees owing to the First respondent by the entities listed in the Affidavit of Manh Van Nguyen dated 25 March 2011, be attached to answer the judgment of the within action.
2.    That a garnishee order made in the form attached hereto and marked ‘A’ be made against each of the entities listed in the said affidavit.
3.    That the Applicant has the costs of this application.
4.    Such further or other order as this honourable Court sees fit.
Enforcement of orders of this Court (other than orders in its family law jurisdiction) is governed by s.78(2) of the Federal Magistrates Act 1999. That section is in the following terms:
(2) A person in whose favour a judgment of the Federal Magistrates Court is given is entitled to the same remedies for enforcement of the judgment in a State or Territory, by execution or otherwise, as are allowed in like cases by the laws of that State or Territory to persons in whose favour a judgment of the Supreme Court of that State or Territory is given.
Execution of judgments of the Supreme Court of Queensland are governed by a number of Queensland Acts and the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”). Although decided before the commencement of the UCPR a useful explanation of the history of the practice and procedure relating to garnishee orders can be found in Relwood Pty Ltd v Manning Homes Pty Ltd (No. 2) [1992] 2 Qd R 197 at 199 – 202.
Insofar as the present application is concerned, the relevant rule is UCPR 840. It is in the following terms:
(1)     A court may issue an enforcement warrant authorising redirection to an enforcement creditor of specified debts certainly payable, belonging to an enforcement debtor, from a third person.
(2)     In deciding whether to issue an enforcement warrant authorising redirection, including regular redirection under division 2, the court must have regard to the following--
(a)     whether the enforcement debtor has adequate means of satisfying the order after deducting--
(i)     the necessary living expenses of the enforcement debtor and the enforcement debtor's dependants; and
(ii)     any other known liabilities of the enforcement debtor;
(b)     whether the amount of regular debt to be redirected would impose unreasonable hardship on the enforcement debtor;
(c) if the applicant is the enforcement debtor--whether, having regard to the availability of other enforcement means, the issue of the warrant would be consistent with the public interest in enforcing orders efficiently and expeditiously;
(d)     whether, having regard to the nature of the debt (belonging to the enforcement debtor from the financial institution) and the type of redirection, a regular redirection or otherwise, is appropriate.
(3)     A debt may be redirected only if the debt, or the part of the debt belonging to the enforcement debtor, is payable to the enforcement debtor from the third person on the date the enforcement warrant is served on the third person.
In MC Projects Pty Ltd v Nigel Farah Trading as The Tiling Crew & Ors [2009] QDC 288 the enforcement creditor secured the issue of an enforcement warrant to redirect a debt alleged to be due from a third party to the enforcement debtor. The enforcement creditor was a subcontractor on a building project, the enforcement debtor was the contractor who engaged the enforcement creditor and the third party was the builder/developer of the project with whom the enforcement debtor had its contract.
To secure the issue of the enforcement warrant the enforcement creditor swore that there was a debt certainly payable to the enforcement debtor from the third party. In fact, there was a genuine dispute between the enforcement debtor and the third party about the existence of the debt, or if it existed, the amount of the debt. Wall QC DCJ held that the words specified debts certainly payable in UCPR 840(1) should be construed in the following way:
There must be an actual debt, not a mere probability or possibility that a debt may become due; there must be an actual debt in existence, a debt existing at present, a debt then existing, not merely the possibility of a debt in the future or the mere prospect that money may be received in the future. Only debts can be redirected; moneys which may or may not become payable are not debts which can be redirected: Shilliday v. Stevenson [1921] QWN 38 (QDC); Webb v. Stenton [1883] 11 QBD 518; Jackson & Anor v. Marsh & Webster Ltd [1924] SR Qd 318. See also Thomas Brown & Sons Ltd v. Dempster [1902] QWN 62 (QDC); Queensland Carriage etc v. Somerville (1890) 4 QLJ 10 and Breen v. Doyle (1920) 37 WN (NSW) 258 at 260 where the Prothonotary said:
"Whether or no the orders made in the Small Debts Court at Tocumwal ought to have been made is a matter which, in my opinion, I cannot take into consideration. So long as those orders have not been set aside, for the purpose of this application I must treat them as valid, and it is unnecessary to consider how, if at all, an appeal would lie, although I assume that, if at the time they were made there was no attachable debt due by Doyle, an application to set them aside might be made...
I think the cases clearly establish the proposition that at the time an order nisi for attachment is made, there must be a debt either due or accruing due from the garnishee to the judgment debtor. There must be an actual debt, although it may not be payable till some future time, and not merely certain circumstances which in the future may or may not give rise to a debt; in other words, a contingent debt, or a claim which, as the result of certain events happening, becomes a debt is not attachable, at any rate, when it is unknown whether those events will happen or not."
The relevant evidence before me is contained within the affidavit of Manh Van Nguyen filed on 28 March, 2011. That person deposes to being the sole director and secretary of the applicant company. That person further deposes:
5. While there was a franchise agreement in force between the Applicant and the First respondent, the Applicant made fixed monthly payments of licence fees which were due on the tenth day of every month. The Applicant posted cheques payable to “Le’s Enterprises to the Respondents’ business address in California…”
The deponent swears that after conducting research on the internet and “through some information I have obtained from a friend in the nail business I understand that the First respondent has entered into franchise agreements (‘the franchise agreements’) with the following entities:”. Thereafter is listed fourteen entities, their addresses and in all cases but one, the date of a franchise agreement. The deponent swears to a belief that “pursuant to the franchise agreements, the First Respondent receives regular payments of licence fees (‘the license fees’) from the above entities.” The applicant seeks to attach “the licence fees” to answer the judgment debt.
In my view, the applicant has not demonstrated on the balance of probabilities that there is a specified debt certainly payable from any of the potential garnishees to the first respondent in this application. On the evidence, I cannot be satisfied that any debt exists, let alone the mere probability of a debt (which according to Wall QC DCJ is insufficient in any event). The franchise agreements, or the franchise agreement between the applicant and the first respondent, are not in evidence.
There has been no enforcement hearing pursuant to UCPR.
The form of the enforcement warrant which might be issued pursuant to UCPR (form 76) is different to the form of order sought by the applicant in this case. The UCPR form makes clear that the debt, the subject of the enforcement warrant, must be certain and particulars must be given. Certain notices, to both the third party to whom the enforcement warrant is directed and to the enforcement debtor must be included.
Having regard to the matters set out above, the application must be dismissed.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Jarrett FM

Associate: L French

Date: 11 May 2011