Falcone and Williams v Mentyn, Pearce v Mentyn (No 2)

[2004] TASSC 156

[2004] TASSC 156

CITATION:      Falcone and Williams v Mentyn, Pearce v Mentyn (No 2) [2004] TASSC 156

PARTIES:  FALCONE, Jeffrey James

FALCONE, Vivien May
WILLIAMS, Timothy John
v
MENTYN, Jean Paul (also known as

MEYER, John Andrew)

PEARCE, Arthur David
v
MENTYN, Jean Paul (also known as

MEYER, John Andrew)

TITLE OF COURT:  SUPREME COURT OF TASMANIA
JURISDICTION:  ORIGINAL
FILE NO/S:  M286/2003

M297/2003

DELIVERED ON:  23 December 2004
DELIVERED AT:  Hobart
HEARING DATES:  9 November, 13 December 2004
JUDGMENT OF:  Underwood CJ
CATCHWORDS:

Procedure – Judgments and orders – Enforcement of judgments and orders – Execution against property – Other writs and modes of execution – Charging orders – When made – How and when enforceable.

Supreme Court Civil Procedure Act1932 (Tas), ss166 and 167.
Supreme Court Rules 2000 (Tas), Pt36, Div1.
Brereton v Edwards (1888) 21 QBD 488; Leggott v Western (1884) 12 QBD 287, followed.
Aust Dig Procedure [519]

REPRESENTATION:

Counsel:
             Applicants: Falcone and Williams       D J Gunson SC
             Applicant Pearce:  P L Jackson
             Respondent:  In Person
Solicitors:
             Applicants: Falcone and Williams       Gunson Williams
             Applicant Pearce:  Jackson and Tremayne
             Respondent:  In Person

Judgment Number:  [2004] TASSC 156
Number of Paragraphs:  30

Serial No 156/2004
File Nos M286/2003

M297/2003

JEFFREY JAMES FALCONE and VIVIEN MAY FALCONE,
TIMOTHY JOHN WILLIAMS
v JEAN PAUL MENTYN (also known as JOHN ANDREW MEYER)
ARTHUR DAVID PEARCE
v JEAN PAUL MENTYN (also known as JOHN ANDREW MEYER) (NO 2)

REASONS FOR JUDGMENT  UNDERWOOD CJ

23 December 2004

The applications

1. Towards the end of 1999, the respondent entered into a contract to purchase a house and land.  In circumstances not presently material, the contract was repudiated.  In January 2000, the applicant in M297/2003, a solicitor, was left with a sum of money slightly in excess of $100,000 that belonged to the respondent.  In circumstances that are also not presently material, he paid it to Tasmanian Trustees Ltd.  In November 2000, Tasmanian Trustees Ltd paid the capital sum and interest into Court.  That money ("the fund") has since remained in this Court.

1. There followed considerable litigation with respect to the failed contract and associated matters.  In result, the respondent incurred a number of judgment debts, in the main for costs.

1. On 6 October 2003, in M286/2003, and on 10 October 2003, in M297/2003, applications were made for charging orders over the fund.  On 20 October 2003, Crawford J made orders calling upon the respondent to show cause why charging orders should not be made. 

1. On 10 November 2003, the former Chief Justice commenced hearing the respondent upon the return of the order to show cause.  The whole of the available hearing time was occupied with submissions from the respondent that the learned Chief Justice should disqualify himself from determining the show cause hearing.  His Honour declined to disqualify himself and the hearing was adjourned to a date to be fixed.  It resumed before me on 9 November 2004.  Not long after the hearing re-commenced, the respondent made an application for an adjournment.  The application was granted.  The hearing finally resumed on 13 December 2004. 

1. At the hearing I found that the respondent was beneficially entitled to the fund and was indebted to Mr and Mrs Falcone and Mr Williams (the applicants in M286/2003) and to Mr Pearce (the applicant in M297/2003) in the sums deposed to in the affidavits of Mr David John Gunson and Mr Philip Louis Jackson, respectively.  I also found that the respondent had not paid any of the judgment debts, nor was there any likelihood of him doing so.  In those circumstances, I said that the applicants were entitled to charging orders over the fund in favour of the applicants in the sums set forth in the affidavits.  I gave some brief reasons for reaching that conclusion.  The following paragraphs set out an edited version of those oral reasons.  The applicants then applied for orders that moneys be paid out of the fund to the applicants to meet the judgment debts.  I was then unpersuaded that I should make those orders and reserved my decision. 

"I will deal with Mr Mentyn's application for an adjournment to enable him to reply to submissions made by counsel.  That application will be refused.  Counsel's submissions did not raise matters that were raised at this hearing for the first time.  They concerned matters that have been in issue from the very start.  They were in issue when the matter was before the former Chief Justice in November 2003, I think it was, as indeed has been borne out by the extract that Mr Mentyn has just read me from a transcript of those proceedings.  It is not right that there should be any further adjournment.  Further, I am confident in saying that were Mr Mentyn given an adjournment to study this at great length, he would be of very little assistance to the Court with submissions concerning it. The application for him to have an adjournment for further time to consider the matter is refused.

Before me are proceedings under the file numbers M286/2003 and M297/2003.  I accept the affidavit evidence set forth in the affidavits of Mr David Gunson and Mr Philip Jackson sworn 3 October 2003 and 10 October 2003 respectively.

The respondent to these proceedings was called upon to show cause why charging orders should not be made with respect to a sum of money, or fund, that has been paid into Court.  To resist the making of a charging order, he filed an affidavit sworn by him on 19 November 2004.  That affidavit contains a lot of irrelevant material.  It also contains material which states that it was his intention to put the title to the property he contracted to purchase from Mr and Mrs Falcone in the names of himself and his wife, known as Jill Dalrymple.  That seems to be pretty clear.  But the issue is not names into which the title is to be put, but who actually owns the money, and there is plenty of cogent evidence in the affidavit material, in particular the note from the Westpac Banking Corporation, to satisfy me that the owner of the funds in Court is indeed the respondent.

The affidavit evidence also clearly satisfies me that the respondent is indebted to the persons whose names are set forth in the affidavits, that is, Mr and Mrs Falcone and Mr Williams in M286/2003 and Mr Pearce in M297/2003, by virtue of various orders of the Court and subsequent taxations of costs.

I am also satisfied from the affidavit material that the respondent has made no payments with respect to any of those orders.  The bailiff's returns indicate that the prospect of him making any payments is extremely unlikely.

Most of what Mr Mentyn has said to me today has not made sense to me.  He has failed to address the issues raised by the two applications that are before me.  I want to make it clear that I asked him to do so on several occasions.  I repeatedly reminded him of what were the issues by reading out to him the terms of the order I made on 9 November 2004, a written copy of which was sent to him.  The difficulty I had was compounded by the fact that Mr Mentyn frequently failed to complete his sentences and appeared to jump from topic to topic.  I make it clear that there is a limit to the amount of time a judicial officer can give to listen to nonsensical submissions.  The judicial resource is finite and there are other claims on it.  I do not know whether Mr Mentyn is unable or unwilling to make coherent submissions, but that is what in fact happened today.

Accordingly, I am satisfied that charging orders should be made and I will make them, more or less in the terms that were put to me.  But having said all that, I need to reserve for further consideration whether orders of payment out should be made.  I have considerable difficulty when I look at the Supreme Court Civil Procedure Act 1932, ss166 and 167, and the Supreme Court Rules 2000, dealing with charging orders and the like. I need to satisfy myself that an order of enforcement of the charging orders should be made. I will reserve that aspect of my decision and give it in due course."

The entitlement to a charging order over the money in Court

1. The jurisdiction to make a charging order is to be found in the Supreme Court Civil Procedure Act 1932 ("the Act"), ss166 and 167. The relevant Rules of Court are the Supreme Court Rules 2000, Pt36, Div1.

1. There is no doubt that the provenance of the Act, ss166 and 167, is the Judgments Act 1838 (UK), ss14 and 15, for the words of the English and the Tasmanian provisions are virtually identical. The authority to make a charging order is enacted by the Act, s166, and the procedure for obtaining such an order is prescribed by s167. The English practice, as enacted by the Judgments Act, (UK) s15 was to apply ex parte in the first instance for an order nisi.  The order nisi called upon the respondent to show cause why the order should not be made absolute.  See Seton's Judgments and Orders (6^th ed) Chapter XXVIII.  See Haly v Barry (1868), 3 Ch App 452; Brereton v Edwards (1888) 21 QBD 488.

1. The Act, s166 authorises the making of a charging order over "Government stock, funds, or annuities, or securities of a public authority, or stocks or shares in any public company in this State". Contrary to an assumption that underpinned the hearing (and to which I was a party) the word "fund" in that section has no application to the money paid into Court by Tasmanian Trustees Ltd That word, like the words "stock" and "annuities" is governed by the word "Government". Slingsby v Grainger (1859) 7 HL Cas 280 was a will case. In it, the learned Law Lords expressed the firm view that "the Funds" meant Government funds or public funds. That decision is supported by Howard v Kay 27 LJ  448 which was another will case.  More importantly, in Brereton v Edwards (supra) the Court of Appeal unanimously held that the Judgments Act (UK), ss14 and 15, did not apply to monies in Court. With respect to s14, Lord Esher said at 493, " … s 14 does not apply to money ¾… it applies only to Government stock, funds or annuities, and stock or shares in a company". The same must be said with respect to the Act, s166.

1. The foregoing serves to explain why the Rules of Court concerning charging orders have only referred to stocks or shares from the time they were first made until the enactment of the Supreme Court Rules 2000. The Rules of the Supreme Court 1965, and its predecessors, provided by O51 (formerly O50), r1 that:

"An order charging stock or shares may be made by the Court or a judge, and the proceedings for obtaining such an order shall be such as are directed, and the effect shall be such as is provided by Part IX [ss166 and 167] of the Act."

1. That seems to me to be a reference to long-standing English practice of obtaining an order nisi ex parte in the first instance and if cause is not shown, an order absolute. 

1. When first enacted, the Rules of Court, O50, rr13 and 14, provided:

"13  Enforcement of judgment against money in Court  When any person, against whom a judgment or order for the payment of money has been given or made, is entitled in his own right to any money standing to the credit of any cause or matter in Court, the Court or a judge, upon the application of the party who has obtained the judgment or order, may order that the money shall be applied so far as it will extend in satisfaction of the amount payable under the judgment or order, and be paid to the person entitled thereunder accordingly.

14    Mode of application  An order under the last preceding Rule may be made on summons, or the judge may make an order ex parte in the first instance charging the money in court, and calling on the person by whom the payment is adjudged or ordered to be made to show cause why it should not be paid to the party who has obtained the judgment or order."

1. The applicants have not made application for an order of payment out pursuant to those Rules for the very good reason that they were repealed by the Supreme Court Rules 2000 and not re-enacted in that form.

1. The Supreme Court Rules 2000, r933(2) and (3), provide:

"(2)  In the case of an order to show cause in respect of funds in Court, the order is to be served on ¾  

(a)the judgment debtor; and

(b)the Principal Registrar.

(3)  An order under subrule (2) may order ¾  

(a)that a charge be imposed on the judgment debtor's beneficial interest in any funds in Court; and

(b)that the funds so charged be applied in satisfaction of the amount payable under the judgment and paid to the person entitled under the judgment." [Emphasis added.]

1. The Supreme Court Rules 2000, r935 provides:

"(1)     On the return of an order to show cause, the Court or a judge may ¾  

(a)make the order final in respect of those securities, interests or funds to which the order relates; or

(b)discharge the order.

(2)     A charging order which has been made final has the same effect, and gives the judgment creditor the same remedies for enforcing it, as if it were a valid charge made by the judgment debtor.

(3)     The Court or a judge may at any time vary or discharge a charging order which has been made final."

1. I can only conclude that r933(3)(b) is an error. It should have been enacted in r935. It is inconceivable that an order to show cause could also contain an order that the funds be paid out of court to the person entitled under the judgment. Such an order would defeat the whole purpose of calling upon a respondent to show cause why such funds should not be charged with an indebtedness. It may be that r933(3) was an attempt to re-enact former O51, r13 in modern language, but somehow it was put in the wrong place in the Rules. I think that the whole of the Supreme CourtRules 2000, Pt36, could bear a little re-consideration, notwithstanding that there appears to be a good argument that r930, which purports to extend the operation of the Act by including a power to make a charging order over money in Court, is authorised by the Act, s197(1)(u).

1. However, notwithstanding all these difficulties, I am satisfied that the applicants are entitled to a charging order over the money in Court.  Brereton v Edwards (supra) is authority to the effect that notwithstanding the absence of statutory authority to make a charging order over money in Court, a court of equity can make such an order in aid of execution.  This is a form of equitable execution that the Court of Chancery used to give to a judgment creditor prior to the Judicature Acts on the ground that there was no other remedy by execution available at law.  See Shephard, Atkins v Shephard (1889) 43 Ch D 131; Thompson v Gill [1903] 1 KB 551.

Enforcement of the charging order

1. There remains the question of enforcement of a charging order. The effect of a charging order is enacted by the Act, s166, viz:

"… such order shall entitle the judgment creditor to all such remedies as he would have been entitled to if such charge had been made in his favour by the judgment debtor."

1. With respect to the enforcement of a charging order, the editors of Daniell's Chancery Practice wrote in the 8th edition at 818:

"The provisions of section 24 of the Judicature Act, 1873, have not conferred any new jurisdiction on the Court with regard to the enforcement of a charging order, so as to enable it to make an order for sale after the expiration of six calendar months from the date of the charging order.  The judgment creditor is only entitled to such remedies as he would have been entitled to if such charge had been made in his favour by the judgment debtor, and must, therefore, in order to enforce the charge, institute separate proceedings Leggott v Western, 12 QBD 287; Kolchmann v Meurice, (1903) 1 KB 534. The application may be made by originating summons Under O LV 5a. The summons cannot be served out of the jurisdiction, see Chap v 8; Moritz v Stephen, 58 LT 850; Kolchmann v Meurice, supra.  It is settled law that the remedy is by sale, not forcelosure D'Auvergne v Cooper, WN (1899) 256."

1. Leggott v Western (1884) 12 QBD 287 was a case of a plaintiff who had recovered judgment in an action and who obtained an order absolute charging shares of the defendant in a company with the payment of the judgment debt and interest. The plaintiff made application for an order for sale of the shares. The court was unanimous that it had no jurisdiction to make the order sought. The court held that because the plaintiff was in the same position as if the defendant had executed the charge himself, it was necessary for him to institute separate proceedings to obtain an order for sale of the shares. Referring to the equivalent of the Act, s166, Cave J said, at 290:

"The effect of s 14 is to entitle the judgment creditor to the same remedies as he would have had if the charging order had been created by contract between himself and the debtor.  There is not one word in Order xlvi, to shew any intention to increase the power of the Court in respect of enforcing charging orders."

Kolchmann v Meurice [1903] 1 KBD 534 is a similar case. In it the Court of Appeal affirmed the correctness of Leggott v Western.

1. The Supreme Court Rules 2000, r70, define "money in Court" to mean (inter alia) "any sum of money paid into Court".  Rule 71 provides:

"Any money in Court that a person is entitled to may be paid out to the person or his or her solicitor on such written authority as the Principal Registrar considers sufficient"

1. Subject to one final matter, once a charging order has been made charging the fund in Court with the repayment of the sum due to a judgment creditor, that creditor is entitled to apply pursuant to r71 for an order that payment of that sum be made from the fund upon proof of the judgment debt and that it remains unpaid. The Rules make it unnecessary to apply for any other order such as the appointment of a receiver.

1. Rules 90(r) and (y) provide that the appropriate form of application for both a charging order and for an order relating to a fund paid into court is an application to a judge in Chambers.  All the applicants have made an application to a judge in Chambers for an order for payment out of the fund.  The affidavit evidence has satisfied me of the existence of the judgment debts and that they remain unpaid.  But for the one remaining matter, I conclude that the applicants are entitled to an order pursuant to the Supreme Court Rules 2000, r71, that the Registrar be authorised to pay out of the fund in Court in accordance with the orders that follow.

The final matter

1. Brereton v Edwards (supra) is authority for the proposition that upon becoming absolute, the order absolute dates back to the date of the order nisi.  Orders nisi appear to have been a frequently used procedure in Chancery Courts before the Judicature Acts.  It has been said that an order nisi is an order of the court that does not take effect until the person affected by it fails to show cause against it within the time prescribed by it.  See Jowitt's Dictionary of English Law (2^nd ed) 1239; Halsbury's Laws of Australia Vol 11.8 par88.  The orders to show cause were made on 20 October 2003, more than six months ago.  However, the orders were not in the terms of an order nisi.  The orders of Crawford J, made on 20 October 2003, were not, in my view, orders nisi.  They did not order that the fund in court be charged with the payment of judgment debts owed to the applicants unless the respondent showed cause.  The orders did no more than specify a date upon which the respondent show cause why a charging order should not be made.  The principle upon which an order absolute is deemed to be back-dated to the date of the order nisi does not apply to an order such as that made by Crawford J in these matters.  Accordingly, I am of the view that whilst the applicants are entitled to charging orders, they are not entitled to an order authorising the Registrar to make a payment out of Court until the expiration of 6 months from the date hereof. 

1. The making of a charging order calls for the exercise of judicial discretion.  The respondent made no submission at all that he should be given further time to discharge his indebtedness or that he would make payments by instalments.  The respondent did not suggest that the sums in respect of which charging orders were sought were not owing by him.  He has lodged an appeal to the Full Court with respect to the judgment obtained by the applicants Mr and Mrs Falcone, but that does not operate as a stay of proceedings.  The respondent made no submission that because of the appeal no order of payment out of the fund should be made. 

1. By their application, the applicants in M286/2003 sought a charging order for an unspecified amount and orders for the payment out of specific sums calculated in accordance with the facts set out in Mr Gunson's affidavit.

1. By his application, the applicant in M297/2003 sought charging orders with respect to "money due and payable to the applicant by the respondent pursuant to" two identified orders of this Court. 

1. Consequently, there will be slight differences between the terms of the orders made upon each application. 

1. All applicants sought an order that the respondent pay the taxed costs of the application and that when taxed, the sum be the subject of a charging order and paid out of the fund.  It seems to me that I should not make such orders.  I was referred to a note in the 1993 edition of the Supreme Court Practice (UK) that stated that the "fixed costs" of the application "will be added to the judgment".  However, I could find neither rule nor authority for so doing.  Until the making of this order, the respondent has no liability to pay the costs of the application.  Immediately upon the making of the order, the liability is contingent upon the amount being assessed by taxation.  Until that has been done, the respondent has no indebtedness to the applicants.  Accordingly, it seems to me that at this stage of the proceedings, it is inappropriate to make a charging order with respect to the costs of the application.

1. The following orders are made in M286/2003:

(1)The respondent's beneficial interest in the funds paid into Court on 23 November 2000 and any income earned thereon is charged with the payment of $99,611.99 to the applicants Jeffrey James Falcone and Vivien May Falcone.

(2)The respondent's beneficial interest in the funds paid into Court on 23 November 2000 and any income earned thereon is further charged with the payment of $5,327.21 to the applicant Timothy John Williams.

(3)The respondent pay the applicants' taxed costs of this application.

(4)I certify this to have been a proper matter for the attendance of counsel.

1. In M297/2003, the following orders are made:

(1)The respondent's beneficial interest in the funds paid into Court on 23 November 2000 and any income earned thereon, is charged with the payment to the applicant, Arthur David Pearce, of:

(a)   the sum of $5,633.78, together with a further sum for interest to be calculated by the Registrar of this Court at the prescribed rate on the said $5,633.78 from 7 October 2002 until the date of payment;

(b)   the sum of $1,644.56, together with a further sum for interest to be calculated by the Registrar of this Court at the prescribed rate on the said $1,644.56 from 1 April 2003 until the date of payment.

(2)The respondent pay the applicant's taxed costs of this application.

(3)I certify this to have been a proper matter for the attendance of counsel.