Fitzroy All Pty Ltd v Mansfield
[2014] WASC 498
•19 DECEMBER 2014
FITZROY ALL PTY LTD -v- MANSFIELD [2014] WASC 498
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 498 | |
| Case No: | CIV:2565/2002 | 4 NOVEMBER 2014 & BY WRITTEN SUBMISSIONS OF 5 & 12 NOVEMBER 2014 | |
| Coram: | KENNETH MARTIN J | 19/12/14 | |
| 26 | Judgment Part: | 1 of 1 | |
| Result: | Application refused | ||
| A | |||
| PDF Version |
| Parties: | FITZROY ALL PTY LTD as Trustee for the FITZROY ALL TRUST NIGEL CUNNINGHAM SWIFT MANSFIELD |
Catchwords: | Undertaking as to damages Debt appropriation order 'Available debt' Garnishee order sought by judgment creditor Expiry period to enforce Urgency No cause of action capable of attachment by judgment creditor |
Legislation: | Civil Judgments Enforcement Act 2004 (WA), s 11, s 12, s 46, s 49 Criminal Property Confiscation Act 2000 (WA), s 50 |
Case References: | Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 Ansett Australia Ltd v Travel Software Solutions Pty Ltd (2007) 65 ACSR 47 Australian Securities and Investments Commission v Endresz [2014] FCA 786 Balkanbank v Taher [1994] 4 All ER 239 Cheltenham and Gloucester Building Society v Ricketts [1993] 1 WLR 1545 Church of Jesus Christ of Latterday Saints v King (1998) 165 DLR (4th) 227 Cirillo v Citicorp Australia Ltd [2004] SASC 294 Digital Equipment Corporation v Darkcrest Ltd [1984] Ch 512 Director of Public Prosecutions for Western Australia v Mansfield [2006] WASC 255; (2006) 170 A Crim R 521 F Hoffman-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295 Financial Services Authority v Sinaloa Gold plc [2013] UKSC 11; [2013] 2 AC 28 Fletcher Sutcliffe Wild Ltd v Burch [1982] FSR 64 Flower & Hart (a firm) v White Industries (Qld) Pty Ltd [2001] FCA 370; (2001) 109 FCR 280 Love v Thwaites [2014] VSCA 56 Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; (2006) 226 CLR 486 National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 Re Hailstone; Hopkinson v Carter (1910) 102 LT 877 Re Hudson [1966] Ch 209 Russell v Farley (1881) 105 US 433 Smith v Day (1882) 21 Ch D 421 Sugden v Sugden [1957] P 120; [1957] 2 WLR 210 Victorian Onion & Potato Growers' Association Ltd v Finnigan [No 2] [1922] VLR 819 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
NIGEL CUNNINGHAM SWIFT MANSFIELD
Defendant
Catchwords:
Undertaking as to damages - Debt appropriation order - 'Available debt' - Garnishee order sought by judgment creditor - Expiry period to enforce - Urgency - No cause of action capable of attachment by judgment creditor
Legislation:
Civil Judgments Enforcement Act 2004 (WA), s 11, s 12, s 46, s 49
Criminal Property Confiscation Act 2000 (WA), s 50
Result:
Application refused
Category: A
Representation:
Counsel:
Plaintiff : Mr N P Gentilli
Defendant : Mr M L Bennett
Solicitors:
Plaintiff : Jackson McDonald
Defendant : Bennett & Co
Case(s) referred to in judgment(s):
Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249
Ansett Australia Ltd v Travel Software Solutions Pty Ltd (2007) 65 ACSR 47
Australian Securities and Investments Commission v Endresz [2014] FCA 786
Balkanbank v Taher [1994] 4 All ER 239
Cheltenham and Gloucester Building Society v Ricketts [1993] 1 WLR 1545
Church of Jesus Christ of Latterday Saints v King (1998) 165 DLR (4th) 227
Cirillo v Citicorp Australia Ltd [2004] SASC 294
Digital Equipment Corporation v Darkcrest Ltd [1984] Ch 512
Director of Public Prosecutions for Western Australia v Mansfield [2006] WASC 255; (2006) 170 A Crim R 521
F Hoffman-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295
Financial Services Authority v Sinaloa Gold plc [2013] UKSC 11; [2013] 2 AC 28
Fletcher Sutcliffe Wild Ltd v Burch [1982] FSR 64
Flower & Hart (a firm) v White Industries (Qld) Pty Ltd [2001] FCA 370; (2001) 109 FCR 280
Love v Thwaites [2014] VSCA 56
Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; (2006) 226 CLR 486
National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386
Re Hailstone; Hopkinson v Carter (1910) 102 LT 877
Re Hudson [1966] Ch 209
Russell v Farley (1881) 105 US 433
Smith v Day (1882) 21 Ch D 421
Sugden v Sugden [1957] P 120; [1957] 2 WLR 210
Victorian Onion & Potato Growers' Association Ltd v Finnigan [No 2] [1922] VLR 819
1 KENNETH MARTIN J: I am dealing with what is the opposed application of the plaintiff, Fitzroy All Pty Ltd (Fitzroy), seeking a debt appropriation order under s 49 of the Civil Judgments Enforcement Act 2004 (WA) in its favour, by way of enforcement process against the defendant, Mr Mansfield, as a judgment debtor.
2 Fitzroy's application is supported by the affidavit of Neil Philip Gentilli sworn 19 May 2014, which contains essentially uncontroversial material.
Background
3 Fitzroy commenced this action against Mr Mansfield on 14 November 2002.
4 It obtained summary judgment against Mr Mansfield for a liquidated sum under orders of Master Sanderson, on 15 April 2003.
5 The judgment favouring Fitzroy was extracted on 23 April 2003. In terms it provided:
1. The defendant pay the plaintiff the sum of $1,190,000.
2. The defendant pay the plaintiff interest on the sum of $1,190,000 at 6% per annum from 23 August 2001 to 15 April 2003, pursuant to s 32 of the Supreme Court Act 1935, such interest to be calculated on an annualised and compound basis.
3. ...
4. The plaintiff have liberty to apply:
(a) generally in relation to execution of the orders referred to in paragraphs 1, 2 and 3 above, including in respect of discovery in aid thereof;
(b) ...
(c) for judgment in respect of all other claims, save and except in respect of the judgment referred to in paragraph 1 above.
7 It is common ground that the 15 April 2003 judgment of Fitzroy in the liquidated amount of $1,190,000 plus interest, remains wholly unsatisfied.
8 For reasons which will become apparent, I will note that the Civil Judgments Enforcement Act received Royal Assent on 14 October 2004, with s 1 and s 2 having commenced on 14 October 2004 and the balance of that Act having commenced operation on and from 1 May 2005. See also s 2 of the Civil Judgments Enforcement Act.
9 For present purposes it is only relevant to record that Fitzroy obtained its liquidated judgment against Mr Mansfield, prior to the coming into force of any parts of the Civil Judgments Enforcement Act.
10 Whilst dealing with the procedural history of this action, I should also note from the file that no enforcement steps to pursue recovery of its judgment debt appear to have been taken by Fitzroy at all, in a period between 12 August 2003 and February 2014. On 5 February 2014 there was a notice of change of solicitors, ie, to the plaintiff's current solicitors.
11 Then, on 11 February 2014, there was an application filed on the part of Fitzroy by the newly appointed solicitors seeking leave pursuant to s 13(1)(a) of the Civil Judgments Enforcement Act to enforce the judgments obtained under the earlier orders of the Court - in fact, over a decade earlier, on 15 April 2003 and 19 June 2003.
12 That application for leave to enforce was heard before Master Sanderson on 18 March 2014. At that appointment, the learned master made orders:
Pursuant to s 13(1)(a) of the Civil Judgments Enforcement Act 2004 the judgment creditor have leave to enforce the judgments of the court dated 15 April 2003 and 19 June 2003.
13 Having obtained leave from the Master to enforce its 2003 judgments, Fitzroy's solicitors have then filed, on 19 May 2014, this present application, by a Form 7 of the Civil Judgments Enforcement Act, seeking:
An order under section 49 of the Act requiring the State of Western Australia to pay the applicant such of the monies payable to the judgment debtor pursuant to the undertaking as to damages given by or on behalf of the State of Western Australia dated 12 December 2006 as will satisfy the judgment debt owed to the judgment debtor under the judgment of the Court dated 15 April 2003.
14 The present application, which I will refer to as the 'Fitzroy Application', came to my attention on 3 July 2014 in chambers. At the time I issued some case management directions, and particularly for the application to be managed alongside subsisting proceedings involving Mr Mansfield and his wife - namely, CIV 1977 of 2002. That action involves the Director of Public Prosecutions (WA) (the DPP), Mr Mansfield and his wife, Rosalind Mansfield, Fitzroy, and the State of Western Australia. The Fitzroy Application arises only within the ambit of CIV 2565 of 2002.
15 I will explain the subject matter of Mr Mansfield's involvement in the two actions shortly. In essence, both Mansfield matters are now being managed together - and now along with the Fitzroy Application.
16 On 17 October 2014, I listed the Fitzroy Application, seeking orders pursuant to s 49 of the Civil Judgments Enforcement Act for a hearing on the afternoon of 4 November 2014. There was, as is customary, an exchange of written submissions between the parties beforehand.
17 Fitzroy moves by its s 49 application that the Court issue a 'debt appropriation order' under the Civil Judgments Enforcement Act, by way of enforcement of the 2003 liquidated judgment it holds against Mr Mansfield. The terms of the debt appropriation order Fitzroy seeks manifest under a draft Form 18 Debt Appropriation Order provided by email to my Associate, on 2 July 2014, in terms that the State:
Pay to the judgment creditor [ie, Fitzroy] any amount you may be obliged to pay the judgment debtor under the undertaking as to damages dated 12 December 2006 given by or on your behalf in action CIV 1977 of 2002 or so much of that amount as may be sufficient to satisfy the judgment debt (under the judgment herein dated 15 April 2003) of $1,900,000 an interest thereon at 6% from 23 August 2001 until payment, being the unpaid amount of the judgment debt after deducting such amounts (if any) as may be notified in writing to you by the judgment creditor or the registrar as having been paid or credited to the judgment creditor on account of that unpaid amount otherwise than under this order.
18 The State of Western Australia has not participated at all upon Fitzroy's application for the debt appropriation order. In effect then, it simply abides the Court's decision.
19 Nevertheless, the position of Mr Mansfield through written submissions filed on his behalf on 29 October 2014, is to oppose the making of any such debt appropriation order.
The Civil Judgments Enforcement Act 2004 (WA)
20 The application was listed for an expedited appointment, on the basis of Fitzroy's concerns, expressed through counsel, that it faced a looming vulnerability by losing the opportunity to enforce its 2003 liquidated judgment against Mr Mansfield, if it did not obtain from the Court a debt appropriation order prior to 15 April 2015. In reality that turns out, as will be seen below, not to be the case.
21 The argument towards urgency was framed on the basis that s 12 of the Civil Judgments Enforcement Act essentially imposed a 12-year period for a party to enforce a judgment it holds against a judgment debtor. Having obtained the liquidated judgment on 15 April 2003, Fitzroy's expressed concern was that a 12-year limitation expiry deadline was looming on 15 April 2015 and, further, that as a hearing of Mr and Mrs Mansfield's application in the matter CIV 1977 of 2002 to enforce their claim to be compensated under the undertaking of the DPP had then provisionally been fixed to commence at a two week hearing on 16 March 2015, there was a pressing need to obtain a s 49 order from the Court. (That matter is now presently fixed to begin in early June 2015.)
22 Concerning the looming deadline argument of Fitzroy, it is necessary to first observe s 12 of the Civil Judgments Enforcement Act provides:
An order under this Act to enforce a judgment that takes effect after the commencement of this Act must not be made if 12 years have elapsed since the judgment took effect. (emphasis added)
23 During the course of oral submissions on 4 November 2014, I drew the attention of counsel to the fact that the liquidated judgment Fitzroy obtained on 15 April 2003, had taken effect before the commencement of the Civil Judgments Enforcement Act. On that basis it, s 12 was not therefore engaged.
24 By supplementary written submissions received from Fitzroy (by my leave) of 12 November 2014, the revised position is that Fitzroy now proceeds on the basis of submitting, as I accept, that s 12 (and thereby a 12 year enforcement deadline), is not applicable.
25 My attention is drawn to s 144 of the Courts Legislation Amendment and Repeal Act 2004 (WA) which provides:
If immediately before commencement a judgment of the Supreme Court, ... is unsatisfied, then on commencement -
(a) if proceedings to enforce the judgment are pending or any process for the enforcement of the judgment is in force, section 145 applies;
(b) otherwise, the judgment may be enforced under and subject to the Civil Judgments Enforcement Act 2004.
26 As I have earlier said, it is apparent no proceedings to enforce the liquidated judgment obtained by Fitzroy on 15 April 2003 were ever pending, for the purpose of engaging s 144(a). Hence only s 144(b) above, is the applicable provision.
27 Section 144(b) directs attention back to the terms of the Civil Judgments Enforcement Act - where it has now been established that s 12 of that Act is not applicable to the present circumstances. This is because the judgment obtained by Fitzroy was obtained prior to the commencement of the Civil Judgments Enforcement Act.
28 Accordingly, the applicable provision from the Civil Judgments Enforcement Act presents as s 11. That section provides:
(1) A judgment has effect -
(a) at the time it is given; or
(b) ...
(2) Subject to sections 12 and 13, an application for an order under this Act to enforce a judgment may be made at any time after it has effect.
29 The operative requirement then, by reason of s 11(2), to enforce a judgment at any time after that judgment has effect, is relevantly found here only within s 13(1) of the Civil Judgments Enforcement Act, which provides:
(1) Leave of the court must be obtained before an order may be made under this Act to enforce a judgment -
(a) if 6 years have elapsed since the judgment took effect.
31 Having considered the applicability of the Civil Judgments Enforcement Act to these proceedings, it can also be accepted, for the purposes of the Act and as regards the judgment of 15 April 2003, that Mr Mansfield is, relevantly, a 'judgment debtor', that Fitzroy is a 'judgment creditor', and that the liquidated amount of $1,190,000 (plus interest on that judgment debt of Fitzroy from 15 April 2003), is a 'judgment debt', as those terms are defined in the Act, by reason of the statutory definitions which, for convenience, are set out below.
32 Section 3 provides:
In this Act, unless the contrary intention appears -
…
judgment creditormeans a person who is entitled to the benefit of a monetary judgment, including a person to whom the benefit of a monetary judgment has passed (by assignment or any other way);
judgment debt means the unpaid amount of any of the following:
(a) a judgment sum;
(b) interest on the judgment sum;
(c) enforcement costs of the judgment.
judgment debtor means any person against whom a monetary judgment has been given or may be enforced;
judgment sum means the amount of money ordered to be paid under a monetary judgment, whether or not the money is or includes costs or pre-judgment interest.
33 Next, it is clear that pt 4 of the Civil Judgments Enforcement Act confers a range of mechanisms by which a judgment creditor can seek to enforce their monetary judgment, including by appropriating certain debts owed to a judgment debtor - by applying to the Court for what is termed a debt appropriation order (see s 45 to s 58 of the Act), akin to what was in times past perhaps better understood as draft garnishee proceedings.
Debt appropriation order
34 From the Civil Judgments Enforcement Act it is convenient to note the definition of 'debt appropriation order' under s 3 of the Act, which says:
In this Act, unless the contrary intention appears -
...
debt appropriation order means an order made under section 49(2).
35 The terms of s 49 provide:
(1) In order to recover a judgment debt, a judgment creditor may apply to the court for an order requiring a person who owes or will or may owe an available debt to the judgment debtor alone or to the judgment debtor jointly with another or others to pay -
(a) the whole amount of the available debt; or
(b) such of the available debt as will satisfy the judgment debt,
to the judgment creditor at the time or times when the available debt would otherwise be paid to the judgment debtor.
(2) The court may make such an order, subject to sections 20(1) and 22.
(3) When or after making a debt appropriation order, the court may make an order under Schedule 1 clause 2, 3 or 4.
(4) A debt appropriation order may apply to more than one available debt that is or will be or may be owed by one person to the judgment debtor alone or to the judgment debtor jointly with another or others.
(5) Despite any other law, a debt appropriation order may be made in respect of any available debt owed by the State to the judgment debtor.
36 From s 49(1) it is apparent that the term 'available debt' is of key significance to an understanding of the workings of s 49.
37 The term 'available debt' is also a defined term, under s 3 of the Act - but then on a basis that 'available debt has the meaning given by section 46'.
38 Finally, I arrive at s 46(1), which is in these terms:
(1) An available debt in relation to a judgment debtor is any obligation on the part of a person to pay money to the debtor alone, or to the debtor jointly with another or others, which obligation, at the time a debt appropriation order is made -
(a) is current and unconditional, irrespective of whether the money or any part of it is payable at some future time; or
(b) will arise on the fulfilment of one or more conditions under -
(i) an existing agreement or trust; or
(ii) the will of a deceased person; or
(iii) an issued share or other marketable security; or
(c) may arise in respect of an existing cause of action; or
(d) is imposed by a written law and is likely to arise as a result of an event that has occurred.
40 Further distilled, the dispute reduces to whether or not Mr Mansfield, as a relevant judgment debtor of Fitzroy since 2003, is a person in respect of whom it can be said he holds an existing cause of action - for the purposes of engaging s 46(1)(c) against the State of Western Australia for an obligation that may arise to pay money to Mr Mansfield - either alone or jointly with someone else. (It is not necessary to refer to the provisions of s 46(2)).
Obstacles to a debt appropriation order at this time - raised by Mr Mansfield's submissions
41 Under the initial exchange of written submissions, four conceptual stumbling blocks presented as being attempted to be raised by Mr Mansfield, against the making of a debt appropriation order against the State at this time.
42 First, it was said that making such an order would be contrary to the express terms of s 50 of the Criminal Property Confiscation Act 2000 (WA) which provides - at s 50(1) - that a person must not deal with seized or frozen property in any way.
43 Second, it was contended that Mr Mansfield, under an amended statement of facts, issues and contentions of 11 December 2012 filed in CIV 1977 of 2002, suffers an exposure to debts owed to many other creditors. These liabilities it is said would exceed $2 million. Hence, the effect of making a debt appropriation order now, without affording notice to other creditors, could potentially prefer the interests of Fitzroy over all those other creditors, so it was put.
44 Third, it was said that there were significant matrimonial difficulties as between Mr and Mrs Mansfield. She, of course, has her own application pending against the DPP (State of Western Australia) arising out of the 2002 ex parte asset freezing order impacting against all the Mansfields' property (including her own property, on a basis that it was then controlled by Mr Mansfield). It is then argued:
The prosecution of the debt appropriation order would require Mrs Mansfield and Mr Mansfield (in circumstances where they are effectively without assets) to prosecute proceedings in the Family Court of Western Australia. This will lead to unacceptable interruption and delay to the resolution of the claim in the main proceedings.
45 Last, it was argued that Fitzroy needed to obtain the leave of the Court in order to obtain a debt appropriation order by way of enforcement of its 2003 judgment debt, pursuant to s 13 of the Civil Judgments Enforcement Act. However, this last obstacle submission was factually misconceived and can be immediately dismissed - given the fact of leave obtained on 18 March 2014 from Master Sanderson, which as I have already mentioned, was pursuant to s 13(1)(a) of the Civil Judgments Enforcement Act.
Fitzroy's response
46 The answering written submissions of Fitzroy of 31 October 2014 point out that the 2002 freezing orders initially made ex parte in this court have been varied on 28 May 2009, so as to release any property acquired after the date of the order. Hence, it was said there would appear to be no arguable infringement against s 50 of the Criminal Property Confiscation Act, by reason of that. This submission must be accepted. The first contended obstacle is therefore removed.
47 Next, Fitzroy says it is a legitimate judgment creditor of Mr Mansfield since 2003, and there is
nothing to prevent other creditors from also applying for a debt appropriation order if they hold a judgment or should they be in a position to commence bankruptcy proceedings to ensure they receive a rateable proportion of Mr Mansfield's assets if he holds insufficient assets to meet the obligations to his other creditors.
- That submission must also be accepted. The second asserted obstacle is removed.
48 Fitzroy further responds that there is no evidence before me in these proceedings concerning the existence of any proceedings as between the Mansfields in the Family Court. In other words, it is said there is only a mere submission, essentially by assertion, concerning such matrimonial proceedings and that this is not a basis to inhibit the making of an order under s 49, if it is otherwise appropriate for such relief to be obtained by this judgment creditor.
49 Again this submission must be accepted and so, the third obstacle is removed. (I have already disposed of the supposed fourth obstacle concerning the leave obtained under s 13(1)(a) on 19 March 2014.)
50 Notwithstanding the removal of those distractions, there emerged another potential obstacle that only manifested at a late stage, during the 4 November 2014 hearing.
Residual issue: an existing cause of action held by Mr Mansfield against the State of Western Australia
51 Removing those other distracting considerations leaves essentially only the live obstacle. During oral argument on 4 November 2014 counsel for Mr Mansfield pointed to an inaccuracy in what otherwise amounted to a concession, under par 3 of Mr Mansfield's written submissions of 28 October 2014, in terms:
For the purposes of this application it is accepted that an application for assessment of damages pursuant to an undertaking given to the court is an existing cause of action. (my emphasis in bold)
52 Nevertheless, at the hearing that ostensible concession was revoked. Counsel for Mr Mansfield drew my attention to the definition of 'available debt' under s 46(1), indicating, properly, that he did not wish the Court to be misled into making an error of law. In the circumstances, since the presenting issue is indeed one of law, as an issue of statutory interpretation and characterisation, it became necessary to pursue this late emerging problem by further written submissions after the hearing.
53 Mr Mansfield, through his solicitors, filed supplementary written submissions, contending:
An application pursuant to an undertaking as to damages is not a cause of action prior to the determination of the application by the court and a direction for payment by the court.
The new obstacle
54 Section 46(1), which I set out earlier, defines an 'available debt' in relation to a judgment debtor as any 'obligation' on the part of a person to pay money to the debtor alone or the debtor jointly along with another or others. It then goes to provide four alternative scenarios describing this obligation, at the time a debt appropriation order is made - see s 46(1)(a), s 46(1)(b), s 46(1)(c) and s 46(1)(d).
55 Of these four scenarios, an undertaking as to damages, such as the 2006 undertaking by the DPP, could readily be said to potentially fall only within the third scenario - ie, that the undertaking constitutes an obligation that 'may arise in respect of an existing cause of action'. The scenarios under s 46(1)(a) and s 46(1)(b) clearly do not apply. As regards s 46(1)(a), an undertaking provided to the Court is not a 'current' or 'unconditional' obligation to pay money - since any order upon the undertaking is – as we will consider further - ultimately subject to the discretion of the Court.
56 Mr Bennett's submissions refer me to a decision of Falconer J in Digital Equipment Corporation v Darkcrest Ltd [1984] Ch 512, 518 - 520 and, in turn, to that of Fletcher Sutcliffe Wild Ltd v Burch [1982] FSR 64 for the influential observations of Peter Gibson J in that case.
57 I was also referred to the treatment of undertakings as to damages in Appendix A to Spry ICF, Equitable Remedies (9th ed, 2014) 679 - 687 and then to Church of Jesus Christ of Latterday Saints v King (1998) 165 DLR (4th) 227.
58 In Smith v Day (1882) 21 Ch D 421 Brett LJ observed as to undertakings given to the Court in these terms:
Now in the present case there is no undertaking with the opposite party, but only with the Court. There is no contract on which the opposite party could sue, and let us examine the case by analogy to cases where there is a contract with, or an obligation to the other party (428).
59 It was further pointed out that Aickin J, as the primary justice in Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249, 263 expressly approved that passage by Brett LJ, and that Aickin J's reasons were upheld on the appeal from his decision to Barwick CJ, Gibbs and Stephen JJ, Mason J dissenting.
60 In essence, therefore, the proposition most lately put by Mr Mansfield is that the proceedings pending before this court to be heard during 2015 by way of his attempted enforcement of the DPP's 2006 undertaking, do not constitute an existing cause of action which Mr Mansfield holds against the State - for the purposes of presently satisfying the definition of 'available debt' under s 46(1)(c) and s 49.
61 Hence, there is at present, it is put, no 'existing cause of action', held by Mr Mansfield against the State which Fitzroy can attach by garnishee action.
62 For its part Fitzroy, by supplementary written submissions of 12 November 2014, joins issue against that proposition. Fitzroy draws my attention to observations of Clarke J in Balkanbank v Taher [1994] 4 All ER 239, 256 - 260, as regards the two-stage process in the enforcement of an undertaking as to damages given to the Court, those stages being:
(a) a finding that the person who gave the injunction should pay damages; and
(b) the enquiry as to damages.
63 Fitzroy submits (par 12, supplementary submissions) that my orders made in CIV 1977 of 2002 on 11 March 2011 (referred to at page 23 of Mr Gentilli's affidavit sworn 19 May 2014), properly understood, mean that the Court has exercised its discretion and that the matter is now proceeding to an enquiry as to damages to be received by Mr Mansfield.
64 Fitzroy also asserts that the non-participation position taken by the State of Western Australia (although strictly the State's position, if such a view has been taken, is wholly irrelevant, since the question is ultimately for the Court alone) supports its position. Fitzroy further submits the phrase 'cause of action' when used in a statute such as the Civil Judgments Enforcement Act s 46(1)(c) should be given its 'broader meaning', as a 'right enforceable by proceedings', or a 'right or liability accrued due', invoking the observations of Denning LJ regarding the breadth of the term 'causes of action' there, in a probate context: see Sugden v Sugden [1957] P 120; [1957] 2 WLR 210, 302.
65 My attention was also properly drawn by counsel for Fitzroy to the observations in Flower & Hart (a firm) v White Industries (Qld) Pty Ltd [2001] FCA 370; (2001) 109 FCR 280 [58] - [59].
My directions of 11 March 2011
66 I point out that page 23 of Mr Gentilli's 19 May 2014 affidavit attaches my directions of 11 March 2011, made in CIV 1977 of 2002, which were in these terms:
1. The matter be admitted to the CMC List to be case managed by the Honourable Justice Kenneth Martin.
2. The stay order the subject of paragraph 1 of the orders of the Honourable Justice Beech of 12 January 2010 do be partially lifted so as to permit applications to be made within these proceedings to invoke, rely upon and enforce the undertaking of 12 December 2006.
3. Within seven days the respondent serve on the second-named first objector a copy of these orders.
4. By 4 April 2011 the respondent file and serve a statement of issues, facts and contentions in relation to his application to enforce the undertaking of 12 December 2006.
5. The costs of today be reserved.
6. The matter otherwise be adjourned to Thursday 7 April 2011 at 9.15 am in his Honour's CMC List.
67 Paragraph 2 above is essentially relied upon by Fitzroy, as I understood the argument, to support the proposition that I effectively ordered an enquiry as to damages upon the undertaking and so it looked, in effect, to be a case of simply ascertaining how much Mr Mansfield would get. That is not correct, as we shall see.
The 2006 undertaking as to damages by the DPP (State of Western Australia)
68 Before turning to the terms of the 2006 undertaking as to damages, I will note that the undertaking arose from the circumstance of an ex parte freezing order granted by McKechnie J against Mr Mansfield on 12 July 2002, on the application of the DPP and under s 41(1) of the Criminal Property Confiscation Act. The order is set out as Attachment MPG1 to Mr Gentilli's affidavit. A freezing order was issued pursuant to s 43 of the Criminal Property Confiscation Act. The orders froze all the property of Mr and Mrs Mansfield, in extensive terms, on grounds that:
A An application for an order for examination has been made in relation to the Property [under s 43(3)(b) of the Criminal Property Confiscation Act 2000]; and
B An application against Mansfield for a criminal benefits declaration is likely to be made within 21 days in relation to the Property [under s 43(3)(c) of the Act].
69 More background to the making of the 2002 freezing orders and the absence of any undertaking as to damages at that time can be obtained from the reasons of the High Court of Australia in Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; (2006) 226 CLR 486. That appeal resolved a controversial issue over whether the Supreme Court held power to require such an undertaking. In the result, it did, although whether the Supreme Court exercised its discretionary power to require an undertaking was another question.
70 Subsequent to that 2006 decision of the High Court, application was made to the Supreme Court for an undertaking as to damages to be provided, or for the 2002 freezing orders to be discharged. This was, of course, a wholly distinct question.
71 That 2006 application was heard before Blaxell J who, in the end, decided that an undertaking would be required in order for the freezing orders to be continued: see Director of Public Prosecutions for Western Australia v Mansfield [2006] WASC 255; (2006) 170 A Crim R 521.
72 An undertaking as to damages (which is Attachment MPG5 to Mr Gentilli's affidavit) was duly provided to the Court on 12 December 2006 signed by the then DPP, Mr Robert Cock QC. The undertaking is expressed as being given for and on behalf of the State of Western Australia. I set out the full terms of the 2006 undertaking later in these reasons.
73 The question then for present determination is whether Mr Mansfield's pursuit of compensation, by reference to that 2006 undertaking (and likewise the separate application by his wife, which is jointly pursued) constitutes, either with or without the orders I issued on 11 March 2011, an 'existing cause of action'?
74 I turn to determine that issue.
No existing cause of action
75 Such rights as Mr Mansfield presently enjoys, by reason of the State's undertaking as to damages provided to this court on 13 December 2006, do not fall under the description of an existing 'cause of action' held by him - for the purposes of meeting the definition of 'available debt' under s 49(1) of the Civil Judgments Enforcement Act.
76 In particular, I conclude that the definition of 'available debt' that is provided under s 46(1) of the Act, as regards 'any obligation on the part of a person to pay money' (s 46(1)), which 'may arise in respect of an existing cause of action' (s 46(1)(c)), is not met, for the reasons given below.
77 The present facts, of course, are not an instance of calling upon a cross-undertaking as to damages, that is received in the context of the more orthodox interlocutory injunction scenario. Such an undertaking is, of course, almost invariably required by a court of equity before a private applicant may obtain interim or interlocutory injunctive relief. Nor is it a case of a party obtaining on an interlocutory basis orders in the nature of Mareva injunctions or Anton Piller orders, or their present day described contemporary orders, effectively now codified, under the Rules of the Supreme Court 1971 (WA) (RSC): see RSC O 52A for what are termed either 'freezing orders' or by RSC O 52B 'search orders'.
78 The December 2006 undertaking of the State was received by the Court in circumstances, as explained by Blaxell J in his Honour's reasons in Director of Public Prosecutions for Western Australia v Mansfield. His Honour's decision followed the decision of a plurality in the High Court in Mansfield v Director of Public Prosecutions for Western Australia addressing the circumstances of the ex parte orders obtained on 12 July 2002, under the Criminal Property Confiscation Act. The plurality had concluded that the Supreme Court, within the authority of s 43 of the Criminal Property Confiscation Act held the power, although not the duty, to require the DPP to provide an undertaking as to damages, and that if the undertaking was not provided on satisfactory terms, the Court was at liberty to refuse the freezing order.
79 Subsequently assessing what is the distinct issue as to whether or not such an undertaking should be required of a public institution in the exercise of its statutory role (cf F Hoffman-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295), Blaxell J observed in Director of Public Prosecutions for Western Australia v Mansfield, speaking with regard to the plurality's recent reasons:
At [46] it was noted that the statutory regime is sui generis and confers jurisdiction on the Supreme Court to make freezing orders for the purpose of protecting the prospective or contingent property rights of the State. Although the present litigation has not invoked this Court's general jurisdiction to grant injunctive relief:
' ... within the authority conferred by s 43 of the Act, the Supreme Court had the power (albeit not the duty) to require the provision of an undertaking and, if this was not offered or was offered in unsatisfactory terms, the Supreme Court was at liberty to refuse the freezing order sought by the DPP.'
The High Court has not provided any guidelines as to the factors to be considered when exercising the discretion to order such an undertaking. However at [28] it refers to 'the considerations of justice and fairness which ordinarily attend the administration of a new remedy', and at [10] to the power 'to require the provision of undertakings so as to diminish the possibility of oppression and injustice'.
These are very fundamental considerations which need to be looked at in light of the statutory framework of the Act, and the impact that a freezing order is likely to have on a respondent or other affected party. Quite obviously there is a valid public interest in preserving the assets of an alleged criminal pending proceedings for their confiscation. On the other hand a freezing order has the potential to inflict considerable injustice if it turns out that there was no real basis for those proceedings in the first place. Depending on the particular circumstances in each case an undertaking as to damages offers some prospect of reconciling these competing concerns [6] - [8].
80 The ensuing undertaking of 13 December 2006 was given for and on behalf of the State of Western Australia. By its terms it provides:
The applicant on behalf of the State of Western Australia undertakes to the Court that he will pay to the respondent and/or the second-named first objector restrained or effected by the restraints imposed by the freezing order of the Honourable Justice McKechnie dated 12 July 2002 (as varied), such compensation as the Court may in its discretion consider in the circumstances to be just, such compensation to be assessed by the Court or in accordance with such directions as the Court may make and to be paid in such manner as the Court may direct.
81 A number of straightforward features may be discerned within the 13 December 2006 undertaking:
(a) The undertaking is provided to the Court, not to the Mansfields.
(b) It refers to compensation, rather than to damages.
(c) Compensation ordered by the Court is at the discretion of the Court.
(d) Compensation is to be paid in such manner as the Court may direct. In other words, until there is an order from the Court to the State to pay something, there is no existing obligation to pay anything to anyone. Plainly that event has not occurred to date. Because such an order lies at the discretion of the Court, there may never be such an order.
(e) Although the 2002 ex parte freezing orders in respect of the property of Mr Mansfield, and over the property of his wife, took effect from 12 July 2002, an undertaking was only provided after the 2006 appeal to the High Court and Blaxell J's decision delivered on 13 November 2006.
(f) Notwithstanding (e), the scope of the undertaking on its face responds to providing just compensation, assessed and ordered by the Court, in respect of adverse consequences sustained by the Mansfields from 12 July 2002.
Undertakings as to damages given to courts: relevant principles - Australia
82 Before turning to consider the issue of whether an undertaking as to damages might constitute an 'existing cause of action' for the purposes of s 46(2) of the Civil Judgments Enforcement Act, it is necessary to explain the court practice of requiring an undertaking as the price of granting an injunction (or similar remedy) applied for.
83 In Mansfield v Director of Public Prosecutions for Western Australia the plurality cite an extract from a judgment of the Supreme Court of the United States in Russell v Farley (1881) 105 US 433. Part of that extract at 438 was emphasised in the plurality reasons. It read:
The power to impose such conditions is founded upon, and arose from, the discretion which the court has in such cases, to grant, or not to grant, the injunction applied for. It is a power inherent in the court, as a court of equity, and has been exercised from time immemorial.
84 Subsequently in European Bank Limited v Robb Evans of Robb Evans & Associates [2010] HCA 6; (2010) 240 CLR 432 ('European Bank') the High Court, in a joint judgment (French CJ, Gummow, Hayne, Heydon and Kiefel JJ) mention Russell v Farley again, now observing that there:
Bradley J had explained the requirement of the undertaking as a response to the anxiety entertained by the court that otherwise its interlocutory order might lead to damage for which there could be no redress except by an order for costs (439).
85 The practice of requiring an undertaking as to damages therefore represents, in bare terms, an expedient method, deriving from the discretionary power of the court, to allow for the compensation of defendants (or, possibly, third parties) that suffer loss by reason of the granting of an interlocutory injunction (or other remedy) where it subsequently appears that the interlocutory relief was wrongly granted.
86 In European Bank the High Court emphasised a principle, stated by Farwell LJ in Re Hailstone; Hopkinson v Carter (1910) 102 LT 877, 880, repeated by Cussen J in Victorian Onion & Potato Growers' Association Ltd v Finnigan [No 2] [1922] VLR 819, 823 and more recently by Neill LJ in Cheltenham and Gloucester Building Society v Ricketts [1993] 1 WLR 1545, 1550, that the undertaking as to damages
is given to the court, for enforcement by the court; it is not a contract between parties or some other cause of action upon which one party can sue the other (438 - 439). (my emphasis in bold)
87 Numerous articulations of the principle that an undertaking as to damages is not a cause of action can be found in a range of equitable and statutory contexts in Australia: see Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249, 261 - 262 (Aickin J), 318 - 319 (Stephen J); National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386, 583 - 584 (Murphy J); Cirillo v Citicorp Australia Ltd [2004] SASC 294 [72] - [74]; Australian Securities and Investments Commission v Endresz [2014] FCA 786 [19]; and Love v Thwaites [2014] VSCA 56 [59].
88 In Cirillo, a decision of the Full Court of the Supreme Court of South Australia,Gray J (Bleby J expressly agreeing with Gray J's reasons) summarised the principles surrounding the enforcement of an undertaking at [72] - [74] in these terms:
An undertaking as to damages is given to the court and not to an enjoined party. The termination of an injunction creates no right to damages in favour of an enjoined party. Enforcement and the extent of the enforcement are discretionary matters for the court. It is for the court to decide whether an interlocutory injunction should have been granted. Only if it is decided that the interlocutory injunction should not have been granted does any question of an enquiry as to damages arise.
An undertaking as to damages does not found or create a cause of action. The right in issue, on which Mr Cirillo's standing depends, is the right to apply to the court to request an exercise of discretion to order an enquiry as to damages. There is no 'right' to an enquiry until the court's discretion is positively exercised in favour of ordering an enquiry. Even where it is determined that an injunction should not have been granted, the court retains a discretion not to enforce an undertaking.
The enquiry itself will not be held unless and until the Court exercises its discretion in favour of an applicant. Until such time, an applicant can only be said to have a mere hope, a spes, of being awarded compensation, or a mere right to apply. The right to damages does not come into existence until after an enquiry. A chose in action is an existing right, whether vested or contingent. A mere hope or spes is not a chose in action.
89 Those same paragraphs were cited with approval by Pagone J in Endresz,which bears somewhat on the present circumstances.
90 In Endresz Pagone J heard four separate proceedings together - the Australian Securities and Investments Commission (ASIC) having sought sequestration orders against the four named defendants under s 43 of the Bankruptcy Act 1966 (Cth).
91 The respondents in Endresz opposed the making of a sequestration order against them, on a ground that they had, by virtue of an undertaking of the Commonwealth given to the Supreme Court of the ACT to support the granting of an injunction against them (and other parties), a 'counter claim, set-off or cross demand' that exceeded the amount of the judgment debts that ASIC sought to rely upon against them (those debts arising from costs orders made in separate proceedings brought by ASIC in the Supreme Court of New South Wales). Pagone J found at [18] that, as ASIC had not been a party to the ACT proceedings, any claim the respondents may have had against the Commonwealth in the ACT proceedings was not a claim they held against ASIC and, thus, not a sufficient cause for a sequestration order not to be made.
92 Pagone J continued to observe:
An additional obstacle confronting the respondents in relation to these grounds is that the nature of the claim they have against the Commonwealth is not one existing as a right until a declaration is made by a court. The claims of the respondents against the Commonwealth depend upon orders, not yet made, flowing from a finding, not yet found, by a court for damages which the court may order by reason of an undertaking given by the Commonwealth to the ACT Court. Such a claim by the respondents does not yet exist against ASIC (assuming it were the Commonwealth or its privy). In Ansett Australia Ltd v Travel Software Solutions Pty Ltd (2007) 65 ACSR 47 Hargrave J explained that for a debt to be contingent there needed to be an existing right albeit that it may be dependent upon the happening of an event [19].
93 After citing several paragraphs from Ansett Australia Ltd v Travel Software Solutions Pty Ltd (2007) 65 ACSR 47, Pagone J observed:
What the respondents must show, therefore, is that there is an existing right or liability which they have in answer to the debt relied upon for sequestration: see also Sutherland v Jatkar [2014] FCA 532, [13]. The respondents' claims in this case, however, depend upon the undertaking as to damages given by the Commonwealth in the ACT proceedings. Any claim by the respondents flowing from the undertaking as to damages does not yet exist as a cause of action.
94 Pagone J went on to cite at [72] - [74] the decision of Gray J in Cirillo before concluding:
Any hope the respondents may have of securing an order from the court pursuant to the undertaking as to damages has not arisen and is not able to be raised as against the existing claim by ASIC from the orders by the court; nor, furthermore, is there any evidence to substantiate the quantum of any amount that may be awarded in the future if ultimately the respondents are successful.
95 There is also a useful general summary of principles applicable to the enforcement of undertakings to be found in Appendix A to Spry's Equitable Remedies pages 679 - 687. The learned author's observations emphasise the equitable antecedents and, in particular, a need for the particular presenting factual circumstances in each case to be afforded a bespoken evaluation.
English authority
96 There is also much English authority that an undertaking to the court does not constitute a cause of action: see Re Hudson [1966] Ch 209; Fletcher Sutcliffe Wild Ltd v Burch [1982] FSR 64; Digital Equipment Corporation v Darkcrest Ltd [1984] Ch 512; Cheltenham and Gloucester Building Society v Ricketts [1993] 1 WLR 1545; and Balkanbank v Taher [1994] 4 All ER 239. The observations of Niell LJ at 1551 - 1552 in Cheltenham and Gloucester Building Society v Ricketts are cited as a 'useful review' of the general principles regarding the enforcement of an undertaking by Lord Mance in Financial Services Authority v Sinaloa Gold plc [2013] UKSC 11; [2013] 2 AC 28, 38. The observations of Niell LJ include, at 1151 D - E, his Lordship's decision of the principle that:
The undertaking, though described as an undertaking as to damages, does not found any cause of action. It does, however, enable the party to apply to the court for compensation if it is subsequently established that the interlocutory injunction should not have been granted.
97 In Fletcher Sutcliffe Wild Ltd v Burch Peter Gibson J observed that a party claiming damages under a cross undertaking does not have any right 'in the sense of one that is enforceable in the courts' either as a matter of contract or as a matter of tort:
True it is that the basis of an award of damages pursuant to the undertaking is to recompense the person affected by the injunction for being kept out of his money, but in my judgment that does not amount to a tort in respect of which that person can sue independently of seeking the assistance of the court to enforce an undertaking (70).
98 However, parties may, by reason of their actions vis-à-vis an undertaking, create collateral obligations that sit alongside the obligation of the plaintiff to the court. The learned authors of Halsbury's Laws of England,vol 12 [1234] observe, citing Re Hudson [1966] Ch 209 as authority, that:
[a]n undertaking to the court to pay money to another party does not have the same effect as an order to pay; it does not confer any personal right or remedy on any other party unless the circumstances in which it was given were such that a collateral obligation to a party was created.
99 As regards such a 'collateral obligation', Buckley J said in Re Hudson:
An undertaking given to the court, unless the circumstances are such that it has some collateral contractual operation between the parties concerned, confers no personal right or remedy on any other party. The giver of the undertaking assumes thereby an obligation to the court but to nobody else (214).
100 Buckley J went on to observe that an enforceable contractual obligation may arise in circumstances where an undertaking to the court 'forms part of a bargain between the parties to litigation' (214).
101 More recently, the speech of Lord Mance (with whom the other members of the UK Supreme Court agreed) in Sinaloa Gold traced the line of authority in that jurisdiction commencing from F Hoffman-La Roche & Co AG v Secretary of State for Trade and Industry concerning interlocutory freezing orders which are sought by public authorities, in a context of evaluating the state of the law concerning whether or not such a public authority should be required to provide a cross-undertaking as to damages. That was, in effect, the same question which was assessed by Blaxell J in Director of Public Prosecutions for Western Australia v Mansfield, albeit Lord Mance was concerned with a third party who was seeking the benefit of the undertaking, rather than the defendant.
102 The speech of Lord Mance displays the rapid development of a strong line of authority as to the requirements for a cross-undertaking as to damages, between [17] and [27], before concluding that the position in the UK essentially stands on a basis that a party seeking to obtain the benefit of a cross-undertaking needs to make good that case: see [41].
103 For present purposes, two conceptual points of significance emerge from that line, both of which are consistent with Australian law:
(a) the undertaking as to damages is given to the court, not to the defendant or a third party or parties affected by the order; and
(b) enforcement of the undertaking is expressed to be in the court's discretion, and the court maintains a discretion not to enforce the undertaking.
Conclusion
104 In the end, I assess it as conceptually impossible to equate the right currently held by Mr Mansfield to approach the Court (as he has) to seek for the Court to exercise its discretion to issue compensatory orders in his favour as being an 'existing cause of action' under s 46(1) of the Civil Judgments Enforcement Act - however wide the legal meaning of the term 'cause of action' that might be deployed.
105 The case authorities discussed above present as uniformly fatal, in my assessment, to a contention that Mr Mansfield, correctly viewed, presently holds any genre of cause of action capable of being harnessed by a judgment creditor such as Fitzroy for the recovery of its judgment debt under a debt appropriation order - or, to adopt the more venerable (and elegant) terminology, which can be garnisheed, in order to meet the debt of a judgment creditor of Mr Mansfield.
106 Thus, in the end, Fitzroy has failed, at this time, to show the existence of an 'available debt' owed or due to Mr Mansfield, for the purposes of Fitzroy obtaining a debt appropriation order under s 49 of the Act.
107 In the present circumstances, there is no evidence to suggest the 13 December 2006 DPP undertaking involved any agreement between the parties that might found a collateral obligation as between the parties. The 2002 application by the DPP for a freezing order was made on an ex parte basis. The DPP only agreed to provide an undertaking to the Court following the decision of Blaxell J in Director of Public Prosecutions for Western Australia v Mansfield, which made a provision of an undertaking as to damages a condition for the Court's continuation of the 12 July 2002 freezing orders (as varied). The terms of the undertaking display no agreement with Mr Mansfield, or any other party that stands alongside the DPP's enjoinment to the Court.
108 As regards Fitzroy's submission that my directions of 11 March 2011 may be understood to mean that the Court has already exercised its discretion and that the matter is now proceeding to an enquiry as to damages, this submission cannot, on close analysis, be supported. What were clearly case management directions were made to permit the bringing of an application by Mr Mansfield (the named respondent in CIV 1977 of 2002) and his wife to invoke, rely upon and enforce the undertaking of 12 December 2006, and to regulate orderly progression of those applications in the context of a matter admitted to my CMC (Commercial and Managed Cases) List. It has not yet been decided that Mr Mansfield is entitled to, or will receive, any money.
109 Should the Court resolve to order a payment of money by way of compensation to Mr Mansfield, as a matter of its discretion, a making of such an order so obliging the DPP (or the State of Western Australia) towards Mr Mansfield would then present distinct circumstances, requiring independent re-evaluation, at that time, as regards Fitzroy taking steps to 'garnishee' dollar amounts the subject of such a compensation order, if made.
110 For completeness, I should say that the present decision will not inhibit further applications being made for a debt appropriation order under the Act at a later occasion by Fitzroy, if the Court should ultimately issue orders against the State of Western Australia favouring Mr Mansfield, by reference to the 2006 undertaking.
10
2