Gibbs v Haoma Mining Nl [No 4]
[2016] WADC 105
•15 JULY 2016
GIBBS -v- HAOMA MINING NL [No 4] [2016] WADC 105
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WADC 105 | |
| Case No: | CIV:1348/2007 | 15 MARCH 2016 | |
| Coram: | REGISTRAR KINGSLEY | 15/07/16 | |
| PERTH | |||
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Third person's objection allowed Debt appropriation order set aside | ||
| PDF Version |
| Parties: | BARBARA JEAN GIBBS HAOMA MINING NL INSURANCE COMMISSION OF WESTERN AUSTRALIA |
Catchwords: | Practice Third person's objection to a debt appropriation order Third person is judgment debtor's indemnity insurer Was there an available debt |
Legislation: | Nil |
Case References: | Fitzroy All Pty Ltd v Mansfield [2014] WASC 498 Israelson v Dawson (Port of Manchester Insurance Co Ltd Garnishee) [1933] 1 KB 301 Johnson v Diamond (1855) 24 LJ Ex 217 Morrell v Mercantile Mutual Insurance (Aust) Ltd [1999] WASCA 250 New Cap Reinsurance Corp Ltd (in liq) v AE Grant [2008] NSWSC 1015 Nicholson v McDonald [1936] VLR 233 Universal Guarantee Pty Ltd v Derefink [1958] VR 51 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
HAOMA MINING NL
Defendant
INSURANCE COMMISSION OF WESTERN AUSTRALIA
Third Party
Catchwords:
Practice - Third person's objection to a debt appropriation order - Third person is judgment debtor's indemnity insurer - Was there an available debt
Legislation:
Nil
Result:
Third person's objection allowed
Debt appropriation order set aside
Representation:
Counsel:
Plaintiff : Ms R Sorgiovanni
Defendant : Mr J D Catlin
Third Party : Mr T Mason
Solicitors:
Plaintiff : Sorgiovanni Legal
Defendant : Mr Yeatman, in-house counsel for Haoma
Third Party : Jackson McDonald
Case(s) referred to in judgment(s):
Fitzroy All Pty Ltd v Mansfield [2014] WASC 498
Israelson v Dawson (Port of Manchester Insurance Co Ltd Garnishee) [1933] 1 KB 301
Johnson v Diamond (1855) 24 LJ Ex 217
Morrell v Mercantile Mutual Insurance (Aust) Ltd [1999] WASCA 250
New Cap Reinsurance Corp Ltd (in liq) v AE Grant [2008] NSWSC 1015
Nicholson v McDonald [1936] VLR 233
Universal Guarantee Pty Ltd v Derefink [1958] VR 51
1 REGISTRAR KINGSLEY: The judgment debtor (Gibbs), as plaintiff, issued a writ claiming general damages in respect of injuries arising from her driving an unsafe motor vehicle in the course of her employment with the defendant (Haoma). In June 2009, Haoma issued third party proceedings against the Insurance Commission of Western Australia (ICWA) and against Insurance Australia Ltd (IAL), Haoma's employer's indemnity insurer. IAL were named in the third party notice as CGU Insurance. The third party proceedings between IAL and Haoma, by a consent order signed by the solicitors for the Haoma and for IAL, were dismissed on 7 April 2010.
2 After a hearing, the trial judge awarded damages to Gibbs against the Haoma. The trial judge also found that ICWA was not obliged to indemnify Haoma because Haoma had breached a warranty contained in its policy of insurance with ICWA.
3 The trial judge awarded Gibbs damages totalling $448,420.
4 By an application dated 18 September 2015 brought pursuant to s 49 of the Civil Judgments Enforcement Act 2004 (CJEA), Gibbs sought a debt appropriation order against IAL. In support of the application for a debt appropriation order, the solicitor for Gibbs deposed, in her affidavit sworn 18 September 2015, that 'given the valid and operative insurance policy in place at the time of the accident, the defendant was and is indemnified by IAH (sic)'.
5 By application dated 23 December 2015, IAL brought an application, pursuant to s 55 of the CJEA, for an order that an objection to the debt appropriation order be allowed.
6 At a hearing on 15 March 2016 a number of issues were canvassed. Those issues will be dealt with in the context of these reasons. Subsequent to the hearing I sought submissions from all parties on the relevance of Israelson v Dawson (Port of Manchester Insurance Co Ltd Garnishee) [1933] 1 KB 301.
7 The CJEA is a code for the enforcement of judgments given in the civil jurisdiction of courts. A court considering any application under the CJEA looks to that Act with regard to the standing of a judgment creditor, the rights of a judgment creditor, judgment debtor and third person and whether there is an available debt for the purposes of, in this case, a debt appropriation order.
8 By her decision given 15 May 2015, Judge Schoombee ordered that Haoma pay Gibbs the sum of $448,420 plus interest at a daily rate of $73.71 until payment is made. Section 3 of the CJEA defines judgment in two ways, one being a monetary judgment. Section 3 goes on to define a judgment creditor as being a person who is entitled to the benefit of a monetary judgment and includes a person to whom the benefit of a monetary judgment has passed (by assignment or any other way). By virtue of s 3, Gibbs has the benefit of a monetary judgment.
9 Judgment debtor is defined in s 3 of the CJEA as a person against whom a monetary judgment has been given. It is clear from Judge Schoombee's decision that Haoma is the person against whom a monetary judgment has been given.
10 For the sake of completeness, s 3 of the CJEA defines monetary judgment as being the judgment or order of the court that requires or has the effect of requiring, a person to pay money, whether or not the judgment or order contains any other requirements.
11 A debt appropriation order falls under div 5 of the CJEA. A debt appropriation order may be sought against a third person where the third person owes, or will or may owe, an available debt to the judgment creditor (s 49 of the CJEA). In this case the third person is IAL as that is the person to whom the debt appropriation order is addressed.
12 Section 45 CJEA defines appropriated debt as being an available debt, or a portion of an available debt, to which a debt appropriation order applies.
13 Section 46 of the CJEA defines available debt as:
46. Available debt in relation to a judgment debtor
(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.
(2) The following are not available debts in relation to a judgment debtor —
(a) earnings that are or may be payable to the debtor;
(b) money standing to the credit of the debtor in a court;
(c) money that is payable to the debtor as a trustee and in which the debtor does not have a beneficial interest, unless the judgment concerned was given against the debtor as that trustee.
15 A third person, in this case IAL, may object to an appropriation order. Section 54 of the CJEA provides that a third person who is served with a debt appropriation order may object to the order on one or more of the grounds specified. Those grounds are:
1. That a person other than the judgment debtor and the judgment creditor owns or has a claim on or interest in the appropriated debt.
2. That the appropriated debt does not and will not exist.
3. That the third person has an unsatisfied monetary judgment against the judgment creditor or the judgment debtor.
16 IAL argues that the appropriated debt does not and will not exist.
17 The predecessor to a debt appropriation application was the garnishee proceeding: Fitzroy All Pty Ltd v Mansfield [2014] WASC 498 [33]. The purpose of a garnishee proceeding was to make debts a form of property available in execution.
18 In a garnishee proceeding the judgment creditor applied for a garnishee order nisi. If a garnishee order nisi was made, the order, upon service, attached debts owing by the garnishee to the judgment debtor. The garnishee order nisi specified a date and time for further consideration of the matter. If the garnishee did not appear on the specified date, or did not oppose the order nisi, the order nisi was made absolute. If the garnishee appeared, the garnishee could argue that there was no available debt, and therefore the order nisi should not be confirmed.
19 Under the CJEA, a debt appropriation order is made, and takes effect from service on the third person (garnishee). It is for the third person to bring an application objecting to the debt appropriation order.
20 Universal Guarantee Pty Ltd v Derefink [1958] VR 51 is authority for the proposition that the words 'owing or accruing' means a present debt due to the judgment debtor at the date of the order nisi. A debt which is uncertain in amount or as the time of payment is not attachable. Nicholson v McDonald [1936] VLR 233 is authority for the proposition that for a debt to be attachable, the judgment debtor must have an immediate legal or equitable right to it.
21 Whilst not an infallible test, if the judgment debtor could sue the garnishee for an amount and recover it, it is plain there would be an attachable debt. However, a judgment creditor cannot, by means of attachment, stand in a better position as regards the garnishee than the judgment debtor.
22 Johnson v Diamond (1855) 24 LJ Ex 217 held that a contract by a third person to indemnify the judgment debtor was not attachable. In Israelson v Dawson (Port of Manchester Insurance Co Ltd Garnishee) (Israelson) the court found that no debt was due from an insurer to the insured, and therefore was not an available debt for the purposes of garnishee proceedings.
23 In Israelson a plaintiff was injured by a motor vehicle and successfully sued the driver to recover damages. The driver had a policy of indemnity with the Greater Manchester Insurance Company (Insurance Company). The plaintiff, as judgment creditor, sought an order nisi to attach a debt from the insurance company to the driver.
24 Scutton L J came to the conclusion that as:
between the assured and underwriter there is no debt. There may be a breach of contract or obligation to indemnify, but there is nothing which could be called a debt or indebtedness within the meaning of Order XLV r 1.
25 Greer L J was of the opinion that the Insurance Company had not agreed to pay the defendant the judgment sum. What had been promised was to indemnify the defendant against any payment the defendant had to make, and the Insurance Company may do that by not paying the defendant but paying some other person.
26 In written submissions, counsel for IAL referred to Morrell v Mercantile Mutual Insurance (Aust) Ltd[1999] WASCA 250. In that case the applicant plaintiff sought to be joined in an appeal between the respondent defendant and the appellant insurer. The Full Court concluded that the applicant plaintiff had no direct legal or equitable right which would be affected by the existence or otherwise of a liability on the part of the appellant insurer.
27 Written submissions by counsel for Haoma focus on the fact that, as judgment has been given, and an award has been made which meets the definition of judgment debt, then the statutory workers compensation regime makes payment mandatory. Accordingly there is a debt due and payable. Counsel for Gibbs, in her written submissions, notes the definition of available debt in s 46 of the CJEA is not limited to those debts that are current and unconditional, but includes three further alternatives.
28 In New Cap Reinsurance Corp Ltd (in liq) v AE Grant [2008] NSWSC 1015 Whites J, commented at [101] – [102]:
A contract of indemnity insurance is often, perhaps usually, characterised as one under which the insured is entitled to be protected from loss. In In re Richardson [1911] 2 KB 705, Buckley LJ said (at 716) 'Indemnity requires that the party to be indemnified shall never be called upon to pay.' Where that is the nature of the contract, then the insurer is liable in damages if the insured is not protected from loss, because the insurer has failed to perform its primary obligation.
Such a promise can and should be distinguished from a promise to redress or compensate the indemnified party for losses sustained (and a fortiori paid) by that party. In the former case the indemnifier is liable in damages for his breach of contract in not preventing the loss. In the latter he can be sued in debt for the recovery of what he promised to pay (Jervis v Harris at 202-203; see generally Zakrzewski, 'The Nature of a Claim on an Indemnity' (2006) 22 JCL 54)'.
29 If the indemnity policy is characterised as protecting the insured from loss, then the claim by the insured is for damages. If the indemnity policy is to redress or compensate for loss sustained, then the claim is again for damages. I note that Haoma has not paid the damages to Gibbs and therefore there can be no action by Haoma against IAL in debt.
30 In my opinion, at the time of the debt appropriation order was made there was no obligation on the part of the third person which was current and unconditional. There is no available debt for appropriation.
Is there an available debt by reason of s 46(1)(d) CJEA?
31 Available debt in s 46(1)(d) of the CJEA includes an obligation, at the time a debt appropriation order is made, which is imposed by a written law and is likely to arise as a result of an event that has occurred. Gibbs' counsel argues that pursuant to the Workers' Compensation Act and Injury Management Act 1981 (WCA), an obligation arises. Counsel for Gibbs agues, an argument supported by counsel for Haoma, that s 160 of the WCA provides that every employer shall keep a current policy of insurance for the amount of the employer's liability to pay damages to or in respect of any worker employed by the employer. Section 301 of the WCA prohibits contracting out of these provisions are prohibited.
32 As I understand the argument of counsel for Gibbs, the WCA provides at s 160 that every employer shall obtain from an approved insurance office and keep current a policy of insurance for, amongst other things, the full amount of the employer's liability to pay compensation. Section 301 provides that contracting out is prohibited 'Except as provided by this Act, its provisions apply notwithstanding any contract to the contrary …'.
33 This issue is a distraction from the central question: is there an available debt. The WCA statutorily imposes obligations, and rights, for the benefit of employees. The terms of the WCA do not create an attachable obligation as that term is defined in the CJEA. The written law (the WCA) does not create an attachable obligation for the purposes of the CJEA. In my opinion this argument does not assist Gibbs.
The Estoppel argument
34 Counsel for IAL argues that Gibbs is estopped from asserting that Haoma is indemnified by IAL, and in maintaining a claim against IAL. Counsel for IAL argues that the issue estoppel arises because Haoma's claims against IAL were dismissed by consent orders dated 7 April 2010. Counsel for IAL submits that Gibbs is estopped from asserting Haoma was and is indemnified by IAL, because the issues of indemnity as between Haoma and IAL have already been determined in the primary action.
35 Order 43 r16 of the Rules of the Supreme Court 1971 (RSC) provides that parties to the proceedings may consent to the making of orders. In this case Haoma and IAL endorsed their consent. There was no consent from Gibbs or ICWA. Gibbs' counsel argues that the consent is ineffectual as between Haoma and IAL, and therefore IAL remains a party to the proceeding.
36 Order 43 r 16 of RSC provides that the consent be between the parties to the proceedings. In this matter the parties to the proceedings for the purposes of the O 43 r 16 RSC consent are Haoma and IAL, that is the defendant and the third party.
37 Third party proceedings are separate and distinct proceedings; hence the common order sought in an O 19 RSC summons for directions that the third party proceedings be heard at the same time and before the same judge as the primary proceeding. In my opinion, having reflected on the matter, the consent order validly dismissed the proceeding as between Haoma and IAL. But that dismissal is only in relation to the third party proceedings and has does not affect the primary proceedings.
38 This is not the place to embark on a fulsome discussion on estoppel. It is sufficient to say that estoppel, in whatever form, has the potential to arise from a judgment in proceedings. The themes in the various forms of estoppel are to preclude assertion in subsequent proceedings of a claim asserted, and found by judicial determination, in earlier proceedings; or to prevent the raising in subsequent proceedings an ultimate issue of fact or law which was necessarily resolved as a step in the determination made in the judgment; or where a claim or issue is so connected to the first proceeding that it was unreasonable for the issue not to have been raised in the subsequent proceeding.
39 In my opinion there is no estoppel that could assist IAL. In the proceedings between Gibbs and Haoma no obligation by IAL was asserted, nor was any purported obligation a necessary step in reaching a conclusion in the Gibbs and Haoma proceeding, and finally it was never the case that Gibbs could join IAL as a defendant in her proceedings to make a subsequent claim unreasonable.
The Supreme Court appeal, and pursuing Haoma first
40 For the sake of completeness, counsel for IAL argued that as there was an appeal on foot, then Gibbs had to await the outcome of the appeal, and that Gibbs had to pursue her judgment against Haoma first.
41 Section 11(1) of the CJEA provides that a judgment has effect from the time it is given, and s 11(3) provides that the commencement of an appeal against a judgment does not affect the time the judgment is given. Thus, once the judgment is given, Gibbs may enforce that judgment, notwithstanding any appeal. In any event, generally an appeal does not have the effect of a stay unless an order is made.
42 Section 19 of the CJEA provides that a judgment creditor may apply to a court for an enforcement order, and s 19(2) CJEA provides that an application for an enforcement order may be made whether or not a means enquiry has previously been held or an enforcement order been made. In my opinion there is no requirement for Gibbs to first pursue Haoma for the amount claimed.
Conclusion
43 Having regard to these reasons, in my opinion there is no available debt to be appropriated and the third person's objection is allowed.
44 I will hear counsel on the issue of costs.
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