Landmark Operations Limited v J Tiver Nominees Pty Ltd (No 3) - [2009] SASC 329

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
LANDMARK OPERATIONS LIMITED v J TIVER NOMINEES PTY LTD & ORS (No 3)
[2009] SASC 329
Reasons of Judge Lunn a Master of the Supreme Court
22 October 2009
PROCEDURE
Post judgment interest under s 114(1) Supreme Court Act 1935 and 87R 84.19 - Order under s 8 of the Enforcement of Judgments Act 1991 for chattels to be delivered up to the plaintiff and for it to be able to sell them to satisfy a judgment debt - held judgment for the purpose of s 8 of that Act did not include any post judgment interest.

PROCEDURE
Stay of execution - s 17 of Enforcement of Judgments Act 1991 - stay refused on sale of chattels under s 8 of that Act where proceeds of sale may exceed the amount of the judgment - whether post judgment interest could be brought into account when plaintiff accounted for any surplus.

LANDMARK OPERATIONS LIMITED v J TIVER NOMINEES PTY LTD & ORS (No 3)
[2009] SASC 329
Reasons on a further application by the third defendant to stay the order for sale.

JUDGE LUNN:
Background.
On 26 November 2008 this Court gave judgment against all six defendants, inter alia, for $10,857,200 (“the judgment”). The first defendant is now in liquidation and the five personal defendants, apart from the third defendant, Phyllis Tiver, are bankrupt. There are bankruptcy proceedings by the plaintiff pending against the third defendant in the Federal Magistrates Court, but as far as I am aware they remain undecided.
The second to sixth defendants had previously carried on a partnership of “Flagstaff Proprietors” which owned various plant and equipment. On 14 February and 16 June 2009 this Court made charging orders under s 8 of the Enforcement of Judgments Act 1991 over this plant and equipment. On 12 August 2009 I made the following order for the delivery up and sale of much of this plant and equipment in the following terms:
1The items in the Schedule to this Order save for items A-6, A-11, A-14, A-15, A-16, A-19, A-26, A-27, A-32, A-33, A-34, A-39, A2-16, A2-28, A2-33, A2-37, A2-40, A2-41, A2-42 and A2-46 be delivered up to the plaintiff.
2The plaintiff be at liberty to sell the items in the Schedule to this Order.
3That the proceeds of sale received by the plaintiff pursuant to paragraph 2 of this Order be applied by the plaintiff to the judgment herein entered against the defendants in favour of the plaintiff on 26 November 2008.
(The Schedule contained a detailed description of the numerous items of plant and equipment of the partnership, but their precise identities are not relevant for this application).
By an application dated 9 September 2009, FDN 414, the third defendant sought an order “That a stay of execution of the orders made ….. on 12 August 2009 be granted”. On 9 September 2009 another Master made an Order partly staying the Order of 12 August 2009 until further order as a holding measure to enable this application to be determined.
On 20 August 2009 the plaintiff exercised its power as mortgagee to sell various real estate of the first defendant for a gross amount of $8,155,750 (“the land sales”). Settlement on these sales is not scheduled to occur until 20 February 2010.
The plaintiff has also exercised various other rights as a secured and judgment creditor to obtain payments of various amounts on account of the judgment debt. I do not intend to say anything about the amounts recovered and how they have been applied by the plaintiff as that may be the subject of subsequent disputes. The essence of the third defendant’s submission on the present application is that the plaintiff will be able to recover all of its judgment debt without resort to any sale of the plant and equipment of the partnership. Hence it argues that it would be unjust for that plant and equipment now to be delivered up and sold. Whether the third defendant’s contention about the satisfaction of the judgment is correct depends largely upon whether the plaintiff is also able to recover through the Order of 12 August 2009 post judgment interest on its judgment. Hence it is necessary for me to consider some novel and interesting submissions about the entitlement of a judgment creditor to post-judgment interest and how such interest can be recovered.
Post-Judgment Interest.
At Common Law a judgment did not carry interest. The right was first given by an English statute of 1837, which provided:
Every judgment debt shall carry interest at the rate of 4 Pounds per centum per annum from the time of entering up the judgment ….. until the same shall be satisfied, and such interest may be levied under a writ of execution on such judgment.
Order 41 Rule 14 of the English Judicature Act Rules 1876 provided:
Every writ of execution for the recovery of money shall be indorsed with a direction to the sheriff ….. to levy the money really due and payable and sought to be recovered under the judgment, stating the amount, and also to levy interest thereon, if sought to be recovered, at the rate of …..
(This history is taken from the judgment of Griffiths CJ in Reis v Carling (1908) 5 CLR 673 at 676-678).
In South Australia s 33 of the Supreme Court Act 1867 provided:
Every judgment debt shall carry interest at the rate of Ten Pounds per centum per annum, from the time of entering up the judgment until the same shall be satisfied, in lieu and instead of Five Pounds per centum per annum, as provided by the Ordinance No 9 of 1846.
This partly followed the English 1837 Act, but left out the latter part about interest being levied under a writ of execution. This section was replaced by the present s 114(1) of the Supreme Court Act 1935 which provides:
(1)All money, including costs, payable under any judgment or order shall bear interest at the rate from time to time prescribed by the Rules of Court.
This action is still governed by the Supreme Court Rules 1987. Rule 84.19, now prescribes that the rate shall be that specified in Rule 261 of the Supreme Court Civil Rules 2006.
The former Supreme Court Rules in this State also largely re-enacted the English Judicature Act Order 41 Rule 14. It appeared in the Supreme Court Rules 1947 as Order 42 Rule 17:
17Every writ of execution for the recovery of money shall be indorsed with a direction to the Sheriff, or other officer or person to whom the writ is directed, to levy the money really due and payable and sought to be recovered under the judgment or order, stating the amount, and also to levy interest thereon, if sought to be recovered, at the rate of ten per cent per annum from the date of the judgment or order: Provided that in cases where there is an agreement between the parties that more than ten per cent interest shall be secured by the judgment, then the indorsement may be accordingly to levy the amount of interest so agreed.
There was no direct equivalent of that Rule in the Supreme Court Rules 1987, but there was a partial equivalent in Rule 88A.06(2) which provided:
(2)Recovery of interest accrued after issue of warrant.The Sheriff may deduct from the proceeds of any warrant and pay to the judgment creditor interest accrued on the judgment debt under rule 84.19 from the time of the issue of the warrant to when he makes payment to the judgment creditor provided that if he receives payment of the judgment debt in lieu of effecting a sale he need not account to the judgment creditor for interest accrued after the date on which he receives payment of the debt.
That Rule does not apply here because, under the terms of the Order of 12 August 2009, the sale of the items is to be conducted by the plaintiff and not by the Sheriff.
As far as I am aware there is no authority in this State about how a judgment creditor can recover its post judgment interest under s 114(1) of the Supreme Court Act where the proceeds of execution do not pass through the hands of the Sheriff. There are authorities on the question generally in England and interstate, but they turn in part upon the particular terms of the statutes and rules in those places. I do not consider that the omission from s 114(1) of the provision in the 1837 English Act, and in some other equivalent Australian legislation, that the interest may be levied under writ of execution on the judgment is of any significance. The English Act and Rules covered much the same ground on this topic, and it would appear that Parliament in this State in enacting s 33 of the Supreme Court Act 1867 and s 114(1) of the Supreme Court Act 1935 chose to leave the issue of how post judgment interest was to be recovered to the Rules. While the authorities on similar legislation and rules elsewhere treat the post judgment interest as being necessarily and inextricably attached to the judgment, Reis v Carling (above); re Manion ex parte DCT (1978) 37 FLR 78; re Mullavaney, ex parte ANZ Bank (1977) 20 ALR 276, it does not become part of a judgment as such: ex parte Lewis, re Clagett (1888) 36 WR 653 per Bowen LJ, which was cited with approval by the Full Court of Western Australia in Mercantile Credits Ltd v Buckeridge [1986] WAR 149 at 152. There is no dispute that post judgment interest under s 114(1), and as calculated in accordance with 87R 84.19 and 6R 219, is a debt payable by the defendant to the plaintiff. I accept the submission of counsel for the third defendant that such post judgment interest is not part of the judgment given on 26 November 2008 and hence is not part of the “judgment” referred to in the Order of 12 August 2009. However, I do not accept that its recoverability by the plaintiff is confined to where the plaintiff obtains a separate judgment for it.
The third defendant conceded that if the plaintiff did not have other means to satisfy its judgment it could proceed immediately under the Order of 12 August 2009 and seize and immediately sell the plant and equipment of the partnership. (The plaintiff envisages holding a public auction to sell this plant and equipment and it was not suggested that it could not do so by one auction and had to sell the items piece-meal until it had obtained enough money to satisfy the judgment). The plaintiff is entitled to avail itself of the Order of 12 August to obtain payment of its judgment as quickly as practicable. In the circumstances of this matter there is no reason why it needs to await settlement on the land sales to see what, if any, deficiency there might then be which would need to be made up by pursuing recovery under the Order of 12 August 2009. If it can sell, and obtain payment for, the plant and equipment before settlement on the land sales, it is entitled to receive this money. This would also have the beneficial effect of stopping post judgment interest running on the net amount realised from such sales. What it is likely to mean in practice is that the plaintiff will get partial satisfaction of its judgment through the Order of 12 August 2009 and then when the settlements on the land sales do occur it will received amounts which, when taken with the other amounts previously received, will exceed the amount of the judgment. At that point the plaintiff will then be required to account to the third defendant for any surplus recovered by it. If necessary this Court will adjudicate upon that account and determine any amount properly refundable. Doubtless in that account the plaintiff will claim a debit to the third defendant for the post judgment interest. It is certainly arguable that it is entitled to have this debt brought into account on the taking such an account, but I need not now finally determine the point.
The present application is brought under s 17 of the Enforcement of Judgments Act which gives the Court a general discretion to stay execution if there is a proper reason for doing so. (The application refers to 6R 300(2) but that is clearly incorrect). The remedy of a stay is an exceptional course: re Moore, ex parte Pillar (1991) 103 ALR 11. The starting point is usually that a party holding a judgment should be entitled to enforce it as it wishes: State Bank of Victoria v Parry [1989] WAR 240 at 244. I do not accept that on the evidence before me the third defendant has established any hardship or prejudice on which the granting of a stay could be based. The third defendant is an elderly lady in a nursing home and has no personal use for the items in question. There is no evidence of her personal financial position to suggest that she would be benefited personally if the stay was granted. It would appear to be generally in her interests for the items in question to be converted into money. Indeed, the winding up of the partnership between the defendants requires this. There is no suggestion that the plaintiff will not properly conduct any sale of the plant and equipment. Accordingly, the stay will be refused.
I have today made the following orders:
1The third defendant’s application, FDN 414, is dismissed.
2The costs of the application as agreed or adjudicated is to be paid by the third defendant to the plaintiff.
3Fit for counsel.