Meat 2 Please v Manna
[2022] VSC 144
•25 March 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PRACTICE COURT
S ECI 2021 03736
| MEAT 2 PLEASE PTY LTD (ACN 138 225 073) | Applicant |
| v | |
| VINCENZO MANNA | Respondent |
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JUDGE: | MOORE J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 21 March 2022 |
DATE OF JUDGMENT: | 25 March 2022 |
CASE MAY BE CITED AS: | Meat 2 Please v Manna |
MEDIUM NEUTRAL CITATION: | [2022] VSC 144 |
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COSTS – Judgment debt recovery – Review of instalment order granted to judgment debtor – Applicant objected to instalment order – Instalment order cancelled – Costs awarded on an indemnity basis – Cahill v Howe [1986] VR 630 – C Tina Pty Ltd v Barham-Floreani [2019] VSC 819 – Judgment Debt Recovery Act 1984 (Vic) s 6.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr S Officer | |
| For the Respondent | Mr G Rossis |
HIS HONOUR:
The parties to this proceeding occupy adjacent commercial premises in Keysborough. In December 2020, the respondent, Vincenzo Manna, commenced a proceeding in the Victorian Civil and Administrative Tribunal (VCAT) against the applicant, Meat 2 Please Pty Ltd (M2P), seeking relief in relation to M2P’s alleged use of the common area adjacent to the parties’ commercial premises.
Mr Manna’s application in VCAT was struck out on 8 June 2021. VCAT subsequently granted M2P’s application that Mr Manna pay a portion of its costs to be taxed in default of agreement. The parties were unable to agree on the quantum of costs; a taxation hearing occurred in the Costs Court on 7 December 2021. M2P was awarded its costs in the sum of $26,133.56, including the costs of the taxation (the judgment debt).
On 30 December 2021, Mr Manna filed an application under s 6 of the Judgment Debt Recovery Act 1984 (the Act) for an order that the judgment debt be paid by instalments. That application was granted by an Associate Justice[1] on 24 January 2022 and an order made that Mr Manna pay M2P the judgment debt in 26 monthly instalments of $1,005.14.[2] Consistent with the provisions of the Act, M2P was not on notice of Mr Manna’s application for an instalment order.[3]
[1]Pursuant to s 6(1) of the Act, application for an instalment order is made to ‘the proper officer of the court’. Rule 61.01 of the Supreme Court (General Civil Procedure) Rules 2015 defines an Associate Judge or a judicial registrar as being the ‘proper officer’ of the Court.
[2]The orders made by the Associate Justice also provided that: the first instalment be paid on 8 February 2022; the last instalment be paid on 8 April 2024; and that a further payment be made on 8 May 2024 in respect of the statutory interest accrued on the judgment debt.
[3]Pursuant to s 6(3) of the Act, an instalment order can be made without notice to the judgment creditor.
Section 6(5) of the Act permits a judgment creditor to lodge an objection to an instalment order. On 7 February 2022, M2P filed a notice of objection in relation to the instalment order issued on Mr Manna’s application. Once such a notice is filed, the proper officer of the Court is to set the matter down for hearing by the Court.[4] Such a hearing is a hearing de novo.[5]
[4]The Act, s 6(5).
[5]Cahill v Howe [1986] VR 630, 631.
I heard M2P’s notice of objection in the Practice Court on 21 March 2022. I made orders including that the instalment order made on 24 January 2022 be cancelled. These are my reasons for judgment for so ordering.
Legal principles
The making of the instalment order and the filing of a notice of objection by M2P proceeded in accordance with the framework established by s 6 of the Act. Relevantly, s 6(7)(b) of the Act provides that where, as here, an objection to an instalment order is made under s 6(5) of the Act, the Court may vary or cancel the instalment order.
In Cahill v Howe, Young CJ observed that the Act provides little guidance as to the circumstances in which Parliament considered that it was appropriate for an instalment order to be made.[6] In the second reading speech of the Bill which led to the enactment of the Act in 1984, the Minister stated that the Bill seeks to put in place:[7]
… a simple procedure leading to the payment of judgment debts by instalments in appropriate cases. That procedure should be available to both creditor and debtor. …
The Act does not provide any guidance about those features which might make a case an ‘appropriate’ one for the making of an instalment order.
[6]Ibid 632.
[7]Victoria, Parliamentary Debates, Legislative Assembly, 1 May 1984, 4165 (Mr Fordham, Minister for Education).
In C Tina Pty Ltd v Barham-Floreani (C Tina), after referring to this extrinsic material and by reference to the authorities in New South Wales dealing with the equivalent statutory regime, Riordan J summarised the relevant principles as follows:[8]
[8][2019] VSC 819, [21]-[22].
Accordingly, on an application by a judgment debtor, the Court has a broad discretion to be exercised in determining whether it is an ‘appropriate’ case for an order; and to fairly balance:
(a) the rights of the creditor to the fruits of its judgment;[9] and
[9] Chint Australasia Pty Ltd v Cosmoluce Pty Ltd [2008] NSWSC 1054, [15](iii) (Einstein J).
(b)the provision to the judgment debtor of an opportunity to repay the judgment debt on reasonable terms, being the policy underlying the Act.
In my opinion, an application by a judgment debtor to pay by instalments will usually be granted unless:
(a)the judgment debtor has the means to pay the debt immediately or in a significantly shorter time than proposed;
(b)it is unlikely that the judgment debtor will be able to comply with the instalment order; or
(c)the proposed instalment plan will not result in the repayment of the debt and interest in a reasonable period of time.[10]
[10]Hellier Capital Pty Ltd v Albarran [2009] NSWSC 403, [8]-[11] (McDougall J); IceTV Pty Ltd v Ross [2011] NSWSC 1211, [7]-[8] (Brereton J).
These statements of principle are consistent with the observations of McDougall J in Hellier Capital Pty Ltd v Albarran[11] to which Riordan J referred in C Tina. Justice McDougall emphasised that the exercise of the discretion to rescind an instalment order required ‘close attention to the facts of the case’.[12] In taking into account the entitlement of a successful party to the fruits of their success and to enforce the Court’s orders in the exercise of the discretion, his Honour stated that:[13]
There is a real public interest in enabling parties who have litigated their disputes to enforce the victory that they have achieved. That public interest arises, at least in part, because the system of adjudication through courts depends firstly on acceptance of the outcome (if necessary, after exhausting all available avenues of appeal) and, secondly, the ability to enforce the outcome. If the process of adjudication is to survive, so that people do not resort to self-help, the courts should be slow to interfere in the normal processes of enforcement.
[11]Hellier Capital Pty Ltd v Albarran [2009] NSWSC 403, [8]–[11].
[12]Ibid [3].
[13]Ibid [19].
Consideration
Applying these principles, I am satisfied that this is not an appropriate case for an instalment order to be made for payment of the judgment debt.
Mr Manna’s own evidence indicates that he has the means to pay the judgment debt immediately. He owns two properties – a factory and a townhouse – with a combined market value of $920,000. Neither property is encumbered. He has also deposed that he has $8,000 in bank deposits. The evidence also indicates that he holds funds in superannuation; the amount of those funds has not been disclosed.
Mr Manna’s only debt is a $9,000 personal loan to his father which is said to be ‘deferred’ and payable to his father or his estate.
It is therefore apparent that, on his own evidence, Mr Manna has net assets worth in excess of $900,000. It may also be noted that Mr Manna does not have any dependents.
There is no evidence that Mr Manna has made any attempt to secure a loan to finance the immediate payment of the judgment debt. As the holder of net assets worth more than $900,000 and with only a small debt which has been deferred, Mr Manna is in a position to readily secure such a loan, being for the comparatively small amount of $26,133.56. I am fortified in that view given that there is evidence that members of Mr Manna’s family and his partner are willing to guarantee payments in that total amount.
Separate to Mr Manna’s own evidence, my conclusion that Mr Manna has the means to immediately pay the judgment debt is also supported by the documentary evidence in the form of Mr Manna’s bank statements: those statements portray a materially better financial position than that deposed to by Mr Manna in his affidavit.
Contrary to the contents of his affidavit sworn on 29 December 2021 in which he deposes that he has a bank or authorised deposit of $8,000, Mr Manna’s bank account statements record a bank account balance of $41,862.86 on 23 December 2021 and $40,591.36 on 4 January 2022. This significant difference between the affidavit and documentary evidence was unexplained. In the circumstances, I do not accept Mr Manna’s evidence as to the amount of funds held by him in deposit at the bank or authorised deposit taking institution.
Putting aside Mr Manna’s real property holdings, the bank statements show that, in late December 2021 and early January 2022, Mr Manna had sufficient cash in the bank to pay the whole of the judgment debt immediately. Even if one excludes from this bank deposit the amount of $18,000 said to be an amount transferred from his superannuation, Mr Manna had cash deposits equal to about 70% of the judgment debt.
There are also significant disparities between Mr Manna’s sworn claims about his level of income and that which is suggested by the bank statements. In his affidavit he deposed to a total gross weekly income of $1,110.00, comprised of rental from his investment property and financial support from his family of some $700.00 per week. However, the bank statements indicate that, in the period between September and December 2021, Mr Manna’s average receipts of income were approximately $13,000 per month (also taking into account the $700 per week said to be promised to be paid by Mr Manna’s family). Again, these inconsistencies between the documentary evidence and Mr Manna’s affidavit evidence were unexplained. I do not accept Mr Manna’s evidence about his level of income.
Two other matters also militate in favour of the cancellation of the instalment order. First, M2P has a legitimate interest as the successful party in this litigation in being able to enjoy the fruits of its success and to enforce the Court’s orders as to costs.
Secondly, I do not consider that the instalment order will provide for the repayment of the judgment debt and interest in a reasonable period of time. Taking into account interest, the total period over which the instalments are to be paid is about 29 months. In my view, it is unreasonable to require M2P to wait nearly 2½ years for the judgment debt and interest to be paid in full in circumstances where the judgment debt is reasonably modest. This is particularly so given that, as I have explained, Mr Manna’s financial position is such that he is capable to of paying the full amount due forthwith.
Costs
Despite the assertions made to the contrary on behalf of Mr Manna, given that M2P has been wholly successful in obtaining the cancellation of the instalment order, there is no good reason to depart from the usual rule that costs should follow the event and that Mr Manna should be required to pay M2P’s costs. The real controversy is whether the Court should accede to M2P’s submission that Mr Manna should pay its costs on an indemnity basis.
Special circumstances must exist to justify an award of costs on an indemnity basis. Some of the categories of special circumstances were referred to by Harper J in Ugly Tribe Co Pty Ltd v Sikola:[14]
[14][2001] VSC 189, [7] (omitting citations).
(i)The making of an allegation, known to be false, that the opposite party is guilty of fraud;
(ii)The making of an irrelevant allegation of fraud;
(iii)Conduct which causes loss of time to the Court and to other parties;
(iv)The commencement or continuation of proceedings for an ulterior motive;
(v)Conduct which amounts to a contempt of court;
(vi)The commencement or continuation of proceedings in wilful disregard of known facts or clearly established law;
(vii)The failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial.
The categories of special circumstances are not closed.
M2P submitted that it should have its costs on an indemnity basis because Mr Manna’s conduct in the litigation went beyond the ‘normal process of litigation’ so as to have unnecessarily added to its costs. In particular, M2P pointed to the failure by Mr Manna to properly respond to its requests for documentation substantiating his claim for an instalment order and which explained the basis of his claimed financial position set out in his affidavit.
Mr Manna’s representative opposed the application for indemnity costs. It was submitted that Mr Manna responded specifically and adequately to the request for information; he went to great lengths to compile documents and materials to support his claims; that the issues relating to the veracity of the information provided by Mr Manna were not raised until the hearing; and that an order as to indemnity costs would place Mr Manna under significant stress and pressure. It was further submitted that, by applying for the instalment order, Mr Manna had evinced a clear intention to make payment of the costs and not to evade his obligations. It was submitted that any additional costs ordered against Mr Manna would have the effect of forcing him into bankruptcy.
In my assessment, subject to issues of quantification to which I refer below, there are special circumstances which warrant a departure from the usual course in relation to costs and which justify an order that Mr Manna pay M2P’s costs on an indemnity basis. The basis of my conclusion stems from a consideration of the competing policy considerations which underpin the different approaches in relation to costs and which were discussed by Harper J in Ugly Tribe. His Honour stated:[15]
… potential litigants must not be unnecessarily discouraged from bringing their disputes to the courts. After all success can seldom be guaranteed, if only because – where the facts are in dispute, as they generally are – it is seldom possible to predict with certainty what findings of fact will be made. In these circumstances, an honest plaintiff or defendant might be discouraged from bringing or defending a claim were an adverse result to be followed by an order that the losing party indemnify, or go close to providing an indemnity to, the successful party against the latter's costs.
The position changes where a litigant acts dishonestly in the litigation, or where the rights and privileges of a litigant are flouted or abused. Then, the rationale for refusing to order that the losing party indemnify an opposite party against that party's costs is less compelling. Indeed, costs are more frequently if not invariably awarded on an indemnity or like basis (such as that of solicitor/client) where findings of dishonesty or serious misconduct have been made against the party ordered to pay.
[15][2001] VSC 189, [11]-[12].
This case falls within the second general category. As I have explained, the documentary evidence about Mr Manna’s financial position paints a very different picture to that which emerges from his affidavit. These inconsistencies in the evidence about Mr Manna’s asset holdings and income were unexplained and went to the heart of the controversy about whether an instalment order was properly justified in the circumstances of the case. The documents showed the impression of Mr Manna’s financial position given by his affidavit to be inaccurate and misleading. Considered objectively, the position revealed by the documentary evidence indicates that, upon examination, there was little or no proper basis for Mr Manna to defend the instalment order which had been made.
This conclusion, if not reasonably able to be ascertained soon after Mr Manna decided to seek an instalment order, should have at least become apparent when his financial documents were produced at the request of M2P’s solicitors. It is not to be overlooked that these were Mr Manna’s own documents, not documents obtained by subpoena from a third party. Properly advised, at least by this time, Mr Manna ought reasonably to have abandoned his defence of the instalment order. Not only did this not occur, but the requests for information by M2P were not addressed in a timely and appropriate way. Contrary to Mr Manna’s submissions, it is evident from the correspondence sent by M2P’s solicitors that the veracity of Mr Manna’s claims was in issue well before the hearing before the Court.
I am accordingly satisfied that there exist special circumstances which warrant a departure from the usual approach and which justify an order that Mr Manna pay M2P’s costs on an indemnity basis. Those special circumstances are: (a) Mr Manna’s defence of an instalment order in circumstances where, objectively considered, there was little or no proper basis for doing so; (b) the fact that Mr Manna’s claim for and defence of an instalment order was advanced on the basis of inaccurate and misleading claims about his financial position; and (c) the piecemeal and delayed manner in which Mr Manna responded to M2P’s reasonable requests for documentation in support of his claim.
M2P also sought an order that its costs be fixed in the amount of $20,100.00 and be paid forthwith. I accept on the material before me that costs in the sum of $18,450.00 have been incurred by M2P in relation to its application for the instalment order to be cancelled.[16] These costs are discrete and readily ascertainable. In these circumstances and in the interests of ensuring finality in the litigation and avoiding the possibility of a further taxation of costs, it is appropriate to fix M2P’s costs in that amount and for them to be paid forthwith. I will stay the operation of that order for 30 days.
[16]I am not satisfied on the material before me that the component of the costs claimed by M2P described as ‘Additional items’ were incurred, or are otherwise appropriate to include in the order as to costs.
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