RACV Finance Ltd v Formica

[2018] VSC 271

IN THE SUPREME COURT OF VICTORIA	Not Restricted
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST

S CI 2018 01796

R.A.C.V. FINANCE LIMITED (ABN 82 004 292 291)	Plaintiff
v
SHAYNE GORDON FORMICA	First Defendant
MAGISTRATES’ COURT OF VICTORIA	Second Defendant

---

JUDGE:	Ginnane J
WHERE HELD:	Melbourne
DATE OF HEARING:	16 May 2018
DATE OF RULING:	16 May 2018 (Revised)
CASE MAY BE CITED AS:	RACV Finance Ltd v Formica
MEDIUM NEUTRAL CITATION:	[2018] VSC 271

---

JUDICIAL REVIEW — Magistrates’ Court — Order that garnisheed sum be repaid — Judicial review of order - Stay application — Stay refused.

PRACTICE AND PROCEDURE — Magistrates’ Court default judgment on loan agreement — Garnishee order executed — Default judgment set aside by consent — Magistrate’s order for repayment of amount garnisheed — Judicial review application of Magistrate’s order — Stay application for repayment order — Stay refused.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D Gration	James Partners Lawyers
For the First Defendant	Mr E Chen	Starke Westwood

HIS HONOUR:

1. This judicial review proceeding has been commenced following an order of the Magistrates' Court made on 9 May 2018. The Magistrates’ Court order was that the plaintiff, RACV Finance, had seven days to file and serve an application for monies paid under a garnishee order to be paid into court, otherwise the monies be returned forthwith to the first defendant. RACV Finance’s application was that the order be stayed pending the determination of this proceeding, which is an originating motion seeking judicial review of the Magistrate’s order.[1] RACV Finance had obtained a default judgment for $77,176.57 under a loan contract with the first defendant, Mr Shayne Formica, and then obtained a garnishee order for a sum of $60,351.06, which Mr Formica had deposited with the Commonwealth Bank.

   [1]A stay may be granted under Rule 66.16 of the Supreme Court (General Civil Procedure) Rules 2015.

1. The default judgment was set aside by consent. Mr Formica says that he did not enter into the loan agreement, and that he did not obtain the Superliner van that the loan monies were used to purchase. Based on the material before me, that seems an odd state of affairs, but I cannot make any definite findings because matters of fact and matters of evidence called at the hearing of the proceeding will need to be considered. RACV Finance’s proceeding for the debt remains to be heard in the Magistrates' Court. RACV Finance will be suing for a judgment, the substantial amount of which it obtained under the garnishee order and which it will continue to retain until that amount is repaid to Mr Formica.

1. But as it is now May, and no hearing date has been fixed, the proceeding in the Magistrates’ Court may not be heard until 2019. In the meantime, RACV Finance has the sum of money until seven days from 9 May 2018 - perhaps today or tomorrow.

1. It is likely that some part of the $60,351.06, if returned to Mr Formica, may well be spent for legitimate purposes before the case is heard in the Magistrates' Court. Usually, when a party presents an arguable case for error by a Magistrate – in this case, jurisdictional error or error of law on the face of the record– this Court will grant a stay so that the judgment is not enforced against the party, and its proceeding in this Court is not rendered nugatory.

1. There will, of course, be many cases where that principle applies in circumstances where an order has been made against a party in the Magistrates' Court, and that party wishes to appeal or review the order. However, this is not a case of that character; this is a case where an executed garnishee order has been based on a default judgment which has now been set aside.

1. That is a quite different state of affairs. Following the setting aside of the default judgment, RACV Finance is in the same position it was before obtaining the garnishee order and, indeed, in the position it was before obtaining the default judgment. It is a litigant yet to prove its case. As I have said, there is a likelihood that part of the sum that has been garnisheed will be spent if it is returned to Mr Formica before the case comes on again for hearing in the Magistrates' Court.

1. As Mr Chen has pointed out, Mr Formica did not spend the $60,351.06 deposited in the Commonwealth Bank account in the period leading up to the default judgment in the Magistrates' Court. But his case is that he did not know anything about that proceeding and his conduct has to be viewed in that light. Mr Gration has referred me to Basten JA's observation in the New South Wales Court of Appeal decision of Fitz Jersey Pty Ltd v Atlas Construction Group PtyLtd,[2] that he had been referred to no case where a court had granted equitable relief to require repayment of a sum acquired pursuant to an executed garnishee order. However, the availability of that relief will be for this Court to determine at the final hearing of this proceeding.

   [2](2017) 94 NSWLR 606 [86].

1. Basten JA’s observation, at least, provides an arguable basis for the RACV Finance's case. It also relies on a denial of procedural fairness ground, although that may stand or fall on the earlier proposition of the identification of the power or discretion to require repayment of the garnisheed sum.

1. The granting of a stay is discretionary. I can see arguments that support both parties’ cases, but ultimately I am not persuaded that I should stay the Magistrate’s order. I consider that this case is now to be viewed in the light of the fact that the judgment on which the garnishee order was made has been set aside.

1. It is true, as previously mentioned, that RACV Finance relies on a denial of procedural fairness ground which may stand or fall on whether the Magistrate had a discretion or power to order the repayment of the sum that had been garnisheed. Even if he was exercising a discretion, the situation presented to him was that the parties had come to Court knowing that default orders were being set aside, in circumstances where the orders that should thereafter be made were clearly to be determined by the Magistrate. The Magistrate has made the order under review, and I am not persuaded that it is appropriate in the exercise of the discretion to stay it. I will list the proceeding for hearing on 6 September 2018.