Refaat v Barry

[2017] VCC 1295

IN THE COUNTY COURT OF VICTORIA AT MELBOURNE

COMMERCIAL DIVISION GENERAL LIST

Revised (Not) Restricted Suitable for Publication

Case No. CI-12-02108

SAMEH REFAAT  Plaintiff

v

MICHAEL BARRY  Defendant

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JUDGE:	HIS HONOUR JUDGE ANDERSON
WHERE HELD:	Melbourne
DATEOF HEARING:	4 September 2017
DATEOF JUDGMENT:	14 September 2017
CASE MAY BE CITEDAS:	Refaat v Barry
MEDIUMNEUTRAL CITATION:	[2017] VCC 1295

REASONS FOR JUDGMENT

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Catchwords: Practice and procedure – Enforcement of judgment – Instalment order – Applications for varied and substituted orders – Two monthly instalments not paid - Applications for varied or substituted instalment orders refused – Warrant of seizure and sale issued – Outstanding instalments paid – Whether enforcement or execution of judgment stayed by applications – Meaning of words in section 6(8)(b) of the Judgment Debt Recovery Act 1984 (Vic), “until the proper officer of the court or the court (as the case requires) deals with the matter”.

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APPEARANCES:	Counsel	Solicitors
For thePlaintiff	In person
For the Defendant	In person

COUNTY COURT OF VICTORIA

250 William Street, Melbourne

HIS HONOUR:

1On 2 June 2014, His Honour Judge Macnamara after an 11 day trial dismissed a claim by Dr Sameh Refaat against Mr Michael Barry and entered judgment on Mr Barry’s counterclaim for the sum of $81,497.64 (inclusive of interest). The Court of Appeal on 20 August 2015 dismissed Dr Refaat’s appeal against these orders.

2Upon the application of Dr Refaat, Judicial Registrar Tran on 16 December 2015 ordered that the judgment be paid by monthly instalments of $3,035 “to be paid on the first day of every month”.

3The present dispute requiring decision arises because Dr Refaat did not pay the instalments due on the first days of June and July 2017 until about 2 August 2017, by which time Mr Barry had issued a warrant of execution in respect of Dr Refaat’s family home at Chirnside Park. Dr Refaat on 8 August 2017 made application for the warrant to be set aside.

4The issues for determination arising on the application are as follows:

a.whether, at the time the warrant was issued, there was a stay of enforcement or execution of the judgment by operation of the Judgment Debt Recovery Act 1984 (“the Act”);

b.whether, in any event, the warrant should be set aside by reason of the following matters:

i.Mr Barry failed to follow the processes set out in section 17 of the Act upon “default in payment of instalments”;

ii.Dr Refaat had by 2 August 2017 paid the instalments due on the first days of June, July and August 2017, and has recently paid the September instalment;

iii.Dr Refaat has instituted proceedings in the Victorian Civil and Administrative Tribunal (“VCAT”) in respect of claims by him and his company against Mr Barry;

c.whether no further indulgence should be shown to Dr Refaat because:

i.in September 2016 the Court, whilst not allowing Mr Barry leave to issue a warrant, had warned Dr Refaat that an application to vary an instalment order did not stay enforcement or execution of the judgment;

ii.Dr Refaat is likely to have a substantial liability to Mr Barry in respect of the costs of the proceeding in the County Court and for a proportion of the costs of the appeal.

Whether enforcement or execution of the judgment stayed

5The Warrant of Seizure and Sale bears a court stamp with 14 July 2017 as the date the warrant was issued. From what I was told in court, it appears likely that the warrant was sought to be issued by Mr Barry on or about that date but was not in fact issued until about 28 July 2017 after leave was granted to issue the warrant by Judicial Registrar Tran.

6On 29 May 2017, Dr Refaat made application for the variation of the instalment order made on 16 December 2015. The application was dealt with by Judicial Registrar Tran at a hearing on 17 July 2017.  Dr Refaat apparently believed that the making of the application had the effect of staying enforcement or execution of the judgment. As a consequence, Dr Refaat said that he had not paid the instalments due to be paid on 1 June and 1 July 2017.

7At the hearing on 17 July 2017, Judicial Registrar Tran told Dr Refaat that his belief was mistaken as a variation application pursuant to section 8 of the Act did not operate as a stay. The Judicial Registrar discussed Dr Refaat’s application but raised the possibility that an application by him for a substituted instalment order

under section 6 of the Act would be effective to stay enforcement or execution of the judgment.

8On about 17 July 2017, Dr Refaat filed an application under section 6 for a substituted order. By section 6(8)(b):

“From the time of service the application shall operate as a stay of enforcement or execution of the judgment in respect of which the application is made until the proper officer of the court or the court (as the case requires) deals with the matter.”

9On 24 July 2017, the proper officer of the court refused Dr Refaat’s application for a substituted instalment order. In accordance with the obligation pursuant to section 6(3)(b), the proper officer notified Dr Refaat and Mr Barry of the refusal to make a substituted order. Dr Refaat admits that he was “informed of that decision by email on the 27th of July 2017”.

10On 25 July 2017, Judicial Registrar Tran made an order “on the papers” that Mr Barry “have leave to issue the Warrant of Seizure and Sale filed 14 July 2017”. The  Judicial Registrar noted that the proper officer had dismissed Dr Refaat’s application for a substituted instalment order on 24 July 2017, and that:

“No notice of objection has yet been filed [and that] in the circumstances there is currently no barrier to the enforcement or execution of the judgment and leave to issue the warrant should be granted.”

11Dr Refaat said that he only became aware that the warrant had been issued when he attended the Court Registry on 29 July 2017. An earlier email on 25 July 2017 enclosing Judicial Registrar Tran’s order was apparently sent to an incorrect address for Dr Refaat.  Dr Refaat said that as soon as he became aware that the warrant had been issued, he took steps to pay the outstanding instalments.

12By section 6(5) of the Act, Dr Refaat had “the prescribed period” (14 days) “after receiving notice [of the refusal by the proper officer to make the substituted instalment order to] file with the proper officer of the court notice of objection and the

proper officer shall set the matter down for hearing by the court”.  By section 6(6), the parties must be notified by the proper officer “of the time and place of the hearing”.

13Dr Refaat said that he had intended to file an objection to the refusal of his application by the proper officer. In fact, he did not do so.  Dr Refaat on 2 August 2017 paid the outstanding instalments due on 1 June and 1 July 2017 and the instalment that had been due on 1 August 2017.

14Dr Refaat submitted that section 6(8) should be construed so that, until the time for filing a notice of objection had expired, the stay under sub-section (8)(b) continued to operate. The sub-section envisages that the stay shall continue to operate “until the proper officer of the court or the court (as the case requires) deals with the matter”.

15Although, during the course of argument, I was not attracted by Dr Refaat’s submission, I now consider that it should probably be accepted. Section 6 sets out a procedure to be followed after the determination of an application by the proper officer, including the notification to the parties of the result of the application and the process for the rehearing of the application in open court. Sub-section 8(b) sufficiently, in my view, anticipates that a stay will operate until the processes set out in section 6 are completed.

16These processes include notification to the parties of the proper officer’s decision, allowing time for filing an objection and the matter being dealt with by the court by way of rehearing at a nominated time and place.

17Whilst no general stay operated following the filing of the variation application on 29 May 2017, the making of the application on 17 July 2017 for a substituted instalment order had a different effect. Before the substituted order application was made, the protection offered by section 9 of the Act of “a stay of enforcement or execution of the judgment” would generally have been available. However, as the instalment order was not “being complied with” prior to 17 July 2017, no protection was given by section 9.

18For these reasons, I consider that the granting of leave to issue the Warrant of Seizure and Sale on 25 July 2017 was probably not justified and, therefore, ineffective.  If I am wrong in this conclusion, it would not affect my determination in relation to the application. For the brief reasons I set out below, I consider that even if the warrant were appropriately issued and effective, I should nevertheless set aside the warrant in view of the payments by Dr Refaat on about 2 August and 4 September 2017.

19The arrears of instalments, and the September instalment, have now been paid. In these circumstances, Dr Refaat has the protection of section 9. This protection will only continue so long as the original instalment order “is being complied with”.  This has not always been the case, with the necessary funds rarely being made available in Mr Barry’s bank account by the first day of the month. I warned Dr Refaat that he must ensure that he strictly comply with the requirements of the instalment order.

Other issues

20By reason of my primary conclusion, I will only give brief consideration to the other issues raised on the application.

21I do not consider that a judgment creditor is limited to the enforcement option in section 17 of the Act, if “a judgment debtor defaults in the payment of any instalment under an instalment order”, namely the issue of a summons “requiring the judgment debtor to attend before the court”.  If a stay were not in operation by reason of non- compliance with an instalment order, there may in my view be “enforcement or execution of the judgment”.

22The proceeding instituted by Dr Refaat in VCAT in April 2016 was rejected by the Court of Appeal on 5 August 2016 as an appropriate basis for “a stay of execution of the orders of [the Court of Appeal] pending the outcome of the new proceeding in the Tribunal” (at [2016] VSCA 189). There is no basis for this Court to come to a different conclusion on that matter.

23On 24 October 2016, Judicial Registrar Tran recorded in an order a note of her “ex tempore reasons for decision” upon an application by Mr Barry for leave to issue a Warrant of Seizure and Sale. The Judicial Registrar had dismissed the application because Dr Refaat had:

a.“failed to make the 1 September 2016 instalment apparently because he was under the misapprehension that he was not required to do so because of the variation application [he sought to make on or about 17 August 2016]”;

b.“once Dr Refaat’s variation application was refused, he rectified this default the same day (26 September 2016)”;

c.“he has since paid the October 2016 instalment on time”.

24In her reasons, the Judicial Registrar comprehensively set out the differences between a section 6 application and a section 8 application and the consequences so far as a stay is concerned (sections 6(8)(b) and 9). The Judicial Registrar stated at paragraph 17 of her written reasons that:

“When one considers the events of this proceeding in light of these provisions of the JDR Act, it is apparent that Dr Refaat was not relieved from the obligation to pay an instalment on 1 September 2016 by sub-section 6(8) of the JDR Act”.

25In paragraphs 14 and 15 of his second affidavit in support of his application to set aside the warrant, Dr Refaat said:

“14.     On the 31st of May 2017 I (the applicant/debtor) realized that I will not be able to make the payment due on the 1st of June 2017.  I then applied to the county court on the same day under the debt recovery act, section 8, to vary the installment order.

15.      I made the mistake of not making this application under section 6.  Section 6 provides protection under the debt recovery act while the application is on foot, while section 8 does not provide that protection. The mistake is honest

and cannot be otherwise because I had no reason whatsoever to make that mistake. All what I needed is to write in my application that it is under section 6 rather than section 8. I admit that the county court warned me against that mistake in the past.  I admit also that I should have paid attention to that detail. Still, I maintain that it is an honest mistake”.

26Dr Refaat’s position in the present circumstances is less compelling than it was when he appeared before Judicial Registrar Tran on 24 October 2016, he having admitted he had been warned “against that mistake” last year. It appears that whilst the Judicial Registrar regarded the 2016 default by Dr Refaat as “trivial or minor”, she took a different view of the instalment defaults when making the order on 25 July 2017.

27I consider that if the matter presently before me had involved the exercise of discretion, I would still have been inclined to set aside the Warrant of Seizure and Sale dated 14 July 2017, as the default had been remedied and the September instalment made, although these payments were made late.

28Whilst it is likely that the costs orders Mr Barry has obtained in respect of the trial and the appeal will be assessed at a substantial total sum, the present amount outstanding under the judgment, according to Mr Barry’s calculations (which are likely to be correct), is about $44,568.04. Of the $60,700 paid by Dr Refaat under the instalment order, $23,770.40 of the payments has been applied to interest and

$36,929.60 to principal.

29I do not consider that it would, in circumstances where no stay was operative, be appropriate to allow the warrant to proceed by having regard to the likely future substantial liability by Dr Refaat for costs, rather than the more limited judgment subject to the instalment order, and with which Dr Refaat has been largely compliant since December 2015.

Proposed orders

30I will order that the Warrant of Seizure and Sale dated 14 July 2017 be set aside.

31I will receive written submissions on the issue of the costs of Dr Refaat’s application made 8 August 2017 to set aside the warrant including the costs reserved by Judge Cosgrave on 28 August 2017. Both parties must file and exchange written submissions of no more than three pages by 4pm on 20 September 2017.

32I will then make a further order as to the costs of the application, “on the papers”,

without further attendance by the parties.

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Certificate

I certify that the preceding 8 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 14 September 2017.

Dated: 14 September 2017

Carla Cianfaglione

Associate to His Honour Judge Anderson