Shoringco Pty Ltd v Dynamic Excavation and Demolition Pty Ltd

[2021] NSWDC 588

District Court

New South Wales

Medium Neutral Citation:

Shoringco Pty Ltd v Dynamic Excavation and Demolition Pty Ltd [2021] NSWDC 588

Hearing dates:

29 October 2021 - on the papers

Date of orders:

29 October 2021

Decision date:

29 October 2021

Jurisdiction:

Civil

Before:

Dicker SC DCJ

Decision:

The application is dismissed.

Catchwords:

CHARGING ORDER – types of property in relation to which a charging order can be made – monies of a person with contractual obligations to a judgment debtor cannot be subject to a charging order unless within s 126(1) of the Civil Procedure Act 2005 (NSW)

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Galbally & O’Bryan v Easton [2016] NSWSC 77

Paul Michael Pty Ltd v Urban Traders Pty Ltd [2010] NSWSC 1246

Category:

Procedural rulings

Parties:

Shoringco Pty Ltd (Plaintiff)
Dynamic Excavation and Demolition Pty Ltd (Defendant)

Representation:

Counsel:

Solicitors:
ANB Lawyers (Plaintiff)

File Number(s):

2021/00269621

Publication restriction:

No

Judgment

1. An application has been made by a Notice of Motion filed on 28 October 2021 by the plaintiff for a charging order against Hogar Constructions Pty Ltd (“Hogar”). Hogar is not the judgment creditor, the defendant on the application, Dynamic Excavation and Demolition Pty Ltd.

2. The file reveals that a judgment was entered in favour of the plaintiff against the defendant in this court on 22 September 2021 in the sum of $214,207.95.

3. In support of the application is an affidavit of Radwan Elhelou affirmed 28 October 2021 who is the director of the plaintiff. Paragraph 4 of the affidavit states that payments of $50,030.69 have been received by the plaintiff pursuant to a garnishee in reduction of the judgment debt. The amount owing by the defendant is thus $164,177.26. Paragraph 7 of the affidavit makes clear that the proposed chargee is Hogar. See also the proposed charging order attached to the Notice of Motion.

4. The application is made under Part 39 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”). The power to make a charging order is granted by s 106(1)(c) of the Civil Procedure Act 2005 (NSW) (“CPA”). The application may be dealt with in the absence of the parties and need not be served on the judgment debtor or the proposed chargee: Part 39.44. Part 39 has to be read in the light of Section 126 of the CPA. Section 126(1) of the CPA limits the kinds of property of a judgment debtor in relation to which a charging order can be made: Paul Michael Pty Ltd v Urban Traders Pty Ltd [2010] NSWSC 1246 at [72]; Galbally & O’Bryan v Easton [2016] NSWSC 77 at [60]. The views of White J in Urban Traders have been followed in later cases.

5. Section 126 of the CPA provides as follows:

“126   Operation of charging order in relation to specified security interests

(1)  This section applies to the following kinds of property in relation to a judgment debtor (referred to in this Division as security interests)—

(a)  stock and shares in a public company,

(b)  money on deposit in a financial institution, being—

(i)  money held in the judgment debtor’s name in the judgment debtor’s own right, or

(ii)  money held in the name of some other person in trust for the judgment debtor,

(c)  any equitable interest in property.

(2)  Subject to the uniform rules, a charging order operates, in relation to each security interest specified in the order—

(a)  to charge the security interest in favour of the judgment creditor to the extent necessary to satisfy the judgment, and

(b)  to restrain the chargee from dealing with the security interest otherwise than in accordance with the directions of the judgment creditor.

(3)  A charging order takes effect when it is made.

(4)  Despite subsection (3), the judgment creditor may not commence proceedings to take the benefit of a charge arising under a charging order until after the expiration of 3 months from the date of the order.

(5)  A charging order entitles the judgment creditor, in relation to the security interests charged by the order, to any relief to which the judgment creditor would have been entitled had the charge been made in the judgment creditor’s favour by the judgment debtor.

Note—

Section 106 (1) (c) provides that a judgment debt may be enforced by a charging order only in the case of a judgment of the Supreme Court or the District Court.”

6. The application relates to, and seeks to charge, monies payable by Hogar. It is Hogar’s money to which the application is directed. It is not directed to contractual rights which the judgment debtor may have against Hogar, in other words choses in action of the judgment debtor against Hogar.

7. Monies of a party to a contract who may have contractual obligations to a judgment debtor are not listed in Section 126(1) of the CPA as “security interests”. The monies sought to be charged are not, on the evidence, held on trust for the defendant or constitute some other “equitable interest in property” within Section 126(1)(c) of the CPA.

8. Accordingly, the interest sought to be charged, monies of Hogar “payable” to the judgment debtor, may not be charged under Section 126 of the CPA and Part 39.44 of the UCPR.

9. The application is therefore dismissed.

**********

Decision last updated: 29 October 2021