Thai v Vilches
[2023] FedCFamC2G 1230
•3 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Thai v Vilches [2023] FedCFamC2G 1230
File number(s): SYG 341 of 2021 Judgment of: JUDGE STREET Date of judgment: 3 November 2023 Catchwords: INDUSTRIAL LAW – enforcement – charging order – state legislation – picked up by s 79 of the Judiciary Act 1903 (Cth) Legislation: Bankruptcy Act 1966 (Cth)
Fair Work Act 2009 (Cth)
Federal Circuit and Family Court of Australia Act 2021 (Cth)
Judiciary Act 1903 (Cth)
Civil Procedure Act 2005 (NSW)
Cases cited: Rizeq v Western Australia [2017] HCA 23 Division: Division 2 General Federal Law Number of paragraphs: 24 Date of hearing: 3 November 2023 Place: Sydney Solicitor for the Applicant: Mr J Martin of Australian Manufacturing Workers’ Union Solicitor for the Respondent: No Appearance ORDERS
SYG 341 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: VAN-SON THAI
Applicant
AND: JAVIER VILCHES
Respondent
ORDER MADE BY:
JUDGE STREET
DATE OF ORDER:
3 NOVEMBER 2023
THE COURT ORDERS THAT:
1.Pursuant to s106(1)(c) of the Civil Procedure Act 2005 (NSW), picked up by s79 of the Judiciary Act 1903 (Cth), the land owned by the respondent judgment debtor in folio 2 SP80502 known as 2/145 Avoca drive, Avoca Beach, NSW 2251, is charged with the payment of the following judgment debts owing to the applicant:
(a)$33,072 pursuant to order 5 made on 1 June 2021 and order 2 made on 15 June 2023, in this proceeding number SYG341/2021 by the Federal Circuit Court of Australia, now the Federal Circuit and Family Court of Australia Division 2;
(b)Interest from 28 October 2019 at the applicable rate under the Federal Court Rules payable on the judgment debt sum of $33,072, pursuant to order 6 made on 1 June 2021 in this proceeding;
(c)$12,600 being a judgment debt pecuniary penalty order made on 10 September 2021 in this proceedings;
(d)$3,500 being the costs of the enforcement steps by the applicant pursuant to s570 of the Fair Work Act 2009 (Cth) and fixed by the Court in this proceeding.
2.Leave is granted to the applicant to file in Court the amended application in a proceeding dated 3 November 2023.
3.The respondent judgment debtor pay the applicant’s costs under s570(2)(b) of the Fair Work Act 2009 (Cth) in respect of enforcement steps against the respondent judgment debtor since 10 September 2021 fixed in the amount of $3,500.
4.The amended application in a proceeding dated 3 November 2023 is otherwise dismissed.
5.Leave is granted to the applicant to take further steps for enforcement on seven days notice by the filing of a fresh application in a proceeding and affidavit in support.
THE COURT NOTES THAT:
A.The applicant judgment creditor is entitled to have the charging order made by this Court against the registered owner, being the respondent judgment debtor, recorded as a charging order on the registered title of the above property at Avoca Beach, by the Registrar General, and that notice of the same can also be given to any other secured interest on that property.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE STREET
These are fair work proceedings within the Court’s jurisdiction pursuant to s 566 of the Fair Work Act2009 (Cth) (“the Fair Work Act”) that were commenced by the applicant who had been a metal worker for the entity, Email Ventilation Pty Ltd, against the respondent, being the sole director of that entity, which was a national system employer in respect of compensation for unfair dismissal pursuant to s 392 of the Fair Work Act.
The proceedings came before another Judge of the then Federal Circuit Court of Australia (now the Federal Circuit and Family Court of Australia) on 30 March 2021 and orders were made facilitating substituted service on 27 April 2021. An order was made bringing the matter before this Court on 1 June 2021. On 1 June 2021, this Court confirmed the service process, and given the failure of the respondent to participate in the proceedings made an order for the proceedings to proceed and made an order that the facts in the statement of claim were taken to have been admitted and held that the applicant was entitled to default judgment and by order 5, having found that the respondent was knowingly involved in the contravention pursuant to ss 550 and 545, ordered the respondent to pay the applicant the sum of $33,072.00 together with interest pursuant to s 547 of the Fair Work Act. The judgment sum was the subject of an error that was subsequently corrected on 15 June 2023 under the slip rule.
The Court then made orders fixing the matter for a penalty hearing. On 15 July 2021, the penalty hearing was adjourned to 10 September 2021. On 10 September 2021, this Court made a pecuniary penalty order against the respondent in favour of the applicant in the sum of $12,600.00 to be paid in 28 days. Since 10 September 2021, further processes filed in this Court as enforcement steps because of the respondent’s failure to pay the outstanding amounts.
The affidavits of service have been filed, by reason of which the Court is satisfied that the respondent has been and remains aware of the orders of this Court for payment of amounts that have remained outstanding to the applicant has had to incur due to the unreasonable failure of the respondent to attend to and pay the outstanding amounts. A number of steps endeavouring to obtain the respondent to complying with an examination summons, notwithstanding the Court being satisfied the respondent was served the same and the respondent failed to attend.
The applicant has taken other steps to try and obtain enforcement, including seeking that the respondent be dealt with for contempt for failing to attend in relation to the examination summons and non-compliance with the Court’s orders. The applicant has had to take the step of seeking a charging order under the Civil Procedure Act2005 (NSW) in respect of land owned by the respondent. An affidavit has been put on that identifies the respondent is the legal owner, relevantly of 2/145 Avoca Drive, Avoca Beach New South Wales 2251, and a copy of the title search with some encumbrance has been tendered before the Court.
There are, in fact, two other properties in which the respondent is a joint owner. That evidence, apart from satisfying the Court that, again, the respondent was on notice of these applications establishes that this is a respondent who has unreasonably failed to engage with these proceedings, rather than a person suffering from overwhelming impecuniosity or some other incapacitating state that prevented proper engagement with the proceedings.
The Court finds that the costs of the enforcement steps taken by the respondent since 10 September 2021 in these proceedings are all steps in respect of the party-party costs, in respect of which the Court is satisfied that it was due to the unreasonable failure by the respondent to engage with the outstanding judgment debts, penalty amounts, failure to attend in response to the examination and failure to attend the directions that this Court has now have before it on a number of occasions since 10 September 2021.
The Court expressly finds within s 570(2)(b) that it is satisfied that the enforcement steps and costs incurred thereby by the applicant have been incurred due to the unreasonable acts and omissions of the respondent in failing to pay the outstanding judgment debts and penalty, and failing to attend Court in response to the examination orders and failing to attend Court in respect of the other orders made by this Court . It is appropriate these circumstances to make an order under s 570 in respect of those costs.
The matter came back before the Court on 15 June 2023 in relation to a request for an examination hearing. On that occasion, the Court corrected under the slip rule the typographical error in respect of the principal judgment debt under ss 550 and 545. The Court took the step of striking out some other proceedings that were commenced that were superfluous seeking to enforce the judgment debt, but those proceedings were clearly steps being taken in enforcement.
As a result of the respondent’s failure to engage, they are to be included in the costs order under s 570. The Court directed the respondent to attend for an examination. An affidavit was filed in relation to service. The respondent failed to attend on the 8 September 2023. The Court stood the matter over for examination to today’s date and, again, the respondent has failed to attend, and an affidavit of service has been read in that regard.
On 12 October 2023, the applicant filed an application in a proceeding supported by an affidavit seeking to have the respondent dealt with for contempt and seeking, in that regard, a sequestration order so that the real property held by the respondent in respect of the Avoca Beach property be the subject of appropriate orders for sale pursuant to that sequestration to the enforcement of the amounts owed by the respondent to the applicant. Order 4 sought such other order as the Court deems appropriate.
When the matter came before the Court today, an affidavit of service was also read, the Court endeavoured twice to contact the respondent via telephone without success. The Court is satisfied the respondent was well aware of the proceedings back before the Court today and of his continued failure to comply with the Court’s orders.
The taking of proceedings for contempt involves a number of steps, including the proper formulation of a contempt charge and, further, the Court’s time and cost for the applicant. Contempt is a serious allegation and the powers of the Court to deal with contempt are broad and significant. That said, in the present case, at one level, the conduct that has given rise to the potential charges all relates to a failure to pay a judgment debt. Whilst the Court now is in possession of facts that identify the judgment debtor does in fact have real property and, accordingly, has a capacity to pay the judgment debt, the process of contempt is not one that should be lightly used for the purpose of enforcement of judgment debts. There are other steps which can be taken, to which the Court will return.
The Court raised with Mr Martin, the solicitor for the applicant, that this might be an appropriate matter for a charging order under s 106 of the Civil Procedure Act 2005 (NSW). Section 106 provides:
Judgments for payment of money
(1)A judgment debt may be enforced by means of any one or more of the following—
(a) a writ for the levy of property,
(b) a garnishee order,
(c) in the case of a judgment of the Supreme Court or the District Court, a charging order.
(2)Subject to the uniform rules, a writ for the levy of property is sufficient authority for the Sheriff—
(a) to seize and to sell goods of or to which the judgment debtor is or may be possessed or entitled or which the judgment debtor may, at law or in equity, assign or dispose of, and
(b) to seize money belonging to the judgment debtor, and
(c) to seize and to realise cheques, bills of exchange, promissory notes, bonds, specialties or other securities for money belonging to the judgment debtor, and
(d) to enter into possession of, and to sell, land of or to which the judgment debtor is seized or entitled, or which the judgment debtor may, at law or in equity, assign or dispose of, and
(e) to take and to sell choses in action or equitable interests in goods or land held by the judgment debtor.
(3)The power conferred on the Sheriff by subsection (2) (a) may not be exercised in relation to any property referred to in section 116 (2) of the Bankruptcy Act 1966 of the Commonwealth. For that purpose, a reference in section 116 (2) of that Act to the property of the bankrupt is taken to be a reference to the goods of the judgment debtor.
(4)For the purposes of subsection (2) (d), the Sheriff is taken to have entered into possession of land when notice of the proposed sale of the land is published in accordance with the uniform rules.
(4A)The power conferred on the Sheriff by subsection (2) (a) may not be exercised if, in the opinion of the Sheriff, the cost of the seizure, storage or sale of the goods would likely exceed the sale price of the goods.
(5)The power conferred on the Sheriff by subsection (2) (d) may not be exercised in relation to land if the amount outstanding under the judgment is less than the jurisdictional limit of the Local Court when sitting in its Small Claims Division.
(6)A garnishee order or charging order addressed to the Crown binds the Crown as garnishee or chargee, as the case requires.
There is a definition of “Court” that is said to include “tribunal” in section 3. While the section itself refers to the Supreme Court or District Court, s 79 of the Judiciary Act 1903 (Cth), relevantly, provides as follows:
State or Territory laws govern where applicable
(1)The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.
(1A)For the purposes of subsection (1), a Court exercising federal jurisdiction in a proceeding is taken to be exercising federal jurisdiction in:
(a) if the laws of a State or Territory apply to a part of the proceeding because of subsection 68C(5)--that State or Territory; or
(b) if paragraph (a) does not apply:
(i) if the proceeding is transferred or remitted--the State or Territory to which the proceeding is transferred or remitted; and
(ii) otherwise--the State or Territory in which the proceeding is commenced;
except as otherwise provided by the Constitution or the laws of the Commonwealth.
(2)A provision of this Act does not prevent a law of a State or Territory covered by subsection (3) from binding a court under this section in connection with a suit relating to the recovery of an amount paid in connection with a tax that a law of a State or Territory invalidly purported to impose.
(3)This subsection covers a law of a State or Territory that would be applicable to the suit if it did not involve federal jurisdiction, including, for example, a law doing any of the following:
(a) limiting the period for bringing the suit to recover the amount;
(b) requiring prior notice to be given to the person against whom the suit is brought;
(c) barring the suit on the grounds that the person bringing the suit has charged someone else for the amount.
(4)For the purposes of subsection (2), some examples of an amount paid in connection with a tax are as follows:
(a) an amount paid as the tax;
(b) an amount of penalty for failure to pay the tax on time;
(c) an amount of penalty for failure to pay enough of the tax;
(d) an amount that is paid to a taxpayer by a customer of the taxpayer and is directly referable to the taxpayer's liability to the tax in connection with the taxpayer's dealings with the customer.
Section 79 is a provision that fills the gaps, if there are gaps, in respect of Courts exercising federal jurisdiction and matters coming before those Courts with necessary powers for the hearing or determination of those matters. See Rizeq v Western Australia [2017] HCA 23 (at [16], [19], [20], [21] and [22]).
There is no power in the Federal Circuit and Family Court of Australia Act 2021 (Cth) that expressly provides for the making of a charging order. There is no such power in the Court rules nor in the Federal Court Rules picked up through this Court’s rules. The Court is satisfied that there is a gap of the kind engaging in the Court’s jurisdiction under s 79 of the Judiciary Act 1903 (Cth).
Whilst the language of s 106 refers to a judgment of the Supreme Court or District Court in respect of the making of a charging order, this Court is satisfied that s 79 picks up s 106 in respect of a charging order made by this chapter 3 Court. It is unnecessary to go further in respect of characterising this Court as having powers of a similar kind to the Supreme Court or the District Court. It is sufficient that it is a chapter 3 Court to which s 79 was intended to operate.
The Court would add that this Court has many of the powers of the indicia of a superior Court, but it is not necessary to further address that aspect. The Court is satisfied that it does have jurisdiction to make an order under s 106 of the Civil Procedure Act 2005 (NSW), because that provision is picked up through s 79 of the Judiciary Act 1903 (Cth).
The evidence in the present case demonstrates a recalcitrant respondent in respect of employee entitlements arising from his unfair dismissal in respect of which the respondent was knowingly involved in the contravention and has failed to attend to payment of the amounts orders by this Court and that those failures have been in circumstances where in light of the evidence of three properties in respect of which the respondent has ownership interests, the failure to attend to the payment of the outstanding amounts and these amounts are unreasonable and warrant the Court exercising its jurisdiction to make a charging order to facilitate enforcement of the orders under the Fair Work Act.
It is possible that the applicant could have sought to enforce the judgment order under the Bankruptcy Act 1966 (Cth); however, there are issues to the extent to which the penalty order may or may not have fallen within the scope of the same and bankruptcy proceedings are ones for the administration of insolvent estates and not just a process for enforcement of judgment debts. It is not necessary for the Court to determine whether or not the judgment creditor should have pursued bankruptcy proceedings. However, it was not unreasonable for the judgment creditor to take the various steps that have been taken to seek enforcement and all those steps have incurred costs, as a result of which this Court is satisfied that a costs order should be made under s 570 in respect of those enforcement steps against the respondent.
Given there are other avenues which the Court has identified in respect of the capacity to make a charging order, which the Court proposes to make, there is a possibility of other steps, such as under the Bankruptcy Act 1966 (Cth). However, the Court is not satisfied that this is an appropriate matter in which to permit further costs and time to be incurred in formulating a charge of contempt and bringing the matter back before it on a contempt charge in respect of enforcement, effectively, of a judgment debt. Rather, the Court is satisfied that the making of a charging order in respect of the outstanding amounts, including the costs amount that the court proposes to fix today will ensure that the applicant is in due course paid by reason of the charging order against the real property at Avoca Beach owned by the respondent.
The following judgment debts owing to the applicant and interest from 28 October 2019 at the rate applicable under the Federal Court Rules. It seems to me that there are, effectively, now four amounts the subject of a charging order. It is interest from 28 October on the $33,000.00. I see no reason to have to fix that because it has not been paid. It is at the Federal Court rates and that is what I ordered. The $33,072.00 is the first amount. The interest payable from that date is the second amount. The third is the $12,600 and the fourth is the costs order that I have made under s 570.
The applicant judgment debtor is entitled to have the charging order made by this Court recorded on the title of the above property at Avoca Beach by the registrar general and that notice of the same can also be given to any other secured interest on that property.
Accordingly, the Court makes the above orders.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Ex Tempore Reasons for Judgment of Judge Street. Associate:
Dated: 20 February 2024