Zeigler v Cenric Group Pty Ltd

[2020] NSWSC 1084

Supreme Court

New South Wales

Medium Neutral Citation:

Zeigler v Cenric Group Pty Ltd [2020] NSWSC 1084

Hearing dates:

11 August 2020

Date of orders:

11 August 2020

Decision date:

11 August 2020

Jurisdiction:

Common Law

Before:

Garling J

Decision:

1. Dismiss the Notice of Motion filed 10 August 2020.

2. Order the defendant to pay the plaintiff’s costs of the Motion.

3. Grant leave to the respondent if so advised to make an application pursuant to s98 of Civil Procedure Act for a specified gross sum order for costs provided that such application and all supporting material is filed within 7 days of today.

4. Order that if the applicant resists such an order, for it to file any material and submissions within 7 days after that.

5. The application for that costs order will be determined on the papers.

Catchwords:

JUDGMENT AND ORDERS – Judgment Debt –whether an examination order should be set aside due to change of circumstances – does the granting of an application to pay by instalments on an existing judgment debt constitute a significant change in circumstances

Legislation Cited:

Civil Procedure Act 2005

Uniform Civil Procedure Rules

Cases Cited:

Not Applicable

Texts Cited:

Not Applicable

Category:

Principal judgment

Parties:

Carolyn Zeigler (Plaintiff/Respondent)
Cenric Group Pty Ltd (Defendant/Applicant)

Representation:

Counsel:
J Johnson (Plaintiff/Respondent)
C Wood SC (Defendant/Applicant)

Solicitors:
Blackstone Waterhouse Lawyers (Plaintiff/Respondent)
MDW Law (Defendant/Applicant)

File Number(s):

2019/266843

Publication restriction:

Not Applicable

EX TEMPORE Judgment

1. This is an application made in the duty list as a matter of urgency by Cenric Group Pty Limited (“Cenric”), a judgment debtor. The application is made by Notice of Motion seeking an order that the Examination Order made by the Registrar of the Court on 13 July 2020 be set aside, together with an order for costs.

2. The order sought by the applicant to have the examination order set aside is resisted by the respondent, the judgment creditor, Ms Zeigler. The examination is to take place pursuant to the Order at 11am today. A short background of facts is necessary.

Background Facts

3. On 27 August 2019, a judgment was registered in this Court in favour of Ms Zeigler against Cenric and two individuals, in the total sum of $253,566.91. As at today, no moneys have been paid by the applicant to the respondent in whole or part satisfaction of that judgment.

4. The Examination Order was applied for on 6 July 2020, and was made on 13 July 2020. The applicant does not suggest that there is any reason to question the validity of that Order.

5. The Order was served on the applicant by a letter sent on 17 July 2020, to its registered office. It is unclear if the applicant came to know of the Order at any time before 24 July 2020, when its solicitors were provided with a copy of the Order.

6. On 6 August 2020, at 6.30pm, the applicant applied by Notice of Motion in accordance with r 37.2 of the Uniform Civil Procedure Rules (the “UCPR”) for an order to pay the judgment debt by instalments. That Instalment Order was made by the Court on 7 August 2020. It fixed a monthly instalment amount of $23,819.82, with the first payment to be paid on 31 August 2020. The intention behind the monthly sum being fixed at that rate was to enable the entire judgment debt to be paid off within 12 months.

Notice of Motion

7. This Notice of Motion brought by the applicant relies principally upon two grounds to persuade the Court that the Examination Order ought be set aside. The first ground is that since the Order was made, the application to pay by instalments has been made and granted with the consequence that s 107(2) of the Civil Procedure Act 2005 provides that the execution of the judgment is stayed. The applicant points to the fact that the execution of the judgment is stayed as being a significant change in circumstances such that were the application for an Examination Order to be considered afresh today, the Order would not be made.

8. Secondly, the applicant notes that the first instalment payment has not yet fallen due and that there is no reason to think that it will not be paid in accordance with the Instalment Order. Accordingly, the applicant submits that as a matter of discretion the Court would not make an order for an examination to take place.

9. In response to the submissions, the respondent points to the material which suggests that the company, Cenric, has a considerable excess of assets over liabilities: namely, an amount in the order of $8 million or more. Further, in the respondent’s submission, the financial statement provided by the applicant reveals current assets which suggest that the company has sufficient cash money in its accounts to pay the entirety of the debt. The effect of this is that the respondent says it is entitled to explore the true asset and liability position of Cenric.

10. I note that the respondent has not yet filed an objection to the Instalment Order, and that she is entitled to do so providing a period of 14 days has not elapsed after the making of the Order.

Discernment

11. I accept that s 107(2) of the Civil Procedure Act has stayed the execution of the judgment of 27 August 2019, because the Instalment Order remains in force. However, I note that what is stayed by that provision is only the execution of the judgment.

12. Rule 38.2 of the UCPR sets out the matters to which a Registrar is entitled to have regard when considering the making of an examination order.

13. Leaving aside those matters which are obvious, such as that there is a judgment and it remains unsatisfied, r 38.2(1)(d) provides as follows:

“In the case of a judgment or order for the payment of money, whether or not an instalment order has previously been made in relation to the amount payable under the judgment or order; and, if such an order has been made, that the person bound by the judgment or order has failed to comply with the instalment order.”

14. It is clearly a matter of relevance to the Registrar or the Court, when considering whether an examination order ought be made, whether there has been an order for instalments and whether or not that order has been complied with.

15. However, I note the introductory words of r 38.2(1) which are as follows:

“An application for an order for examination with respect to the enforcement of a judgment or order ..."

16. The phrase “with respect to” is one of wide import. The examination only has to relate to the enforcement of a judgment. It does not need to amount to an enforcement. An order for examination can, as it seems to me, be made in circumstances where an Instalment Order has been made. Putting it differently, the fact that an Instalment Order has been made does not preclude the making of an Examination Order having regard to the terms of the rule itself.

17. As well, I am not satisfied that an order for an examination would constitute execution of a judgment contrary to the stay imposed by s 107(2) of the Civil Procedure Act. An order for examination provides for the obtaining of information by the judgment creditor which may or may not (depending on the information obtained) be relevant to the execution of a judgment. But an order for an examination is not an execution of a judgment. It is a step provided for by the rules which enables a judgment creditor to give consideration to how a judgment may be executed or otherwise enforced.

18. In those circumstances, whilst I accept that the circumstances have changed since the Registrar considered the making of an order, I am not satisfied that the existence of a stay on the judgment is of such significance that it would prevent an order for examination being made today. I would not on that ground uphold the applicant's argument.

19. The second proposition is that there is negligible utility or little utility in the examination taking place. I do not agree. On the face of the Statement of Assets and Liabilities there is a substantial question as to whether the company ought be permitted to pay the judgment debt by instalments and a substantial question as to whether, if it is to be permitted, the instalments which are the subject of the order are appropriate.

20. In short, I have not been satisfied by the applicant that there is any basis upon which the examination order ought be set aside. If I were to determine this completely afresh, I would confirm the examination order because there is, in my view, a very real question as to the true asset and liability position of the company and its capacity to pay the judgment.

21. For those short reasons, given in urgent circumstances, I would dismiss the Notice of Motion filed 6 August 2020. Costs ought to follow the event

Orders

22. I make the following order:

1. Dismiss the Notice of Motion filed 10 August 2020.

2. Order the defendant to pay the plaintiff’s costs of the Motion.

3. Grant leave to the respondent if so advised to make an application pursuant to s98 of Civil Procedure Act for a specified gross sum order for costs provided that such application and all supporting material is filed within 7 days of today.

4. Order that if the applicant resists such an order, for it to file any material and submissions within 7 days after that.

5. The application for that costs order will be determined on the papers.

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Decision last updated: 27 August 2020