Supreme Court New South Wales Medium Neutral Citation: Ryan v UPG 322 Pty Ltd (No 2) [2023] NSWSC 1629 Hearing dates: 8 December 2023; further written submissions ending 13 December 2023 Date of orders: 20 December 2023 Decision date: 20 December 2023 Jurisdiction: Equity - Expedition List Before: Parker J Decision: See [76]-[83] Catchwords: CIVIL PROCEDURE – judgments and orders – enforcement – default – application for examination order – contract for sale of land – order for specific performance against purchaser and guarantor – direction for payment of amount due on settlement –– whether order which "requires the person bound by it to pay money" – Civil Procedure Act 2005, s 108(5) – purchaser and guarantor in default – further remedies – contempt – no election against later damages claim by pursuit of specific performance – directions appointing further settlement date under order for specific performance – application for appointment of receiver – equitable execution– Uniform Civil Procedure Rules, r 40.2 – examination order made Legislation Cited: Civil Procedure Act 2005, ss, 3(1), 87, 106, 108 Evidence Act 1995, s 128 Supreme Court Act 1970, s 67 Uniform Civil Procedure Rules 2005, rr 34.1, 40.2, 40.6, 42.7 Cases Cited: Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 Austress Freyssinet v Kowalski [2007] NSWSC 1105 Caird Seven Pty Ltd v Attia (2016) 92 NSWLR 457 Despot v Registrar General of New South Wales [2016] NSWCA 5 In the matter of Xpress Fuel Australia Pty Ltd [2023] NSWSC 692 Johnson v Agnew [1980] AC 367 Marcolongo v Mazoudier [2008] NSWSC 1403 Quadunion Builders Pte Ltd v Aircraft Support Industries Pty Ltd (No 2) [2015] NSWSC 1857 Ryan v UPG 322 Pty Ltd [2023] NSWSC 1293 Texts Cited: Nil Category: Consequential orders Parties: Notice of Motion filed 22 November 2023 Michael Carl Ryan (Applicant) UPG 322 Pty Limited (First Respondent) Bhart Bhushan (Second Respondent) Notice of Motion filed 30 November 2023 Bhart Bhushan (Applicant) Michael Carl Ryan (Respondent) Notice of Motion filed 6 December 2023 Bhart Bhushan (Applicant) Michael Carl Ryan (Respondent) Representation: Notice of Motion filed 22 November 2023 Counsel: A J McInerney SC/ E Dunlop (Applicant) G A Sirtes SC/ S Hanscomb (Respondents) Solicitors: McCabes Lawyers (Applicant) Sparke Helmore Lawyers (Respondents) Notice of Motion filed 30 November 2023 Counsel: G A Sirtes SC/ S Hanscomb (Applicant) A J McInerney SC/ E Dunlop (Respondent) Solicitors: Sparke Helmore Lawyers (Applicant) McCabes Lawyers (Respondent) Notice of Motion filed 6 December 2023 Counsel: G A Sirtes SC/ S Hanscomb (Applicant) A J McInerney SC/ E Dunlop (Respondent) Solicitors: Sparke Helmore Lawyers (Applicant) McCabes Lawyers (Respondent) File Number(s): 2023/268559 Publication restriction: Nil JUDGMENT 1. These are specific performance proceedings in which I gave judgment in favour of the plaintiff on 31 October this year: Ryan v UPG 322 Pty Ltd [2023] NSWSC 1293 ("J1"). In giving judgment, I made directions for the contract to be completed no later than 13 November. The contract was not completed by that date, and it still has not been completed. The plaintiff moved for further orders from the Court including orders for the examination of, and production of documents, by one of the defendants. 2. Having heard argument on 8 December and a short supplementary argument earlier today, I made orders dealing with the plaintiff's motion (as well as two counter-motions by the defendant). In this judgment, I set out my reasons for those orders. 3. The proceedings were described, and the parties identified, at J1 [1]-[4]. Specific performance was sought of a contract for the sale of land at Box Hill in outer north-western Sydney. The sale price is $39.5 million. The plaintiff, Mr Ryan is the vendor. The first defendant, UPG 322 Pty Limited ("UPG 322") is the purchaser. 4. UPG 322 is a special purpose vehicle in a corporate group ("UPG Group"), the holding company of which is Universal Property Group Pty Limited ("UPG"). The Group is controlled by the second defendant, Mr Bhushan, who owns one half of the equity in the Group, through a half share in UPG. Mr Bhushan is a party to the contract in question; he has guaranteed UPG 322's obligations under that contract. Background and procedural history 1. The factual background and the course of proceedings up to the delivery of my judgment can be found at J1 [5]-[18]. These may be summarised as follows for the purpose of the present judgment. 2. The contract is dated January this year. It provided for a completion date of 18 April. UPG 322 did not complete on that date. Eventually, a date of 15 May was agreed, at the request of the solicitors acting for UPG 322. But UPG 322 failed to complete on that date as well. There was some dispute about the validity of a Notice to Complete earlier issued on behalf of Mr Ryan. In September, a further Notice to Complete was issued on his behalf, without prejudice to his existing rights, which required completion on 9 October. Again, the contract was not completed by UPG 322 on that date. 3. The proceedings were commenced on 23 August. They were conducted on an expedited basis. A statement of claim and defence were filed. 4. One of the defences pleaded on behalf of the defendants was that they lacked the funds necessary to complete the contract. Evidence was filed on behalf of the defendants in support of this defence, which resulted in the plaintiffs requiring documents to be produced to enable them to test some of the assertions made in those affidavits. But at the hearing, the defence was abandoned. 5. The orders which I made on 31 October are set out at J1 [96]. Those orders included: 1. Declare that the Contract dated 18th January 2023 for sale of land at [XX] Box Hill in the State of New South Wales, being the land comprised in Folio Identifier [XX] (the Property) between the Plaintiff as vendor, the First Defendant as purchaser and the Second Defendant as Guarantor (the Contract) is valid and enforceable. 2. Order that the Contract be specifically performed by the Defendants and carried into execution. 3. Direct the First Defendant to complete the purchase of the Property at PEXA by not later than 2:00 PM on Monday, 13 November 2023 (Settlement Date) on the PEXA Settlement Platform's Electronic Workspace ID [XX] (PEXA Workspace) in accordance with clause 30.11.2 of the Contract. 4. Direct the First Defendant through its conveyancer/solicitor prior to the Settlement Date to attend to verifying its Stamp Duty in the PEXA Workspace. 5. Direct the First Defendant through its conveyancer/solicitor to submit a Settlement Statement to the Plaintiff's Solicitor (which must account for interest required to be paid by the First Defendant pursuant to clause 36 of the Contract, and the cost of the Plaintiff issuing the Notices to Complete on the First Defendant pursuant to clause 35.4 of the Contract) two business days prior to the Settlement Date. … (7) Direct the First Defendant through its conveyancer/solicitor prior to the Settlement Date to do all things necessary in the PEXA Workspace to ensure completion can occur on the Settlement Date, including but not limited to: 1. Accepting the time and date for completion in the PEXA Workspace; 2. Completing and or create all Documents in the PEXA Workspace for completion to occur; 3. Ensuring all source funds are inputted into the PEXA Workspace to ensure completion can occur, and populate any necessary destination line items for the First Defendant; 4. Once the total source funds and payment directions are inputted and the documents have successfully passed lodgement verification with the land registry, attending to signing off on the Documents, completing the financial settlement schedule and signing the financial settlement statement. (8) Direct the Defendants to pay the balance of the monies due under the Contract at the Settlement Date, inclusive of the balance of the purchase price, interest, and adjustment for Council rates, to the Plaintiff or as the Plaintiff directs, in return for the Plaintiff conveying title to the Property to the First Defendant through PEXA. … 1. Orders 3, 4, 5 and 7 were directions to UPG 322 only. Order 8, which required payment of money, was directed both to UPG 322 and Mr Bhushan. The reason for this is explained at J1 [87]-[88]. As purchaser, it was UPG 322's responsibility to arrange the conveyancing steps, and not that of Mr Bhushan. But Mr Bhushan, as guarantor, was jointly and severally liable and it was therefore proper to make an order for payment against him personally. 2. In the week before the settlement date referred to in the Court's orders, correspondence passed between Ms Cable, the solicitor for Mr Ryan, and a conveyancing firm known as Platinum Property Law ("Platinum Property") retained by the defendants. On 9 November (a Thursday), Ms Cable wrote seeking confirmation that the defendants intended to complete the contract on 13 November (the following Monday). No formal confirmation seems to have been received from Platinum Property, but on that day, Ms Cable received confirmation via PEXA that the settlement date (13 November) and time (2 pm) had been accepted by all necessary participants. 3. On 13 November, the following emails were exchanged between Ms Cable and "Matali" of Platinum Property (the defendants' solicitors were also copied in the emails): Cable to Platinum Property, 13 November, 11:15 We refer to earlier communication and confirm that the revised amount due in settlement, as confirmed in our settlement sheet sent to you on Friday, 10 November 2023, has been input in PEXA. Please confirm you will arrange stamp duty verification this morning so that the workspace can be balanced ready for settlement at 2:00pm today. Please also confirm that sufficient funds are held for your client to complete this transaction today. Cable to Platinum Property, 13 November, 12:56 I refer to our telephone call at 12:50pm today. As you are aware settlement is scheduled for 2pm today and you have accepted this time and date for settlement on the PEXA workspace. I note that stamp duty has not been verified and I understand from Janette in your office that you have yet to receive the stamp duty and are unsure of when such funds will be receipted. May I please ask that you keep me fully updated in relation to same, noting the Orders of Parker J in this matter. Cable to Platinum Property, 13 November, 14:01 We note that the stamp duty has yet to be verified. Please provide an update as to when settlement will take place given it is currently 2pm. Platinum Property to Cable, 13 November, 14:35 I refer to the below Email and understand that the Purchaser has not been able to secure Funding to Settle today. They apologise for the inconvenience and seek additional time to comply with the Court Order. Cable to Platinum Property, 13 November, 14:40 Thank you. Can you please be a bit more specific regarding the funding- how much is in place and when is it likely to be received and what additional time are you considering. Please do advise what actions will be taken to apply for additional time to comply with the Orders of Parker J. Obviously, I will have to take instructions following your advices. Cable to Platinum Property, 13 November, 15:17 Further to my earlier email below, we require the following response by COB today: (a) what funding do your clients presently have, (b) what additional time are your clients seeking, (c) when will they have the additional funding be received, and (d) what further order you are proposing the court make to appoint a new date for completion of the Contract. I await your advice as a matter of priority. 1. There does not appear to have been any response to the last two emails. After 5pm, Ms Cable received a message from PEXA formally recording that the settlement had failed. 2. On the following day, 14 November, Mr McDonald, the solicitor for the defendants, wrote to Ms Cable as follows: We … refer to previous correspondence and in particular your email on Monday 13 November 2023 at 3:18pm to Platinum Property Law, our clients' conveyancer. Our clients have taken numerous steps to obtain finance so as to comply with orders 2 and 8 of the judgment. Unfortunately, despite these attempts, our clients have been unable to secure finance and were subsequently unable to complete the Contract on Monday 13 November 2023 at 2:00pm, being the Settlement Date proposed in the judgment. We are instructed to reiterate that our clients anticipate being in receipt of funds via the sale of assets and, consequently, in a position to complete the Contract no later than April 2024. If notwithstanding this your client elects to terminate the Contract, resell the Property and sue our clients for damages in respect of any shortfall to the Contract price, we will seek to rely upon this correspondence in the defence of any such proceedings. 1. As far as the evidence before me is concerned, there were no further communications either from Platinum Property or from Sparke Helmore, apart from a letter from Sparke Helmore enclosing a Notice of Intention to Appeal filed on 14 November. The defendants did not at any stage advise the Court of their non-compliance with the Court's orders and directions, and have not offered any explanation or apology to the Court for that non-compliance. 2. Mr Ryan's Notice of Motion was filed on 22 November. The motion sought orders that Mr Bhushan both attend to be examined and produce specified categories of documents. I will refer to these as the "examination order" and the "production order" respectively. 3. The examination order identifies the subject of the examination as being "whether any and, if so, what debts are owing to you [Mr Bhushan] and whether you have and, if so, what, other property and other means of satisfying the judgment". The production order seeks the production of Mr Bhushan's personal tax returns ending 30 June 2021, 2022, and 2023, together with tax returns, financial statements and other financial records of any trusts of which Mr Bhushan is the appointor, or a beneficiary unit holder or discretionary object for the same period. 4. On the same day as Mr Ryan's Notice of Motion was filed, a notice to produce addressed to Mr Bhushan was issued by Mr Ryan's solicitors. The notice to produce was issued under r 34.1 of the Uniform Civil Procedure Rules 2005 ("UCPR") and required production to the Court of categories of documents which were substantially, if not entirely, the same as the categories of documents sought in the proposed production order. 5. Later, on 4 December, a further notice to produce was issued by Mr Ryan's solicitors. This required production to the Court of documents "in respect of" any application for finance made on behalf of UPG 322, Mr Bhushan or UPG for the purchase of the subject property, from 1 January 2023 to date. 6. Both the examination order and the production order where wholly opposed by Mr Bhushan. Notices of motion were also filed by Mr Bhushan on 30 November and 4 December respectively to have the notices to produce issued on behalf of Mr Ryan's solicitors set aside. All three motions came on for hearing before me on 8 December. 7. Mr Ryan's Notice of Motion also sought directions fixing a further date for the completion of the contract pursuant to the order for specific performance which the Court made on 31 October. That prayer for relief was not pressed at the hearing before me. I understand that counsel for Mr Ryan decided to hold over that question until the outcome of the other prayers for relief in the motion was determined. Application for examination and production orders 1. The evidence in support of Mr Ryan's application included evidence about the financial strength, or claimed financial strength, of the UPG Group. Its financial statements for the financial year ending 30 June 2022 show net assets of over $289 million, with total assets of over $2.59 billion, and annual profit (after tax) of over $62.7 million. A "Project and Debt Schedule", dated 31 August this year, indicates a total valuation of the sites listed in the schedule of $1.3 billion. 2. Other evidence showed that another subsidiary within the UPG Group purchased a property for $13.66 million as recently as 10 October this year. Counsel for Mr Ryan also pointed to clause 54 of the special conditions of the contract in the present case, where UPG 322 had warranted that it did not require credit in order to pay for the property, or, if it did, that it had obtained such credit, on reasonable terms, before the date of the contract. 3. This evidence clearly demonstrates that there is a real question as to why Mr Bhushan did not procure the completion of the contract by UPG 322 and why UPG 322 is said to be able to complete the contract only next April. I did not understand counsel for Mr Bhushan to contend to the contrary. 4. The application is made under the Civil Procedure Act 2005 ("CPA"), s 108, which relevantly provides: (1) The court may, subject to and in accordance with the uniform rules, make an order requiring a person bound by a judgment or order— (a) to attend the court to be orally examined as to any material question, or (b) to produce any document or thing that is in his or her possession and that relates to a material question. (2) … (3) Without limiting subsection (1), the uniform rules may require the judgment creditor under a judgment debt to have attempted to obtain information as to the judgment debtor's financial circumstances (whether by means of a notice requiring the judgment debtor to supply such information or otherwise) before the judgment creditor may apply for an order under this section. (4) … (5) For the purposes of this section, the material questions in relation to a judgment or order are— (a) to the extent to which it requires the person bound by it to pay money— (i) questions as to whether any and, if so, what debts are owing to that person, and (ii) questions as to whether that person has any and, if so, what other property or other means of satisfying the judgment or order, and (b) to the extent to which it does not require the person bound by it to pay money, such questions concerning or in aid of the enforcement or satisfaction of the judgment or order as may be specified in the order under this section. 1. The issues debated were: 1. the application of CPA s 108 to orders for specific performance; 2. whether Mr Ryan was now confined by election to pursuing his right to enforcement of the orders for specific performance, as distinct from applying to terminate the order and sue for damages (cf J1 [17]); 3. whether there was a proper forensic basis for the orders sought, particularly given the potential for issues to arise concerning contempt of the 31 October orders and the privilege against self-incrimination (there was a question about whether the privilege was governed by the CPA or the Evidence Act 1995 ("EA"), but that question does not need to be resolved). Application of CPA s 108 1. Section 108 contains the defined terms "judgment", "judgment creditor", "judgment debt" and "judgment debtor". The definitions (CPA, s 3(1)) are as follows: judgment includes any order for the payment of money, including any order for the payment of costs. judgment creditor means the person to whom a judgment debt is payable. judgment debt includes— (a) any amount payable under a judgment, and (b) any interest after judgment that is payable on that amount under section 101, and (c) any other amount payable under rules of court without the need for a judgment. judgment debtor means the person by whom a judgment debt is payable. 1. Section 108 appears in Part 8 of the CPA ("Enforcement of judgments and orders") and, more specifically, Division 1 of that Part ("Preliminary"). As its title suggests, Division 1 sets out preliminary matters, whereas Divisions 2 through 4 concern particular methods of enforcement, which correspond to the methods set out in s 106(1) for enforcing a "judgment debt" (s 106 being headed, "Judgments for the payment of money"). 2. Section 108 is a provision of general application, covering all types of judgments and orders. It imposes only one direct jurisdictional limitation on the making of an order for examination or production. That requirement is that the person against whom the order is made is "bound by" a judgment or order of the Court. As an order has been made directly against Mr Bhushan for specific performance, that requirement is satisfied, and I did not understand counsel for Mr Bhushan to contend to the contrary. 3. Section 108(1), however, confines the power to make an order for examination or the production of documents by reference to relevance to a "material question". The term "material question" is defined in s 108(5). Subparagraph (5)(a) applies to a judgment or order to the extent to which it "requires the person bound by it to pay money". Conversely subparagraph (5)(b) applies to the extent to which the judgment or order does not require the person bound by it to pay money. 4. In the present case, the form of the examination order sought follows the wording of subparagraph (5)(a). Counsel for Mr Bhushan raised a question as to whether, the parent order being one for specific performance, it is one which "requires [Mr Bhushan] to pay money". 5. Counsel referred me in particular to the decision of Palmer J in Marcolongo v Mazoudier [2008] NSWSC 1403. In that case, an order for specific performance had been obtained against the purchaser under a contract for the sale of land. The purchaser failed to comply with the order. 6. The vendors applied for a charging order under CPA, s 126, which relevantly provides: … (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. … (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. 1. The submission for the vendors was that the amount payable by the purchaser on settlement was "an amount payable under a judgment" for the purposes of paragraph (a) of the definition of "judgment debt" in s 3(1), and thus fell within s 126 (see [6]-[7]). 2. Palmer J rejected this submission. He stated (at [8]-[9]): I am unable to agree. A "judgment debt" within paragraph (a) of the definition and within the operation of s 126 CPA arises when a judgment of the Court specifies the precise amount which the Court orders is to be paid when the judgment takes effect. That amount is then "the amount payable under a judgment" in paragraph (a) of the definition and it is interest on that amount which is referred to in paragraph (b): see e.g. Cahill v Howe [1986] VR 630. In the present case the Court … did not order the Defendant to pay the Plaintiffs a specific sum of money. It ordered the Defendant to perform the contract according to its terms. Unarguably, one of the acts of performance by the Defendant was to pay money, but the precise amount to be paid could depend on a number of contractual provisions, applied in the events that happened, not just upon a mathematical calculation of adjustments of rates, taxes and outgoings as between vendor and purchaser as at a stated settlement date. 1. The paradigm case of an "order for the payment of money" for the purposes of the CPA is what I will refer to as a "conventional monetary judgment". Such a judgment is a formal statement by the court which records that the judgment debtor has been adjudged liable to the judgment creditor in a specified sum of money. The entry of such a judgment is an authoritative determination of the cause of action on which the plaintiff sued, and that cause of action merges in the judgment. 2. Order 8 made on 31 October was not a conventional monetary judgment in the sense in which I have used the term. Mr Ryan's contractual cause of action did not merge in the order. The order did not immediately require Mr Bhushan to pay; he had until the date organised for settlement, which could have been as late as 13 November. And, as Palmer J pointed out in Marcolongo, the precise amount payable on settlement was not fixed by the order. It would depend upon Mr Bhushan's contractual obligations, which would in turn be affected by external factors, in particular the date upon which payment was required. 3. The order thus did not create a relationship of judgment debtor and judgment creditor at the time it was made. Nor was the amount payable specified at the date of making the order. 4. But it does not follow that the order falls outside s 108(5)(a). Marcolongo is distinguishable. Section 126 requires a "judgment" which the charged property could "satisfy". Section 108(5)(a) applies to an "order … which … requires the person bound by it to pay money" and allows for examination where there are questions as to that person's means "of satisfying" such an "order". 5. I think the language of s 108(5)(a) is appreciably wider. It is not confined to a "judgment". In particular, the indefinite reference to a requirement to pay "money" means that the precise amount need not have been determined by the order. In my view, the order requiring Mr Bhushan to pay the amount due under the contract on settlement is covered by s 108(5)(a). 6. However, I did not think anything turns on this question for practical purposes. To the extent that the order does not fall under subparagraph (a), it falls under subparagraph (b). Mr Bhushan's ability to pay the amount due on settlement, or procure its payment by UPG 322, seems to me to be a question "concerning or in aid of the enforcement" of the order, and thus a "material question" for the purposes of that subparagraph. Election 1. Counsel for Mr Bhushan submitted that a claim for specific performance and an action for common law damages for breach of contract were alternative remedies. Counsel submitted that in the present case, the plaintiff had elected, by bringing this application, to pursue a claim for specific performance. This election was, so the submission ran, irrevocable. Thus, even if UPG and Mr Bhushan continued to fail to pay, it would not be open to Mr Ryan to apply for leave to discharge the order for specific performance and then to terminate the contract and sue for damages. 2. It may be accepted that a plaintiff cannot simultaneously have on foot an order for specific performance and a claim for damages for repudiation of the relevant contract. But obtaining an order for specific performance, and taking steps to enforce it, is never irrevocable. Specific performance is only granted if damages is not an adequate remedy. It would be wrong in principle if, having failed to obtain specific performance, the plaintiff were not permitted to pursue the second-best remedy of damages. 3. I am fortified in this view by the following observations of Lord Wilberforce in Johnson v Agnew [1980] AC 367 (at 398): Election, though the subject of much learning and refinement, is in the end a doctrine based on simple considerations of common sense and equity. It is easy to see that a party who has chosen to put an end to a contract by accepting the other party's repudiation cannot afterwards seek specific performance. This is simply because the contract has gone – what is dead is dead. But it is no more difficult to agree that a party, who has chosen to seek specific performance, may quite well thereafter, if specific performance fails to be realised, say, "Very well, then, the contract should be regarded as terminated.'' It is quite consistent with a decision provisionally to keep alive, to say, "Well, this is no use – let us now end the contract's life.'' A vendor who seeks (and gets) specific performance is merely electing for a course which may or may not lead to implementation of the contract – what he elects for is not eternal and unconditional affirmation, but a continuance of the contract under control of the court which control involves the power, in certain events, to terminate it. 1. Counsel for Mr Bhushan referred to the decision of the Court of Appeal in Despot v Registrar General of New South Wales [2016] NSWCA 5. I see nothing in that decision to cast any doubt on the passage which I have quoted from Johnson. In fact, the Court followed the general approach by Lord Wilberforce in that case: see [115]-[118]. 2. I reject the contention that, by making or pursuing this application, Mr Ryan has in some way forever put it out of his power to pursue a claim for damages if he is unable to obtain payment of the amount due for conveyance of the property. Forensic basis 1. Counsel for Mr Bhushan contended that there was no proper forensic basis for making the examination and production orders which had been sought. There were two steps to counsel's argument. The first was that, in the current circumstances, the only remedy available to Mr Ryan to enforce the order for specific performance was to make an application to have Mr Bhushan committed, or otherwise punished, for contempt. The second step was that making examination or production orders in aid of such an application would, given Mr Ryan's privilege against self-incrimination, serve no useful forensic purpose. 2. In support of the first step to their argument, counsel relied upon the following remarks of Palmer J in Marcolongo (at [11]-[12]): In making an order for specific performance of a contract the Court usually does no more than attach the sanction of contempt proceedings to a breach by the defendant of whatever obligations the defendant has to perform under the contract. If the defendant then fails to perform those obligations, the plaintiff may seek to compel performance by invoking the Court's sanction for contempt or may, with leave of the Court, terminate the contract and claim damages. The plaintiff's choice usually depends upon whether the defendant's breach of the Court's order is deliberate – i.e. the defendant is able to perform but chooses not to perform – or involuntary, in that the defendant simply cannot perform, usually because of financial incapacity. If a purchaser fails to perform a contract, even under threat of punishment for contempt of an order for specific performance, the vendor is not entitled to recover the purchase price by way of damages: he may recover only the difference between the purchase price and the value of the land remaining in his hands, and he must prove that amount to the satisfaction of the Court before judgment will be entered in his favour for payment of a specific amount, resulting in a "judgment debt" [citations omitted]. 1. In the light of this reasoning, counsel submitted, Mr Ryan's only option now was to pursue an application under UCPR, r 40.6, which provides: Doing or abstaining from doing an act (1) This rule applies in the following circumstances— (a) if— (i) a judgment requires a person to do an act within a time specified in the judgment, and (ii) the person fails to do the act within that time or, if that time is extended or abridged, within that time as extended or abridged, (b) if— (i) a judgment requires a person to do an act forthwith, or forthwith on a specified event, and (ii) the person fails to do the act as so required, (c) if— (i) a judgment requires a person to abstain from doing an act, and (ii) the person disobeys the judgment, but does not apply to a judgment for the payment of money (including a judgment for the payment of money into court). (2) In circumstances to which this rule applies, a judgment may be enforced by one or more of the following means— (a) committal of the person bound by the judgment, (b) sequestration of the property of the person bound by the judgment, (c) if the person bound by the judgment is a corporation— (i) committal of any officer of the corporation, and (ii) sequestration of the property of any officer of the corporation. 1. I have already pointed out that Marcolongo was a case about charging orders. It may be accepted that such an order cannot be used to enforce the specific performance of payment of a sum of money. But I do not think that Palmer J can have intended to say that a plaintiff seeking to enforce an order for specific performance can only ever proceed by way of contempt application. If that is what his Honour intended to say, then I must respectfully disagree. 2. In supplementary written submissions, counsel for Mr Ryan submitted that it would be open to him to apply for the appointment of a receiver under UCPR, r 40.2. That rule provides: Payment of money (1) A judgment for the payment of money (including a judgment for the payment of money into court) may be enforced by one or more of the following means— (a) appointment of a receiver of the income of the property of the person bound by the judgment, (b) sequestration of the property of the person bound by the judgment. (2) Subrule (1) does not affect any other means for enforcement of a judgment for the payment of money. 1. Counsel for Mr Bhushan submitted, in a written response, that r 40.2 was not available. Counsel's argument was that the order for Mr Bhushan to pay the amount due to Mr Ryan on settlement of the contract was not a "judgment for the payment of money" for the purposes of the rule. 2. As already noted, the order against Mr Bhushan is not a conventional monetary judgment. But the inclusion of a judgment "for the payment of money into court" shows that a "judgment for the payment of money" in r 40.2 is not necessarily limited to conventional monetary judgments. That is consistent with the purpose of the rule. Where a receiver is to be appointed, there is no need for the amount of the judgment to be specified in advance, so long as the amount due can be calculated and paid by the receiver out of the income collected. Consistently with this, the terms "judgment debt" and "judgment debtor" do not appear in the rule. 3. Counsel for Mr Bhushan also argued that r 40.2 has to be read disjunctively from r 40.6, and therefore r 40.2 cannot apply where r 40.6 is engaged. I disagree; r 40.6 is confined to this Court, whereas r 40.2 applies to several different courts. There would be no justification for compartmentalising the two rules. 4. The receivership possibilities do not end with r 40.2. In Caird Seven Pty Ltd v Attia (2016) 92 NSWLR 457, Emmett AJA appointed a receiver in aid of a specific performance order in order to secure the enforcement of that order. His Honour noted that this Court's power to appoint a receiver (Supreme Court Act 1970, s 67) is confined to "interlocutory" proceedings, but held that subsequent proceedings to give effect to a specific performance order are "interlocutory" for this purpose. Counsel for the defendants did not challenge his Honour's reasoning. 5. In Caird Seven, the specific performance order had been made at the instance of a purchaser against a vendor, and the receiver was appointed to the property which was the subject of the contract. But there seems no reason in principle why a receiver could not be appointed over identified property of a purchaser in default so as to provide a fund to meet the contract price. Such an order could be made over any property of the purchaser, rather than being confined to the purchaser's income under r 40.2. 6. Even if the option of applying for the appointment of a receiver is put to one side, I do not agree that examination and production orders can only serve the purpose of pursuing a contempt application. The authorities recognise that examination and production orders under s 108 may perform a legitimate investigative function. 7. I was referred to two decisions in particular concerning the breadth of s 108. The first was the decision of Austin J in Austress Freyssinet v Kowalski [2007] NSWSC 1105. A restraining order had been made earlier in the proceedings. Austin J (at [13]) characterised its effect as "requiring the defendant to resign as a director [of a company] and to divest himself of shares in [another company]". A form of transfer had been executed for consideration of $10, to a company of which the defendant's accountant was the sole director and secretary (see [14]). 8. The plaintiffs' solicitors had sought further information, and the defendant had made two statutory declarations by way of response. Austin J records (at [15]) that in the first, the defendant said that he had executed the transfer and did not know of anything more he could do to complete the transfer. In the second, he outlined a conversation with his accountant (and claimed there was no other communication, arrangement or understanding between them). Allegedly, the defendant had simply asked his accountant if he would take the shares, after telling him that there was a court order requiring him to transfer them, and the accountant agreed, telling him to transfer them to his company. 9. Counsel for the plaintiffs argued that the evidence provided a basis for further investigating whether the transferee company held the shares on trust for the defendant, or whether there was some arrangement between the company and the defendant. Accordingly, an order under s 108 was sought. 10. Austin J made the following observations (at [22]) about the scope of s 108: Section 108 is wider than the rules of court that were considered in the [cases referred to by counsel] because it expressly extends to an examination of a person bound by a judgment or order that does not require payment of money. In such a case, it gives the court a discretion to allow any questions "concerning or in aid of enforcement or satisfaction of the judgment or order". In my view the language of the section is inherently available to be used in aid of enforcement of an injunctive order, in circumstances where the evidence, while not establishing failure to comply with the order, points to circumstances raising a question about compliance that reasonably warrants investigation. The question is whether the evidence in the present case meets that threshold. 1. His Honour concluded that an order should be made, observing (at [31]): It seems to me that s 108 provides a useful function in circumstances such as the present. The very limited information available to the plaintiffs, summarised above, is arguably not sufficient for them to conclude that the defendant is in contempt of [the earlier] orders. It would be an unsatisfactory situation if, in such a case, the person with the benefit of the orders had no other remedy than to commit to an immediate application for punishment for contempt. It is in my view reasonable for a party in the position of the plaintiffs to employ the examination and production procedure with a view to clarifying whether the transfer has led to a resulting trust or the presumption of resulting trust has been rebutted by further facts. 1. In the matter of Xpress Fuel Australia Pty Ltd [2023] NSWSC 692, Williams J considered Austin J's decision in Austress. Consent orders had earlier been made, requiring the delivery up of specified assets to receivers. There were 21 assets unaccounted for, and no report had been made under s 430 of the Corporations Act 2001 (Cth) (as had been required) (see [9]-[13]). The application before Williams J was an application under CPA, s 108 to examine two individuals about these non-compliances. 2. In hearing the application, her Honour had to consider a potential constraint on the Court's powers in the form of UCPR r 38.2(1), which requires an application for an order for examination under CPA s 108 to be supported by an affidavit as to specified matters, including "that the judgment or order remains unsatisfied". The potential constraint was that no order could be made for examination on a s 108(5)(b) question unless evidence had first established that the potential examinees were responsible for non-compliance with the parent orders. Her Honour rejected this possibility, concluding (at [29]) that: [the decision of Austin J] is consistent with the evident purpose of s 108 of the Civil Procedure Act insofar as it applies to compliance with non-monetary judgments or orders, and I accept the plaintiffs' submission that the power under s 108 is available to be used in aid of enforcement of the orders made on 13 June 2023 if the evidence, whilst not conclusively establishing a failure to comply with those orders, raises questions about compliance with those orders that reasonably warrant investigation. 1. Austress and Xpress Fuel concerned examination on a s 108(5)(b) question. So far as s 108(5)(a) questions are concerned, in Quadunion Builders Pte Ltd v Aircraft Support Industries Pty Ltd (No 2) [2015] NSWSC 1857, Adamson J (as her Honour then was) stated (at [33]): The "material questions" in s 108(5) of the Civil Procedure Act relate only to the means whereby the judgment debtor can satisfy the judgment. The answers to the material questions are designed to inform the judgment creditor as to what, if any, enforcement action, such as a garnishee order, can be taken; or whether, there being no real prospect that the judgment debtor can satisfy the judgment, the judgment creditor ought move to wind up or bankrupt the judgment debtor. 1. In Quadunion, the parent "judgment or order" was a conventional monetary judgment. In the present case, given my conclusion that s 108(5)(a) is engaged, the possibilities which may be investigated are wider. 2. I have rejected the submission that Mr Ryan had irrevocably elected not to pursue a claim for damages. Thus, it would be legitimate for him to explore Mr Bhushan's financial position for the purposes of determining whether it is worth continuing to press him to comply with the order, or whether it would be better to apply to discharge it and pursue a claim for damages. 3. Furthermore, it was accepted that Mr Ryan may make an application for further directions specifying a new settlement date at which the defendants are to complete the contract. He has in fact done so, in the part of his application which was held over. The defendants, through their solicitors' letter of 14 November (quoted above), indicated that monies to complete the transaction will, or at least may, be available to enable completion of the contract in April. Initially, I had some trouble understanding the costs warning in the last paragraph of the letter. But on analysis, I concluded that what the defendants were saying was that Mr Ryan ought to make a further attempt to complete the contract pursuant to the order for specific performance rather than electing to claim damages. Counsel for Mr Bhushan confirmed that this was the correct interpretation. 4. This attitude seems inconsistent with the line taken by counsel in the present case, namely that the right to claim damages had been lost, but I have dealt with that submission on its merits and need say nothing more about the inconsistency. The important point for present purposes is that the defendants themselves have, in effect, called for another opportunity to complete. 5. It appeared to me to follow that it would be legitimate to use examination and production orders for the purpose of assessing Mr Bhushan's financial resources, so as to determine when a further settlement date should be fixed. It seemed, however, that this was not accepted by counsel for Mr Bhushan. 6. I put to counsel that, in effect, the defendants were saying that Mr Ryan had no choice but to accept the timetable proposed by them, and their assertions as to their financial position which lay behind that proposal. The response was that this was "unfortunately an aspect of the principles which inform specific performance". Mr Bhushan had failed to comply with the order. That was clear. Any further investigation, according to counsel, would only be an enquiry into why he had not complied, and that in effect would be to ask whether he had been guilty of contempt. 7. Counsel noted that Austin J in Austress (at [33], quoted above) seems to have regarded such an enquiry as legitimate. Counsel pointed out however that there is a distinction between breach of an order and contempt of it. It is only if the breach is "wilful" rather than "casual, accidental or unintentional" (Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 111) that it will be a contempt. In Austress, it was unclear whether the Court's order had in fact been breached. Counsel submitted that his Honour's observations should be read as applying only to such a situation. 8. It is unnecessary to reach a final decision on this point. I think that there is a clear distinction in principle between enquiring into what Mr Bhushan's financial position now is and what his position was on the 13 November settlement date. In practice, there may be some overlap. But at most, that might allow Mr Bhushan to claim the privilege against self-incrimination in response to some of the questions. It would not be a reason for declining to permit the examination at all. Not all questions would give rise to a claim for privilege. And it might be possible to deal with claims for privilege by the statutory certificate procedure (CPA, s 87; EA, s 128). In short, any question of the application of the privilege would need to be dealt with on a question-by-question basis at the examination hearing. 9. For these reasons, I did not accept the first step in counsel's argument. There were other purposes to be served by the examination and production orders sought than enquiring into whether Mr Bhushan had been guilty of contempt. This made it unnecessary to decide whether inquiring into whether Mr Bhushan had committed a contempt of court would itself have been a legitimate purpose for seeking such orders. 10. In passing, I note that r 40.6 allows for the pursuit of sequestration as an alternative to committal for contempt. It may be that an application for a sequestration order would not trigger the privilege against self-incrimination. But this was not debated before me and does not need to be considered any further. Orders 1. I concluded that there was a legitimate basis for the making of examination and production orders in the present case. It seemed to me however that documents should not be sought simultaneously by notice to produce as well as by production order. I considered that both notices to produce should be set aside but the production order should be expanded to cover the additional documents sought by the second notice to produce. 2. For completeness, I should mention that the application for directions concerning a revised settlement date in Mr Ryan's motion remained undetermined. But I consider that this would best be dealt with later, in a separate motion. All three motions will therefore be recorded in the Court's records as having been finally disposed of. 3. There was no dispute that Mr Bhushan should pay Mr Ryan's costs of his motion seeking examination and production orders. The only dispute as to costs concerned the additional costs associated with the counter-motions to set aside the notices to produce. I considered that the first notice to produce was duplicative, and so ordered Mr Ryan to pay Mr Bhushan's additional costs of his motion to set it aside. But I considered that, in substance, the second notice to produce was justified, and made no order as to the additional costs of Mr Bhushan's second motion. 4. A question arose in the course of today's hearing about when the costs would be assessable and payable. Junior counsel for the plaintiffs sought an order for immediate payment under UCPR r 42.7. This was resisted by junior counsel for Mr Bhushan, on the footing that further costs would be incurred in connection with the examinations and the costs of the motion should be dealt with as part of the costs of the examination process. 5. There is an initial question about whether r 42.7 is actually applicable. The scheme of the rule is that, unless the Court otherwise orders, costs of interlocutory applications follow the general costs of the proceedings and are assessable and payable when orders are made following final judgment at the "conclusion of the proceedings". This I think means the making of final orders (which, in the present proceedings, were made on 31 October). It is difficult to see how subsequent proceedings by way enforcement fall within the language of the rule. 6. In any event, I do not see Mr Ryan's motion as forming part of the examination and production process itself. The motion raised issue of principle as to whether orders should be made at all, and, as I have noted, has now been fully disposed of. Any further proceedings associated with the production and examination which have been ordered will, in my view, be quite discrete. 7. I therefore saw no reason why the costs of Mr Ryan's motion (and, to the extent awarded, the costs of Mr Bhushan's counter-motions) should not be assessed and paid now. For abundance of caution, the costs orders contain an express statement to that effect. 8. The orders of the Court made following the argument earlier today were: 1. The proceedings be made returnable before the Chief Judge in Equity, sitting in the Duty List, at 10 am on 2 February 2024. 2. Order that there be an examination of the Second Defendant pursuant to s 108(1)(a) of the Civil Procedure Act 2005 (NSW), as to whether any and, if so, what debts are owing to him and whether he has any and, if so, what other property or other means of satisfying the judgment (Examination Order). 3. Note that the Second Defendant has submitted that he may assert a right to claim privilege against self-incrimination, which the Court has ruled is to be determined, on a question and answer basis, by reference to each objection taken, at the hearing of the Examination Order. 4. The Examination Order is listed for directions before Chief Judge in Equity, sitting in the Duty List, at 10 am on 2 February 2024, for the fixing of a time, and date, for the hearing of the Examination Order. 5. Order the Second Defendant to produce to the court pursuant to s 108(1)(b) of the Civil Procedure Act 2005 (NSW), on or before 5.00 pm on 19 January 2024 the following documents or things that are in his possession: 1. his personal Tax Returns for the financial years ending 30 June 2021, 30 June 2022 and 30 June 2023; 2. the Tax Returns, and Financial Statements, for any Trust of which the Second Defendant is the appointor, beneficiary, unit holder or object, for the financial years ending 30 June 2021, 30 June 2022 and 30 June 2023; 3. the Bank Statements for any Trust of which the Second Defendant is the appointor, beneficiary, unit holder or object, for the period from 1 July 2023 to date; 4. the Tax Returns, and Financial Statements, for any Trust with a corporate trustee, and in respect of which corporate trustee the Second Defendant is a shareholder, or director, for the financial years ending 30 June 2021, 30 June 2022 and 30 June 2023; 5. the Bank Statements for any Trust with a corporate trustee, and in respect of which corporate trustee the Second Defendant is a shareholder, or director, for the period from 1 July 2023 to date; 6. all documents held, created or received by the Second Defendant in the period from 1 January 2023 to date in respect of any application for finance made for or on behalf of the First Defendant, the Second Defendant, or Universal Property Group Pty Ltd in respect of the purchase of property known as 33-35 Hynds Rd Box Hill in the state of NSW, being the land comprised in Folio Identifier 880/1245035. 1. The Second Defendant is to pay the Plaintiff's costs of the Notice of Motion dated 21 November 2023, assessable and payable forthwith. 2. The Plaintiff is to pay the Second Defendant's costs solely referable to the Notice of Motion dated 22 November 2023, assessable and payable forthwith. 3. No order as to costs of the Notice of Motion dated 4 December 2023. 4. Direct that the Order may be taken out forthwith. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 December 2023