District Court New South Wales Medium Neutral Citation: Gadd v Australia Business Executive Investments Pty Limited [2020] NSWDC 64 Hearing dates: 10 February 2020 Date of orders: 10 February 2020 Decision date: 10 February 2020 Jurisdiction: Civil Before: Neilson DCJ Decision: See [14] – [16] Catchwords: Practice and Procedure – Enforcement of Judgments – Application to pay by instalments – Review of decision of the Registrar – Applicable principles. Cases Cited: Chint Australasia Pty Ltd v Cosmolouce Pty Ltd [2008] NSWSC 1054 Hellier Capital Pty Ltd v Richard Albarran [2009] NSWSC 403 Leondarias v KGB Design and Construction Pty Ltd [1998] FCA 1354 Re Australian Institute of Fitness (Vic & Tas) [2016] NSWSC 1143 SRG Civil Pty Ltd v Brolton Group Pty Ltd [2018] NSWSC 618 Category: Procedural and other rulings Parties: Mark Gadd – Plaintiff Australia Business Executive Investments Pty Ltd – Defendant Representation: W. Kozlowski – Plaintiff B. Hemsworth – Defendant File Number(s): 2018/00275247 Publication restriction: Nil. Judgment 1. HIS HONOUR: On 5 November 2019 Taylor DCJ gave judgment for the plaintiff, Mr Mark Lawrence Gadd against each of Australian Business Executive Investments Pty Ltd, the first defendant, and Mark Alexander Erber, the second defendant, for $244,249.75. His Honour also ordered the defendants to pay the plaintiff's costs of the proceedings on the ordinary basis until 4 December 2018 and thereafter on an indemnity basis. 2. On 5 December 2019 the defendants filed a notice of motion seeking to pay by instalments. The actual notice of motion is headed "Notice of Motion to Pay by Instalments Individual", albeit that the orders sought were that the judgment debt be paid by the judgment debtors jointly and severally by way of instalments. The notice of motion was supported by an affidavit of Mark Alexander Erber sworn on 5 December 2019 in which he averred on oath that the information about his present income, assets and liabilities was true. The application was supported by a financial statement of the first defendant but that was on the incorrect form. The form used was for an individual rather than for a corporation. The application was also supported by a financial statement of Mr Alexander Erber in which he disclosed that his average weekly income, after tax, from salary or wages was $3,500 and that all other income was $1,700 per week giving a total weekly income of $5,200. He disclosed that he had $5,000 as funds in banks or financial institutions, a motor vehicle worth $50,000, household contents worth $150,000 and "other personal property" worth $50,000. He estimated that his total living expenses were $2,600 per week. He said that he had dependent upon him one son aged 15 years. 3. That application was rejected by the Principal Registrar on 6 December 2019. The Registrar's reasons pointed out that the application by the first defendant was refused because it had not been made on the corporate application form and did not disclose, in any event, any income. As far as the second defendant was concerned the registrar's reasons went to say this: "The 'other personal property' in respect of vehicle, an amount of $50,000, has been disclosed but has not been particularised. Paragraphs 2, 4, 6 of the payment plan indicate amounts that appear to exceed the second defendant's wherewithal to pay. In relation to pars 3 and 5, the second defendant appears to have the wherewithal to pay more than the amount offered. Additionally, the payment plan does not appear to include the payment of interest in accordance with s 13G [sic] of the Civil Procedure Act 2005. Application refused." 1. On 12 December 2019 the plaintiff/judgment creditor issued a bankruptcy notice to Mr Alexander Erber. On 20 December 2019 the defendants again filed a Notice of Motion to Pay by Instalments Individual. However, the document only refers to one judgment debtor and clearly refers to Mr Alexander Erber. The payment plan proposed was different to that originally proposed. It proposed the payment of $11,000 on the 21st day of each month commencing on 21 January 2020 with the last payment being on 21 December 2022, that payment not being for $11,000 but for $10,639.22 which would result in the judgment being paid in full together with interest thereon at the rate of 7.5% per annum as required by the Act. 2. On this occasion the financial statement particularised the motor vehicle as being a 1985 Mercedes Benz 380SL and provided other details of the vehicle. However, "other personal property" was not particularised. Again the judgment debtor said that he had dependent upon him one son aged 15 years. The Principal Registrar refused that application. On 23 December 2019. The Principal Registrar pointed out that there was no application by the first defendant on the corporate form of application, the same reason that was given to the initial application. The Principal Registrar's reasons continue thus: "The application by the second defendant that was filed on 05/12/19 did not particularise the 'other personal property' in respect of which the sum of $50,000 was disclosed. This was one of the reasons for the refusal of the application filed on 05/12/19. The application filed on 20/12/19 also does not particularise the 'other personal property' in respect of which $50,000 has been disclosed. The application is refused." 1. The current proceedings are a notice of motion seeking a review of the reasons of the Registrar of 23/12/2019. Lest it be thought that I am being schizophrenic when I refer "the Registrar" both the decisions of 6 December 2019 and 23 December 2019 purport to be made by the Principal Registrar yet the review is sought in respect of orders made by Assistant Registrar Grew on 23 December 2019. 2. When the matter came before me with the reasonable estimate of a half hour last Friday it became clear that there were a number of deficiencies in the evidence. To try to cure that I made certain orders and stood the matter over to today. The second judgment debtor, Mr Alexander Erber, has sought to comply with those orders. Firstly, he has prepared a financial statement on behalf of the first judgment debtor, Australian Business Executive Investments Pty Ltd, which discloses its having no income, no assets and no liabilities. In fact, it does have a liability which is the judgment debt. Although Mr Hemsworth, who appears for the judgment debtors, made it clear that he is only making the application in respect of the second judgment debtor, I ordered that the financial statement be prepared to see if there were some assets that might be available to the first judgment debtor. Apparently there is none. 3. The affidavit prepared to obey the order that I made last Friday, and tendered this morning, raises a number of issues. The personal judgment debtor describes himself as a "chief executive officer" and that would appear to be as his role in respect of Golden Robot Records Worldwide Pty Ltd, which he describes as a family business of which the director is his wife, Anna, but the corporate search indicates that his wife is not a shareholder and that the shareholder is another company, King Rock N Roll Pty Ltd of the same address, namely, 39 Jones Street, Ultimo. The relevant paragraphs in the affidavit are these: "GRRW is a family business. I work within the business as the chief executive officer. I do not draw a salary and there is no formal agreement. It is an agreement between myself and my wife. The amount of income I have included in my financial statements represents what I estimate to be an average of the amount of money I obtain from the business. The agreement between myself and my wife has been in place for the last two years and assists me support my two teenage children from a previous marriage who also reside with us." The affidavit does not formally state that the judgment debtor has dependent upon him two teenage children and the application only states that he has one dependent child. He may have a second teenage child living at home who earns money but, as a father of a 29 year old boy living at home, I can assure one that children never cease to draw on their parents' income if they can. 1. There is no evidence tendered to support the estimate made by the judgment debtor about his income or its source. There are no financial statements either from his own bankers showing money being paid into an account nor is there any evidence from GRRW showing payments leaving its account which might be destined to the judgment debtor and/or his wife, Anna. The evidence is unsatisfactory in that regard. 2. As far as the "other personal property", pars [9] to [12] indicate what that personal property is and it is clear that it represents replacement value and the actual value of the property is only an amount of between $8,000 and $10,000. Despite references to the evidence given at the trial before Taylor DCJ by the personal judgment debtor, he says that he currently has no interest in any corporation other than ABEI Pty Ltd, the first judgment debtor. 3. I have been referred to the decision of McDougall J in Hellier Capital Pty Ltd v Richard Albarran [2009] NSWSC 403, the decision of Barrett AJA in Re Australian Institute of Fitness (Vic & Tas) [2016] NSWSC 1143 and SRG Civil Pty Ltd v Brolton Group Pty Ltd [2018] NSWSC 618 a decision of N Adams J. They set out the principles applicable to making an instalment order. At [8] of Hellier Capital Pty Ltd v Albarran McDougall J pointed out that, "An instalment order ought not be made if the judgment debtor's means are sufficient to enable him or her to pay the judgment immediately and in full". His Honour referred to the decision of Einstein J in Chint Australasia Pty Ltd v Cosmolouce Pty Ltd [2008] NSWSC 1054 and Leondarias v KGB Design and Construction Pty Ltd [1998] FCA 1354. In the current matter there is no evidence that Mr Alexander Erber has the ability to pay the judgment debt immediately and in full and the current payment plan allows for the whole of the judgment debt, together with interest thereon, to be paid over a period of two years. 4. The authorities make it abundantly clear that the important thing is for the judgment debt to be paid in full to the judgment creditor because in that way the judgment creditor obtains the fruit of his victory in court. Although the application that has been made can be criticised in many respects, as I have sought to point out to Mr Kozlowski, who appears for the judgment creditor, that the proof of the pudding is in the eating and if the personal judgment debtor does adhere to the instalment order that his client will receive the fruit of the judgment in the next two year period but if there be default the judgment creditor has his remedies elsewhere. 5. It has been submitted that the instalment order plan does not allow anything for the costs of the plaintiff/judgment creditor which are yet to be agreed or assessed, but, when they have been agreed or assessed, the judgment debtor, if he still have no capital to pay a large judgment debt, can make a further application for a second instalment order. Bearing in mind the evidence put before me on this application it may be very difficult for him to obtain another instalment order for the payment of the costs but that is a question that has to be considered by the personal judgment debtor and his solicitors and not by the Court. What is currently before the Court is, in my view, an appropriate way of satisfying the judgment debt over a reasonable period of time. 6. For those reasons I allow the review of the decision of the Registrar made on 23 December 2019, which was notified by the Registrar on 8 January 2020. 7. I order the second judgment debtor Mark Alexander Erber to pay to the judgment creditor the sum of $11,000 per month on the 10th day of each month commencing on 10 February 2020 until the judgment be paid in full together with interest thereon the final payment to be made paying the outstanding balance of the judgment debt on 10 January 2022. 8. I have now heard the parties on the question of costs. The judgment creditor was not heard by the Registrar in respect of either Notice of Motion to pay by instalments. The judgment creditor was bound to appear before the Court in answer to the current notice of motion seeking a review of the decision of the Registrar made on 23 December 2019. One can understand, in light of the deficiencies in the evidence, why it was opposed by the judgment creditor. I would point out that the application has only been successful because the orders that I made last Friday, to put the matter in some state where there had compliance with the earlier orders made by the Registrar, and compliance with the rules. In the circumstances I believe the appropriate order is that each party should pay his own costs of the current notice of motion. ********** 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: 27 March 2020