The background to this matter is set out in the judgment of Ball J in Big Country Developments Pty Ltd v Peter Griffiths (No 4). [1]
On 7 September 2015, the plaintiff, Big Country Developments Pty Ltd, obtained a judgment against the fourth defendant, Mr Adrian Duncan, in the sum of $664,613.
The matter before Ball J was an application by Mr Duncan to set aside an order made by the Deputy Registrar dismissing Mr Duncan's application to pay that judgment by instalments. Mr Duncan's application would have resulted in the debt being paid over a period of four years.
Ball J dismissed Mr Duncan's application, principally because his Honour:
1. was not satisfied that the proposed payment plan would result in the debt being paid within a reasonable time [2] ; and
2. concluded that there was no reason to believe that Mr Duncan would be able to comply with his proposed payment plan. [3]
Since then, there have been a number of developments.
On 18 December 2019 Mr Duncan made a further application for an instalment order. That application was refused on 23 December 2019.
On 15 January 2020 Mr Duncan applied for a further instalment order.
An instalment order was made on 30 January 2020 that Mr Duncan pay:
1. $300,000 in respect of the judgment by 20 February 2020;
2. $12,000 per month from 15 March 2020;
3. $19,700 per month from 15 March 2021; and
4. $21,700 per month from 15 March 2022.
Mr Duncan failed to pay the first instalment of $300,000 and the 30 January 2020 order thereby ceased to be effective. [4]
On 16 March 2020 Mr Duncan applied for a further instalment order.
On 7 April 2020 an instalment order was made requiring Mr Duncan to pay:
1. $430,000 by 14 April 2020;
2. $12,000 per month from 17 April 2020;
3. $19,700 per month from 16 April 2021; and
4. $21,700 per month from 15 April 2022.
I am now considering Big Country's notice of motion of 24 April 2020 to set aside the 7 April 2020 instalment order.
Mr Duncan has, to date, complied with the 7 April 2020 order.
Thus, he has made the following payments in respect of the 2015 judgment:
1. $430,000 on 9 April 2020;
2. $12,000 on 9 April 2020;
3. $12,000 on 13 May 2020;
4. $12,000 on 4 June 2020.
Mr Duncan was able to pay the $430,000 with the assistance of a loan made to him by his de facto partner, Ms Susannah Fitzgerald, in the sum of $350,000. Ms Fitzgerald received those funds as part of a settlement with her former husband.
The effect of the 7 April 2020 instalment order is that, assuming it continues to be complied with, the judgment debt will be repaid in around September 2022.
Mr Duncan resides in the United Kingdom. He is a chartered accountant and a specialist insolvency practitioner.
Mr Duncan says that he is confident that he will be able to comply with the 7 April 2020 order because of recent improvements in the profitability of a business in which he has an interest, Savants Advisory Ltd.
Ball J was sceptical about Mr Duncan's assertions concerning this business because Mr Duncan had not then produced any accounts concerning that business.
However, before me there are management accounts for the financial years ended 31 March 2016 to 31 March 2019. Mr Duncan has produced a report from his "external accountant in respect of my current and expected future financial position for the businesses in which I am involved" which states that Savants' net profit for calendar year 2019 was some ₤125,000 and its forecast profit for the calendars year 2020 and 2021 are some ₤331,000 and ₤336,000 respectively.
Mr Duncan said that Savants currently has work in progress of over ₤500,000
I do not understand there to be any dispute about this as it was submitted on behalf of Big Country:
"Since the instalment order was made on 7 April 2020, it appears that [Mr Duncan's] financial circumstances have improved significantly. Mr Friedlander [Mr Duncan's solicitor] deposes that [Mr Duncan's] insolvency business is booming and [Mr Duncan] expects this in the following year to be the most profitable he has ever had."
Mr Friedlander went further and gave this evidence:
"As a result of the effects of Covid-19 on individuals and businesses in the United Kingdom, [Mr Duncan's] insolvency work is rapidly expanding and will provide an increased revenue stream for some considerable time through what is shaping up to be the biggest amount of insolvency work the United Kingdom has ever seen.
He expects this year and the coming years will be the most profitable years he has ever had.
…
Unlike in Australia, there has been no extension of time in the United Kingdom to allow companies and individuals to avoid a deemed insolvency. As a result, Mr Duncan is receiving appointments for insolvency and pensions cases every day … Mr Duncan informs me that several of the liquidations listed in his table have substantial assets and he estimates they will generate over ₤200,000 in professional fees, plus signing fees, over the coming months.
He is working from 4am to 8pm as well as working on weekends. His pensions team is at full capacity and working 7 days a week and his insolvency team is working 6 days a week.
He has employed 4 new technical staff in the past 4 weeks and is interviewing for more staff.
He has employed over 25 commission only sales consultants who are starting to generate additional work."
In his judgment of 12 December 2019, Ball J summarised the relevant principles as follows:
"Section 107 of the Civil Procedure Act 2005 (NSW) and Pt 37 of the Uniform Civil Procedure Rules 2005 (NSW) contain the provisions relating to the payment of a judgment sum by instalments. It is common ground that the hearing before me under those provisions is a hearing de novo, and not an appeal. In considering whether an order for the payment of a judgment debt by instalments should be made, the starting point is that the judgment creditor's right to immediate enforcement of the judgment should not be disturbed without some good reason going to enhancing the prospects of payment in full. As was said by Barrett AJA in In the matter of Australian Institute of Fitness (VIC & TAS) [5] :
… The principal concern, as I say, is to discover whether an instalment arrangement will be more conducive to the judgment creditor's achieving payment in full in a reasonable time. …
In considering that question, the Court is entitled to consider various matters, including the history of the matter, the period of time for payment, the conduct of the judgment debtor, and the evidence going to the judgment debtor's ability to pay: see, for example, Hellier Capital Pty Limited v Richard Albarran. [6] It also may be appropriate for the Court to consider the public interest, including the public interest in persons with professional qualifications continuing to be able to work."
Circumstances have changed since Ball J considered this matter.
First, as I have said, the effect of the 7 April 2020 instalment order, if complied with, is that the judgment will be paid by around September 2022; whereas the proposed payment plan before Ball J would have had the effect that the judgment was not paid for four years.
Second, Mr Duncan has now paid a considerable proportion of the judgment; around half.
Third, the evidence before me suggests that there is reason to believe that Mr Duncan will be able to comply with the 7 April 2020 instalment order. He has complied with the order to date, including by making the $430,000 payment to which I have referred. The Savants business appears to be strong.
I do not accept the submission made on behalf of Big Country that "it is doubtful that [Mr Duncan] is willing or even able to comply with any instalment arrangement".
The events of the past few months suggest that the contrary is the case.
On behalf of Mr Duncan, reference was made to Barrett J's observations that the relevant question is whether "indulgence to the judgment debtor will enhance the prospects of full recover by the judgment creditor". [7] On behalf of Mr Duncan it was submitted that the 7 April 2020 instalment orders "are the best and only means" of achieving this result and that, were the 7 April 2020 instalment order set aside, it is likely that Mr Duncan would become bankrupt.
That may be overstating matters somewhat but I am satisfied that permitting Mr Duncan to pay the amount he owes to Big Country in accordance with the 7 April 2020 instalment order is more likely than not to result in Big Country being paid in full; albeit not until September 2022.
In those circumstances, for me the issue comes down to whether it is reasonable to expect Big Country to wait a further two years before being paid in full: that is, whether maintenance of the 7 April 2020 instalment order will result in Big Country being paid in a reasonable time.
Big Country obtained its judgment almost 5 years ago. The have been delays as described by Ball J in his Honour's 12 December 2019 judgment. But, now, half of the judgment has been paid and, contrary to the position as it was when Ball J considered it in December, it does appear likely that Mr Duncan will be able to repay the balance due by the instalments specified in the 7 April 2020 order. Considering the amount involved, something in the order of a further $500,000 when interest is taken into account, my conclusion is that this will result in the balance owing to Big Country being paid in a reasonable time.
I order that the plaintiff's notice of motion of 24 April 2020 be dismissed, with the intent that the 7 April 2020 order stands.
However, Mr Duncan must pay the costs of the application because, as he accepts, he is being granted an indulgence.
[3]
Endnotes
[2019] NSWSC 1791.
At [11].
At [16].
Uniform Civil Procedure Rules 2005 (NSW) r 37.7.
[2016] NSWSC 1143 at [11].
[2009] NSWSC 403 at [3]-[4], [9]-[10] (McDougall J).
Hellier Capital Pty Limited v Richard Albarran, supra note 6 at [11].
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Decision last updated: 03 July 2020