Catalano v Managing Australian Destinations Pty Limited

AND: FINE FOOD SOLUTIONZ PTY LTD (ACN 134 923 005)

JUDGE: FLICK J DATE: 13 NOVEMBER 2013 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 On 24 May 2012 an Originating Application was filed in this Court. Judgment in that proceeding was delivered on 10 July 2013: Catalano v Managing Australia Destinations Pty Ltd (No 2) [2013] FCA 672. 2 Orders were made disposing of that proceeding on 13 September 2013. One of the orders then made was in the following terms: Judgment be entered for Fine Food Solutionz Pty Ltd against Nathan Catalano personally and as a trustee of the Equicap Pty Ltd Provident Fund and Samuel Catalano, jointly and severally, for the sum of $130,000 together with interest of $6,684.78. No monies have been paid in compliance with that order. The amount said to be now owing, up-dated to this morning, is $140,151.29. 3 On 21 October 2013 an Interlocutory Application was filed by Fine Food Solutionz Pty Ltd ("Fine Food Solutionz") seeking a garnishee order as against Westpac Banking Corporation. Evidence filed in support of the Interlocutory Application establishes that there is presently held by the St George Bank Partnership, a division of the Westpac Banking Corporation ("Westpac"), monies in an account in the name of Equicap Pty Ltd Provident Fund (the "Equicap Fund"). 4 The Interlocutory Application invokes r 41.10 of the Federal Court Rules 2011 (Cth). Rule 41.10(1) provides as follows: A party may apply to the Court to issue a writ, order or any other means of enforcement of a judgment or order that can be issued or taken in the Supreme Court of the State or Territory in which the judgment or order has been made, as if it were a judgment or order of that Supreme Court. Rule 41.10(3) provides as follows: A party who wants to enforce an order in more than one State or Territory may adopt the procedures and forms of process of the Supreme Court of the State or Territory in which the judgment or order has been made. 5 The purpose of a garnishee order is to secure monies owed by a third party to a judgment debtor for the benefit of the judgment creditor: Watson v Morrow (1880) 6 VLR (L) 134 at 139. Stawell CJ there observed: … A judgment creditor is enabled to obtain from persons indebted to his judgment debtor, who are called garnishees, payment of his debt, or as much of it as the garnishees had funds of the [judgment] debtor from which they could pay. The usual practice of the Court, as was the course pursued in the present application, is to hear such applications ex parte: Coshott v Learoyd [2001] FCA 88 at [12] per Wilcox J. The form of the order as now sought by Fine Food Solutionz is an order that Westpac pay monies "up to a maximum amount of $140,151.29". That amount is the sum of $130,000.00 plus interest of $10,151.29. There is considered to be no difficulty in a garnishee order being expressed in terms of an amount sufficient to satisfy a judgment: Rogers v Whiteley [1892] AC 118. 6 In the present Interlocutory Application, Fine Food Solutionz places reliance upon s 117 of the Civil Procedure Act 2005 (NSW) and the Uniform Civil Procedure Rules 2005 (NSW). Section 117 provides as follows: Operation of garnishee order in relation to debts (1) Subject to the uniform rules, a garnishee order operates to attach, to the extent of the amount outstanding under the judgment, all debts that are due or accruing from the garnishee to the judgment debtor at the time of service of the order. (2) For the purposes of this Division, any amount standing to the credit of the judgment debtor in a financial institution is taken to be a debt owed to the judgment debtor by that institution. 7 The reference to an amount "due or accruing" refers to an amount which is "due and payable": cf. Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 at 15 per Mason J. A debt which is "due or accruing" must be an absolute and not merely a conditional debt: Howell v Metropolitan District Railway Company (1881) 19 Ch D 508. Upon service of a garnishee order, all debts due or accruing from the garnishee to the judgment debtor are attached: ML Ubase Holdings Co Ltd v Trigem Computer Inc [2007] NSWSC 859 at [6], 69 NSWLR 577 at 581 per Brereton J. The making absolute of a garnishee order is discretionary: [2007] NSWSC 859 at [56], 69 NSWLR at 595. As there explained by his Honour, a garnishee order may be refused where its effect would be to confer a preference on a creditor. 8 The garnishee order as sought is refused. 9 The difficulty confronted by Fine Food Solutionz is its failure to establish that any of the monies held in the Equicap Fund are presently due and payable to Mr Nathan Catalano. All that is presently known is that the Equicap Fund holds monies on trust. It is said that Mr Nathan Catalano is a trustee. But that adds nothing. The nature of the trust and any entitlement of any beneficiaries to that trust to be paid any monies remain unknown. In their summary of principles, Vout and Nolan have stated: Where the debt owed by the garnishee to the judgment debtor has not formed, as in the case of undistributed trust money, or is owed jointly to the judgment debtor and one or more others, as in a joint bank account, the debt is not attachable. In short, an attachable debt is one that is indivisibly owed by the garnishee to the judgment debtor: Garnish of debts in the Supreme Court (2003) 77 LIJ 48. Fine Food Solutionz has failed to establish that any monies held by Westpac in the Equicap Fund are "due or accruing" to Mr Nathan Catalano: cf. Vernon v Perry [1962] VR 223. Section 117(2), it is respectfully considered, does not overcome the need for a person seeking a garnishee order to establish that trust monies held in a bank account are monies "due and payable" to the judgment debtor. No authority was cited by Counsel for Fine Food Solutionz in support of his proposition that s 117(2) permitted a garnishee order to be made as against a bank account holding trust monies in favour of a trustee where there was no certainty that any of the monies in that account were otherwise "due and payable" to the trustee. 10 The garnishee order as sought in the Interlocutory Application is thus refused.

THE ORDER OF THE COURT IS:

1. The Interlocutory Application filed on 21 October 2013 is dismissed. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick.