Refaat v Barry [2017] VSCA 362

1 The parties to this application have been engaged in litigation since 2012. On 2 June 2014, following the trial of a claim and counterclaim in the County Court, the respondent obtained a judgment against the applicant in the sum of $81,497.64. An appeal against that order was dismissed by the Court of Appeal on 20 August 2015.[1] Following the dismissal of this appeal, various applications have been made by the parties in relation to the amount owing by the applicant to the respondent on the judgment debt. In his applications, the applicant has sought to pay the judgment debt owed by him in monthly instalments and, from time to time, to reduce the amount of those instalments. The respondent, on the other hand, has sought to recover the whole of the judgment debt owed to him.

2 The order that is the subject of the present application for leave to appeal is an order made against the applicant by Judge Anderson on 21 September 2017. In that order, the judge enjoined the applicant from settling the sale of a property in Chirnside Park ('the Chirnside Park property'), which property was owned by the applicant, without obtaining a bank cheque payable to the respondent in the sum of $42,874.09. This sum was the balance of the judgment debt at the time of Judge Anderson's order, together with an allowance for interest and ancillary costs.

3 From the applicant's application for leave to appeal, it appears that the sum referred to in Judge Anderson's order ($42,874.09) was paid from the settlement of the Chirnside Park property to the respondent on 29 September 2017. Apart from seeking orders setting aside the relevant orders made by Judge Anderson on 21 September 2017, in his application for leave to appeal, the applicant seeks orders as follows:

• Refund the money paid (~$43,000) by the appellant to the respondent to this appeal on 29/09/2017.
• Compensate the plaintiff for the period where he was forced to live in a hotel, at $200/day.
• Resuming the instalment order. No existing court order would stop resuming the instalment order of 16/12/2015.

4 The application for leave to appeal identifies 12 proposed grounds of appeal. Proposed grounds 1-4 contend that the judge failed to consider ss 6, 8(2)(b), 9 and 17 of the Judgment Debt Recovery Act 1984 ('the JDR Act') and an instalment order ('the instalment order') that had been made on 16 December 2015, and confirmed on 24 July 2017.[2] Proposed grounds 5-12 make various complaints under headings asserting that the judge failed to recognise or consider the applicant's 'commitments', an earlier Court of Appeal ruling, principles of issue estoppel, principles of Anshun estoppel,[3] the terms of what was in fact sought by the respondent in the hearing before the judge, 'the urgency of the matter', s 138(1) of the Evidence Act 2008 and 'the essence of the dispute'.

5 Following the dismissal of his appeal, the applicant applied to the County Court for an order under s 6(1) of the JDR Act for the judgment debt to be paid in instalments. On 16 December 2015, Tran JR made orders that the judgment debt be paid by monthly instalments of $3,035. On 17 December 2015, Tran JR made a further order in which it was directed that each instalment was to be applied first in reduction of any interest on the judgment debt which had accrued, and secondly (insofar as there was any remainder) in reduction of the principal judgment debt.

6 On 29 May 2017, the applicant applied to the County Court for an order under s 8(1) of the JDR Act, seeking to reduce the amount of the monthly instalments from $3,035 per month to $1,649 per month. On 17 July 2017, that application was dismissed by Tran JR. In the order dismissing this application, under the heading 'Other Matters', the Judicial Registrar noted that the applicant had not paid the last two instalments due under the instalment order. The Judicial Registrar noted the applicant's statement that he was under the mistaken impression that his application for a variation had the effect, under s 8 of the JDR Act, of staying enforcement or execution of the judgment (notwithstanding a note to the contrary made in an order on 24 October 2016 dismissing an earlier application by the applicant for a variation). The Judicial Registrar also noted that, in order to obtain the protection provided in s 9 of the JDR Act, the applicant intended to file and serve a fresh application under s 6(1) for an instalment order in substitution of the existing order.

7 On 17 July 2017, the applicant filed the fresh application he foreshadowed for a substituted instalment order. In the fresh application, the applicant sought an order for the payment of the amount owing by him by monthly instalments of $1,850. In support of this application, the applicant filed an affidavit sworn on 17 July 2017 ('the July 2017 affidavit') in which he deposed that the market value of the Chirnside Park property (being the only property that he owned) was $560,000 and that there was a mortgage of $541,000, giving him a net equity of $29,000.

8 On 24 July 2017, a deputy registrar of the County Court dismissed that application. In the order dismissing the application, the order made on 16 December 2015 is stated to be 'confirmed'.

9 Under s 6(5) of the JDR Act, the applicant, if dissatisfied with the dismissal of his application, had 14 days to file a notice of objection seeking that the matter be set down for hearing by the Court. The applicant did not file a notice of objection.

10 On 25 July 2017, while the applicant was still in time to file a notice of objection under s 6(5) of the JDR Act, Tran JR made an order in favour of the respondent granting leave to issue a warrant of seizure and sale that had been filed

10 on 14 July 2017.[4] Under the heading 'Other Matters' in this order, Tran JR said that she was satisfied on the basis of an affidavit sworn by the respondent that 'the instalment order has not been complied with as no instalments have been paid since 3 May 2017'. On 28 July 2017, the warrant of seizure and sale dated 14 July 2017 was issued.

11 On 2 August 2017, the applicant paid the outstanding instalments due on 1 June, 1 July and 1 August 2017.

12 On 8 August 2017, the applicant filed a summons in the County Court seeking an order that the warrant of seizure and sale be set aside. The applicant's summons was heard, by Judge Anderson, on 4 September 2017. On the same day, the applicant paid the instalment that was due on 1 September 2017.

13 On 14 September 2017, Judge Anderson set aside the warrant of seizure and sale. The judge considered that leave to issue the warrant on 25 July 2017 'was probably not justified and, therefore, ineffective'.[5] The judge said, however, that if he was wrong in this conclusion then he would nevertheless set aside the warrant in view of the payments made on 2 August and 4 September 2017.[6]

14 On 19 September 2017, the respondent made an ex parte application to the County Court for an order in the following terms:

urgent injunction that an amount of money be held over by the selling agent to satisfy the judgment debt of Mr Refaat (property sale is due for settlement 20 September 2017).

In support of this application, the respondent swore an affidavit that exhibited a contract of sale of the Chirnside Park property. The contract of sale was dated 23 June 2017. The terms of the contract provided that the purchase price was $700,000 and that settlement was to occur on 22 September 2017. Also exhibited to the respondent's affidavit was an email, dated 8 September 2017, from the applicant's conveyancer to the respondent asking the respondent to:

calculate the funds that you will require on 22 September, including all penalties, and we will ensure a cheque for this amount is drawn at the settlement on your behalf.

15 The respondent's ex parte application was heard by Judge Anderson on the day the application was filed (19 September 2017). The judge made an interim order until 5:00 pm on 21 September 2017 restraining the applicant from settling the sale of the Chirnside Park property without obtaining a bank cheque payable to the respondent in the amount of the balance outstanding on the judgment debt, interest and ancillary costs. The hearing of the respondent's application was adjourned to 21 September 2017 at 9:30 am.

16 On 21 September 2017, the parties appeared on the return of the respondent's application before Judge Anderson. Following a hearing, the judge set aside the order he made on 14 September 2017 revoking the warrant of seizure and sale, and extended the injunction that he had granted on 21 September until further order. It is these orders from which the applicant now seeks leave to appeal.

17 On 26 September 2017, the judge gave reasons for the orders he made on 21 September 2017.[7] The judge said that the primary reason for the orders he made on 21 September 2017 was that the applicant, in the July 2017 affidavit, had not 'properly disclosed the circumstances relating to the Chirnside Park property'.[8] The judge said that he had set aside the warrant of seizure and sale on 14 September 2017 in the exercise of his discretion, and that among the factors he took into account was the applicant's sworn statement that 'essentially ... his equity in [the Chirnside Park property] was minimal'.[9] The judge concluded that the applicant's equity was 'minimal' because the applicant, in the July 2017 affidavit, deposed that the Chirnside Park property had a market value of $560,000 with a mortgage of $541,000. As the judge however observed, in fact, on 23 June 2017, the applicant had executed a contract of sale for the Chirnside Park property for a price of $700,000.[10]

18 The applicant contends that the judge was wrong to make the orders he made, that required the applicant to pay the outstanding amount of the judgment debt, owed by the applicant to the respondent, from the proceeds of sale of the Chirnside Park property. The applicant submits that in making this order, the judge failed to consider or recognise the matters we have identified in paragraph [4] above.

19 The basis for the judge's order was the evidence, tendered for the first time on 19 September 2017, of the applicant's sale of the Chirnside Park property for $700,000. The applicant contends, however, that the copy of the contract of sale tendered in evidence before the judge was improperly obtained, and therefore should have been excluded from evidence under s 138(1) of the Evidence Act. It was submitted that the contract was improperly obtained because it was obtained without the knowledge or consent of the applicant (proposed ground 11). As an alternative, in proposed ground 8, the applicant submitted that if evidence of the sale of the Chirnside Park property was admissible then, pursuant to the principles in Anshun, the respondent should have been prevented from relying upon the evidence of the proposed sale because the respondent was aware of the existence of the proposed sale from discussions with the applicant's conveyancer, either prior to the hearing on 4 September 2017 or prior to the judgment delivered on 14 September 2017.

20 Next, under proposed grounds 1-4, the applicant submitted that the judge erred in failing to consider or properly apply the provisions of the JDR Act. In essence, the applicant's argument is that at all relevant times there was a valid instalment order in force under the JDR Act and that the provisions of that Act did not permit the judge to make the orders about which complaint is made. Moreover, it was submitted that the instalment order was required to remain in place until there were circumstances of the kind referred to in s 8 or s 17 of the JDR Act, and that the respondent's entitlement (if any) to any order against the applicant was governed by and confined to the operation of the mechanisms in ss 8 and 17 of the JDR Act.

21 Proposed ground 9 makes complaint that the judge made an order in favour of the respondent that was more generous to the respondent than the order that the respondent actually sought. The applicant contended that the respondent's application of 19 September 2017 only sought that the amount of the outstanding judgment debt be paid into a trust account, rather than that there be a payment from the proceeds of sale to the respondent.

22 Next, in proposed ground 7, it was submitted that the judge's order infringed the principles of issue estoppel. It was submitted that the County Court had, in effect, heard the same application six times and that the judge was bound by the earlier determinations that had been made in the applicant's favour.

23 Under proposed ground 6, complaint was made that the judge ignored a previous Court of Appeal ruling made on 28 November 2014. The applicant contended that this ruling allowed him 'to sell his house to relocate without restrictions'.

24 Finally, under the remainder of the applicant's proposed grounds of appeal (proposed grounds 5, 10 and 12), the applicant sought to argue that the Court erred in failing to take his commitments and personal circumstances into account, and also erred in failing to properly recognise 'the core of the dispute' that underlies the present application. Specifically, under proposed ground 12, the applicant sought to argue the underlying merits of the dispute that was resolved at trial in 2014, and also the merits of a VCAT proceeding in which the applicant and his company Simplex Automation Pty Ltd are applicants, and the respondent is the respondent.[11]

25 As the applicant's written case makes plain, it is the order enjoining the settlement of the sale of the Chirnside Park property, without payment of the outstanding amount of the judgment debt being made to the respondent, that is the focus of the present application. Whether the judge was correct in setting aside his order revoking the warrant of seizure and sale is of no moment in the present application, execution on the warrant never having been levied. Accordingly, we turn to the applicant's proposed grounds of appeal as they relate to the primary order about which complaint is made.

26 There is no substance in any of the applicant's proposed grounds of appeal. When the judge made the order from which the applicant seeks leave to appeal, the amount owing on the judgment debt by the applicant to the respondent was $42,874.09. The fact that there was in force a valid instalment order under the JDR Act did not mean that the applicant was immunised from his liability to pay the amount outstanding under the judgment debt to the respondent - particularly if the applicant's means to pay were to be increased by the receipt of the proceeds of sale of a property.[12]

27 The order made by the judge was an interlocutory discretionary decision on a question of procedure. As has been said many times before, there is a strong presumption in favour of the correctness of such decisions. The judge was entitled to take into account the failure by the applicant to depose to the true circumstances concerning the Chirnside Park property in his affidavit sworn in support of his application made on 17 July 2017. The judge was entitled to reject an explanation offered by the applicant from the Bar table, as to figures being copied by the applicant's wife from a previous affidavit into the July 2017 affidavit, as satisfactorily explaining the applicant's non-disclosure of the proposed sale.

28 No questions of Anshun estoppel or issue estoppel arose before the judge. This was not a case where the applicant had the benefit of a final order, or a case where the respondent was attempting to re-litigate an issue that had been finally determined against him. Moreover, as to the Anshun estoppel point, there is no evidence that the respondent knew of the proposed sale of the Chirnside Park property at any time before 8 September 2017[13] (remembering that the hearing, in respect of which the applicant says that this point should have been raised, occurred on 4 September 2017).

29 Similarly, there was no illegally or improperly obtained evidence tendered before the judge, and s 138(1) of the Evidence Act was not engaged on the application before the judge. From the evidence before the primary judge, it appeared that the respondent became aware of the sale of the Chirnside Park property as a result of an email sent to him by the applicant's conveyancer on 8 September 2017[14] - after the hearing before the judge on 4 September 2017. Moreover, there is no basis upon which it might be said that there was any impropriety or illegality on the part of the respondent in obtaining this evidence.

30 The Court of Appeal order made on 28 November 2014 is of no assistance to the applicant. On that day, the Court dismissed an application by the respondent for a freezing order pending the hearing of the applicant's appeal from the judgment made at trial.[15] The freezing order was sought over the proceeds of a proposed sale of the Chirnside Park property. The Court held that an explanation then given by the applicant for the proposed sale was a plausible one[16] and that the respondent had not established that there was a real danger that the applicant was likely to dissipate his assets so that a prospective judgment would be wholly or partly unsatisfied.[17] The Court did not hold that the applicant had some ongoing right, as asserted by the applicant or otherwise, 'to sell his house to relocate without restrictions'.

31 Finally, there is no merit in the remainder of the applicant's proposed grounds of appeal. Specifically, there is no basis for contending that the judge failed to have proper regard to any of the provisions of the JDR Act or that the judge failed to have proper regard to relevant considerations. Indeed, on all of the evidence, we think the judge was entirely correct to make the orders about which the applicant now complains. We see no circumstances which could justify orders that would result in the respondent having to repay his judgment debt to the applicant, much less any basis upon which the respondent might be liable to pay the costs of hotel accommodation for the applicant.

32 The application for leave to appeal has no real prospect of success.[18] Indeed, the application is totally without merit.[19] The application for leave to appeal must be refused.

[1] Refaat v Barry [2015] VSCA 218.

[2] While the application for leave to appeal identifies ss 6, 8, 9 and 17 of the JDR Act as the sections the judge failed to consider, in the applicant's written case s 5 is also identified as a section the judge failed to consider.

[3] Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 ('Anshun').

[4] While it may be doubted that leave was required (as to which, see r 68.02(1)(d) of the County Court Civil Procedure Rules 2008) nothing turns on that question in the present application.

[5] Refaat v Barry [2017] VCC 1295 [18].

[6] Ibid. The judge also observed, at [15] that, even if no review was sought under s 6(5) of the JDR Act, s 6(8)(b) of the JDR Act probably resulted in a stay of execution until the expiration of the review period referred to in s 6(5). While the correctness of that proposition may be doubted, having regard to the issues in the present application, it is unnecessary for us to resolve that question.

[7] Refaat v Barry [No 2] [2017] VCC 1375.

[11] A proceeding that was summarily dismissed on 17 November 2017 (see Simplex Automation Pty Ltd v Barry [2017] VCAT 1874).

[12] Cf s 8(2)(b) of the JDR Act as it relates to the 'substantial increase in the ... means of [a] judgment debtor'.

[13] Although, in his written case in this Court, the respondent conceded that he became aware of the proposed sale of the Chirnside Park property from a telephone call with an employee of the applicant's conveyancer on 7 September 2017.

[14] As we have already noted, it now appears that the respondent was advised of the proposed sale on 7 September 2017.

[15] Refaat v Barry (Unreported, Court of Appeal, Neave JA, Ginnane and Sloss AJJA, 28 November 2014).

[18] See s 14C of the Supreme Court Act 1986

[19] See s 14D(3) of the Supreme Court Act 1986.