FEDERAL COURT OF AUSTRALIA

Linke v TT Builders Pty Ltd (No 3) [2015] FCA 1054

THE COURT ORDERS THAT:

1.    Pursuant to rr 41.01 and 41.10 of the Federal Court Rules 2011 and s 4 of the Enforcement of Judgments Act 1991 (SA), there be an investigation by the Court of the means of the First and Second Respondents to satisfy the judgment arising from the Certificate of Taxation issued on 22 May 2015 (the Judgment).

2.    A summons be issued to Mr Armando William Tessitore of 42A Burnell Drive, Belair South Australia requiring him to appear before the Court at a date and time to be nominated by the Registrar for examination as to:

(a)    any interest that the Second Respondent may have in the property at 42A Burnell Drive, Belair;

(b)    any assets of the First and Second Respondents;

and to produce to the Court any documents in his possession, custody or power;

(c)    recording or evidencing the assets of Antonio Maurizio Tessitore and TT Builders Pty Ltd;

(d)    evidencing the transfer of Certificate of Title Volume 5567 Folio 340, being the land situated at 42A Burnell Drive, Belair, South Australia, from Antonio Tessitore to Armando William Tessitore on or about 28 February 2013, the terms of that transfer and payment of consideration in respect of the transfer.

3.    A summons be issued to the Department of Premier and Cabinet of 200 Victoria Square, Adelaide requiring it to produce to the Court at a date and time to be nominated by the Registrar, a list of all current and previous motor vehicle and boat registrations in the name of Antonio Maurizio Tessitore, date of birth 21 January 1962, including details of model, make and registration number details.

4.    The non-party Mr Armando William Tessitore pay the Applicant’s costs of, and incidental to, today’s hearing, but excluding the costs associated with Mr Linke’s affidavit of 8 September 2015 and excluding the costs of the attendance on 24 July 2015, as to which there is no order as to costs.

5.    The matter be adjourned to a date and time to be fixed by the Registrar for the investigation.

6.    There be liberty to apply

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

EX TEMPORE REASONS FOR JUDGMENT

1    The applicant seeks to enforce against the first and second respondents his entitlement to costs arising from the issue on 22 May 2015 by a Registrar of this Court of a sealed certificate of taxation. By virtue of r 40.32(2) of the Federal Court Rules 2011 (Cth) (FCR), a sealed certificate of taxation has the form and effect of an order of the Court. The applicant’s entitlement pursuant to the certificate is $94,507.33.

2    The background to the litigation giving rise to the applicant’s claim and to the order for costs is set out in Linke v TT Builders Pty Ltd [2014] FCA 672 and in Linke v TT Builders Pty Ltd [2015] FCA 111.

3    On 8 July 2015, the Court made orders charging two properties owned by the second respondent in Archibald Street, American River: Linke v TT Builders Pty Ltd (No. 2) [2015] FCA 704. The mortgagee of those properties has since indicated that they may not realise on sale sufficient to discharge the debts secured by each mortgage with the consequence that they may not provide a means by which the applicant can satisfy the judgment debt. Accordingly, the applicant has applied for orders, pursuant to FCR 41.01 and 41.10 and pursuant to s 4 of the Enforcement of Judgments Act 1991 (SA), that the Court investigate the first and second respondents’ means of satisfying the judgment debt and that, as part of that investigation, the Court issue a summons to Armando Tessitore, the second respondent’s son, requiring him to appear for examination before the Court and to produce specified documents. The applicant also seeks the issue of a summons directed to a South Australian Government Department to which I will refer later.

4    I will refer to Mr Armando Tessitore as Mr Tessitore and to his father as the second respondent. Mr Tessitore opposes the orders sought by the applicant. He contends that the Court does not have the power to issue a summons for the purposes stated by the applicant, that the Court should not be satisfied that he is a person who is able to assist in the investigation and, in the alternative, that the Court should not, in the exercise of its discretion, cause the summons to be issued against him.

5    Rule 41.01 of the FCR permits a party to apply to the Court for directions about the enforcement or execution of an order. FCR 41.10 authorises the Court, implicitly, to make any order which could be made by the Supreme Court of the State or Territory in which the judgment or order was made, as if the judgment or order was a judgment or order of that Supreme Court. It provides:

(1)    A party who wants to enforce a judgment or order of the Court may apply to the Court to make an order, to issue any writ, or to take any other step that can be taken in the Supreme Court of the State or Territory in which the judgment or order has been made as if the judgement or order was a judgment or order of that Supreme Court.

(2)    An order made under subrule (1) authorises the Sheriff, when executing the orders of the Court, to act in the same manner as a similar officer of the Supreme Court of the State or Territory in which the order is being executed is entitled to act.

(3)    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.

Note It is not necessary to adopt different modes of procedure and forms of process in each State or Territory.

6    Rule 41.10 should be read in conjunction with s 53 of the Federal Court of Australia Act 1976 (Cth) which provides:

(1)    Subject to the Rules of Court, a person in whose favour a judgment of the Court is given is entitled to the same remedies for enforcement of the judgment in a State or Territory, by execution or otherwise, as are allowed in like cases by the laws of that State or Territory to persons in whose favour a judgment of the Supreme Court of that State or Territory is given.

(2)    This section does not affect the operation of any provision made by or under any other Act or by the Rules of Court for the execution and enforcement of judgments of the Court.

7    Having regard to r 41.10 and to s 53, the applicant invokes s 4 of the Enforcement of Judgments Act 1991. Section 4 provides:

(1)    The court may, on application by the judgment creditor, investigate the judgment debtor's means of satisfying a monetary judgment.

(2)    The court will, on application by the judgment creditor, issue a summons to require the judgment debtor or any other person who may be able to assist with the investigation to appear for examination before the court or to produce documents relevant to the investigation to the court.

(3)    A summons under subsection (2) must be served personally.

(4)    If a person fails to appear as required by the summons, the court may issue a warrant to have the person arrested and brought before the court.

8    As can be seen, s 4(1) authorises a court, on application by a judgment creditor, to investigate the judgment debtor’s “means of satisfying a monetary judgment”. Subsection (2) provides that the court “will”, on application by the judgment creditor, issue a summons requiring the judgment debtor or any other person “who may be able to assist with the investigation” to appear for examination before the court or to produce documents “relevant to the investigation” to the court.

9    I did not understand Mr Tessitore to advance a contention that the Court should not accede to the applicant’s application that it investigate the first and second respondents’ means of satisfying the monetary judgment. Rather, his submissions went to whether or not the summons should be issued requiring him to appear for examination.

10    I am satisfied that it is appropriate for the Court to investigate the means of the first and second respondents of satisfying the judgment against them. The judgment has so far gone unsatisfied. Attempts by the applicant to contact the first and second respondents have been unsuccessful and the second respondent, in particular, has not proffered anything to the applicant indicating an intention, let alone an ability, to satisfy the judgment.

11    Mr Tessitore’s first contention is that s 4 contemplates an investigation only of the judgment debtor’s “means” of satisfying a monetary judgment and not an investigation more generally of the judgment debtor’s financial circumstances or “examinable affairs”, to use the expression in the Bankruptcy Act 1966 (Cth). He submits that the application of the applicant does not recognise this limitation.

12    Mr Tessitore also contends that, when a summons is sought against a person other than the judgment debtor, the Court must be satisfied that that person is a person “who may be able to assist” with the investigation. He says that on the evidence he does not answer that description.

13    In support of his submission that the Court’s power under s 4 is not properly invoked in the present circumstance, Mr Tessitore relies upon the purposes of the proposed examination stated by the applicant’s solicitor in his affidavit in support of the application:

[24]    ... I believe that Armando Tessitore is able to assist in an investigation under s.4 of the Enforcement of Judgments Act 1991 (SA) into the means of the Second Respondent to satisfy the Judgment Sum as he may have information regarding:

(a)    the whereabouts of the Second Respondent;

(b)    any interest that the Second Respondent has in the Second Respondent’s son’s property; and

(c)    any assets of the Second Respondent.

14    The second respondent’s son’s property, to which the solicitor referred in (b), is a property at Burnell Drive, Belair, transferred by the second respondent to Mr Tessitore on 27 February 2013. The applicant attaches significance to the fact that this intra-family transfer occurred after the commencement of underlying proceedings in the Federal Circuit Court.

15    The decision in McCormack v National Australia Bank Ltd [1992] FCA 183; (1992) 35 FCR 303 supports Mr Tessitore’s submission in part. In relation to an analogous provision in the Rules of the Supreme Court of the Australian Capital Territory, the Full Court held (at [12]) that the Rule permitted, relevantly, only an examination of the judgment debtor’s “means” and that it did not contemplate an unlimited examination of a debtor in respect of his financial affairs. The Full Court went on to say (at [13]-[14]):

We would not read the term “means” as limited to pecuniary resources presently, in the sense of instantly or currently, available. ... The term “means” of its very nature denotes not only existing property or assets but also resources or sources whereby assets or property may become available for satisfaction of the judgment debt. But nevertheless, the rule allows only an examination as to the property and means which the judgment debtor has to satisfy the judgment.

Order 43 r 31 does not, as does s 81 of the Bankruptcy Act 1966 (Cth), allow for a general, wide-ranging inquiry into the financial transactions of the debtor. The purpose of the examination is to ascertain from what sources the debtor may satisfy the judgment debt. The term “means” does not denote other possible methods by which the judgment creditor may obtain satisfaction of the debt. It is the means of a debtor which are the subject of the examination.

16    The Full Court then went on to hold that the Rule did not permit the creditor to conduct an examination as to whether the alternative process of bankruptcy was worthwhile.

17    In my opinion, the same reasoning is apposite in the case of s 4 of the Enforcement of Judgments Act 1991. On its own terms s 4(1) authorises an investigation only of judgment debtors’ “means” of satisfying the monetary judgment and not an examination of their affairs more generally.

18    The justification given by the applicant for seeking to examine Mr Tessitore about the whereabouts of his father (being the first purpose stated by the applicant’s solicitor) is, at best, tenuous. It was to the effect that if the applicant is informed as to where the second respondent is, he might then be able to obtain information as to the ownership of the property in which he is residing or at which he conducts a business and, in turn, that this might give some indication of the second respondent’s means. That indicates immediately, in my opinion, that the relationship between the proposed subject matter of the inquiry and the purpose of the investigation contemplated by s 4(1) is quite indirect. I consider that s 4(1) does not authorise an investigation of this kind. I uphold Mr Tessitore’s submission in that respect.

19    However, in my opinion the second and third purposes identified by the applicant’s solicitor for the investigation are within s 4(1) as they go directly to the means by which the second respondent may satisfy the applicant’s judgment. The Court does have the power to order an investigation of those matters and, providing that the Court is satisfied that Mr Tessitore is a person who may be able to assist in that investigation, it would be within the Court’s power to issue a summons to require him to attend for examination.

20    The applicant contended that once the Court decides to exercise its discretion to order an investigation, s 4(2) requires it then to issue a summons requiring either the judgment debtor or any other person who may be able to assist to appear for examination. This was said to be a consequence of the use of the word “will” in s 4(2).

21    I do not accept that submission. In my opinion, s 4(2) of the Enforcement of Judgments Act vests a discretion in the Court to decide whether or not to issue a summons requiring a person to attend for examination should be issued. The use of the word “will” in s 4(2) does not indicate to the contrary. I note, first, that while s 4 uses three different terms in its first three subsections (“may”, “will” and “must”), it does not use the word “must” in s 4(2). Plainly, it was open to the legislature to use that word if it intended that the Court should have no discretion under s 4(2). That rather suggests that the legislature was not intending to impose an obligation on the Court to issue a summons under subs (2). One would not readily adopt a construction which produces that effect as it would be rather surprising that the legislature did intend that courts should have no discretion under s 4(2).

22    I think it more likely that the word “will” is used in the sense that the Court will “usually” or “ordinarily” issue a summons, that is, as indicating a position which will be the norm but not a position which a Court is bound to take. It will be the norm because s 4 does not of itself vest the Court with other express powers by which to conduct an investigation.

23    I also note that there are instances in which even the word “must” has been construed as conveying a discretion (Director of Public Prosecution v George [2008] SASC 330; (2008) 102 SASR 246 at [184] and [245]) so that one cannot infer necessarily from the use of the word “will” that the legislature was intending to exclude the exercise of a discretion.

24    Accordingly, it is appropriate to consider whether Mr Tessitore answers the description of a person who may be able to assist with the investigation. Mr Tessitore’s evidence is to the effect that he is unable to assist because he has only limited contact with his father, knows nothing about his financial affairs and does not have knowledge of any assets or other means by which the judgment debt may be satisfied. It is significant that Mr Tessitore has deposed to those matters by way of affidavit but I do not regard that as being conclusive. His statements have not been tested by cross-examination under oath and it would be inappropriate in my opinion, for the Court to proceed at this stage on the basis that Mr Tessitore’s affidavit is exhaustive of all matters within his knowledge bearing upon the means by which the second respondent may satisfy the applicant’s judgment debt.

25    There are some indications that Mr Tessitore may have knowledge of at least some assets of his father or at least some knowledge of his means of satisfying the judgment debt. First, the very relationship of father and son between the two men is significant. They are not strangers to one another or at arms-length. Commonly, sons do have at least some knowledge of their fathers’ circumstances.

26    Next, the fact that the second respondent transferred the house at Belair to Mr Tessitore as an intra-family transaction gives rise by itself to the possibility that Mr Tessitore may have some knowledge of the second respondent’s means. Despite the terms of the transfer form to which counsel for Mr Tessitore referred relating to the Belair property, there remains the possibility that the second respondent may have some beneficial interest in the property. Although the transfer occurred in 2013, there is potentially some significance in the fact that the transfer occurred only after the applicant had commenced the present proceedings in the Federal Circuit Court. The transfer also occurred relatively quickly after the second respondent had acquired the property, which on my understanding was before the applicant had commenced the proceedings in the Circuit Court.

27    Next, I note that Mr Tessitore is shown in the Australian Securities and Investment Commission records as a shareholder in the first respondent. It may well be that he is minority shareholder only and has played no part in the business conducted by the first respondent. However, it does indicate that he has, at least to some extent, involved himself in his father’s business affairs.

28    There is some force in Mr Tessitore’s submission that the material indicating that he may be able to assist is not strong, but the Court does not have to be satisfied that he is a person who will, in fact, be able to assist. There is sufficient, in my opinion, to warrant the Court concluding that he is a person who may be able to assist with the investigation. It would also be inappropriate to determine on an application of this kind the very matter which will have to be explored in the event that the examination takes place.

29    The matters which favour the exercise of the discretion in favour of the applicant include matters already canvassed. His judgment remains unsatisfied. There seems to be no immediate prospect of the judgment being satisfied and, as I have indicated, Mr Tessitore is a person who may be able to assist with the investigation of the first and second respondents’ means.

30    Mr Tessitore raises a number of matters bearing on the exercise of the discretion. First, an absence of utility, bearing in mind what he has said about an absence of knowledge on his part. For the reasons given earlier, I do not regard that as conclusive.

31    Next, he submitted, relying upon the judgment of Gray J in Martinek v Evans [2004] FCA 1269; (2004) 211 ALR 651 at [18], that a summons should be issued only as a last resort and that the applicant has not reached that stage yet. That was because the applicant has not yet exhausted the potential for recovery from the sale of the two properties at American River or shown by other alternatives, perhaps including bankruptcy, that he cannot have the judgment debt satisfied.

32    Next, Mr Tessitore points to the prejudice to him as an individual. The issuing of the summons will be an interference with his personal liberty, as he will appear by coercion to be examined. In addition, there will be some disruption to his own business affairs with an associated loss of income.

33    In my opinion, the applicant has demonstrated sufficiently that there do not appear to be available alternative means by which the judgment debt may be satisfied. As I indicated earlier, the mortgagee of the properties at American River has indicated that it does not expect to recover enough from the sale of the two properties to satisfy its own debt, let alone for there to be a surplus available to the present applicant.

34    There may be circumstances in which it is appropriate to exercise the power to issue a summons only as a last resort, but in my opinion, it would be inappropriate to fetter the exercise of the discretion under section 4 by a court imposed requirement of that kind. The availability of alternative means by which the applicant may obtain the information it seeks is a very relevant consideration, but to my mind, not a decisive one.

35    In any event, the applicant’s solicitor has deposed to significant attempts to ascertain material relating to the ability of the two respondents to satisfy the judgment debt. It is not as though the applicant is asking the Court to issue a summons without having explored other means of obtaining the information which he seeks.

36    In Linke v TT Builders Pty Ltd (No. 2), I referred to the public interest in the Court’s orders being respected and obeyed and the appropriateness of the Court assisting judgment creditors to enforce their entitlements. The underlying policy consideration is that respect for the law will be undermined if judgment debtors can frustrate enforcement of judgments against them. These considerations are significant matters and the personal considerations raised by Mr Tessitore, while important, are to be balanced against them.

37    On balance, I am satisfied that the discretion should be exercised in favour of the applicant and that the Court should issue a summons requiring Mr Tessitore to appear for examination before the Court and to produce documents relevant to the investigation to the Court.

38    I make it plain, however, that I would not regard questioning of Mr Tessitore as to the second respondent’s location, residence or business address as being, by itself, a proper subject of questioning at the examination. It is possible that questions of that kind might arise as a proper incident of other matters raised at the examination, and I do not seek to preclude the Registrar from allowing such questions if a proper basis be identified, but I indicate that I am not authorising the issue of a summons to Mr Tessitore for that purpose.

39    For the same reason, I will not authorise a summons requiring Mr Tessitore to produce documents recording or evidencing the second respondent’s location, residential address or business address.

40    The applicant also seeks that a summons be issued to the Department of Premier and Cabinet in South Australia, requiring it to produce to the Court a list of all current and historical motor vehicle and boat registrations in the name of the second respondent, and that a summons be issued to the Commonwealth Department of Immigration and Border Protection, requiring it to produce to the Court a schedule of all international departures and arrivals by the second respondent in the period from 3 October 2014 to the present.

41    The second aspect of this part of the application was not pressed ultimately, but I will issue the summons to the relevant South Australian department, as I am satisfied that it too seeks information bearing upon the second respondent’s means of satisfying the judgment debt.

Associate:

Dated:    25 September 2015