By Andrew Ng, Associate, Insolvency and Restructuring Group
In the matter of Aquaqueen International Pty Limited [2016] NSWSC 508
In April this year, the Supreme Court of NSW was asked to consider the Court’s inherent jurisdiction to enforce judgments (also referred to as equitable execution) in the matter of Aquaqueen International Pty Limited [2016] NSWSC 508. The principle underpinning equitable execution is to enable judgments to be enforced in circumstances where the legal remedies available to a judgment creditor are inadequate.
Kunc J, after traversing through the numerous judgments in favour of the Plaintiffs against the Respondent (approximately 17 in total) resulting from the numerous proceedings and applications brought by the Respondent (some 11 proceedings and in excess of 20 applications) over the period October 2009 to March 2016, adopted the reasons of Ball J in Hall & Foster [2012] NSWSC 974 in concluding that in order to invoke the Court’s inherent jurisdiction to enforce judgments the Plaintiffs must satisfy the Court that the legal remedies available to them for execution are inadequate.
In the case, the Plaintiffs were seeking the appointment of a receiver over the real property of the Respondent to enforce the numerous costs judgments and awards which they had obtained against the Respondent.
Ultimately Kunc J was satisfied that the legal means for execution available to the Plaintiffs were inadequate, such legal means (or lack thereof) including:
- the inability of the Court to order a charge over the Respondent’s real property;
- the insufficient details available to the Plaintiffs of any employer, third party creditor or bank account upon which the Plaintiffs could issue a garnishee;
- the inability of the Plaintiffs to effect personal service of Writs of Possession on the Defendant; and
- the inability of the Plaintiffs to effect personal service of a Bankruptcy Notice or any subsequent Creditors Petition on the Defendant.
In passing, Kunc J made the distinction between the Court’s inherent jurisdiction to appoint a receiver and the Court’s statutory jurisdiction in section 67 of the Supreme Court Act 1970 (NSW), the latter conferring a separate power to appoint a receiver in any case in which it appeared to the Court to be just and convenient to do so.
The decision serves as a reminder that in the context of a non-corporate receivership, the court will only exercise its inherent jurisdiction where all efforts to recover the judgment debt by legal execution have been exhausted.
However it is also good to know that if a recalcitrant debtor is particularly excellent at avoiding service of legal processes, they may well be creating a new avenue for the alert creditor to approach the court for substantial and significant relief.
A copy of the judgment in the matter of Aquaqueen International Pty Limited [2016] NSWSC 508 can be found here(link is external).
If you would like more information or advice in relation to insolvency law, contact Andrew Ng, or a Principal of the Matthews Folbigg Insolvency and Restructuring Team:
Jeffrey Brown on (02) 9806 7446 or jeffreyb@matthewsfolbigg.com.au
Stephen Mullette on (02) 9806 7459 or stephenm@matthewsfolbigg.com.au.
