Allen v CGI Holdings Pty Ltd (No 1) [2021] QDC 238

DISTRICT COURT OF QUEENSLAND CITATION: Allen v CGI Holdings Pty Ltd (No.1) [2021] QDC 238 PARTIES: REECE JUSTIN ALLEN (Plaintiff/Applicant) v CGI HOLDINGS PTY LTD ACN 156 152 359 (Defendant/Respondent) FILE NO: 1465/21 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: Brisbane District Court DELIVERED ON: 20 September 2021 (ex tempore) DELIVERED AT: Brisbane HEARING DATE: 20 September 2021 JUDGE: Porter QC DCJ ORDERS: 1. Stay further steps to give effect to the enforcement warrant issued on 12 August 2021, to the extent it relates to the shares in CGI Kingaroy Pty Ltd and CGI Water Pty Ltd, until further order; and 2. Grant leave to judgment creditor to bring the matter on before Judge Porter QC for further consideration. CATCHWORDS: PROCEDURE – JUDGMENTS AND ORDERS – WARRANTS OF SEIZURE AND SALE – where the plaintiff obtained default judgment against the defendant – where the judgment creditor has sought enforcement warrants to recover judgment debt with limited success – where the known property of the enforcement debtor is shares in a company – whether shares in a company could be seized and sold under an enforcement warrant – whether the express power to issue an enforcement warrant by charging order over shares means that shares are impliedly excluded from the scope of an enforcement warrant to seize and sell property CASES: Lloyds & Scottish Finance Ltd v Modern Cars & Caravans (Kingston) Ltd [1966] 1 QB 764 LEGISATION: Uniform Civil Procedure Rules 1999 (Qld), rr 828, 874-880, 982, Chapter 19, Part 4 and Part 8 -- 1 of 5 -- 2 COUNSEL: R. Allen, solicitor, for the Plaintiff/Applicant SOLICITORS: Project Legal for the Plaintiff/Applicant [1] This is an unusual proceeding. It has come before me on referral from the Registrar under Rule 982 Uniform Civil Procedure Rules 1999 (Qld) (UCPR). That Rule provides: 982 Referral to judge or magistrate (1) If a question arises in a matter before a registrar that the registrar considers appropriate for the decision of a judge or a magistrate, the registrar may refer the matter to a judge or a magistrate. (2) If a party asks a registrar to refer a matter before the registrar to a judge or a magistrate, the registrar must refer the matter to a judge or a magistrate. (3) The judge or magistrate may then dispose of the matter or refer it back to the registrar with the directions the judge or magistrate considers appropriate. [2] It arose in these circumstances. The judgment creditor is Mr Allen, a solicitor, who obtained judgment for a sum in excess of $400,000 against a company called CGI Holdings Pty Ltd some time ago by default. The debt arises from legal costs and counsel’s fees incurred in litigation arising out of a Construction Industry adjudication. As is the way with such matters, a great deal of legal fees can be incurred quickly, and in respect of this one, there was an application to stay the adjudication which ultimately resulted in a settlement of the dispute over the adjudication decision. [3] The current judgment debtor became liable by agreement (what I characterise as a novation) of the obligation of the client debtor, and it is against that company that judgment has been entered. No application to set aside the default judgment has been made. [4] Mr Allen has energetically sought to recover the judgment debt by enforcement warrants, so far with limited success. He has presently, amongst others, the benefit of an enforcement warrant for the seizure and sale of property issued by this Court on 12 August 2021. It is directed to the enforcement officer, requiring that officer to seize and sell such of the real and personal property in which the enforcement debtor has a legal or beneficial interest as will satisfy the total amount of the judgment. [5] It requires, as is usual, that the enforcement officer report concerning execution of the warrant and draws attention to various relevant provisions, and then identifies, most relevantly for this case, that the known property of the enforcement debtor includes 155 ordinary shares in a company called CGI Kingaroy Pty Ltd and 120 ordinary shares in CGI Water Pty Ltd. -- 2 of 5 -- 3 [6] At the time of the application for the warrant to seize and sell the shares in those two companies, the Registrar contacted Mr Allen and communicated her opinion that shares in a company can only be seized based on an enforcement warrant for a charging order from the Supreme Court under Chapter 19, Part 8 of the UCPR. Mr Allen contended to the contrary. The Registrar was willing to issue the warrant, but said, when the time came to enforce, there may be issues encountered. [7] On 6 September 2021, the registry received a letter from Mr Allen instructing the enforcement officer to execute the warrant. He requests the enforcement officer to make demand for payment at the registered office of the judgment debtor, and if payment is not received, to seize, amongst other things, the shares. [8] The registry sought legal advice on whether shares in a company could be seized and sold under an enforcement warrant for seizure and sale, and the senior legal officer consulted advised them to ask the Court. Thus, the application comes before me under Rule 982. Specifically, the Deputy Registrar’s memorandum, addressed to me as the applications Judge, states: The Registrar requests the court to consider the question of whether an enforcement warrant for seizure and sale of property issued in the District Court pursuant to rule 828 UCPR can be used to seize and sell intangible property such as shares. [9] Ironically, that question is the easiest one to answer. The answer is yes. [10] The concern of the registry as to whether the enforcement warrant for seizure and sale could relate to shares at all appeared to arise by reason of the existence of Part 8 of Chapter 19, which, as I said, involves enforcement of warrants for charging orders. Those provisions appear at Rules 874 to 880 UCPR. [11] I can see no reason whatsoever why the existence of those provisions would reduce the scope of the general provisions for seizure and sale in the Rules, nor limit the scope of those general provisions such that seizure and sale of shares were not authorised under those provisions. That is so for these reasons. [12] First, Rule 828(1) authorises the Court to: …issue an enforcement warrant authorising an enforcement officer to seize and sell in satisfaction of a money order all real and personal property (other than exempt property) in which the enforcement debtor has a legal or beneficial interest. [underlining added] [13] I can see no reason to read Rule 828(1) as not including shares. Shares are plainly personal property. (The exclusion for exempt property relates to property that is not divisible on bankruptcy, which clearly does not apply to shares, nor to any assets of a company for that matter.) [14] Second, there is no basis, in my opinion, to impliedly read down Rule 828(1), because of the existence of Chapter 19, Part 8. That is because Chapter 19, Part 8 does something quite different from Chapter 19, Part 4. It contemplates a charging order. A charging order is a more flexible remedy that an order for sale. -- 3 of 5 -- 4 [15] Although I have not been addressed on the law, I can see no reason why it would not, for example, permit the appointment of a receiver. Rule 876(2) seems to contemplate that. So the situation might be that to seize and sell shares would be difficult (or impossible, practically), but they might be shares which receive a regular income stream, in which case the judgment creditor will more easily execute a judgment by obtaining a charging order, appointing a receiver, and receiving the income stream until the debt is met. [16] That could also well be more efficacious than a redirection order, because it might require some active conduct, on the part of the receiver, to ensure the money comes in. In any event, Chapter 19, Part 8 contemplates a different kind of remedy, and therefore provides no basis to read down the scope of the remedy provided in Chapter 19, Part 4. [17] For those two reasons then, the answer to the Registrar’s question is yes. Unfortunately, that does not exhaust the difficulties that the judgment creditor faces in recovering the debt. [18] The shares in the two companies that are sought to be seized and sold are shares in proprietary limited companies. It is almost certain that there will be limits upon the manner and form in which shares in those companies can be sold, and there will also be difficulties in identifying exactly how the sheriff would go about asserting control in a way which amounts to seizure, in accordance with the requirements of the law. Seizure does not necessarily require taking physical control of property:1 …some act must be done…to intimate to the judgment debtor or his servants that a seizure has been made… [19] There are a number of cases in Jackson and Pastellas’ Elegals Litigator’s Toolkit, annotating Rule 828, that explain the subtleties of what is required for seizure, and that is a difficulty for the sheriff, in practice, in seizing the shares and thereby carrying out the first part of his role. [20] The second part of his role is to sell, and as I have intimated, there might also be difficulties about that for a proprietary limited company. There are all sorts of potential answers to these difficulties, but I presently do not know what they are, and Mr Allen, I think, frankly accepts that more work has to be done to work out how to do it, and that unless and until that work is done, it is likely the sheriff will have difficulty in working out how to go about executing the warrant against the shares. [21] Notwithstanding the answer is yes to the Registrar’s question, I propose to stay further steps to enforce the enforcement warrant issued on 12 August 2021, to the extent it relates to the shares in CGI Kingaroy Pty Ltd and CGI Water Pty, until further order (but not to the extent it relates to the 2009 Porsche 911 Carrera 1 Halsbury’s Laws of England (3rd ed, 1956), adopted in Lloyds & Scottish Finance Ltd v Modern Cars & Caravans (Kingston) Ltd [1966] 1 QB 764, 776. -- 4 of 5 -- 5 Coupe, which I am sure the enforcement officers have experience in seizing and selling). [22] I give leave to the judgment creditor to bring the matter on before me for further consideration when he is ready to do so, by contacting my Associate. -- 5 of 5 --