Despot v Registrar General of NSW; Dlakic trading as Johnston Vaughan Solicitors v Despot [2014] NSWSC 1303 (18 September 2014)

Last Updated: 25 September 2014

This decision has been amended. Please see the end of the decision for a list of the amendments.

Supreme Court New South Wales

Case Title:	Despot v Registrar General of NSW; Dlakic trading as Johnston Vaughan Solicitors v Despot
Medium Neutral Citation:	[2014] NSWSC 1303
Hearing Date(s):	18 September 2014
Decision Date:	18 September 2014
Jurisdiction:	Equity Division
Before:	Stevenson J
Decision:	In proceedings number 2013/44732 I order that the garnishee order made by Campbell J on 25 August 2014 be set aside. In proceedings number 2009/298869 I order that the funds in Court be paid out to Mr Despot forthwith. I order that Mr Dlakic pay Mr Despot's costs of today.
Catchwords:	PRACTICE AND PROCEDURE - judgment and orders - enforcement - garnishee order obtained ex parte - relevant authorities not disclosed - garnishee order set aside; PRACTICE AND PROCEDURE - funds paid into court - claim for payment out of court
Legislation Cited:	Bankruptcy Act 1966 (Cth)
Cases Cited:	Despot v Registrar-General of NSW [2013] NSWCA 313 Despot v Registrar General of NSW [2014] NSWSC 1002 Despot v Registrar General of NSW (No 2) [2014] NSWSC 1122 Dlakic v Despot [2014] NSWSC 1203 ML Ubase Holdings Co Pty Limited v Trigem Computer Inc [2007] NSWSC 859; (2007) 69 NSWLR 577
Category:	Interlocutory applications
Parties:	2009/298869: Ranko Despot (Plaintiff) Registrar General of NSW (First Defendant) Roy Maalouf (Second Defendant) Stelli Pty Limited (Third Defendant) Westpac Banking Corporation (Fourth Defendant) Dominic Carbone (Fifth Defendant) Jay Tyler (Sixth Defendant) Joyce Azzi (Seventh Defendant) 2013/44732: Amil Dlakic trading as Johnston Vaughan Solicitors (Plaintiff) Ranko Despot (Defendant)
Representation
- Counsel:	Counsel: 2009/298869: J C Hewitt (Plaintiff) 2013/44732: J W Conomos (Plaintiff) J C Hewitt (Defendant)
- Solicitors:	Solicitors: 2009/298869: Pamela J Enright Solicitor (Plaintiff) GR Bartier, Solicitor for the Registrar-General 2013/44732: Johnston Vaughan Solicitors (Plaintiff) Pamela J Enright Solicitor (Defendant)
File Number(s):	SC 2009/298869; SC 2013/44732

EX TEMPORE JUDGMENT (REVISED)

1. The matter for my consideration today is the identity of the party entitled to the sum of $150,887.86, paid into Court on 1 September 2014 by Westpac Banking Corporation on behalf of its customer, Stelli Pty Ltd.

2. There are two parties who claim to be entitled to that sum. The two parties are Mr Despot, who is the plaintiff in proceedings 2009/298869 ("the Equity Proceedings") and Mr Dlakic, who is the plaintiff and judgment creditor in proceedings 2013/44732 ("the Common Law Proceedings").

3. Mr Despot's claim arises out of a judgment he has obtained in the Equity Proceedings against Stelli in the following circumstances:

(a) pursuant to a contract for the sale of land dated 16 May 2008, Stelli agreed to purchase a property from Mr Despot for $1,600,000;

(b) the proceeds of the sale were paid to Mr Despot's builder (Mr Maalouf) who was holding a void power of attorney in breach of fiduciary duty to Mr Despot: see Despot v Registrar-General of NSW [2013] NSWCA 313. Mr Despot has not to date recovered any amounts on those judgments;

(c) Stelli sought specific performance of the contract and after a trial before Macready AsJ on 15 April 2011 an order for specific performance was made on condition that Stelli pay Mr Despot $91,086;

(d) Notwithstanding the non-payment of $91,086, Stelli became the registered proprietor and Westpac the registered mortgagee of the property on or about 30 May 2011;

(e) Mr Despot appealed against the judgment of Macready AsJ and the Court of Appeal made an order (among others) entering judgment for Mr Despot against Stelli in the amount of $91,086 plus interest on 10 October 2013;

(f) On 6 May 2014, Mr Despot filed a motion seeking to terminate the contract and be restored as registered proprietor of the property on the basis that the amount of $91,086 plus interest had not been paid. That motion was heard by Ball J and was dismissed on 28 July 2014: Despot v Registrar General of NSW [2014] NSWSC 1002. Mr Despot has filed a notice of appeal from Ball J's judgment. Mr Despot is seeking an order from the Court of Appeal that he be reinstated as registered proprietor of the property;

(g) in the course of the hearing before Ball J, Westpac made an undertaking to pay the amount of $91,086 plus interest: Despot v Registrar General of NSW (No 2) [2014] NSWSC 1122 at [16]- [23];

(h) as noted above, on 28 August 2014, Ball J ordered that the amount of $91,086 plus interest be paid to Mr Despot.

4. Mr Dlakic's claim arises from a judgment he obtained against Mr Despot in the Common Law Proceedings on 13 February 2013 for $181,053.98 together with a garnishee order that Campbell J, sitting as the Common Law Duty Judge, caused to be made following an application made to his Honour ex parte on 25 August 2014: (see Dlakic v Despot [2014] NSWSC 1203).

5. In my opinion, the competition between Mr Despot and Mr Dlakic as to the funds in Court should be resolved in Mr Despot's favour for the reason that, in my opinion, the garnishee order by Campbell J should be set aside.

6. It is common ground that there is pending in the Federal Court of Australia a creditor's petition under the Bankruptcy Act 1966 (Cth) against Mr Despot. The petitioning creditor is a Mr Mate Kosovich. Mr Dlakic is a supporting creditor.

7. The bankruptcy petition is defended and has been listed for hearing in the Federal Court on 8 October 2014.

8. The fact of the bankruptcy proceedings was, quite properly, disclosed to Campbell J in the ex parte application when the garnishee order was made.

9. Campbell J delivered ex tempore reasons for making the garnishee order. His Honour said at [9]:

"One matter of concern that I had was that making this order may give Mr Dlakic an advantage in the bankruptcy proceedings. Mr Conomos [who appeared for Mr Dlakic before Campbell J and appears for him before me today] has submitted that the existence of those proceedings does not detract from my ability to make the order. I accept that submission."

10. Evidently through oversight, Mr Conomos did not draw Campbell J's attention to authorities the effect of which is that, first, the making of a garnishee order is a discretionary matter; and, second, where the effect of making a garnishee order would be to confer a preference on a creditor, the garnishee order would not normally be made: see ML Ubase Holdings Co Pty Limited v Trigem Computer Inc [2007] NSWSC 859; (2007) 69 NSWLR 577 at [56] and the cases cited therein per Brereton J.

11. Had Campbell J's attention been drawn to those authorities, it seems to me likely that his Honour would have considered them to be, at the very least, relevant to the exercise by his Honour of the discretion to grant the garnishee order. Indeed, it appears to me to be likely that his Honour would have regarded those authorities as compelling a conclusion that, in the circumstances that were before his Honour, he ought not make a garnishee order.

12. For those reasons, in the Common Law Proceedings, I order that the garnishee order made by Campbell J on 25 August 2014 be set aside.

13. It follows, in my opinion, that I ought make in the Equity Proceedings an order as sought by Mr Despot, namely, that the funds in Court be paid out to him forthwith.

14. I order Mr Dlakic to pay Mr Despot's costs of today.

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Amendments

24 Sep 2014

Paragraphs: Coversheet