McKellar v Jetstar Airways Pty Ltd [2011] FMCA 68 (27 January 2011)

Last Updated: 11 February 2011

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MCKELLAR v JETSTAR AIRWAYS PTY LTD

[2011] FMCA 68

PRACTICE & PROCEDURE – Enforcement of judgments – application for instalment orders – where application if granted, would not result in any diminution of principal amount.

Federal Court Rules, O.37, r.7 Uniform Civil Procedure Rules 2005, Reg 37.2 Queensland Consolidated Uniform Civil Procedure Rules 1999, s.869

Hellier Capital Pty Limited v Richard Albarran [2009] NSWSC 403 Red Lea Chickens Pty Limited v Tansey unreported NSWCA 17 July 1995

Applicant:

ANTHONY MCKELLAR

Respondent:

JETSTAR AIRWAYS PTY LTD

File Number:

SYG 2210 of 2009

Judgment of:

Raphael FM

Hearing date:

27 January 2011

Date of Last Submission:

27 January 2011

Delivered at:

Sydney

Delivered on:

27 January 2011

REPRESENTATION

Solicitors for the Applicant:

Australian and International Pilots Association

Solicitors for the Respondent:

Freehills

ORDERS

(1) Application dismissed.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY

SYG 2210 of 2009

ANTHONY MCKELLAR

Applicant

And

JETSTAR AIRWAYS PTY LTD

Respondent

REASONS FOR JUDGMENT

1. On 9 August 2010 I gave judgment in a industrial law application made by Mr McKellar. The result of that application was that Mr McKellar was ordered to pay to Jetstar Airways Pty Ltd a sum of money which, together with interest up to the date of the application that is currently before me, is agreed to be $18,150.40. The application which is before me seeks an order from this court for payment of the judgment sum by way of instalments of $100.00 per month. It is accepted by the parties that this court can utilise the provisions of O.37 r.7 of the Federal Court Rules 1979 (the “Rules”) in regard to the enforcement of judgments. Order 37 r.7 is in the following form:
   • “Enforcement as in State and Territory Supreme Courts
     • (1) Subject to the Rules, and without limiting any other means of enforcement which may be available, the Court may, in order to enforce a judgment or order of the Court, make any order, issue any writ or take any other step that could be made, issued or taken, by the Supreme Court of the State or Territory in which the judgment or order is to be enforced if the judgment or order had been made by that Supreme Court.
     • (2) The modes of procedure and forms of process of the Supreme Court of the State or Territory in which the judgment or order is sought to be enforced shall be available and followed in the Court so far as is practicable mutatis mutandis for the enforcement of orders of the Court.
     • (3) The Sheriff when executing the orders of the Court, shall be authorized to act in the same manner and to the same extent as the Sheriff or like officer of the Supreme Court of the State or Territory in which the order is being executed, is entitled to act.
     • (4) Where it is desired to enforce an order in more than one State or Territory:
       • (a) it shall not be necessary to adopt different modes of procedure and forms of process in each State or Territory; and
       • (b) it shall be sufficient to adopt the mode of procedure and form of process of the Supreme Court of one of the States or Territories in which execution is to be made, and to execute the order in like manner in the other States and Territories.”
2. The procedures of the State courts, referred to in o.37 r.7(2), are now encompassed within the Uniform Civil Procedure Rules 2005 (“UCPR”) and in regard to instalment orders requested by a judgment debtor are Reg 37.2. That Regulation is in the following form:
   • “UNIFORM CIVIL PROCEDURE RULES 2005 - REG 37.2
   • Application for instalment order by judgment debtor
   • 37.2 Application for instalment order by judgment debtor
   • (cf DCR Part 31A, rule 2; LCR Part 27, rule 2)
     • (1) A judgment debtor may apply to the court for an instalment order with respect to the amount owing under the judgment debt.
     • (2) Such an application:
       • (a) may be made whether or not some other instalment order is in force in relation to the judgment debt, and
       • (b) must be supported by an affidavit as to the judgment debtor’s financial circumstances, and
       • (c) must be dealt with as soon as practicable after it is made.
   • (3) An application under this rule:
     • (a) except as provided by paragraph (b), is to be dealt with by the registrar under rule 37.3, or
     • (b) if it is made during a hearing before the court, is to be dealt with by the court under rule 37.4.
   • (4) Notice of motion of an application under this rule does not have to be filed or served if the application is made during the hearing at which the judgment debtor is being examined pursuant to an order for examination.”
3. It will be noted that reference in the UCPR is to the determination of such an application by Registrar. There is some debate within this court as to whether the Registrars of this court have the power to undertake such decision-making process, so for the avoidance of doubt, the matter has been referred to me.
4. Mr McKellar was a trainee first officer with Jetstar. It was part of the agreement between himself and Jetstar that Jetstar would fund, but he would pay for, some ground training that was required in order that he may hold an endorsement permitting him to fly Airbus A320 aircraft. Mr McKellar undertook the ground training and received the endorsement, which he still holds. Unfortunately, his flying abilities were not such that he was able to pass “check to line” and his employment with Jetstar was terminated. It would appear from his affidavit that he has returned to the air transport industry as a pilot with a small internal carrier. He claims that his average weekly income after tax is $715.00. The respondent generously does not dispute this although no documentary evidence is provided.
5. Mr McKellar has a motor vehicle worth approximately $13,000.00 and also approximately $853.00 in the bank. He appears to have a substantial credit card debt of $12,322.00 and $428.17 per month as a liability for child support of two boys, one of whom is aged 17 years and one is aged 14 years. Again no documentary evidence is provided of any of these figures, in particular, there is no indication of how the child support liability has been calculated but equally there is no evidence that in regard to the elder boy this will not cease within a year upon his attaining his majority.
6. I have been considerably assisted in relation to this matter by Mr Mallios who appears for the applicant and Mr Ogilvie who appears for the respondent. They have referred me to two cases which appear to indicate the manner in which I should consider this application. They are Hellier Capital Pty Limited v Richard Albarran [2009] NSWSC 403, a judgment of McDougall J of the Supreme Court of NSW, who himself referred with approval to the decision of the NSW Court of Appeal; Kirby ACJ Clarke and Sheller JJA in Red Lea Chickens Pty Limited v Tansey unreported 17 July 1995 (BC9505123). Both of those cases noted that in deciding whether to make an instalment order the court was entitled to have regard to those matters referred to in the Queensland Consolidated Uniform Civil Procedure Rules 1999, s.869 which is in the following form:
   • “869 Prerequisites for instalment order
     • (1) In deciding whether to make an instalment order, the court must have regard to the following--
       • (a) whether the enforcement debtor is employed;
       • (b) the enforcement debtor's means of satisfying the order;
       • (c) whether the order debt, including any interest, will be satisfied within a reasonable time;
       • (d) the necessary living expenses of the enforcement debtor and the enforcement debtor's dependants;
       • (e) other liabilities of the enforcement debtor;
       • (f) if the applicant is the enforcement debtor--whether, having regard to the availability of other enforcement means, making the order would be consistent with the public interest in enforcing money orders efficiently and expeditiously.
     • (2) In deciding the amount and timing of the instalments, the court must be satisfied that the instalment order will not impose unreasonable hardship on the enforcement debtor.
     • (3) However, an enforcement hearing is not necessary before the court makes the instalment order.”
7. The cases also indicated that any instalment order that might be made should be one which ensured that at the very least some indentation was made in the principal debt so that an application which did not even pay off the interest payable on judgment debts after judgment would not be one to find favour with the court.
8. Mr McKellar, through his counsel, indicates that whilst he wishes to make payment of his obligations, it would be very difficult for him to do so in a greater sum than that proposed. If the court refuses this application he may well find himself in bankruptcy. In the Red Lea Chicken case, Kirby ACJ, as he then was, was also faced with that dilemma. His response was:
   • “He does not contest his obligation [to pay the debt]. Indeed, he has said that even if he be “forced into” bankruptcy, he would continue to pay the debt. That, in his stated opinion, is his moral as well as legal duty. The opponent also submitted that, if he were made bankrupt, that would have serious ramifications for him. These would include consequences for any future business operations in which he might wish to become involved. He, therefore, supported the order made by Taylor DCJ. He said that if, in the future, his financial position were to improve he would increase his payments. However, the payments ordered were instalments to the full extent of his current ability to pay.
   • Whilst accepting the strong expression of the wishes of the opponent and with every respect to Taylor DCJ, I have reached the view that his Honour’s discretion did miscarry. Upon the present orders, the claimant and the opponent are locked together in an order of the District Court which will bind the claimant to the opponent indefinitely and prevent any other action which may otherwise be available to the claimant. It will also prevent relief in bankruptcy being available to the opponent himself. Unless circumstances materially change (of which there was no evidence before the Court) the order will require the opponent, in effect, to pay the interest for the rest of his life, without any or any significant reduction of the capital debt.
   • ...Exercising the discretion afresh for itself, this court should order that the application be refused. This will release the claimant to reconsider its position and the steps that it should take in furtherance of its interest. It will also ensure that the opponent faces the possibility, including from his own point of view, of drawing a line upon his current financial predicament and facing up to proceedings in Bankruptcy. Under the Bankruptcy Act various solutions are available to meet the predicament of the opponent. It may be that upon those options he needs to give serious consideration in his own interest.”
9. This court has discretion to refuse to make the order in which case, it is very likely that bankruptcy proceedings will follow; to make the order, in which case the debt will never really be paid if it is to continue at that figure or to make an alternative order which may see the debt repaid, albeit still in a very lengthy period of time. The respondent has not cavilled with the applicant’s claims as to his assets and liabilities. It is not for the court to jump in and assume that it knows better, whatever it may think about the strength of the figures presented to it. If the court second guessed the applicant’s ability to pay and made an order which he could not meet, then little would be gained.
10. The applicant does not wish to be pressed into bankruptcy and this is understandable. But as Kirby J indicated, the Bankruptcy Act is there to allow people to draw a line under previous misfortunes and to start again. The Act also allows for a bankrupt to make repayments. Indeed, they are frequently required as part of the scheme. It might also be possible for Mr McKellar, should his position improve, to come to a compromise with his creditor through the provisions of the Bankruptcy Act. I have not been told that bankruptcy would in any way affect Mr McKellar’s ability to fly a small aircraft. I am aware that the Act, whilst requiring instalments from some incomes, will always take into account a debtor’s obligations under the child support legislation.
11. In those circumstances I am of the view that the application should not be granted and that it should be dismissed so that the respondent can be free to enforce its judgment in whatever way it deems fit.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Raphael FM

Date: 10 February 2011