WORMALL PTY LTD -v-MARCHESE INVESTMENTS PTY LTD [2009] WADC 102 (20 July 2009)

Last Updated: 12 August 2009

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION : PERTH

CITATION : WORMALL PTY LTD -v- MARCHESE INVESTMENTS PTY LTD [2009] WADC 102

CORAM : PRINCIPAL REGISTRAR GETHING

HEARD : 1 JULY 2009

DELIVERED : 20 JULY 2009

FILE NO/S : CIVO 54 of 2008

BETWEEN : WORMALL PTY LTD (CAN 107 903 060)

Judgment Creditor

AND

MARCHESE INVESTMENTS PTY LTD (ACN 008 835 930)

Judgment Debtor

Catchwords:

Building and construction - Determination made under Construction Contracts Act 2004 (WA) - Enforcement of judgment - Means inquiry - Application for time for payment order

Legislation:

Civil Judgments Enforcement Act 2004 (WA) s 21 , s 26 , s 31 , s 32 , s 90 Corporations Act 2001 (C'th) s 95A , s 436A , s 459A , s 459E , s 588G , s 588H

Result:

Time for payment order made

Representation:

Counsel:

Judgment Creditor : Mr C C Ko

Judgment Debtor : Mr C C Martin

Solicitors:

Judgment Creditor : Brickhills

Judgment Debtor : Chris Martin & Associates

Case(s) referred to in judgment(s):

Central West Corporate Pty Ltd v Realtech Enterprises Pty Ltd [2003] WADC 83

Lewis v Doran [2004] NSWSC 608 ; (2004) 208 ALR 385

Lewis v Doran [2005] NSWCA 243 ; (2005) 219 ALR 555

McCormack v National Australia Bank Ltd [1999] FCA 183 ; (1992) 106 ALR 647

O'Donnell Griffin Pty Ltd v John Holland Pty Ltd [2008] WASC 58

Sandell v Porter(1966) 115 CLR 666

Wormall Pty Ltd v Marchese Investments Pty Ltd [2008] WADC 140

Wormall Pty Ltd v Marchese Investments Pty Ltd [2008] WADC 173

1 PRINCIPAL REGISTRAR GETHING: The application before me is for a time for payment order following a means inquiry. The judgment creditor, Wormall Pty Ltd ("Wormall"), has examined two directors of the judgment debtor, Marchese Investments Pty Ltd ("Marchese") pursuant to a means inquiry. The two directors were Mr Antonio Marchese and Mrs Rosa Marchese. The issues for determination centre on whether it is appropriate to make a time for payment order under the Civil Judgments Enforcement Act 2004 (WA) ("CJEA") against a company where the only evidence of capacity to pay is undrawn amounts on an overdraft facility.

2 At the means inquiry and hearing in relation to the time for payment order on 1 July 2009 I allowed the parties to file written submissions. Both parties filed submissions. When Marchese filed its written submissions it also sought to file an affidavit sworn 6 July 2009 from Mrs Marchese. Wormall objected to the admission of this affidavit. I convened a hearing by telephone conference on 8 July 2009, and ultimately allowed Marchese to file the affidavit. I did so on the basis that Wormall be given a short opportunity to file a responsive affidavit or responsive submissions. In its response submissions Wormall raised a number of objections to the form of the affidavits of Mrs Marchese. I am prepared to admit the affidavit notwithstanding these deficiencies.

Background

3 The judgment debt in the present case is an amount of $152,967.16 which arises pursuant to a determination ("Determination") made under the Construction Contracts Act 2004 (WA) ("CCA"). On 19 September 2008, his Honour Judge Fenbury granted Wormall leave to enforce the Determination against Marchese: Wormall Pty Ltd v Marchese Investments Pty Ltd [2008] WADC 140. In that decision, his Honour also declined an application by Marchese to allow sums to be set off against the amount of the Determination. His Honour also declined to make a suspension order pursuant to CJEA s 15.

4 The Determination arose out of a contract between Wormall and Marchese for the construction of a sub-division in Secret Harbour. The contract provided for the appointment of a superintendant who had certain obligations. One of those obligations was to issue a "final certificate" which certified the amount which in the superintendent's opinion was finally due from the principal under the contract (Marchese) to the contractor (being Wormall) or visa versa under or arising out of the contract. Subsequent to the decision of Judge Fenbury, the superintendant issued a final certificate. The net result of the final certificate was that Wormall became liable to pay Marchese a sum of $23,870.25. Both Wormall and Marchese have objected to the final certificate pursuant to an objection procedure in the contract. The final amount owing is to be determined by arbitration. I was advised from the bar table that neither party had commenced the arbitration process.

5 Wormall subsequently sought a means inquiry of the directors of Marchese. At the same time as the means inquiry was listed, Marchese had brought a second application for a suspension order pursuant to CJEA s 15. That application was heard by me and I declined to the application to suspend enforcement: Wormall Pty Ltd v Marchese Investments Pty Ltd [2008] WADC 173.

Evidence at the means inquiry

6 For present purposes, there were six matters emerging from the testimony of Mr and Mrs Marchese at the means inquiry which are relevant for present purposes:

(a) Marchese operates an overdraft account with the Commonwealth Bank ("the CBA Account");

(b) there was no evidence of Marchese having any other bank account besides the CBA Account;

(d) the overdraft credit limit on the CBA Account is $300,000;

(e) security for the overdraft facility comprising the CBA Account is provided by related entities; and

(f) throughout the period 19 September 2008 (the date of the order granting leave to enforce) to 29 May 2009, the CBA Account appears to have been actively used with various amounts of money coming in and numerous cheques and other amounts going out.

7 The financial statements for Marchese for the period 1 July 2008 to 31 March 2008 were tendered at the means inquiry. Marchese is the trustee of the Marchese family trust, so the accounts are the accounts of the family trust. The accounts reveal a loss from ordinary activities before income tax for the period 1 July 2008 to 31 March 2009 of $322,030. The accounts also reveal a deficit of assets over liabilities in the amount of $1,618,887. Specifically:

(a) current assets were $3,348;

(b) non-current assets were $108,935, of which $100,000 was goodwill, making total assets $112,283;

(c) current liabilities were $1,194,910, of which just over $1,000,000 was in unpaid present entitlements to persons who appear to be related entities;

(d) non-current liabilities were $536,260, making total liabilities $1,731,170.

8 The judgement sum in the amount of $152,967.16 is not reflected as a current liability in the accounts of Marchese. In the Form 38A Statement of Financial Affairs for a Corporation produced at the means inquiry, both directors note Wormall as a trade debtor, owing $23,870. This was the amount which the superintendant found was owing pursuant to the contract. The inference I draw from this material, from listening to the evidence of Mr and Mrs Marchese at the means inquiry and hearing submissions, is that Mr and Mrs Marchese, as directors, do not consider the amount of the judgement debt as actually owing and, in their mind, the true position is that Wormall owes them money. Thus, while other creditors appear to have been paid out of the CBA Account, Wormall has not been paid.

9 I was also advised from the bar table that the bulk of the creditors are related entities who have not demanded repayment of their liabilities.

Affidavit of Mrs Marchese sworn 6 July 2009

10 Mrs Marchese refers in her affidavit to a previous affidavit sworn in the matter on 12 November 2008. The salient points from that affidavit are:

(a) that Marchese had typically carried on building activities for other companies within our family group;

(b) that Marchese had also carried out building for unrelated third party customers, but at that time had no such homes under construction;

(d) that Marchese intended to recover its costs;

(e) that none of the reimbursement arrangements between Marchese and the related companies are the subject of writing.

11 She then goes on to detail the financial arrangements between Marchese and its related companies. Given the significance of this material for present purposes, I have included it verbatim:

"6 The overdraft is supported by the assets of the related companies referred to in my earlier affidavit. These companies are:-

(a) Kingalup Pty Ltd;

(b) Danzone Pty Ltd;

(d) M & D Marchese Holdings Pty Ltd.

Both my husband and I are directors of those companies.

The overdraft is also supported by guarantees from my husband and myself.
The overdraft would not be available to the Judgment Debtor [Marchese] without the income and the assets of the parties in paragraphs 6 and 7 of this affidavit.
The use of the overdraft is subject to an informal arrangement between the Judgement Debtor and the related companies. That informal arrangement is that the Judgment Debtor cannot use the overdraft for expenses which the related companies do not accept.
However, the restraint means in practice that the Judgment Debtor cannot utilise the overdraft for a purpose that the companies supporting the overdraft would object to.
In the past, payments have been made to the Judgment Creditor in an amount of $1.5 million dollars. These payments have been payments made with the knowledge and support of the related companies.
However, the directors of the related companies do not agree to the overdraft being utilised to satisfy the Judgment Debt. The reasons for that refusal have been canvassed in the context of the Judgement Debtor's application for a suspension order, but in summary are as follows:-

(a) The issue of a Final Certificate by the superintendent of the contract referred to in paragraph 4 of my November affidavit;

(b) The revelation by that Final Certificate that the Judgment Creditor owes to the Judgment Debtor.

I give that evidence not to re-argue the effect of the Final Certificate but to explain the reasons the related companies do not agree to use of the overdraft to pay the Judgment Creditor.

Although it is true that the Judgment Debtor ought to have prosecuted an arbitration process, so that the objections by both sides to the Final Certificate can be determined, the failure to see that process through, is equally a failure of the Judgment Creditor.
Further, and in any event, the related companies have taken steps by direct communication to the bank to withdraw their support for any further drawings on the overdraft. The related companies have instructed the bank that they withdraw support for further drawings on the overdraft. In response the bank has advised the Judgment Debtor that the overdraft limit has been reduced to $171,000."

12 The evidence before me is thus to the effect that:

(a) as at 1 July 2009, there evidence was that there was an amount of approximately $130,000 undrawn on the CBA facility;

(b) after the 1 July hearing, the directors of the related entities – who are the same directors of Marchese – caused the related entities to withdraw their support for the overdraft facility, such that there were no further undrawn funds in the facility.

13 Wormall in its responsive submissions was highly critical of this conduct. The submissions describe the affidavit as "a conscious attempt to change the Judgment Debtor's circumstances to defeat a possible Court order" (par 6). In my view there an ample basis for this criticism. However, as will become apparent from the balance of these reasons, for present purposes it is not necessary for me to express any further opinion on the conduct of the directors of Marchese subsequent to 1 July 2009.

Statutory scheme under the CJEA

14 The nature of the means inquiry under the CJEA is set out in s 26 , in the following terms:

"26. Means inquiry, nature of

A means inquiry in respect of a judgment debtor is an inquiry conducted before a court in order to determine –

(a) the judgment debtor's means to pay the judgment debt having regard to the income, assets and liabilities of the judgment debtor and, if applicable, his or her spouse or de factor partner or de facto partner and any dependents of the judgment debtor and his or her spouse or de facto partner;

(b) whether there are or will be any earnings of the judgment debtor that might be appropriated to satisfy the judgment debt and, if there are, the net earnings for the purpose of Division 4;

(d) the existence and whereabouts and value of any property of the judgement debtor that might be seized and sold to satisfy the judgement debt."

15 One of the outcomes of a means inquiry is to provide the court with information to determine whether or not particular types of enforcement orders ought to be made. Certain orders, including a time for payment order, may only be made after a means inquiry: CJEA s 21(1). CJEA s 21 goes on to provide in sub-section (2) that:

"(2) In making an order referred to in subsection (1) in respect of a judgment debtor who is a natural person, the court should ensure that the order does not impose unreasonable obligations on the judgment debtor having regard to the judgment debtor's means to satisfy the judgment."

16 There is no equivalent caveat where the judgment debtor is a corporation.

17 A further caveat is placed on the power to make orders after a means inquiry by CJEA s 31(1) , which is in the following terms:

"31. Orders at or after a means inquiry

(1) At a means inquiry the court, having regard to the matters listed in section 26 that it has determined, may –

(a) make any enforcement order that is just, whether or not the judgment creditor has applied for the order; or

(b) make a suspension order on the application of the judgment debtor."

18 The specific order sought by Wormall is a time for payment order which is described in CJEA s 32:

"32. Time for payment order

(1) In order to recover a judgment debt, a judgment creditor may apply to the court for an order, addressed to the judgment debtor, that orders the debtor to pay the judgment debt –

(a) immediately; or

(b) on or before a date set by the court.

(2) The court may make such an order, subject to sections 21 and 22 ."

19 In the event of a default of a time for payment order, Wormall, as judgement creditor, may apply for a default inquiry to be held in respect of the judgment debtor, Marchese: CJEA s 88. As in this case the judgment debtor is a corporation, the application for a default inquiry must contain a name and address of one or more officers of the corporation: CJEA s 88(3)(c). The court then issues a summons to the relevant person to attend: CJEA s 89(1).

20 At a default inquiry, the court has the power to find a corporation guilty of contempt of court for non-payment as well as the ability to hold officers of the corporation guilty of contempt of court for non-payment. The specific power is set out in CJEA s 90:

"90. Default inquiry, nature of

(1) If at a default inquiry a court is satisfied –

(a) in the case of an alleged disobedience of a time for payment order – that the judgment debtor, at the time the judgement debt was to be paid under the order –

(i) had the means to pay the judgment debt but did not pay it; and

(ii) did not have a reasonable excuse for not paying the judgment debt;

...

then –

...

(e) if the judgment debtor is a corporation, the corporation is guilty of a contempt of court, and each officer of the corporation is also guilty of a contempt of court unless he or she satisfies the court –

(i) that the corporation's disobedience occurred without the officer's consent or connivance; and

(ii) that the officer took all the measures to ensure the corporation obeyed the order that he or she could reasonably be expected to have taken having regard to the officer's functions and to all the circumstances.

(2) A natural person, partner, corporation or officer guilty of a contempt under subsection (1) may be punished for it by the court or after the default inquiry.

(3) A court may punish a person guilty of a contempt under subsection (1) in any way it may punish a person for any other contempt of the court, but any period of imprisonment imposed must not be longer than 40 days.

(4) If a court decides to imprison a person guilty of a contempt under subsection (1), the court may order that the order for the person's imprisonment be suspended for such period and on such terms as the court orders to enable the judgment debtor to comply with –

(a) a new time for payment order made by the court; or

(b) the instalment order, or an amended or new instalment order made by the court.

(5) If –

(a) an order for a person's imprisonment is suspended under subsection (4); and

(b) the judgment debtor does not comply with the order referred to in subsection (4)(a) or (b), as the case requires,

the court, on the application of the judgment creditor and on proof of the non-compliance, may issue a warrant for the arrest of the person and for his or her imprisonment in accordance with the suspended order.

(6) A punishment imposed on a person under this section for a contempt of court does not –

(a) extinguish or reduce the judgment debt; or

(b) terminate an instalment order, unless the court orders otherwise.

... "

21 It will be seen then that the utility of making a time for payment order consequent upon a means inquiry is that it positions the judgment creditor to apply for a default order with potentially severe consequences for the judgment debtor in the event of non-compliance. Those severe consequences apply equally to an officer of a corporate judgment debtor.

Interpretation of the term "means to pay the judgment debt"

22 One preliminary issue which arises for determination is the interpretation of the term "means to pay the judgment debt" in CJEA s 26. Wormall submits that the overdraft facility is part of Marchese’s "means to pay". Marchese submits that the relevant "means" in CJEA s 26 is the means of the defendant. The overdraft facility is only a means available to the defendant by reason of the income and assets of others. Its use is contingent upon others not objecting to its use in particular circumstances. As those others do not permit its use to satisfy the judgment debt, it cannot be said to be part of Marchese’s means.

23 The term "means" in CJEA s 26 refers to the pecuniary resources which may be available for satisfaction of the judgment debt: McCormack v National Australia Bank Ltd [1992] FCA 183 ; (1992) 106 ALR 647 , at 649; Central West Corporate Pty Ltd v Realtech Enterprises Pty Ltd [2003] WADC 83 , at [12], [20]. In McCormack ( supra ) , the Full Court of the Federal Court commented that 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" (at 649).

24 In my view, undrawn, or potentially undrawn, amounts on a facility are part of the means which a judgment debtor may use to satisfy the judgment debt.

25 This conclusion is supported by reference to the authorities on the question of whether a corporation is insolvent. A company is solvent if, and only if, it is able to pay all its debts as and when they become due and payable – a corporation that is not solvent is insolvent: Corporations Act 2001 (C'th) ("CA") s 95A. Ability to pay debts in the context of CA s 95A is analogous to "means" to pay debts in the context of CJEA s 26.

26 CA s 95A was considered by Palmer J in Lewis v Doran [2004] NSWSC 608 ; (2004) 208 ALR 385. His Honour was asked to consider whether CA s 95A had changed the law as it was then understood, in particular the requirement that the company be able to pay all its debts from its own monies said to arise from the decision in Sandell v Porter [1966] HCA 28 ; (1966) 115 CLR 666. His Honour concluded (par [116]):

"I conclude that s 95A of the CA has changed the pre-existing law as to the definition of insolvency as stated in cases such as Sandell v Porter , and that it is no longer necessary in order to assess solvency to ascertain whether the company is able to pay all of its debts "from its own monies", in the sense discussed in those cases. In my opinion, s 95A requires the court to decide whether the company is able, as at the alleged date of insolvency, to pay all its debts as they become payable by reference to the commercial realities. If the court is satisfied that as a matter of commercial reality the company has a resource available to pay all its debts as they become payable then it will not matter that the resource is an unsecured borrowing or a voluntary extension of credit by another party."

27 This decision was confirmed on appeal: Lewis v Doran [2005] NSWCA 243 ; (2005) 219 ALR 555. Giles J, with whom the other members of the Court agreed, held that, in assessing the ability of the company to pay its debts, the court can look to funds which can be gained from borrowings from third parties, particularly where the business is conducted as one family business with one company in the group acting as the banker to the group. His Honour comments (at 579-580):

[109] Particularly when the limiting words are no longer part of the test, there is no compelling reason to exclude from consideration funds which can be gained from borrowings secured on assets of third parties, or even unsecured borrowings. If the company can borrow without security, it will have funds to pay its debts as they fall due and will be solvent, provided of course that the borrowing is on deferred payment terms or otherwise such that the lender itself is not a creditor whose debt can not be repaid as and when it becomes due and payable. It comes down to a question of fact, in which the key concept is ability to pay the company’s debts as and when they become due and payable.

[110] Even before the wording of s 95A , in Re RHD Power Services Pty Ltd (1991) 3 ACSR 261 ; 9 ACLC 27 McPherson SPJ was prepared to pay regard to ability to borrow without security. Kearney J in Re Adnot Pty Ltd (1982) 7 ACLR 212 ; 1 ACLC 307 took into account that the company "instead of having to resort to some outside lender, is in the fortunate position of having its fellow member of the group of companies to which it belongs, available in effect as banker to provide funds required to meet any shortfall": at ACLR 217; ACLC 311; the shortfall was until completion and sale of a shopping centre. In Re a Company [1986] BCLC 261 Nourse J declined to find that a company was unable to pay its debts as they fell due although it was being "propped up by loans made to it by associated companies and possibly by others": at 262; his Lordship noted at 263 that he had evidence from a director to the effect that there was no question of the loans being withdrawn, the loans not being repayable for some 18 months.

[111] The liquidator’s emphasis on voluntary assistance from other companies in the group was rather off the point. Provision of funds by a third party on the security of the company’s assets is voluntary — the third party can decline. Voluntariness is material to whether the company is able to acquire funds, as part of ability to pay its debts as and when they become due and payable, but if the evidence establishes that the company is able to obtain funds, albeit they are voluntarily provided, that can suffice.

Marchese's means to pay the judgment debt

28 At the hearing immediately following the means inquiry, Wormall submitted that, on the evidence before the court from the means inquiry, Marchese had the capacity to pay at least $130,000. This figure is the unused portion of the overdraft facility comprising the CBA Account. According to Wormall, the directors of Marchese appeared to have the power to write a cheque in the amount of $130,000 on the CBA Account without seeking the permission of the bank or any other party or the need to put in place any further facilities or securities. In essence, Wormall complains that Marchese has selectively been paying creditors using the CBA Account, and has made a conscious decision not to pay Wormall. As I have indicated, it appears this decision is based on the fact that the directors of Marchese believe that the actual amount owing pursuant to the contract is an amount owing by Wormall to Marchese of approximately $23,000.

29 On behalf of Marchese it was submitted that just because there is a facility there, that does not of itself mean that there is a capacity to pay. Further, on the basis of Mrs Marchese's affidavit, there is now no capacity to pay.

30 The legislative scheme in relation to enforcement orders draws a distinction between the position of a corporate entity and that of a natural person. In particular, by CJEA s 21(2) before making, relevantly, a time for payment order "in respect of a judgment debtor who is in a natural person, the court should ensure that the order does not impose unreasonable obligations on the judgment debtor having regard to the judgement debtor's means to satisfy the judgment".

31 The distinction makes eminent sense when one considers the interplay between the obligations in CJEA and the obligations of directors under the CA. A director is under a duty to prevent insolvent trading by the company. This duty arises as the corollary to the prohibition on insolvent trading contained in CA s 588G. As already noted, a company is solvent if, and only if, it is able to pay all its debts as and when they become due and payable – a corporation that is not solvent is insolvent: CA s 95A. It therefore does not lie in the mouth of a director of a company to resist the making of an enforcement order under the CJEA by stating that the company has not got the means to pay the debt. The position is stark. Either the directors are of the view that:

(a) the company has got the means to pay all its debts as and when they become due and payable – in which case it should pay the judgment debt and keep trading;

(b) the directors are of the view that the company does not have the means to pay all its debts as and when they become due and payable and the directors are thereby in breach of their duty to prevent the company trading whilst insolvent.

32 Put slightly differently, a statement by a director that the company did not have the means to pay one of its debts would remove the ability of that director to rely on the defence in CA s 588H(2). This is a defence an alleged contravention of the duty not to trade whilst insolvent in CA s 588G. The defence in CA s 588H(2) provides:

"(2) It is a defence if it is proved that, at the time when the debt was incurred, the person had reasonable grounds to expect, and did expect, that the company was solvent at that time and would remain solvent even if it incurred that debt and any other debts that it incurred at that time."

33 It is significant that the trigger point for the board to be able to appoint a voluntary administrator to the company is something less than proven insolvency. All that is required is a resolution of the board to the effect that, in the opinion of directors, "the company is insolvent or is likely to become insolvent at some future time": CA s 436A.

34 It is open to Wormall in this case to serve on Marchese a statutory demand pursuant to CA s 459E. A failure to comply with this statutory demand can be used as the basis of an application for insolvency: CA s 459A , s 459B. However, for whatever commercial reasons, Wormall has decided instead to adopt the present proceedings, which are equally open to it.

35 In the present case, from its trading position, assets and liabilities, Marchese appears to be insolvent. If forced to defend an assertion of insolvency, I have no doubt that its directors would assert that it does have the ability to pay its debts as and when they fall due by reason of the support voluntarily provided by directors and related entities. I am supported in this view by virtue of the fact that Marchese is not in voluntary administration (nor any other form of external administration), notwithstanding its apparent insolvency from its accounts. Therefore, the directors must hold the view that there are reasonable grounds to expect that Marchese is able to pay all its debts as and when they fall due, so as to be actively relying on the defence in CA s 588H(2) to a contravention of their duty not to trade whilst insolvent.

36 What has occurred here is that under threat of having a time for payment order made, the voluntary support of the directors and related entities (with common directors) has been withdrawn. However, the only reason (on the materials before me) that Marchese is solvent is because of that voluntary support. Therefore, I conclude that this voluntary support is able to be reinstated in order to prevent Marchese from being found insolvent. It seems to me that by virtue of the voluntary support of its directors and related entities, Marchese has the means or ability to pay all its debts, including the present judgment debt, as and when they fall due. I therefore conclude that for the purposes of CJEA s 26, Marchese has the means to pay the judgment debt.

37 Any assertion by the directors of Marchese that it does not currently have the means or ability to pay the judgment debt, which is currently due and payable, can have no credibility unless the directors are prepared to act on this assertion and place the company into voluntary administration. As noted, they are entitled to do so merely by forming the opinion that the company is likely to become insolvent at some future time: CA s 436A.

Discretion to make a time for payment order

38 Under the CJEA, the discretion enlivened following a means inquiry is to "make any enforcement order that is just": CJEA s 31(1). It seems to me that in considering whether or not a particular order is just, I ought to have regard to the factors set out in CJEA s 90 in relation to a default inquiry. There would not seem much utility in making a time for payment order which would not be the subject of subsequent orders under a default enquiry. The two key factors set out in CJEA s 90(1)(a) are whether the judgment debtor had the means to pay the judgment debt but did not pay it and whether the judgment debtor had a reasonable excuse for not paying the judgment debt.

39 As to the first of these factors, I have found that Marchese does have the means to pay the judgment debt. If it did not have the means to pay all its debts, including the presently due the judgment debt, its directors would have placed it in external administration. They have not done so.

40 As to the second factor, the excuse for not paying the judgment debt is set out in par 12 of Mrs Marchese' affidavit. The excuse is that the superintendant has issued a final certificate under the contract to the effect that Wormall actually owes Marchese money, approximately $23,000. Thus, at least in the minds of the directors of Marchese, it is reasonable for them not to pay the judgment debt, but to wait the determination by the arbitrator as to the amounts actually owing.

41 In my view, this is not a reasonable excuse. Both Judge Fenbury and I in previous decisions have refused an application by Marchese for a suspension order. In my earlier decision, I refused to make a suspension order notwithstanding the issue of the final certificate. In doing so in each case, the risks of doing an injustice have been balanced, and held to fall against Marchese.

42 Further, in my view, it is the very clear intent of the CCA that determinations made pursuant to that Act be paid promptly. The CCA was the subject of detailed consideration by his Honour Justice Beech in O'Donnell Griffin Pty Ltd v John Holland Pty Ltd [2008] WASC 58 (" O'Donnell Griffin "). His Honour referred to the explanatory memorandum for the Bill which later became the CCA, and the second reading speech for the same piece of legislation, which both describe the Bill as providing "a rapid adjudication process that operates in parallel to any other legal or contractual remedy": [37] - [38]. His Honour then identified five features of the statutory scheme that were of particular relevance.

"(a) The procedure for determination by an adjudicator is intended to be quick, informal and inexpensive: s 30, s 31, s 32.

(b) A determination is binding on the parties even though other proceedings relating to the substantive dispute between the parties are on foot: s 38.

(d) A determination is, with very limited exceptions, final: s 41, s 46.

(e) The substantive dispute (if any) will be determined by other means (such as arbitration or litigation) involving a comprehensive process, and payments made pursuant to a determination are to be taken into account and dealt with in the resolution of the substantive dispute: s 38, s 40, s 45".

43 The object of the scheme is, as described in the explanatory memorandum and the Second Reading Speech, to "keep the money flowing in the contracting chain by enforcing timely payment and side lining protracted or complex disputes". If every contractor who had an obligation to pay money pursuant to a determination made under the CCA could resist enforcement of an order to pay the money as determined, then the objective of the CCA to "keep the money flowing" would be defeated.

44 It has been open to Marchese to progress an arbitration under the contract in order to determine the final amount owing. The objections to the superintendant's final certificate were made prior to the hearing before me in November 2008. I was advised from the bar table that Marchese has not taken any steps to progress the arbitration. Given that their application for a suspension order failed, that there was a live judgment debt against them, and that the judgment debt arose out of a determination under the CCA, it was, in my view, incumbent upon Marchese to both pay the judgment debt and progress the arbitration with some expedition.

45 For these reasons, I am of the view that it is just in the circumstances of this case to make a time for payment order in the amount of the judgment debt. My preliminary view is that this amount ought to be paid by 31 July 2009.

46 The directors of Marchese have two, and on the materials available to me only two, options open to them:

(a) Continue the voluntary support to Marchese and comply with the time for payment order, or face the consequences of a default order being made; or

(b) Discontinue the voluntary support to Marchese and place the company in external administration.

47 If the effect of this order is to compel the directors of Marchese to place the company in voluntary administration then in my view, that is not an unjust outcome. If the company cannot pay all its debts as and when they fall due it ought to be in voluntary administration.