Talacko v Bennett [2017] HCA 15: Foreign Judgments

Wednesday 3 May 2017 @ 11.52 a.m. | Corporate & Regulatory | Torts, Damages & Civil Liability | Trade & Commerce

In Talacko v Bennett [2017] HCA 15 (3 May 2017), the High Court of Australia has unanimously allowed an appeal from the Court of Appeal of the Supreme Court of Victoria (see Bennett v Talacko [2016] VSCA 179 (28 July 2016)).

In its decision, the High Court has found that the Victorian Court of Appeal erred in its conclusion that  the Foreign Judgments Act 1991 (Cth) subsection 15(2) did not prevent the issue of a certificate under subsection 15(1) of that Act – section 15 in general terms deals with the issue of “. . . certificates of judgments obtained in Australian courts”. This was even though the judgment in question could not be enforced by execution by reason of the operation of the Bankruptcy Act 1966 (Cth) subsection 58(3) (section 58 deals with the vesting of property upon bankruptcy and in subsection (3) restricts options for enforcement and/or further action open to a creditor after a debtor has become a bankrupt).

Background

The case arose out of a dispute between three siblings which concerned certain properties formerly owned by their parents in the former Czechoslovakia, now the Czech Republic. The dispute resulted in the commencement of legal proceedings in 1998 and those proceedings were compromised (settled by each party making concessions) in February 2001. The compromise which was put into written terms of settlement, required one of the siblings, Jan Emil Talacko, to transfer all rights, title and interest in the properties to a nominated person. 

Subsequently Mr Talacko reneged on that agreement, and in July 2005 the families of the other two siblings (the respondents) reactivated the proceedings and in April 2008 obtained judgment. In November 2009, Mr Talacko was ordered to pay in excess of 10 million Euros as equitable compensation. On 4 July 2012, upon the respondents' request, the Prothonotary of the Supreme Court of Victoria issued a document entitled "Certificate of Finality of Judgment and Orders" (the Certificate) in purported reliance on the Foreign Judgments Act 1991 (Cth) subsection 15(1).  The respondents intended to file that certificate in proceedings then on foot in the Czech Republic against Mr Talacko and his sons. 

By the time the Certificate was issued, Mr Talacko had been made a bankrupt by order of the Federal Court of Australia and on being made aware that the Certificate had been issued, he began to take steps to have it set aside.  Mr Talacko passed away intestate shortly after, and his widow (the appellant), who was appointed representative of Mr Talacko's estate, issued a summons in the Supreme Court of Victoria seeking orders that the certificate (and a subsequently issued replacement certificate) were invalid and should be set aside.

On 4 February 2016, Sloss J declared the certificates to be invalid (see Talacko v Talacko [2015] VSC 624 (12 November 2015)), relevantly on the basis that the Bankruptcy Act subsection 58(3), which prevents creditors from enforcing any remedy against the property of a bankrupt in respect of a provable debt, operated to impose a ". . . stay of enforcement of the judgment" within the meaning of the Foreign Judgments Act subsection 15(2) and so precluded the obtaining of a certificate under that Act.

On appeal to the Court of Appeal (see [2016] VSCA 179) it was held, allowing the appeal, that on the basis that "stay of enforcement" referred to in the Foreign Judgments Act subsection 15(2), referred only to a judicially ordered stay (or similar) and did not extend to include the statutory bar imposed by the Bankruptcy Act subsection 58(3).

On Appeal to the High Court

The appellant sought special leave and appealed to the High Court of Australia which has held that the meaning of the word "stay" is not necessarily confined to stays imposed by courts, but is capable of including any legal impediment to execution upon the judgment – see [66]. 

“In Commonwealth legislation, the use of the word "stay" is not confined to stays imposed by courts. It appears that, in addition to s 60(2) of the Bankruptcy Act, as Santamaria JA noted [in] s 91 of the Insurance Act 1973 (Cth), s 161 of the Life Insurance Act 1995 (Cth), s 189AAA of the Bankruptcy Act itself, s 16 of the Cross-Border Insolvency Act 2008 (Cth) and s 58DD of the Federal Court of Australia Act 1976 (Cth) are examples of stays which operate without judicial process. Finally, so far as the text of s 15(2) is concerned, the use of the word "any" in relation to "stay" is some, though perhaps not a decisive, indication of a legislative intention to comprehend any legal impediment to execution upon the judgment.”


Further, the High Court has found that the evident purpose of the Foreign Judgments Act subsection 15(2) is to prevent an application for a certificate which, if granted, would facilitate the enforcement abroad of a judgment that cannot be enforced in Australia.  The judgment debt in question, because of the Bankruptcy Act subsection 58(3), was in that category. 

The Victorian Court of Appeal orders were set aside, with the effect that the declaration of the primary judge was reinstated.

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Sources:

Talacko v Bennett [2017] HCA 15 3 May 2017 and summaries.

Bennett v Talacko [2016] VSCA 179 (28 July 2016)

Talacko & Ors v Talacko [2015] VSC 624 (12 November 2015)

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