The High Court has allowed an appeal against a decision of the Victorian Court of Appeal on the enforcement of Australian judgments overseas in the context of bankruptcy. Section 15(2) of the Foreign Judgments Act 1991 (Cth), which lays out the procedure for an Australian court to issue a certified copy of a judgment for the purposes of enforcement in a foreign court, provides that a judgment creditor cannot make an application until the expiration of any ‘stay of enforcement’. Section 58(3) of the Bankruptcy Act 1966 (Cth) provides that when a debtor has become bankrupt ‘it is not competent for a creditor to enforce any remedy against the person’.
Following a long-running family dispute over properties in then Czechoslovakia that were expropriated by the Communist regime, the VSC held in 2009 that one sibling had reneged on an agreement with the others to share the proceeds and costs of the restoration, and ordered him to pay approximately €10 million in equitable compensation. After that sibling fell bankrupt, a majority of the VSCA held that that bankruptcy (and s 58(3) of the Bankruptcy Act) did not preclude the issuing of a certificate to the others to allow them to enforce the 2009 judgment in the Czech Republic against the bankrupt sibling.
The High Court unanimously allowed the appeal, holding that the VSCA majority had erred in interpreting s 15(2) and the effect that s 58(3). Looking to the text, context and purpose of s 15(2), the plurality judges (Kiefel CJ, Bell, Keane, Gordon and Edelman JJ) held that s 15(2) prohibited the making of an application in relation to a judgment that could not, by Australian law, be enforced by execution. The word ‘stay’ is not confined to stays imposed by courts, but also includes any legal impediment to execution upon a judgment (at  and see ). Section 15(2)’s purpose is to preclude applications for certificates that, if granted, would facilitate the enforcement of a judgment in a foreign jurisdiction which could not be executed under Australian law (at ), and it is impossible to conceive of any good reason why a judgment that could not be executed in Australia should be capable of being enforced outside Australia at the behest of an Australian court: at . Consequently, there is no reason to conclude that s 15(2) was only focused on stays ordered by a court, to the exclusion of stays that resulted from the operation of a statute (at ). The plurality then held that s 58(3) constituted just such a statutory stay. Excluding s 58(3)’s operation from the reach of s 15(2) would undermine an ‘essential feature’ of the Bankruptcy Act, namely by allowing a judgment creditor to take individual action to obtain a payment due to them, which would constitute an unfair advantage over other creditors (at ff). Consequently, the appeal was allowed and the plurality ordered the appeal to the VSCA dismissed (at ff).
Nettle J agreed with the orders of the plurality but added further observations on the term ‘stay of execution’. Nettle J emphasised that s 15(2) uses the term ‘”stay of enforcement”, presumably by execution’ rather than ‘stay of execution’, which leads to a constructional choice between a narrow understanding of enforcement by execution the equates to execution strictly, or a more expansive interpretation that includes other in personam anti-enforcement mechanisms (at ). From the context of s 15(2) — its place within the structure of the Foreign Judgments Act — Nettle J emphasised the reciprocity of the provisions in pts 2 and 3 of the Act: that the provisions relating to the enforcement of a foreign judgment in an Australian court required that that judgment be enforceable in the courts of the originating country, and likewise certificates issued by Australian courts must relate to judgments enforceable here (at –). This reciprocity strengthens the conclusion that the text of s 15(2) should be construed as including in personam mechanisms, like s 58(3), that effectively render a judgment unenforceable: at .
Gageler J agreed with the reasons of the plurality and the additional observations of Nettle J: at .
|High Court Judgment|| HCA 15||3 May 2017|
|High Court Documents||Talacko v Bennett
|Full Court Hearing|| HCATrans 47||7 March 2017|
|Special Leave Hearing|| HCATrans 263||10 November 2016|
|Appeal from VSCA|| VSCA 179||28 July 2016|
|Trial Judgment, VSC
|| VSC 624||12 November 2015|