Re: Schmidhofer Ex Parte: American Express International Inc

[1991] FCA 936

NOT SUITABLE FOR DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE	) NP 1247 of 1991
OF NEW SOUTH WALES

RE:  JOHANN SCHMIDHOFER

EX PARTE:  AMERICAN EXPRESS INTERNATIONAL INC.

CORAM: Burchett J. RDERAL COURT

L PLACE: Sydney . OF AUSTRALIA

DATE : 16 July 1991 21 J A N ? ' 5

EX TEMPORE REASONS FOR JUDGMENT 0 LIBRARY

BURCHETT J.:

In this matter there is an application for a special costs order in the following circumstances.

The creditor obtained a judgment against the debtor on 22

November 1990 and caused a fourteen days bankruptcy notice to

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be served on 12 February 1991. As a consequence of service of the bankruptcy notice, an act of bankruptcy was committed on 26 February 1991, and the creditor presented a petition on 22 April 1991 in reliance on that act of bankruptcy. However, before service had been effected of this petition, the debtor presented his own petition on 16 May, and it was accepted by the Registrar on the same day. It may be noted that 16 May is prior to the coming into effect of amendments to the

operation of the Act (to produce a bankruptcy upon	Bankru~tcv Act 1966 designed to prevent the automatic
presentation of a debtor's petition) in certain cases where there is an outstanding creditor's petition. Those amendments to the Act in fact came into force, I understand, on 22 June.
What the creditor now seeks is a special order in respect of the costs incurred in relation to the bankruptcy notice and petition. I take the view that, so far as the costs of the petition are concerned, the creditor is not really in a different position from that of a would-be litigant who

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expends money in having counsel settle a statement of claim, and then is paid in full before the statement of claim is served upon the debtor. In such a case, the creditor's

expense would normally be thrown away. However, I think, as a matter of exercise of discretion, one can draw a distinction in respect of the bankruptcy notice. Doubtless, the fact that a bankruptcy notice had been served upon him and that he had been unable to comply with it, was a factor in the debtor's decision to file his own petition. In those circumstances, it

cc/	seems to me that a discretion could reasonably be exercised in favour of the creditor, so far as the costs of and incidental
to the service of the bankruptcy notice are concerned.

In q n (1986) 66 ALR 702, a

debtor presented his own petition prior to the hearing of a creditor's petition, and as a consequence of the presentation of the debtor's petition, he became bankrupt. The petitioning creditor sought an annulment which I refused, being of the opinion that a case for annulment had not been made out. However, I considered that it was open to me, pursuant to S. 32 of the Bankru~tcv Act, to make a special order in respect of the costs of the petitioning creditor, and I did so. That order was in respect of his costs up to the date when his solicitors received notice of the presentation of the debtor's petition.

In the present case, for the reasons I have already

given, I do not think so complete a provision in respect of

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the creditor's costs is appropriate, but I make an order that the creditor's costs of and incidental to the issue and service of the bankruptcy notice be taxed and paid as if I had made a sequestration order on the creditor's petition, and had ordered that those costs of the petitioning creditor be taxed and paid in accordance with the Act. That is the form of order that was made in Re Hankev: Ex Darte Kratzman, and I think it is the appropriate order to cover such a case.

are a true copy of the Reasons for Judgment herein	I certify that this and the preceding two (2) pages
of his Honour M r Justice Burchett.
Associate :  B. -
Date: 16 July 1991