Re: Taubenschlag, John George & Ex Parte: American Express International Inc

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JUDGMENT No. ........ ...* ..... J ,..

IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION 1
1 No. NP 3375 of 1992
BANKRUPTCY DISTRICT OF THE 1
STATE OF NEW SOUTH WALES 1

RE: JOHN GEORGE TAUBENSCHLAG
Debtor

EX PARTE: A M E R I C A N E X P R E S S
INTERNATIONAL INC
Petitioning Creditor

22 June 1993

REASONS FOR JUDGMENT

LOCKHART J.

These are two petitions for sequestration of the estates of two debtors, John George Taubenschlag and Joanna Helena Taubenschlag. The petitions were dismissed on 25 May 1993 and costs of the petitions were reserved until today. The reason for the dismissal of the petitions appears to be that the debt between the parties which had been in dispute was in circumstances I will mention in a moment, the subject of an appeal from the judgment of the District Court to the New South Wales Court of Appeal, which gave judgment in favour of the debtors on 7 May this year. Hence the petition was dismissed.

American Express International Incorporated, against the debtors in the case of the male debtor in the sum of $11,118.85 and in
the case of the female debtor $4087.03. The Acting District Court judge who entered the judgment after a contested hearing granted a stay of proceedings for 28 days from 12 December 1989. On 7 February 1990 the debtors filed a notice of appeal in the Court of Appeal of New South Wales and an appointment was made for the settlement of the appeal papers to be 6 April 1990, but before that date the debtors vacated the appointment to settle the appeal papers.
The next relevant event is that on 18 June 1992, over two
years later, the creditor applied for and obtained the issue of
a bankruptcy notice against the debtors in relation to the
judgment debt which it had obtained on 12 December 1989. The debtors were served with that bankruptcy notice on 27 July 1992 and an act of bankruptcy was committed by each of them on 17 August 1992. The creditor then presented his petition against the debtors on 8 October 1992 returnable on 27 November 1992.

The entitlement of parties to costs, however, is based on different considerations and it is necessary briefly to review the history of the matter. It commences with the entry of judgment on 12 December 1989 by the petitioning creditor,

I

The creditor's petition was served on the debtors on 17

November 1992. That seemed to have precipitated the debtors into some action so that on 18 November 1992 they filed a motion in the District Court for a stay of proceedings in relation to the earlier judgment which was granted by the District Court on 20 November 1992. Thereafter the petition in this Court which had been presented on 8 October 1992 was adjourned on a number of occasions because in the meantime steps had been taken by the debtors to revive their appeal in the Court of Appeal which

ultimately resulted in the judgment in their favour. The question is as to who should bear the incidence of costs of the two petitions in this Court.

The petitioning creditor was plainly entitled, in my view, to take the course which it did in seeking the issue of the bankruptcy notice over two years from the date of the entry of judgment which was in its favour. Although the appeal had been instituted earlier, it bore all the hallmarks of an appeal that had been, for all practical purposes, abandoned so far as the creditor was concerned and the presentation of the petition was an act that occurred before any attempt was made by the debtors to seek a stay of the proceedings in the District Court. Thereafter, as I say, the petition was adjourned pending the outcome of the appeal in the Court of Appeal but events that led to costs had been put in train well before then.

The Court orders the debtors to pay the costs of the petitioning creditor including any reserved costs.

I certify that this and the

preceding two (2) pages are a true copy of the reakons for judgment herein of tKe Honourable Mr. Justice Lockhart.
Associate
Dated: 22 June 1993

Solicitors for the Debtor Craddock Murray & Neumann
Solicitors for the Creditor : Kemp Strang & Chippindall

Date of Hearing . 22 June 1993
Date of Judgment . 22 June 1993

In the Federal Court of Australia, Lockhart J was tasked with deciding the issue of costs in two petitions for sequestration of the estates of John George Taubenschlag and Joanna Helena Taubenschlag. The petitions, brought by American Express International Incorporated, were dismissed on 25 May 1993, with the question of costs reserved for later determination. The central issue before the court was whether the creditor, American Express International Incorporated, was entitled to recover costs from the debtors given the circumstances surrounding the litigation and the eventual outcome of an appeal in the New South Wales Court of Appeal.

The court considered the sequence of events leading up to the petitions. Initially, American Express International Incorporated obtained a judgment against the debtors in the District Court on 12 December 1989. The debtors filed an appeal against this judgment on 7 February 1990, but later vacated the appointment to settle the appeal papers. Over two years later, the creditor issued a bankruptcy notice on 18 June 1992, which led to the debtors committing an act of bankruptcy on 17 August 1992. The creditor then presented the petition against the debtors on 8 October 1992. Despite the appeal being revived by the debtors, the creditor's petition was served on 17 November 1992, which led to the debtors seeking a stay of proceedings in the District Court.

Lockhart J concluded that the creditor was entitled to seek the issue of the bankruptcy notice given that the appeal had been abandoned. The petition was subsequently adjourned pending the outcome of the appeal, but the creditor's actions had already set the stage for the costs issue. Given the creditors' actions and the debtors' delayed response in reviving the appeal, the court determined that the creditors were entitled to recover costs.

In light of the court's findings, the final orders mandated that the debtors pay the costs of the creditor, including any reserved costs, arising from the two petitions. This decision underscores the importance of timely action in legal proceedings and the potential financial implications for parties who delay or abandon appeals without justification.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	1 1 No. NP 3375 of 1992
BANKRUPTCY DISTRICT OF THE	1
STATE OF NEW SOUTH WALES	1

American Express International Incorporated, against the debtors	in the case of the male debtor in the sum of $11,118.85 and in
the case of the female debtor $4087.03. The Acting District Court judge who entered the judgment after a contested hearing granted a stay of proceedings for 28 days from 12 December 1989. On 7 February 1990 the debtors filed a notice of appeal in the Court of Appeal of New South Wales and an appointment was made for the settlement of the appeal papers to be 6 April 1990, but before that date the debtors vacated the appointment to settle the appeal papers.
The next relevant event is that on 18 June 1992, over two years later, the creditor applied for and obtained the issue of
a bankruptcy notice against the debtors in relation to the
judgment debt which it had obtained on 12 December 1989. The debtors were served with that bankruptcy notice on 27 July 1992 and an act of bankruptcy was committed by each of them on 17 August 1992. The creditor then presented his petition against the debtors on 8 October 1992 returnable on 27 November 1992.

The Court orders the debtors to pay the costs of the petitioning creditor including any reserved costs.	I certify that this and the
preceding two (2) pages are a true copy of the reakons for judgment herein of tKe Honourable Mr. Justice Lockhart.
Associate Dated: 22 June 1993

Solicitors for the Debtor	Craddock Murray & Neumann
Solicitors for the Creditor :	Kemp Strang & Chippindall

Date of Hearing	.	22 June 1993
Date of Judgment	.	22 June 1993