Fitz-Gibbon, Peter Gerald v Wily, Hugh Jenner [1998] FCA 1193

FEDERAL COURT OF AUSTRALIA BANKRUPTCY – demand by Trustee for delivery up of property allegedly held by bankrupt. EVIDENCE – whether a civil or criminal burden of proof is applicable with respect to admissions made by a bankrupt when being officially questioned by a trustee – whether s 85 of the Evidence Act 1995 (Cth) prevents acceptance of evidence of admissions made against the bankrupt's interest whilst being officially questioned by a trustee – whether the trial judge applied civil onus of proof. Bankruptcy Act 1966 (Cth) s 30(5), s 34A, s 77, s 78(1) Evidence Act 1995 (Cth) s 85 Neat Holdings Pty Limited v Karajan Holdings Pty Limited (1992) 110 ALR 449, applied Briginshaw v Briginshaw (1938) 60 CLR 336, applied PETER GERARD FITZ-GIBBON v HUGH JENNER WILY NG 203 of 1998 LEE, HEEREY & GOLDBERG JJ SYDNEY 9 SEPTEMBER 1998

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 203 of 1998

BETWEEN: PETER GERALD FITZ-GIBBON

Appellant

AND: HUGH JENNER WILY

Respondent

JUDGES: LEE, HEEREY & GOLDBERG JJ

DATE OF ORDER: 9 september 1998

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The appeal is dismissed. 2. The appellant pay the respondent's costs of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY ng 203 of 1998

BETWEEN: PETER GERALD FITZ-GIBBON

Appellant

AND: HUGH JENNER WILY

Respondent

JUDGES: LEE, HEEREY & GOLDBERG JJ

DATE: 9 SEPTEMBER 1998

PLACE: SYDNEY

REASONS FOR JUDGMENT The appellant, a bankrupt, appeals against the order of Hill J on 2 March 1998 that the appellant comply with the requirement of the respondent, his trustee in bankruptcy, that the appellant deliver to the respondent a gold Rolex watch within seven days of service upon him of a sealed copy of the order. By the order his Honour also reserved as a separate question for consideration whether certain paintings were the property of the appellant and whether an order should be made for their delivery up to the respondent. The order was made in a proceeding brought by the respondent for orders pursuant to s 30(5)(a) and (c) of the Bankruptcy Act 1966 (Cth) ("the Act") that: (i) the appellant comply with the requirements of the respondent that the appellant deliver to the respondent the Rolex watch, the paintings and the Lladro figurine referred to in a letter dated 17 June 1997 from the respondent to the appellant; (ii) if the appellant failed to comply with such an order; (iii) pursuant to s 78(1)(d) and (f) of the Act a warrant should be issued for his arrest and committal to gaol or alternatively, an order made pursuant to s 30(5)(a) and (d) of the Act that the appellant be punished for contempt. On 4 March 1996 the appellant became bankrupt as a result of his petition when accepted by the Court. The respondent was appointed as trustee of the appellant's estate. The appellant had completed a statement of affairs on 29 February 1996 which had disclosed, inter alia, a watch valued at $300. At a meeting of creditors held on 15 April 1996 questions were raised, inter alia, about the appellant's ownership of paintings and Lladro figurines. The appellant said that he had only had one Lladro piece which he had transferred to his mother approximately three years earlier in satisfaction of a debt and that some paintings had been water damaged. Subsequently on 13 June 1997 the respondent obtained information from a former friend of the appellant, a Mr Hudson, who provided information which, if true, led to the conclusion that the appellant had a gold Rolex watch of some value, at least four paintings which he had purchased from his own funds and a Lladro figurine which was also his property. On 10 June 1997 the respondent's partner and son, Mr Andrew Wily, wrote to the appellant and pursuant to s 77(b) of the Act required him to attend his office on 17 June 1997 for an interview regarding his estate. Prior to sending that letter Mr Andrew Wily had spoken to the respondent who was overseas and the respondent had authorised Mr Andrew Wily to issue on his behalf a request for the appellant to attend an interview and had agreed that he should be required to deliver the Rolex watch to the respondent. When the appellant arrived at Mr Wily's office on 17 June 1997 he was handed a letter signed by Mr Andrew Wily dated 17 June 1997 which, relevantly, read as follows: "I have received a number of disturbing allegations regarding your conduct during your bankruptcy. In particular I would like to address the following areas: 1. Failure to disclose property It has come to my attention that the following items of property have not been disclosed to me: a. A gold Rolex watch b. Household furniture. c. Various paintings. d. Lladro figurines. Pursuant to Section 265 of the Bankrupt (sic) Act it is an offence for a Bankrupt to failure (sic) to disclose property to his Trustee. The penalty for contravention of this Section ranges from imprisonment for one year to three years. Pursuant to Section 77 of the Bankruptcy Act I require you to forthwith deliver to me your Rolex watch, paintings, Lladro figurines and proceeds of sale of furniture." The appellant read the letter and at some stage signed a copy of it to acknowledge receipt. He said that he felt "ambushed". Shortly afterwards he went to the toilet. Before he went to the toilet Mr Wily and one of his employees Ms Rebecca Halpin observed that the appellant was wearing a watch of gold appearance (which his Honour found to be a Rolex) but that on his return from the toilet he no longer appeared to be wearing a watch. Mr Wily then handed the appellant another letter dated 17 June 1997 in which, pursuant to s 77 of the Act, he required the appellant to deliver to him: "… your property, being a Rolex watch which I know to be in your possession." A conversation then ensued between Mr Wily and the appellant (to which objection was taken at the trial) in which the appellant said that he did have a watch years ago but now only had a fake Rolex which was at home. He denied wearing a watch when he went to the toilet. Police were called but the appellant refused to permit himself to be searched and the police refused to intervene and after they had left a solicitor engaged by the respondent attended and asked the appellant some further questions. Among the answers he gave (which were also the subject of objection), was a statement by the appellant that he did not wear a watch when he came to the interview. At no time during the interview did the appellant complain that the interview had been conducted in a way that was oppressive to him. This is relevant because the appellant submitted before the primary judge that by virtue of the provisions of ss 84, 85 and 138 of the Evidence Act 1995 (Cth) ("the Evidence Act") statements made by him to Mr Wily at the interview on 17 June 1997 were not admissible against him substantially because the conduct of the meeting was oppressive. The primary judge found that the principles underlying s 84 of the Evidence Act were that in criminal cases admissions must be voluntary in order to be admitted into evidence and that that rule ought to apply to admissions in civil cases. The primary judge found that the evidence before him did not support the view that there was any violent, inhuman or degrading conduct towards the appellant by any person present at the meeting, nor was there anything oppressive at the meeting, adopting the ordinary meaning of oppressive as being "in a burdensome, cruel or unjust manner". The primary judge also found that the delegation of the calling of the meeting by the respondent to his partner and son was not improper or beyond power and he therefore concluded that there was nothing in s 84 of the Evidence Act which prevented acceptance of evidence of admissions made by the appellant against his interest. His Honour accepted the submission by the respondent that s 85 of the Evidence Act had no operation because the proceeding before him was not criminal and because there had been no official questioning to which the section applied. His Honour held that the proceeding before him could not fall within the definition of "criminal proceeding" in the Dictionary in the Evidence Act. He held that the proceeding was not a prosecution for an offence nor for committal for trial or sentence for an offence but was civil in nature. Although it was not necessary for him to consider what was meant by the expression "official questioning" his Honour held that it did not cover an interview by a bankrupt with his trustee at which the trustee puts questions to the bankrupt. His Honour held that s 138 of the Evidence Act was not applicable as the evidence sought to be excluded was not obtained improperly, in contravention of an Australian law or in consequence of an impropriety but that even if the meeting had been invalidly convened he would have admitted the evidence on the basis that the desirability of admitting the evidence "clearly outweighs" the undesirability of the evidence being obtained by what was alleged to have been an invalid delegation. The primary judge considered the terms of s 34A of the Act and concluded that the combined effect of ss 30 and 34A of the Act is that where proceedings are taken by a trustee for an order of the Court that a bankrupt deliver up property, those proceedings are not "proceedings for an offence" and accordingly the provisions of s 34A applied to the proceedings, namely a standard of proof on the balance of probabilities. His Honour took the view that the correct approach was to treat the proceeding before him as involving a civil standard of proof but to have regard to the seriousness of the charges made and the consequences of them in applying the civil standard, relying on Neat Holdings Pty Limited v Karajan Holdings Pty Limited (1992) 110 ALR 449. The primary judge analysed in considerable detail the evidence led in relation to the existence or non‑existence of the Rolex watch and accepted the evidence of Ms Halpin and Mr Wily that at the meeting on 17 June 1997 each of them had intentionally observed the appellant when he entered the boardroom to determine whether he was wearing a wrist watch which was or looked like a gold Rolex. His Honour found that when the appellant returned from the toilet he had asserted that he had not worn a watch. At the trial the appellant admitted that in making that assertion he had lied because he had been wearing a watch although he said this was a dress watch given to him on his 21st birthday but which did not have the appearance of a gold Rolex watch. His Honour accepted as a truthful witness Mr Hudson a former longstanding friend of the appellant who said that he had had a conversation with the appellant approximately two years earlier in which they had discussed whether the appellant should sell his gold Rolex watch, Mr Hudson mentioned the figure of $12,000 as the value of the watch and this was confirmed by the appellant. His Honour accepted that the conversation did occur and that at the time of the conversation the appellant did own a gold Rolex watch. The appellant gave evidence that he had owned a gold Rolex watch but that it had been stolen from him around 1988. The appellant said that he had been approached by a young man who threatened him and stole the watch. He had not confided in Mr Hudson or his wife about the loss of the watch because of embarrassment at the circumstances under which it was stolen. His Honour gave detailed consideration to the credit of Mr Hudson and the appellant. Although he was asked to conclude that Mr Hudson deliberately set out to invent evidence to hurt the appellant his Honour found that that was not the impression Mr Hudson gave him in the witness box. He concluded that Mr Hudson gave his evidence truthfully. His Honour analysed the appellant's evidence and concluded that he would not lightly accept his evidence except where it was corroborated. His Honour made specific findings as follows: that the appellant had purchased a gold Rolex watch in about 1973, that at some stage he purchased a fake Rolex watch, that he continued to own the gold Rolex watch until the meeting on 17 June 1997, that the watch he wore at that meeting and removed in the toilet was the gold Rolex watch and not the dress watch alleged by the appellant, that Mr Wily and Ms Halpin had observed a Rolex watch on the appellant's wrist and that the appellant's discussion with Mr Hudson of the possible sale of the Rolex watch in 1996 was "a matter quite antithetical to the evidence" of the appellant. In his notice of appeal the appellant challenged many of the primary judge's finding of facts but only three issues were raised on the hearing of the appeal: (a) what was the appropriate standard of proof to be applied to the issues before the primary judge; (b) did s 85 of the Evidence Act apply to the evidence of admissions made by the appellant; (c) if the civil onus of proof applied did the primary judge apply that onus to the question in issue before him?