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? What was the appropriate standard of proof to be applied? Mr King who appeared with Mr Watts for the appellant submitted that the criminal standard of proof beyond reasonable doubt applied to the proceeding. He submitted that the nature of the proceeding was such that it involved a proceeding whereby punishment of the appellant was sought and he submitted that by analogy with the reasoning of the High Court in Witham v Holloway (1995) 183 CLR 525 the appropriate standard of proof to apply in a proceeding involving an application for punishment under the Act was that which required that the various elements must be proved beyond reasonable doubt. Mr King submitted that the determination of the appropriate standard of proof should be made by reference to the nature of the proceeding and that as the application before the primary judge sought orders for committal or imposition of punishment, the proceeding should be considered to be in the nature of a criminal proceeding. In Witham v Holloway (supra) at 534 the majority of the High Court (Brennan, Deane, Toohey and Gaudron JJ) concluded that all charges of contempt, whether civil or criminal, must be so treated and the standard of proof must be proved beyond reasonable doubt. However, the order which his Honour made and the primary issue before him did not concern an issue of punishment, nor did it deal with any issue of contempt. The primary issue before his Honour and the one on which he made his findings was whether the appellant had failed to comply with a direction of the respondent and whether he should be ordered to comply with that direction. Mr King submitted that s 30(5) of the Act identified a jurisdictional fact which gave rise to a potential order for committal, namely the failure of the appellant to comply with a direction of the respondent and therefore the proceeding must be viewed as a proceeding for punishment even if punishment was either not sought or was not ordered. However the order which is sought to be set aside is an order simply for delivery up of a gold Rolex watch. In relation to the issues and findings of fact which gave rise to that order we are of the opinion that notwithstanding that it was open to the respondent to seek an order for committal under s 30(5)(d) or to seek a warrant for the arrest of the appellant pursuant to s 78(1)(f) of the Act if the order for delivery up was not ultimately complied with, the appropriate standard of proof to apply in relation to the issues and findings of fact before the primary judge was the civil standard of proof. We consider that this is the standard of proof specified by s 34A of the Act as being appropriate to the circumstances before the primary judge. We do not consider that the Act expressly provides otherwise so s 34A(2) has no operation. Mr King submitted that the proceeding before the Court was a proceeding for "an offence" so that the civil standard provided by s 34A(1) did not apply. He submitted that it was a proceeding for an offence because punishment of the appellant was sought in the application. He submitted that the civil standard only applies in what he called ordinary civil matters and this matter was not an ordinary civil matter in the nature of an application for delivery up, simpliciter, of property. Mr King submitted that the ordinary dictionary definition of offence was that it involved a transgression or a wrong or a breach of law. However, one must look at the word "offence" in the context in which it appears namely, the Bankruptcy Act. Pt XIV of the Act contains a number of provisions dealing with what are properly regarded as "offences" and in particular s 265(1)(c) which, in substance, makes it an offence not to comply with a requirement of a trustee. In our opinion, properly characterised, the application before the primary judge was not a proceeding for an offence. There was no charge laid and no plea taken. Jurisdiction is not conferred upon the Federal Court to hear a prosecution under s 265(1)(c) and in any event the proceeding before the primary judge did not relate to such a matter. In our opinion the primary judge did not err when he concluded that the correct approach to take was to treat the proceeding as involving a civil standard of proof but to have regard to the seriousness of the circumstances and the consequences of findings of fact and to apply to them the civil standard in the same way as the High Court did in deciding Neat Holdings Pty Limited v Karajan Holdings Pty Limited (supra). See also Briginshaw v Briginshaw (1938) 60 CLR 336. Did s 85 of the Evidence Act apply to the appellant's admissions? The appellant submitted that s 85 applied to admissions made by him upon which the primary judge relied. However, s 85 only applies "in a criminal proceeding". The expression "criminal proceeding" is defined in the Dictionary in the Evidence Act as meaning: "a prosecution for an offence and includes: (a) a proceeding for the committal of a person for trial and sentence for an offence; and (b) a proceeding relating to bail; but does not include a prosecution for an offence that is a prescribed taxation offence within the meaning of Part III of the Taxation Administration Act 1953". But in the proceeding before his Honour the appellant was not being prosecuted for an offence. Mr King submitted that by parity of reasoning with Witham v Holloway (supra) he was being proceeded against for a punishment. Even if this be so, and we have determined to the contrary earlier, the submission fails to give sufficient significance to the expression "prosecution for an offence". The proceeding before the primary judge was not a prosecution for an offence. Even though sub‑para (a) of the definition of "criminal proceeding" refers to "sentence for an offence" we do not consider that such an expression covers what the appellant says was the punishment sought in the application. In our opinion the reference to "sentence for an offence" does no more than ensure that the whole spectrum of a criminal prosecution is covered from beginning to end, that is to say, from committal to sentence and is not limited to the formal trial when the accused has pleaded not guilty. Did the primary judge apply the civil onus of proof to the question in issue? The primary judge recognised that he should adopt the approach identified by Dixon J in Briginshaw v Briginshaw (supra) at 361‑362 by the approach he adopted referring to Neat Holdings Pty Limited v Karajan Holdings Pty Limited (supra) to which we have earlier referred. However, there was ample evidence before the primary judge upon which it was open to him to make the findings he made in relation to the existence of the gold Rolex watch. It was submitted by the appellant that the primary judge's finding of fact that: "Both Mr Wily and Miss Halpin make it clear that the watch they observed on Mr Fitz‑Gibbon's wrist was a Rolex watch." was not open on the evidence because they had not specifically stated that what they saw was a Rolex watch. However, the finding of fact of his Honour to which we have referred is a finding based on his full analysis of the evidence and, in our opinion, it is consistent with his Honour's finding that Mr Wily and Ms Halpin had observed a gold watch which in the circumstances could only be a Rolex watch. Putting the matter another way, his Honour was finding that those witnesses saw a watch which he found was a gold (not fake) Rolex watch. Both witnesses had intentionally observed the appellant when he entered the boardroom and his Honour specifically found that Ms Halpin had noticed that the appellant was "wearing on his left wrist a gold watch which had rather a chunky linked chain band". Mr Wily had observed that the appellant was wearing "a gold coloured watch with a chain type band". Although Mr Wily said in cross‑examination that he agreed with the proposition that it was possible that he did not get a good look at the watch sufficient to say with confidence that it was a Rolex watch it was apparent from his evidence, and it was open to his Honour to find, that Mr Wily observed a gold coloured watch with a chain type band which in the circumstances before his Honour was a gold Rolex watch. His Honour found that the watch which the appellant claimed in evidence he had been wearing (although he had denied wearing any watch on the day of the meeting) which was produced to him looked nothing like a gold Rolex watch and he found that the watch which Mr Wily saw was not the dress watch which the appellant said he had been wearing. His Honour found that subsequently the appellant went to his home with Ms Halpin and another employee of the respondent and produced from a drawer in the bedroom the imitation Rolex watch. His Honour therefore concluded that the watch which the appellant wore when he walked into the boardroom was neither the dress watch nor the fake Rolex watch but another watch which appeared to be a gold Rolex watch. His Honour's conclusion was that it was inevitable that the appellant must therefore have worn the original gold Rolex watch and although the appellant challenges this finding, we are of the opinion that it was open to the primary judge so to find on the evidence. We do not consider that in this respect the primary judge dealt with the evidence inappropriately nor do we accept the submission that his Honour did not in fact apply the approach referred to in Briginshaw v Briginshaw (supra) and Neat Holdings Pty Limited v Karajan Holdings Pty Limited (supra). His Honour specifically said that the correct approach to take was as identified in Neat Holdings Pty Limited v Karajan Holdings Pty Limited (supra) and we can see nothing in his Honour's subsequent reasoning which indicates that he did not in fact adopt that approach. In our opinion, the appeal should be dismissed with costs. I certify that this and the preceding nine (9) pages are a true copy of the Reasons for Judgment herein of the Court Associate: Dated: 9 September 1998 Counsel for the Appellant: P King & M J Watts Solicitor for the Appellant: Appellant in person Counsel for the Respondent: J K Chippindall Solicitor for the Respondent: Michell Sillar Date of Hearing: 9 September 1998 Date of Judgment: 9 September 1988