FEDERAL COURT OF AUSTRALIA Official Trustee in Bankruptcy v Pastro [2001] FCA 234 OFFICIAL TRUSTEE IN BANKRUPTCY the Trustee of the property of RODOLFO SAVERIO PASTRO v EMILIO PASTRO and MARIA PASTRO SG 7154 OF 1998 MANSFIELD J 1 MARCH 2001 ADELAIDE IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY SG 7154 OF 1998 BETWEEN: OFFICIAL TRUSTEE IN BANKRUPTCY the Trustee of the property of RODOLFO SAVERIO PASTRO APPLICANT AND: EMILIO PASTRO FIRST RESPONDENT MARIA PASTRO SECOND RESPONDENT JUDGE: MANSFIELD J DATE: 1 MARCH 2001 PLACE: ADELAIDE REASONS FOR JUDGMENT 1 This is a motion that the first respondent Emilio Pastro, ("Mr Pastro") be punished for contempt of court. The motion was issued of 15 December 2000. Accompanying the motion was a statement of charge indicating the nature of the contempt. It alleged that on or before 13 December 2000 Mr Pastro failed to comply with an Order of the Court made on 6 December 2000 and served upon him personally on that date directing him to deliver up to the applicant at the Office of the Official Trustee In Bankruptcy within seven days of the service of the order - that is, by 13 December 2000 - the following documents: (a) Discharge in registrable form of Registered Mortgage 7789769; (b) Mr Pastro's copy of the Registered Mortgage 7789769; and (c) duplicate Certificates of Title Register Book Volume 4214 Folio 197, and Volume 4214 Folio 196. On the material before me those duplicate certificates of title are those titles over which the mortgage is registered. 2 I am satisfied on the material before me that Mr Pastro was served with the Order of the Court made on 6 December 2000 on that date. I am also satisfied that the Order of the Court was in terms in accordance with the statement of charge, and that Mr Pastro did not comply with that Order by 13 December 2000. Indeed, he has acknowledged today that he has not complied with it and does not intend to comply with it. I am also satisfied that the notice of motion dated 15 December 2000, together with the supporting affidavits of Patricia Margaret Tregauer sworn on 15 December 2000 and Gregory Robert Parr sworn on 14 December 2000, were properly served upon Mr Pastro as evidenced by the affidavit of Barry James Kerr ("Mr Kerr") sworn on 21 December 2000. Mr Kerr's earlier affidavit sworn on 14 December 2000 establishes service upon Mr Pastro of the Order itself on 6 December 2000. I am further satisfied that in other respects the Rules of the Court relating to such a motion as the present have been complied with by the applicant. 3 The background to the Order is dealt with in considerable detail in the reasons for judgment of Finn J delivered on 26 November 1999 in the matter of Official Trustee v Pastro [1999] FCA 1631. On this motion I have also received an affidavit of Patricia Margaret Tregauer sworn on 17 November 2000. It too explains something of the background to the present motion. The Official Trustee in Bankruptcy is the trustee of the estate of Rodolfo Saverio Pastro who became a bankrupt by sequestration order made on 12 February 1996. Following that bankruptcy, the applicant became the registered proprietor of the two pieces of land of which the two certificates of title are the relevant titles. 4 The mortgage was registered over the two titles apparently to secure an advance or advances made by Mr Pastro to Rodolfo Saverio Pastro prior to his bankruptcy. On 26 November 1999 Finn J declared, inter alia that the mortgage granted by Rodolfo Saverio Pastro in favour of Mr Pastro and dated 9 September 1994 over the land in the two certificates of title, to which I have referred, was void against the applicant pursuant to ss 120 and 121 of the Bankruptcy Act 1966. That is, the mortgage which became Registered Mortgage 7789769. 5 By notice dated 11 July 2000 and served upon Mr Pastro, the applicant required Mr Pastro to deliver to the applicant a discharge of the mortgage, his copy of the mortgage and the duplicate certificates of title. Mr Pastro declined to do so. His letter to the applicant of 15 August 2000 indicates that he was not prepared to do so, except upon receipt of certain cassette tapes apparently relating to his examination under the Bankruptcy Act. That examination substantially preceded the hearing before Finn J. I do not know the final outcome of that request, but from what Mr Pastro has said to me in Court today by way of submission, it appears that that request has not been satisfied to his satisfaction and that somehow, by reason of the non‑satisfaction of that request, the decision made by Finn J on 26 November 1999 is not accepted by him as a binding decision with which he must comply. He is obviously misconceived in that understanding. 6 To secure the discharge of the mortgage, the applicant has commenced separate proceedings in the Supreme Court of South Australia seeking an order under s 64 of the Real Property Act 1886 (SA), that the Registrar-General be directed to correct the register book by cancelling the registration of the mortgage over the two titles. That application has not yet been finally resolved, although the material before me indicates that the Registrar-General presently opposes the orders sought in the proceedings until all steps possible to enforce compliance with the notice given by the applicant to Mr Pastro dated 11 July 2000 are exhausted. That proceeding is presently adjourned. In the meantime the applicant is being frustrated in the administration of the bankrupt estate of Rodolfo Saverio Pastro by the presence of the registered mortgage on the two titles over the land of which the Official Trustee is now the registered proprietor by transmission following the bankruptcy of Rodolfo Saverio Pastro. 7 That is the background upon which the Court made the order on 6 December 2000 to which I have referred and with which Mr Pastro clearly declines to comply. When the motion first came before me for hearing on 1 February 2001, Mr Pastro appeared for himself. He sought an adjournment to seek legal advice. Counsel for the applicant very properly acquiesced in that request, and the matter was adjourned to today. Mr Pastro has again attended in person today although he has told me that he has consulted solicitors. I invited him to consider seeking a further adjournment of the hearing today while the process of consulting solicitors continues, bearing in mind the possible consequences to him of a finding that he is in contempt of court and of the sort of orders which the Court may make in the light of such a finding. He expressly declined to do so. He indicated that he no longer wished to consult solicitors in respect of the present motion or its possible consequences. I propose in that circumstance to deal with the motion today. 8 In dealing with the motion I should indicate that the Court has power under s 31 of the Federal Court of Australia Act 1976 (Cth) to punish for contempt of court in the same manner as the High Court may do so by virtue of s 24 of the Judiciary Act 1903 (Cth). To make a finding of a contempt of court it is necessary to be satisfied of each of the elements of the contempt beyond reasonable doubt: Witham v Holloway (1995) 183 CLR 525 at 534 and 548. 9 Having regard to the material to which I have referred, I am satisfied beyond reasonable doubt that on 6 December 2000 the Court made an order directing Mr Pastro, pursuant to s 30(5) of the Bankruptcy Act 1966 (Cth) to deliver up to the applicant at the Office of the Official Trustee, within seven days of the date of service of that order upon him, a discharge of Registered Mortgage 7789769 in registrable form, his copy of that Registered Mortgage, and the duplicate Certificates of Title Register Book Volume 4214 Folio 197 and Volume 4214 Folio 196. 10 I am also satisfied beyond reasonable doubt that that order was served upon Mr Pastro on 6 December 2000. I am further satisfied beyond reasonable doubt that Mr Pastro did not comply with that order by 13 December 2000 and still has not done so. Indeed, he indicated to the solicitor for the applicant in a telephone conversation on 13 December 2000 that he would not comply with that order, and he has confirmed that attitude today. 11 In those circumstances I find the alleged contempt proved beyond reasonable doubt. 12 It is necessary then to address what should be done to secure compliance with the Order of the Court. Mr Pastro has not put before me any material relevant to that question. It is apparent from his letter of 12 December 2000 which is exhibited to the affidavit of Mr Parr sworn on 14 December 2000 that he is aware of the Order and understands its terms. That is also apparent from what he has said to the Court today. That letter indicates, as I have previously remarked, that he does not intend to comply with the Order of the Court because in essence he disputes that the judgment of the Court given on 26 November 1999 should be maintained. That judgment nevertheless stands. 13 His concerns about the circumstances of his examination under the Bankruptcy Act 1966 (Cth) before the Registrar, an examination which took place (according to his letter) well before the decision of Finn J on 26 November 1999, are not matters which are presently relevant to excuse him from complying with the Order of 6 December 2000. 14 Counsel for the applicant contended that the contempt is not a casual accidental or unintentional one, but is based upon an explicit refusal to accept the findings and orders of the court adverse to Mr Pastro. I accept that. Counsel on the other hand very fairly acknowledged Mr Pastro may genuinely believe that the judgment entered against him on 26 November 1999, and so the Order of 6 December 2000 with which he will not comply, is one which ought not to have been made. He is wrong in holding that belief. The judgment stands and the Order made in light of that judgment on 6 December 2000 must be complied with. It is not for Mr Pastro to substitute his view of what the judgment of the Court should have been for that judgment itself. I nevertheless have regard to his genuine belief in determining an appropriate penalty for his contempt in an endeavour to secure his compliance with the Order of 6 December 2000. 15 In an endeavour to seek to compel compliance with the order of the Court made on 6 December 2000, and in the light of the circumstances to which I have referred, in my view it is necessary to impose some term of imprisonment. There is nothing before me to indicate that any monetary penalty would serve any useful purpose. I am not disposed to commit the applicant to a term of imprisonment for an indefinite period, bearing in mind the circumstances, and so far as I can discern it, the amount involved in the advance which was the subject of the mortgage required to be discharged. In my judgment an appropriate period of imprisonment in an endeavour to secure Mr Pastro's compliance with the Court's Order is a period of ten days. 16 I propose, therefore, to make an order directing that Mr Pastro be imprisoned for a period of ten days if he does not, prior to the execution of the warrant of imprisonment to be executed upon him, comply with the Order of the Court made on 6 December 2000. He may purge his contempt at any time prior to or upon or after the execution of that warrant of imprisonment by attending before the Court and proffering at that time the following documents: a Discharge of Registered Mortgage 7789769, his copy of Registered Mortgage 7789769, and Duplicate Certificates of Title Register Book Volume 4214 Folio 197 and Volume 4214 Folio 196. He may present those documents alternatively to the applicant, in accordance with the terms of the Order made on 6 December 2000. 17 I propose to direct that the order for imprisonment which I have today made not be executed for a period of twenty-one days from today's date. That will give Mr Pastro the opportunity in that period of time to consider the consequences of his contempt, and an opportunity, prior to any warrant of imprisonment being executed, to purge his contempt by presenting to the Court or to the applicant the documents to which I have referred. 18 I therefore order that the term of imprisonment for contempt of court which I have today made not be executed until on or after 22 March 2001. I require the applicant to draw up minutes of order and present them for settling to the Court. I give Mr Pastro liberty to speak to those minutes. I see no reason why Mr Pastro should not be ordered to pay the applicant's costs of and incidental to the motion dated 15 December 2000, including the costs on 1 February 2001. I so order. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. Associate: Dated: 12 March 2001 Counsel for the Applicant: Mr D Kennelly Solicitors for the Applicant: Knox & Hargrave Counsel for the First Respondent: The First Respondent appeared in person Date of Hearing: 1 March 2001 Date of Judgment: 1 March 2001