Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd

REASONS FOR JUDGMENT 1 This is an application by the District Registrar by motion for an order that Mr Peter Athanasas be punished by way of contempt. The application has been brought by the District Registrar as a result of a direction I gave on 16 May 2008 directing the District Registrar to commence a proceeding against Mr Athanasas for contempt of court for his failure to comply with his statutory obligations to produce documents and for his failure to comply with an undertaking given to the Court by his then solicitor on 18 April 2008. When the matter was called on this morning, Mr Athanasas, through his counsel, Mr Telfer, indicated that he would plead guilty to the two charges in the statement of charge. The statement of charge was read to Mr Athanasas and he pleaded guilty. The matter then falls for consideration of penalty. The penalty which has to be imposed must be understood in the light of the history of the proceeding. 2 This matter has a long history. 3 On 22 June 2007 Mr Athanasas' trustee in bankruptcy, Mr Colin Ambrose, sought the issue of a summons pursuant to s 81 of the Bankruptcy Act 1966 (Cth) (the Act) directed to Mr Athanasas to give evidence and to produce documents. A summons issued on 5 July 2007 requiring Mr Athanasas to attend the Court on 15 August 2007 to be examined under oath under s 81 of the Act and to give evidence in relation to his examinable affairs, and to produce the following documents: (1) For the period 1 July 2001 to the present, electronic copies, paper copies or originals of any and all banking records including but not limited to accounts with any financial institution that the examinee used and any finance contracts including hire purchase and leases, balance sheets, profit and loss statements, taxation returns, notices and correspondence from the Australian Taxation Office, bank statements, credit card statements, cheque butts, employment records, payslips, Australian Taxation Office PAYG slips, group certificates, invoices, insurance schedules, correspondence and receipts in relation to all of the examinee's examinable affairs and all of the examinee's dealings, transactions, property and affairs in connection with the following persons, trusts, businesses, estates and companies:- (i) Mobile Solutions Pty Ltd; (ii) The business known as "Rhodes Cellular"; (iii) Any trust of which the examinee has been a trustee, beneficiary, potential beneficiary and or an appointor who has or had the power to appoint a trustee; (iv) Any company in which the examinee has been a director, shareholder or secretary; and (v) Any other person with whom the examinee has invested monies or assets and or been involved in any business venture with including any persons in any State or Territory in Australia or elsewhere and Ilias Athanasas. (2) For the period 1 July 2001 to the present electronic copies, paper copies or originals of any correspondence, insurance schedules, invoices and or policies in relation to, or settlement statements concerning any and all of the following: any taxi licence including taxi plate licence number 2493, the property at 13 McPharlin Avenue, Port Vincent, South Australia, a 2000 Mercedes Benz vehicle registration number XCC874 and a 1997 Chevrolet Corvette engine number 1V5104513 chassis number / VIN 1G1YY22G4V5104513 registration number C5 and XHB391. 4 The date for the examination specified on the summons was subsequently amended to 18 September 2007 at 10.00 am. The summons was served personally on Mr Athanasas on 24 August 2007. On 17 September 2007 Mr Athanasas sent a statutory declaration to the Court by facsimile advising that he would not be able to attend court on 18 September 2007 because the documents to be produced would not be available until 26 September 2007, but that he would be available to attend the Court after that date. 5 On 18 September 2007 the Registrar adjourned the examination until 23 October 2007. Written notice was given to Mr Athanasas of the date to which the examination was adjourned. Mr Athanasas failed to attend on 23 October 2007 and the examination was further adjourned by the Registrar to 27 November 2007. Again, written notice was given to Mr Athanasas. 6 On the adjourned date, 27 November 2007, the examinee attended represented by a solicitor. He was examined by Mr Ambrose's solicitor. In the examination he refused to answer questions. He said that he could produce certain documents but needed more time to do so. The Registrar says in her affidavit that: The answers that were given by the examinee were often to the effect that he could not recall without having the documents with him and that the documents would explain everything. 7 During the examination the Registrar advised Mr Athanasas of the provisions of s 264C of the Act. That section provides for a penalty if a person appearing before the Registrar, for the purpose of being examined under the Act, either refuses or fails to answer a question which the person is required to answer by the Registrar, or refuses or fails to produce any documents that the person is required by a summons to produce. 8 Mr Athanasas' examination was adjourned until 19 December 2007 when he produced some documents to the Court. On that occasion he told the Registrar that he would need until early January to produce the balance of the documents. 9 The documents which he produced were his passport, which had expired on 5 June 2005; a bundle of documents, being his tax returns for 2005 and 2006; a copy of a motor vehicle insurance policy for the period 6 May 2005 to 6 May 2006 which related to the motor vehicle identified in the summons; four bank statements from the ANZ Bank over the period 31 December 2004 to 29 April 2005; a written contract dated 11 May 2005 between Mr Athanasas and Sean Allwood concerning an investment of $100,000 in a business Rhodes Cellular; a copy of bankruptcy notice number 308 of 2006; a letter from the trustee dated 15 August 2006 advising of the trustee's appointment and attaching a copy of the certificate of appointment; two copies of the form of the statement of affairs; an information booklet; and an income questionnaire. 10 The Registrar adjourned the examination until 5 February 2008. 11 On that day, when the matter was called on, Mr Athanasas' solicitor said that Mr Athanasas was in the vicinity of the Court but did not propose to attend because he did not feel well. He also told the Court that the documents which were to be produced in early January were not yet able to be produced, but would be produced by 21 February 2008. 12 The Registrar adjourned for a short time to allow Mr Athanasas' solicitor to speak with him, as a result of which Mr Athanasas presented himself to the Court for further examination. The examination proceeded for a short time but could not be concluded because of the absence of the necessary documents. The matter was further adjourned to 6 March 2008. 13 On that occasion, Mr Athanasas did not attend, although his solicitor did. Mr Ambrose's solicitor applied to the Court to have the matter referred to a judge of the Court. Mr Athanasas' solicitor advised the Court that it remained Mr Athanasas' intention to produce the documents but production was taking longer than expected. 14 The Registrar adjourned the examination for hearing before me on 12 March 2008. 15 On that day, Mr Athanasas' solicitor applied for an adjournment so that his client could put a proposal to the trustee pursuant to s 73 of the Act and because of his client's ill-health. He said that his client had a benefactor and his client wanted to bring this matter to a head. Mr Athanasas' solicitor said that he did not have instructions in relation to his client's compliance with production of documents. 16 On that occasion I said: An application under section 81 requires the party to whom the summons is directed to attend court and to produce to the court any documents which are the subject matter of the summons under section 81. The party to whom the summons is directed is not a volunteer. He or she must comply with the summons in every respect. The evidence would suggest that your client has provided the Registrar on previous occasions with undertakings that he would comply with the summons, but had failed to do so. In the last examination on 5 February, he would have led the court to believe that he would comply with the summons in respect to the production of documents. He has not done that. He ought to understand that under section 264C his failure to comply with the summons is a criminal offence for which he can be fined or imprisoned, but it's more than that. If this court takes a view that he has failed to comply with an order of the court, this court has power of its own motion to commit him to prison as a contempt of the court and that power is given to the court by Order 40 of the Federal Court Rules. Now, the court does that - imposes penalties of that kind reluctantly and only in the most serious cases - but if the court concluded that he has been given a number of opportunities and he has failed to comply with his obligations under the summons and he has failed to comply with undertakings given to the court and to the Registrar of the court in relation to those matters, the court may have to take such a step. Sometimes the court orders the person to be imprisoned until such time as they comply with the order. 17 I adjourned the matter until Friday, 28 March 2008. On that occasion, neither the trustee's solicitor nor Mr Athanasas' solicitor attended when the matter was called on. Apparently, they had agreed between themselves that the matter would be adjourned. I required their attendance. Eventually, Mr Athanasas' solicitor attended. He advised me that his client was under the misapprehension that he need not attend. He referred me to a psychologist's report of Mr Homer Zeitz. Mr Athanasas' solicitor said he had no instructions in relation to the production of documents. The matter was further adjourned until 18 April 2008. 18 On 18 April 2008, both Mr Athanasas and his solicitor attended late. Mr Athanasas applied for an adjournment for a period of 16 weeks so that Mr Athanasas could undergo medical treatment. For that application he relied upon the report of Mr Zeitz dated March 2008. 19 Mr Zeitz is a psychologist who had interviewed Mr Athanasas for the purpose of providing a report. Mr Zeitz gave an opinion in writing that Mr Athanasas was experiencing very severe levels of anxiety, a moderate level of depression and a mild level of physical stress. His sense of hopelessness was consistent with severe rage. He said, in his report, that Mr Athanasas was an individual who was at significant risk of suicide. 20 He made a number of recommendations, one of which was that Mr Athanasas' obligation to give evidence concerning his bankruptcy be delayed for 16 to 29 weeks so that he could undergo a number of sessions in consultation with Mr Zeitz. The total number of sessions which Mr Zeitz said Mr Athanasas required was 26 at a cost of $4,992. 21 Mr Zeitz gave oral evidence. He had never given evidence in a court before. He said that he assumed that Mr Athanasas' bankruptcy was a triggering stress event. He said that he had suggested that Mr Athanasas' general practitioner refer Mr Athanasas to a psychiatrist. He expected to continue with the treatment process. 22 I was not impressed by Mr Zeitz as a witness. He was prone to exaggerate the extent of Mr Athanasas' condition. A striking illustration was during a long answer to Mr Athanasas' solicitor when he said that Mr Athanasas was unable to handle stress very well and was the type of person who would look for a short term solution. He said Mr Athanasas had a strong tendency to dissociate. He said that he was likely to have a psychotic-type episode. 23 He agreed that there is a real difference between anxiety and psychosis, the latter being much more serious than the former. He said in answer to a question: What I'm saying - I'm not saying that the anxiety would lead to a psychotic episode; you're quite right, it wouldn't. 24 I asked him why he was introducing the concept of a psychosis. He was unable to explain why he had introduced the concept, except to say he was trying to explain the extent or nature of a disassociative condition. He said that Mr Athanasas might, because of his condition, consent to something that he would not intentionally mean to consent to without thinking of the consequences. 25 The transcript shows: It's not a question of agreeing. He has to produce them?---Oh, sorry, my apologies. I used the wrong term. I think he would - he would consent, but I think the problem is that with a disassociation and the barriers he would produce he, in a sense, would start running a - he would consent but then he would be unable to - - - No. Please. I'll ask you to assume what this procedure is all about. Part of the procedure before me is that Mr Athanasas must produce certain documents to the court?---Yes. What about his state would prevent him doing that?---Okay. Well, I would be saying, initially, because he has memory problems which is quite consistent with his depression - so he may consent - he may agree to do something and then forget that he's done it. Also, with his level of disassociation, I don't know whether he would fully understand or even know what - what he's actually agreed to doing. Why do you say that?---Because when he's challenged or when he's frightened - - - He's not being challenged. He's simply being asked to give the documents to the court?---But as your Honour has just said, he would also be informed of what would happen if he didn't do that, and I would be saying the disassociation is likely to create a barrier, a psychological - he was finding that stressful because - - - But what about his condition would prevent him presenting the documents to the court?---Well, in summary he would forget. He would forget, your Honour. Well, have you discussed that with him?---No, your Honour. 26 Later Mr Zeitz was asked whether he had any understanding of the proceedings in which Mr Athanasas was involved. He did not know that Mr Athanasas had previously been examined in these proceedings and was surprised to hear that. He thought Mr Athanasas in subjecting himself to examination of that kind acted in a way inconsistent with his diagnosis. It was put to him that Mr Athanasas had been examined before a Registrar and had submitted to the examination. Again, he thought that was inconsistent with his diagnosis. 27 Mr Zeitz was asked whether Mr Athanasas could continue to undergo an examination and he accepted there would be some questions he would be able to remember and answer. However, Mr Zeitz said there may be an exacerbation of his clinical state. 28 In particular, he was asked whether there was any reason why Mr Athanasas could not produce the documents and his answer was there was no physical reason. Nor was Mr Athanasas unable to sit down with his solicitor and prepare and swear an affidavit. 29 As I say, I was not impressed by his evidence or by his report. I am prepared to accept that Mr Athanasas has found these proceedings stressful and no doubt he feels challenged by the procedure and, in particular, by his obligation to produce documents to the Court. However, I am not prepared to accept that his medical condition in any way prevents him from producing the documents which are the subject matter of the summons to the Court. 30 Mr Athanasas has promised on a number of occasions to produce the documents required under the summons. He has never suggested that his medical condition meant he could not comply. He has never suggested that his reason for failing to comply with his obligations is that he forgot. He has given many excuses but none involve his medical condition. 31 Moreover, there is no evidence before me to support or prove the assumptions upon which Mr Zeitz relied for the purpose of his opinion. I pointed out at the hearing I had not heard Mr Athanasas. I recognise, of course, that Mr Zeitz says that Mr Athanasas cannot, in his opinion, give evidence because he may be forgetful. But there is no reason why he could not give evidence to at least describe his medical condition. 32 I reject Mr Zeitz's opinion. Indeed, his opinion of Mr Athanasas is not consistent with Mr Athanasas' presentation in this Court. I have heard and seen Mr Athanasas. He does not present as Mr Zeitz's evidence would have the Court expect. 33 Shortly after Mr Zeitz finished his evidence, Mr Kayal, Mr Athanasas' then solicitor, obtained an adjournment to obtain instructions to give an undertaking from his client to produce the documents to the Court. It was suggested that Mr Athanasas might produce the documents and the examination be adjourned until Mr Athanasas had had an opportunity of undergoing any treatment that might assist him. I explained in open court the effect of an undertaking. I said: If a party gives an undertaking that the party will do something, in this case, present documents in answer to a summons, which is a legal obligation, and that party fails to produce the documents in accordance with the undertaking given to the court, the court may treat that failure as contempt and charge the party for failing to comply with an undertaking to the court. An undertaking given to the court is one of the most serious things that a party may be called upon to do and to do and, once given, must be complied with unless forces outside the party's control prevent it occurring. 34 Mr Kayal then gave an undertaking on behalf of his client to produce those documents within three weeks. The transcript does not actually record Mr Kayal saying the undertaking was given but it records my accepting it. There is no doubt that an undertaking was given and was accepted by me on that day. There has been no suggestion that an undertaking was not given. 35 A short time later, Mr Kayal asked that Mr Athanasas be given four weeks in which to produce the documents and I extended the time in answer to that request. The matter was adjourned to 16 May 2008. 36 On that day, Mr Athanasas appeared with his solicitor. His solicitor produced an affidavit. In that affidavit he said that his client had made bona fide attempts to obtain the documents by travelling to Sydney to meet with a Mr Ripamonte. In that affidavit Mr Kayal said that he had spoken to Mr Ripamonte on 30 April 2008 to ascertain whether he had any of Mr Athanasas' documents in his possession. Mr Kayal formed the opinion that Mr Ripamonte did. He asked for a further adjournment so that Mr Kayal could travel to Sydney to investigate the matter first hand. 37 The affidavit discloses a failure on the part of Mr Athanasas to obtain his documents within the time which he had undertaken to do. There was no explanation as to why nothing had happened after 30 April 2008 to obtain the documents which were thought to be in Mr Ripamonte's custody, possession or control. 38 However, it is not only the documents which are said to be in Mr Ripamonte's control that should have been produced to the Court. There are other documents about which Mr Athanasas gave evidence in his examination on 5 February 2008 which were in South Australia in the control of a Mr Vellacchio and which also have not been produced. On 16 May 2008 his solicitor said Mr Vellacchio did not hold any documents. That statement might be contrary to his client's evidence. 39 I took the view that the continuing failures by Mr Athanasas to produce any documents apart from those to which I have referred, which were produced on 19 December 2007, in answer to the summons raised for consideration the question of his contempt. For that reason, I gave the directions to which I have already referred. 40 I adjourned the matter to 30 May 2008 to allow further time for Mr Athanasas to comply with the summons. When the matter resumed on 30 May 2008 Mr Athanasas' solicitor sought leave to withdraw because his instructions had been terminated. I gave him leave. 41 In the meantime, the Registrar had, in accordance with the direction given her, commenced this proceeding by notice of motion which was filed on 23 May 2008 together with a statement of charge. 42 The statement of charge reads: 1. The District Registrar of the Federal Court of Australia alleges that Peter Athanasas, is guilty of contempt of Court and further that such contempt is wilful and contumacious in that: 1.1. The said Peter Athanasas has failed to comply with an undertaking given by his solicitor on his behalf to the Court on 18 April 2008 to produce documents pursuant to the summons issued by this Court on 5 July 2007; and 1.2. The said Peter Athanasas has failed to comply with his statutory obligations under sections 81 and 264C(1)(c) of the Bankruptcy Act 1966 (Cth) to produce documents pursuant to the summons issued by this Court on 5 July 2007. 43 On 30 May 2008 I drew to Mr Athanasas' attention that the Registrar's notice of motion was due to be heard on 13 June 2008 and pointed out to him that it would be in his best interests if he produced any documents before that date. He told me that he would definitely be producing documents. 44 He also told me at that time that he would be instructing other solicitors. I told him that if he were to instruct other solicitors that he ought to tell them that the Registrar's summons would be heard on 13 June 2008 and that any affidavit upon which Mr Athanasas intended to rely should be filed by 11 June 2008. 45 On that occasion I concluded by saying: That won't necessarily mean that the contempt hearing won't go on, but it would certainly be in your best interest for it to do so, and that is not only whatever documents Mr Ripamont[e] has got, it's also the documents that you gave evidence were in the accountant's hands and also any copies of any bank statements or any of those sorts of documents - there will need to be a full disclosure. 46 The matter came on for hearing on 13 June 2008. Mr Athanasas was not present when the matter was called on, but attended shortly after. 47 I asked him if he was producing any documents. He answered by saying that he had a lawyer but his lawyer could not see him until 19 June 2008 when he would be retained. He asked for an adjournment. He said he had spoken to his solicitor first a week ago and, as I understood his answer, had not told him that the matter would proceed that day. 48 He was asked whether he had the documents and he said that he was getting them all done and they were going to be forwarded to his solicitor. He said he would have them within a fortnight. He repeated that he would definitely have them within two weeks. 49 Counsel for the District Registrar then took me through the documents. Reference was made to the transcripts of 18 April 2008 and 30 May 2008. I adjourned so that Mr Athanasas could read those transcripts. 50 On the resumption, I was advised by Mr Athanasas that he had phoned his solicitor and his solicitor was on his way. He asked me to delay until such time as his solicitor appeared. I acceded to that request and adjourned until his solicitor appeared. His solicitor, Mr Sanders, appeared and advised that he had not been retained and had a very limited knowledge of the proceedings. He asked that the matter be adjourned for two weeks to enable him to obtain Mr Athanasas' file, provide him with some advice and instruct counsel to represent Mr Athanasas on the contempt application. 51 I asked the District Registrar's counsel to take the Court through the evidence upon which he relied for the purpose of not only educating the Court but also Mr Athanasas' solicitor, which he did. 52 At the conclusion, I acceded to Mr Athanasas' application to adjourn the matter for a fortnight to enable Mr Athanasas to instruct his solicitor, obtain advice, retain counsel and obtain the documents which earlier that day he said he would be able to obtain within a fortnight. 53 The matter was adjourned until 27 June 2008. 54 On that day, Mr Athanasas again did not appear but he was represented by counsel, Mr Algie. Mr Algie told me that Mr Athanasas was in Sydney endeavouring to obtain funds from a third party. He told me that it was imperative that Mr Athanasas be in Sydney to obtain funds. I was told that it was not known when he would return. I was also told that he had paid $40,000 into his solicitor's trust account to demonstrate his bona fides. The money would be used to meet, in part, his obligations to his trustee. 55 Of course, Mr Athanasas' obligation was to be in Adelaide and in Court. He again failed to comply with his obligations. He again failed to produce the documents which, on the previous occasions, he had promised he would produce. 56 The matter was called on again this morning. The statement of charge was read. Mr Athanasas pleaded guilty to both charges. Today he was represented by counsel, Mr Telfer, who informed the Court that he had read the District Registrar's affidavit and the relevant transcripts of proceedings. 57 Mr Telfer did not require the District Registrar's counsel to take the Court through the facts and circumstances leading up to the charge of contempt. He said his client acknowledged that he was guilty of the contempt. He informed the Court that he had no instructions to offer any explanation as to why his client had not complied with the orders and the undertaking. 58 I am satisfied, as Mr Athanasas' guilty plea demonstrates and his counsel's submission acknowledges, that no good reason exists for Mr Athanasas to have failed to comply with both his statutory obligations and his undertaking to the Court. In particular, I am satisfied that there is no medical reason which would have interfered with Mr Athanasas' ability to produce the documents which he promised the Registrar and me on a number of occasions he would produce. 59 I am satisfied that his conduct has been wilful and contumacious in the sense described in Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98. In those circumstances, I am satisfied that the contempt to which he has pleaded guilty was deliberately wilful and contumacious rather than casual, accidental or unintentional. 60 In those circumstances, the only matter left is to determine the appropriate penalty for such a contempt. The District Registrar's counsel took me to the authorities which set out the penalties which may be imposed. 61 This Court has the same power to punish contempts as is possessed by the High Court of Australia in respect of contempts of that Court: s 31 of the Federal Court of Australia Act 1976 (Cth). The High Court of Australia, in turn, has the same power to punish contempts as was possessed in 1903 by the Supreme Court of Judicature in England: s 24 of the Judiciary Act 1903 (Cth). 62 This Court has the power to impose a prison sentence, a fine, costs orders, or a combination of all those orders in relation to any contempt of the Court. 63 It is accepted that a sentence of imprisonment is a punishment of last resort. However, it is a punishment which must be imposed if it is necessary for the purpose of vindicating the Court's authority. 64 In this case, Mr Athanasas is a bankrupt and it would seem to me that a fine would be inappropriate. Notwithstanding that imprisonment is a sentence of last resort, it seems to me, having regard to the conduct of Mr Athanasas over a very long period since the matter first came before the Registrar and since he first informed the Registrar he would comply with the summons, a sentence of imprisonment is necessary. 65 The question remains as to whether or not that sentence ought to be suspended. Mr Telfer urged me to suspend the sentence on condition that Mr Athanasas produce the documents within a period specified in the condition. The difficulty with that submission is that he has no instructions that his client will produce the documents. I specifically asked him whether he was in a position to tell the Court whether Mr Athanasas would produce the documents to the Court at any time in the future. His instructions were that he had no such instructions. 66 It is necessary, in my opinion, to reassert the Court's authority and, in those circumstances, I am not prepared to suspend the sentence of imprisonment. 67 I sentence Mr Athanasas to three months' imprisonment. I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.