THE BACKGROUND FACTS
3 By summons dated 10 December 2009 Mr Nathan was required to attend the Federal Magistrates Court to be examined under oath and to produce documents. He was required to attend on 21 January 2010.
4 On that day the return date of the summons was extended to 24 February 2010. Further adjournments followed, the last of which required Mr Nathan to attend for examination on 17 June 2010.
5 On 17 June 2010 Mr Nathan attended before a Registrar of the Federal Magistrates Court. On a number of occasions the Registrar invited Mr Nathan to take a seat in the witness box. On each occasion he failed to respond to the invitation or refused to enter the witness box. The Registrar warned him that, if he refused to participate in the examination, the Registrar would refer the matter to a Federal Magistrate. The following exchange then took place:
"THE REGISTRAR: Please take a seat in the witness box.
MR NATHAN: That's it, Registrar. I am not - I refuse to … answer any questions.
THE REGISTRAR: Alright. Thank you. What I will do is stand the matter down. I will make enquiries as to the availability of a federal magistrate to hear the matter, and a Court officer will indicate to you the position. I'd ask you to stay in the court, or in the immediate precinct, Mr Nathan. The matter will be referred to a federal magistrate. If you've got anything to say then, you can say it to the federal magistrate. Is that understood?
MR NATHAN: Yes, Registrar, yes, thank you."
6 Later in the morning the referred matter was called on before a Federal Magistrate. The Federal Magistrate commenced by advising Mr Nathan that the Registrar had referred the matter to him. The following exchanges then took place:
"HIS HONOUR: Yes. The registrar, either way, has referred the matter to me, and I note from the file that there has been a summons issued pursuant to section 81 of the Act. And the registrar tells me that you have refused to take the oath, and to answer questions. Is that right, Mr Nathan?
MR NATHAN: Yes, your Honour.
HIS HONOUR: It really isn't open to you to do that. I'll hear from you why you say you shouldn't, but I'll explain to you the provisions of the legislation that seem to me to touch upon this matter. Pursuant to section 264C of the Act, it's provided, relevantly, that:
A person appearing before the court, the registrar or a magistrate for the purposes of being examined under this Act, or appearing as a witness before the court, shall not refuse or fail to be sworn or to make an affirmation -
that's (a)
(b) refuse or fail to answer a question which he or she is required to answer by the court, the registrar or the magistrate, as the case may be; or (c) refuse or fail to produce any books that he or she is required by the court, the registrar or the magistrate, as the case may be, or by a summons under this Act to produce.
The penalty prescribed is a thousand dollar fine, or imprisonment for six months, or both. That section doesn't apply if the person has a reasonable excuse, and by subsection (2) it's provided that:
Nothing in the section limits the power of the court to punish persons who are contempt of court (sic), but a person shall not be punished under the section and for contempt of court in respect of the same act or omission.
So essentially, the person summonsed has to answer questions, and has to take the oath. So there's two matters I'd wish to do at this stage. The first is, do you assert that you have an excuse for not answering questions, or for taking the oath?
MR NATHAN: Yes, I do, your Honour.
HIS HONOUR: And what's that?
MR NATHAN: Well, this so-called bankruptcy has been heard by this court in proceeding number MLG 899 of 2005, before Riethmuller FM, and that petition was dismissed. And the creditor did not appeal that decision.
HIS HONOUR: But if my memory serves me well, were there not subsequent proceedings to which you were the subject of a sequestration order?
MR NATHAN: Well, it appears to be somewhere in Sydney.
HIS HONOUR: Yes?
MR NATHAN: Well, to date, I yet to see an order, a valid order, signed and sealed by a magistrate.
HIS HONOUR: Well - - -
MR NATHAN: There are two different versions of a document floating around, and there are inconsistencies in those orders. And the official receiver was supposed to be in Sydney.
…
HIS HONOUR: Yes. Well, I note that there is, on the court's file, a copy of an order made by Barnes FM, which was a sequestration order made against you. Perhaps I should ask counsel, is that the order upon which the bankruptcy is said to stand?
MR MAZZEO (COUNSEL FOR THE TRUSTEES): Yes, that's the order of 7 October 2008.
HIS HONOUR: Yes.
MR MAZZEO: Your Honour.
HIS HONOUR: Well, Mr Nathan, I'm satisfied that that's an order of the court, so I'm not prepared to accept that as an excuse.
MR NATHAN: Well, your Honour, I'm - this is - - -
HIS HONOUR: It's not a matter of what you're prepared to accept, I'm afraid, Mr Nathan. It's a matter of what I'm prepared to accept. I've no desire to be in any way discourteous to you, but the fact is that you've been summoned before the court, and the Act now applies. And if you don't comply with it, then obviously there will be a requirement upon the court to compel you to comply. And that involves going to gaol, Mr Nathan. It doesn't involve any discussion very much. Now, I could deal with - under the Act, I can either deal with you for breach of this section, or for breach of - or for contempt of court. There's nothing prescribed in the Act or regulations that I'm aware of that says how a section 264C breach is dealt with. But since you're telling me straight up that you won't do what the registrar is requiring you to do, and since, in my view, you've got no valid excuse for doing so - - -
MR NATHAN: Your Honour, I'm happy to do whatever it is. But this court shopping, so-called court shopping - - -
HIS HONOUR: Well, I think you will need - I understand that Registrar Allaway is prepared to reconvene the examination. So there are two choices. Either you go back, and comply with the registrar's directions, have yourself sworn or affirmed and answer the questions, and in due course, produce any books that the court requires you to produce. Or, unfortunately, and this would be extraordinarily regrettable from my perspective, the court will have to compel you to do so. A fine won't do it. The only way in which you can be compelled is by sending you to gaol. And I don't want to do that. If you wish for some time to consider your position, I'll give you until 2:15. If you don't want any time, I'm afraid your options are either to return and conduct yourself properly before the registrar, or for me to deal with you under the section.
MR NATHAN: But, your Honour - - -
HIS HONOUR: And I'll be sending you to gaol, Mr Nathan. You needn't be under any doubt.
MR NATHAN: But, your Honour, I mean, if it takes to go to gaol to prove my point, then I will go to gaol, but in the meantime, there is a proceeding. I'm appealing to the County Court about a criminal conviction - - -
HIS HONOUR: I'm not interested in any of that, Mr Nathan. You are here before the court to answer a summons before the registrar. Are you going to cooperate with that process or not?
MR NATHAN: But as long as I can see a sealed and signed copy of an order - - -
HIS HONOUR: No, there's no "as long as", I'm telling you to do it.
MR NATHAN: Well, that's - you're abusing my rights, your Honour. I mean, this is - - -
HIS HONOUR: Well, I'm not doing anything of the sort, Mr Nathan. I'm merely applying - - -
MR NATHAN: - - - really oppressive.
HIS HONOUR: - - - the law to you.
MR NATHAN: That's really oppressive, your Honour.
HIS HONOUR: I'll give you until midday to consider your position, and I direct you to return here at midday. I'll indicate now, Mr Nathan, that midday, either you - I would strongly suggest that you consider your position. As far as I'm concerned, at midday, either you will indicate that you're prepared to properly cooperate with the proceedings before the registrar, or I will deal with you pursuant to section 264C.
MR NATHAN: I've considered my position, your Honour. I'm asking - all I'm asking - - -
HIS HONOUR: I'm giving you until midday. Whatever happens, Mr Nathan, I urge you to do so. I really do.
MR NATHAN: Well, I can't pay. I have to see - I can't understand this word. I'm a witness to my own case? I can't understand the language.
HIS HONOUR: You don't need to understand it, you've just got to do what you're told, Mr Nathan, I'm afraid.
MR NATHAN: Well, that is working with a third world legal system operates, your Honour.
HIS HONOUR: No, this is applying the law as it stands, Mr Nathan.
MR NATHAN: It's not, your Honour. I understand English - - -
HIS HONOUR: I'm not entering into a debate with you about it, Mr Nathan.
MR MAZZEO: Your Honour, could I just take - - -
HIS HONOUR: Yes.
MR MAZZEO: - - - make one point. If there's a duty solicitor available, it might be worthwhile - - -
HIS HONOUR: If there is, I'll certainly make him available to see - - -
MR MAZZEO: Yes.
HIS HONOUR: My associate will investigate that.
MR MAZZEO: Thank you, your Honour.
HIS HONOUR: My associate will see if there's a duty solicitor who might assist you, Mr Nathan. I would urge you to take advantage of that opportunity.
MR NATHAN: Well, I do understand English very well, your Honour.
HIS HONOUR: Of course you do.
MR NATHAN: Yes.
HIS HONOUR: I'll see you at midday."
7 When the hearing resumed the following exchanges occurred:
"HIS HONOUR: Now, Mr Nathan, you have had an opportunity, I trust, to speak to the duty solicitor, is that right?
MR NATHAN: Yes, your Honour.
HIS HONOUR: I just want to remind you and everybody of where this matter is at. You have been summonsed for examination before a registrar and there's no question, given your answers to me, that you are refusing to be sworn to answer questions and possibly also to produce documents. I have directed you to section 264C of the Bankruptcy Act, which provides that, unless you have a reasonable excuse for such conduct, the court has power to fine you, or send you to gaol for six months or both, or to deal with you for contempt. I can't emphasise too strongly how much I do not wish to have to compel you in this way, but I have tried to make it clear to you that you don't have a discretion as to whether you are going to comply with the questioning process that has led you to come here. Are you now prepared to resume the proceeding before the registrar and to answer the questions that would be put to you on oath?
MR NATHAN: Well, the solicitor has given me a return - few lines here.
HIS HONOUR: By all means, I would like to hear them, thank you.
MR NATHAN: The solicitor says here:
The proceeding MLG 899 of 2005, the application to be declared bankrupt was dismissed. This application relates to the same date and should not proceed on the basis of res judicata.
HIS HONOUR: Yes. I'm afraid I don't think that helps you, Mr Nathan. The reality is that the sequestration order was made by Barnes FM on 7 October 2008 and it's still operative, so that isn't a lawful excuse. I'm quite satisfied on the materials that you have been properly summonsed. There's no issues about service - you're certainly here. I employ (sic) you to reconsider your position and indicate that you're prepared to properly participate in the proceedings before the registrar. Are you prepared to do so?
MR NATHAN: Your Honour, I mean, under the Victorian Charter of Human Rights, there is no order before this court that supports that I am a bankrupt.
HIS HONOUR: Yes, there is. There's the order of Barnes FM made on 7 October 2008.
MR NATHAN: Has your Honour seen a signed and sealed copy?
HIS HONOUR: I have a copy on the court file. I don't have any reason, for a moment, to doubt that it's not a proper version of that order.
MR NATHAN: Well, there is - there is - it is a - it is a really a - I don't know - what do I say? I mean, the law states that document been - looks like it has been deleted or tampered with.
HIS HONOUR: You see, the summons issued by order of Registrar Allaway on 10 December plainly proceeds on the footing that there has been a bankruptcy and, indeed, once you're here in response to that summons, you are required to participate in any event. I want to try and make this as clear as I can. It's not a - I would give you more time if there was any indication that it would produce any result that would change things or assist you, but the clear impression you are giving me is that you won't comply with your obligations pursuant to section 264C, no matter what happens. And I am indicating to you that you don't really have any choice.
And the net result of that is that, since a fine is plainly not an appropriate outcome because you're already bankrupt, and it won't have any coercive effect upon you, the only other thing I can do is send you to gaol for a period of between whatever minimum and six months. I have the capacity to suspend such a sentence, at least implicitly, but that's not going to do any good unless you're going to actually comply. And obviously I'll hear from Mr Mazzeo as to any relevant issues he wishes to raise, but the risk you run is that you leave here in the company of police officers who have been good enough to make themselves available and go straight to gaol and stay there for whatever period I sentence you to. And I'm making it as plain as I can that I don't wish to do that, but I'm not going to not do it.
MR NATHAN: Why is that, your Honour? I mean, if the law states that they bring a proceeding in Melbourne, they lost and then they go to Sydney, bring another proceeding and the documents are so - so unprofessional, unethical, immoral and then I'm - but your Honour is not prepared to listen to that part of the story, but your Honour is, based on a document that is not even signed or sealed by the magistrate, and this is really a, I mean, I - we've got to get fair hearing and we've got to be reasonable. But if you have to go to prison to show that that's the case, then, well, I have to go, because your Honour said so.
HIS HONOUR: Very well, Mr Mazzeo, what do you say about the - what is, in substance, the only matter the applicant has raised, namely the fact that he says there is no signed and sealed copy of the order?
MR MAZZEO: Your Honour, I have a copy of the sealed order if that would assist.
HIS HONOUR: Has Mr Nathan been shown this?
MR MAZZEO: I believe he has seen it, but I can show him again.
HIS HONOUR: Well, my associate will show it to him - - -
MR MAZZEO: Yes.
HIS HONOUR: - - - before I take it.
MR NATHAN: Well, your Honour, I have seen this one, but this one is not signed and sealed by the magistrate - supposed to be - it says "7", but I have looked up under the rules of the Federal Magistrates Court Bankruptcy Rules of 2006 and this does not comply with form 7 of the - of the rules of the court.
HIS HONOUR: And in what way does it not comply with form 7?
MR NATHAN: Well, the law states that where an order is made on an - any particular day, the order has to be entered on the same day of - the petitioning creditor need to file, what do you call - I don't know what you call it - template or so - in accordance with form 7. Now, this one has two dates here; one on 7 October and the other one is dated 22 October and then they - this says in number 3:
"The court orders that, under the bankruptcy regulations, a copy of this sequestration order be given to the official receiver in Sydney within two days."
Is it two days of 7 October - two days of 22 October? But it's - I mean, that's what the law states and yet - and then it says "file and present on the 22nd", and Mr Burness filed a complaint with the ITSA. There was a proceeding in the Sunshine Magistrate's Court under the criminal jurisdiction and I was fined $800. I'm appealing to the County Court, but Mr Burness himself did not come for cross-examination. He was hiding behind the smokescreen, so - - -
HIS HONOUR : Thank you. Could I look at that document, please.
MR MAZZEO: I could also hand to your Honour, if it assists, the certificate of appointment of trustee.
HIS HONOUR: Yes, thank you. Thank you. Is there anything else you would wish to say, Mr Nathan, at this stage?
MR NATHAN: Well, I'm not - - -
HIS HONOUR: I'm quite satisfied that you are bankrupt and that you were bankrupted by Barnes FM on 7 October 2008.
MR NATHAN: Well, I'm not bankrupt from them at all. It was heard in this court and dismissed by Riethmuller FM.
HIS HONOUR: Yes, it sounds to me as though there has been another petition by the sound of it.
MR MAZZEO: I'm not aware of what happened in the past, your Honour.
HIS HONOUR: Neither am I.
MR MAZZEO: But what I can tell your Honour is that - - -
HIS HONOUR: Well, no, what I'm going to do, gentlemen, is this: I'm going to adjourn till 2 o'clock. I'm going to press inquiries as to the formal status of the orders. I will check, if I can, with the chambers of Barnes FM and I'll come back then. Could I request the officers to return at that time, thank you very much. Mr Nathan, you are not to depart the immediate vicinity of the premises until 2 o'clock. We will see you then."
8 The Federal Magistrate caused the foreshadowed enquiries to be made. Upon resuming he said:
"HIS HONOUR: During the luncheon adjournment, I have obtained and read a copy of the reasons for judgment of Barnes FM given on 7 October 2008. From those reasons for judgment, Mr Nathan, it's apparent that you raised, before her Honour, all the issues about the second petition and so forth, and that her Honour found against you. That last paragraph of her Honour's judgment reads, relevantly:
Accordingly, I make a sequestration order against the estate of Kailai Nathan -
and, indeed, the orders that accompany the judgment are to that effect. It is clear beyond doubt to me that those orders were formally taken out by a registrar on 22 October 2008, so that I am in no doubt that you are bankrupt and have been since Barnes FM made that order.
In those circumstances, and given that there is no controversy as to why we are here, it seems to me that you have no possible reasonable excuse for not complying with your obligation to be sworn or make an affirmation before Registrar Allaway to answer the questions put to you, and to produce any documents that the court requires you to produce. There are police officers in court who can and will arrest you. I will make you a final - give you a final direction. I direct you to attend before Registrar Allaway to be sworn or make an affirmation to answer such questions that are put to you, and to produce such documents as the court may require. Are you prepared to comply with that direction?
MR NATHAN: For this - your Honour - this rules, orders, documents don't really mean anything. Is that what I take it as it is?
HIS HONOUR: What I ---
MR NATHAN: There is no such thing as law.
HIS HONOUR: I have given you a direction. I have done it in those formal terms, because although we have discussed the matter, in terms that admitted no doubt, I wanted you to be quite clear as to what's going to happen. I will have to deal with you. It's up to me whether I deal with you pursuant to section 264C or under the court's contempt powers, because you are plainly in - if you don't comply with my direction, you are plainly in contempt of court. I am requiring you to indicate to me whether you're prepared to comply with my direction or not. I urge you to do so. I don't wish to have to deal with you in this way, but I am not going to shirk that responsibility and you shouldn't think I will. Your choices are either to comply with my direction, and attend before Registrar Allaway and conduct yourself in accordance with your obligations; or to be dealt with the failure to do, there is no other choice at this stage.
MR NATHAN: I have answered all questions in proceeding number MLG 899.
HIS HONOUR: I know. Sorry, Mr Nathan, it's one or the other.
MR NATHAN: Well, if they fail in Sydney - happen to fail in Sydney, they can go to Perth, Western Australia, Northern Territory - - -
HIS HONOUR: They didn't fail in Sydney, they succeeded in Sydney.
MR NATHAN: Of course they will succeed.
HIS HONOUR: Yes.
MR NATHAN: That's how the law works.
HIS HONOUR: They have succeeded and you are bankrupt.
MR NATHAN: It's not - it hasn't succeeded.
HIS HONOUR: And you are not complying with your obligations. I am giving you a chance to do so. Will you comply or won't you?
MR NATHAN: I am not a bankrupt, your Honour.
HIS HONOUR: Will you or will you not attend, as I have directed you, before Registrar Allaway, be sworn and answer the questions and produce the documents required of you? If you answer anything other than "yes" or "no", I will take it as a "no".
MR NATHAN: Do I go to New South Wales prison or Victorian prison?
HIS HONOUR : No, that's up to the police, but I would imagine you being incarcerated in Victoria.
MR NATHAN: But I don't have to answer, is it?
HIS HONOUR: You have to answer questions before Registrar Allaway.
MR NATHAN: And if I fail to answer?
HIS HONOUR: Then you will be back where we are now. There is no fudging it. I have directed you to do; you must either do it or not.
MR NATHAN: I will go with them.
HIS HONOUR: I take it you refuse to comply with the direction and attend before Registrar Allaway.
MR NATHAN: I don't understand the question, your Honour.
HIS HONOUR: Mr Nathan, that won't do. I will put it one last time. You have been directed to attend before Registrar Allaway and to comply with the obligations I have already clearly enunciated to you, that obtain pursuant to section 264C of the Bankruptcy Act, namely, to be sworn or affirmed to answer such questions as the court permits to be put to you, and to produce such documents as the court requires. My question is are you going to do that or are you not?
MR NATHAN: Well, I don't understand section 264. I am not a lawyer.
HIS HONOUR: Mr Nathan, that won't do. You are not going to get out of it in this fashion. I take it that you are wilfully refusing to do what you have been directed to do. I direct the police officers to arrest now, keep you here until I come back onto the court bench, as soon as I can, when I will give a ruling. Are there any matters you wish to say as to what sentence or other penalty I should impose upon you for your conduct, Mr Nathan? You will be going to gaol. The question is how long. There is arguably an open-ended time limit under the contempt - or six - up to six months under section 264. What do you say, if anything, about the amount of time you should spend?
MR NATHAN: Is that a question to me, your Honour?
HIS HONOUR: Of course it is.
MR NATHAN: Well, I don't even know what I am supposed to say. What is this all about?
HIS HONOUR: I am asking you to say anything you feel that is relevant to me, as to the amount of time I should imprison you for.
MR NATHAN: Just on the base of power, I suppose, your Honour. I can't think of anything else.
HIS HONOUR: Yes. Thank you. Mr Mazzeo, are there any relevant matters you would wish to put before the court? I am not sure it is strictly a matter for you.
MR MAZZEO: No, your Honour. …"