Nathan v Burness

AND: PAUL BURNESS AND MORGAN GERARD JAMES LANE AS TRUSTEES OF THE BANKRUPT ESTATE OF KAILAI NATHAN

JUDGE: TRACEY J DATE: 31 march 2011 PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 Mr Kailai Nathan is a bankrupt. He was summoned to appear before a Registrar so that he could be examined in relation to his bankruptcy. Mr Nathan attended before the Registrar but refused to be examined. The Registrar referred the matter to a Federal Magistrate. The Magistrate explained to Mr Nathan that he had a statutory obligation to submit to an examination before the Registrar. When Mr Nathan made it clear that he would not submit to such an examination the Federal Magistrate gave him a direction to do so. Mr Nathan intimated that he was not prepared to comply with the direction. The Federal Magistrate found him guilty of contempt of Court and ordered that he be imprisoned for one month. Mr Nathan was committed to prison but was released pending the outcome of this appeal from the Federal Magistrate's orders. 2 The appeal gives rise to a number of important issues concerning the conduct of examinations under s 81 of the Bankruptcy Act 1966 (Cth) ("the Act") and how Registrars and judicial officers may deal with persons who refuse to answer questions in the course of such examinations. These issues relate to the powers conferred on and the procedures available to Registrars and judicial officers where such problems arise.

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. …"

FEDERAL MAGISTRATE'S REASONS 9 The Federal Magistrate delivered reasons shortly thereafter: see Burness v Nathan [2010] FMCA 495. His Honour found that a sequestration order was clearly made by Barnes FM on 7 October 2008, and that the sequestration order was duly taken out by a Registrar. His Honour considered that Mr Nathan had given no reasonable excuse for his contraventions of s 264C of the Act. Mr Nathan's conduct was dealt with by his Honour as a matter of contempt. His Honour noted that the contempt occurred under unusual circumstances: first, there was no suggestion that further time would assist Mr Nathan to form a realistic view of his obligations under the Act; and secondly, the contempt was "clear and unambiguous", and would have the effect, if it were not promptly dealt with, of bringing the administration of the Act into disrepute. For these reasons the Federal Magistrate considered it appropriate to deal with the matter summarily, rather than by means of a charge and referral to another judicial officer. 10 His Honour ordered that: "(1) Mr Nathan is found guilty of the commission of a contempt of this Court in that he refused to obey a direction of the Court to attend before Registrar Allaway and to comply with section 264C of the Bankruptcy Act 1966 ("the Act"). (2) Mr Nathan is sentenced to imprisonment for one month commencing forthwith." His Honour also directed that the matter be referred back to the Registrar for further hearing and disposition.

THE BAIL APPLICATION 11 By notice of appeal, lodged on 1 July 2010, Mr Nathan appealed to this Court from the Federal Magistrate's judgment. On 5 July 2010 Bromberg J dealt with an application by Mr Nathan that he be released from custody pending the hearing and determination of his appeal. His Honour ordered that bail be granted and that Mr Nathan be released, upon various undertakings made to the Court: see Nathan v Burness [2010] FCA 718. 12 Mr Nathan had served at least 18 days of the one month sentence by the time at which he was released on bail.

THE APPEAL 13 Mr Nathan named the trustees of his bankrupt estate as the respondents to the appeal. They were not prepared to act as contradictors and, on 9 September 2010, I ordered that the Attorney-General of the Commonwealth be joined as second respondent. I did so because the Attorney-General is the person with responsibility to protect Commonwealth Courts as Her Majesty's responsible Minister of State: see Clampett v Attorney-General of the Commonwealth (2009) 181 FCR 473 at [80], [83] and [192]. The Attorney-General appeared by counsel who directed the Court's attention to relevant matters of fact and law without acting in a partisan manner. I was most grateful to have this assistance.

GROUNDS OF APPEAL 14 The appeal was brought on the following grounds:

1. The Federal Magistrate lacked jurisdiction to deal with Mr Nathan for contempt;
2. There were procedural irregularities affecting the Federal Magistrate's finding of contempt; and
3. Mr Nathan was denied an opportunity to put on plea material with respect to penalty before the Federal Magistrate determined to impose a term of imprisonment. A submission was also made that the penalty imposed was manifestly excessive in the circumstances.

LEGISLATION 15 Section 81 of the Act provides that a bankrupt may be summoned to attend before the Court to be examined on oath about his or her affairs. Specifically, s 81(1A)(b) provides that the summons may require a person to appear "before the Court or the Registrar or, if the Court or Registrar thinks fit, a magistrate". "The Court" is defined in s 5(1), when read with s 27, to mean this Court and the Federal Magistrates Court. "The Registrar" is defined to include a Registrar of the Federal Magistrates Court. Section 81(3) provides for the adjournment of an examination from time to time. By s 81(4) the Registrar "may at any time adjourn the examination of a person under this section for further hearing before the Court." Section 81(6) provides that: "Where the examination is adjourned for further hearing before the Court, the Court may: (a) continue the examination; (b) at any time direct that the examination be continued before the Registrar …; or (c) make such other order as it thinks proper in the circumstances." 16 By s 81(7) a person who is summoned to attend for examination is entitled to be represented by a lawyer. By s 81(8) a creditor, the trustee or the Official Receiver may take part in the examination. Section 81(11) provides that: "(11) A person being examined under this section shall answer all questions that the Court, the Registrar or the magistrate puts or allows to be put to him or her." 17 A bankrupt who fails to satisfy obligations imposed on him or her under s 81 may be liable to punishment for such failures. Section 264A of the Act provides, in part, that: "264A(1) This section applies to a person who: (a) … (b) … (c) is a relevant person within the meaning of s 81 and is served, … with a summons to attend for examination under that section. (1A) A person to whom this section applies must not, after the commencement of this section: (a) fail to attend as required by the summons served on the person; or (b) fail to appear and report from day to day, unless excused or released from further attendance by the Court, the Registrar or the magistrate, as the case may be. Penalty: Imprisonment for 6 months. (1B) Subsection (1A) does not apply if the person has a reasonable excuse. (2) Nothing in this section limits the power of the Court to punish persons for contempt of court, but a person shall not be punished under this section and for contempt of court in respect of the same act or omission." 18 Section 264C of the Act provides, in part, that: "264C (1) 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: (a) refuse or fail to be sworn or to make an affirmation; (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; … (1A) Subsection (1) does not apply if the person has a reasonable excuse. (2) Nothing in this section limits the power of the Court to punish persons for contempt of court, but a person shall not be punished under this section and for contempt of court in respect of the same act or omission." 19 General powers are conferred on courts in bankruptcy by s 30 of the Act. Relevantly, it provides that: "30(1) … (2) … (3) … (4) (5) Where: (a) a bankrupt, … has failed to comply with an order or direction of a Registrar … under this Act; or (b) … the Court may, on the application of the Registrar … as the case requires: (c) order the person who has failed to comply with the order, direction, requirement or request, as the case may be, to comply with it, or (d) if it thinks fit, make an immediate order for the committal to prison of that person. (6) The power conferred on the Court by subsection (5) is in addition to, and not in substitution for, any other right or remedy in respect of the failure to comply with the order, direction, requirement or request, as the case may be." 20 Mention should also be made of certain powers conferred by the Federal Magistrates Act 1999 (Cth). By s 15(a) the Court has power to "make orders of such kinds … as the … Court thinks appropriate." By s 17 the Court has power to punish contempts, including contempts committed in the face or hearing of the Court.

POWER OF THE FEDERAL MAGISTRATE TO DEAL WITH MR NATHAN FOR CONTEMPT 21 As the Federal Magistrate's reasons and the terms of the order which he made indicate, Mr Nathan was held to be in contempt of Court by reason of his failure to comply with the direction given to him by the Federal Magistrate. That direction required him to attend before the Registrar and to submit to examination relating to his financial affairs. 22 Mr Nathan argued that the legislative scheme did not empower the Federal Magistrate to deal with him for contempt. He sought to establish that the Registrar had not adjourned the public examination in its entirety to the Federal Magistrates Court, but had, instead, stood it down for a "singular purpose" (pursuant to s 81(4) of the Act), and that the Federal Magistrate was therefore not seized of the examination. In any case, he contended that the jurisdiction of the Federal Magistrate under s 30(5) of the Act was not enlivened because there had been no application by the Registrar; that the jurisdictional facts needed to found such an application had not been established; and that evidence relied upon by the Federal Magistrate (that is, a "presumed" conversation with the Registrar, and what Mr Nathan said before his Honour), could not be taken to have been properly obtained pursuant to the Evidence Act, given the various disadvantages said to be suffered by him as a self-represented litigant. 23 The Attorney-General did not seek to rely on ss 30(5) or 264C of the Act or the provisions of Part 19 of the Federal Magistrates Court Rules to support his submission that the Federal Magistrate had power to deal with Mr Nathan for contempt. He relied instead on a combination of s 81 of the Act and s 17 of the Federal Magistrates Act. 24 It was not disputed that Mr Nathan had been summoned to appear before the Federal Magistrates Court on 21 January 2010. The summons had been issued under s 81 of the Act. The Registrar had made a series of orders pursuant to which the return date of the summons was amended to 24 February 2010, 7 April 2010, 20 May 2010 and 17 June 2010. On 17 June 2010, the summons was made returnable before Registrar Allaway. When Mr Nathan refused to enter the witness box and answer questions, the Registrar referred the summons to a "Federal Magistrate to hear the matter." The "matter" was the proceeding which, to that point, had been before the Registrar. It was constituted by the examination which Mr Nathan had been summoned to attend. Section 81 of the Act required Mr Nathan to take an oath or affirmation and then to answer questions relating to his affairs. Plainly, the "matter" which the Registrar referred to the Federal Magistrates Court was the examination which had been scheduled to occur on 17 June 2010. The Registrar had the power to adjourn the matter to the Court pursuant to s 81(4) of the Act. 25 For these reasons I reject Mr Nathan's contention that it was only some ill-defined part of the matter or proceeding which was adjourned to the Federal Magistrates Court. It follows that, upon the adjournment, the Federal Magistrate was seized of the entire matter. In any event, as the Attorney-General points out, Mr Nathan had been summoned to appear before the Court or the Registrar. The Federal Magistrate therefore had jurisdiction to conduct the examination even if the entire matter had not been placed before him by the Registrar. 26 Once the matter came on before the Federal Magistrate, he had the powers conferred on the Court by s 81. These included the powers to conduct the examination, refer the matter back to the Registrar or to give directions relating to the future conduct of the examination: see s 81(6). The Federal Magistrate exercised these powers by directing Mr Nathan to attend before the Registrar and comply with s 264C of the Act. 27 When Mr Nathan made it clear that he would not comply with the direction the Federal Magistrate treated this refusal, as he was entitled to do, as being a contempt in the face of the Court: see s 17 of the Federal Magistrates Act. 28 In the alternative, Mr Nathan contended that, if the Federal Magistrate was seized of jurisdiction, his Honour had misconstrued s 264C of the Act. 29 In one of his exchanges with Mr Nathan the Federal Magistrate had said: "I have directed you to s 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 to send you to gaol for six months, or to deal with you for contempt." (Emphasis added). Mr Nathan submitted that, on its proper construction, s 264C of the Act did not empower the Federal Magistrate to deal with him for contempt. He contended that this submission derived support from the decision of this Court in Re Maher, Maher v Official Trustee in Bankruptcy (1993) 118 ALR 519. In that case Olney J held that a person who is summoned under s 81 of the Act to attend before the Court to be examined could not be punished for contempt of court if he or she failed, without reasonable excuse, to so attend. The bankrupt, in that case, had failed to attend for examination despite being summoned pursuant to s 81. His Honour held, as a matter of statutory construction, that the provisions of s 264A(1)(c) and (1A)(a) effectively covered the field and displaced any scope, which otherwise might exist, for contempt proceedings to be brought in respect of the failure to attend. He held that s 264A(2) did no more than preserve "an existing power to punish the contempt" (at 522). In the course of his reasons (at 523) his Honour referred to s 264C in a context which suggested that the application of the same principles of statutory construction, as he had applied to s 264A, excluded the possibility that a person who refused or failed to be sworn at an examination or to answer questions could be prosecuted for contempt of Court. 30 Uninstructed by this authority, I would be minded to hold that a failure to appear in response to a summons issued under s 81 of the Act could be dealt with either by the laying of a charge under s 264A or by a proceeding for contempt of Court. Section 264A(2) seems, clearly, to recognise that such a choice is available. Maher, however, is not binding authority on the construction of s 264C of the Act. Whereas s 264A deals with failures to attend examinations, s 264C is concerned with refusals or failures by a bankrupt to do certain things once he or she has appeared pursuant to summons. These refusals or failures may result from a refusal or failure to comply with an obligation imposed by s 81 or, independently, from a failure to comply with a direction of the Court or the Registrar to do something which s 81 would otherwise have required. Such a refusal or failure may thus constitute either a statutory offence, or contempt in the face of the Court, or both. Section 264C(2) leaves open the possibility of either prosecution for an offence under s 264C or prosecution for contempt of court being available in such situations. There may be good reason, depending on the circumstances, for resort to be had to the contempt of Court option if contempt is committed in the face of the Court. 31 So much is evident from the later decision of the Court in Ambrose (Trustee), in the matter of Peter Athanasas (Bankrupt) (No 2) [2008] FCA 1016. The bankrupt had attended for examination pursuant to a summons but had failed to produce documents as required by the summons. The Registrar adjourned the examination for hearing before this Court. When he appeared before the Court Lander J advised the bankrupt's solicitor that: "He [the bankrupt] ought to understand that under s 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." (Emphasis added). Despite this advice the bankrupt failed to produce documents at a number of further hearings. He also failed to honour undertakings to the Court that he would do so. As a result the District Registrar of the Court charged the bankrupt with contempt in that he had failed to comply with his statutory obligations under ss 81 and 264C(1)(c) of the Act. The bankrupt pleaded guilty to this charge and he was imprisoned for contempt of Court. 32 It is to be noted that the bankrupt was found to have been in contempt, not by reason of a failure to comply with directions given by the Court, but rather by failure to comply with obligations imposed on him by ss 81 and 264C of the Act. It is also to be noted that Maher was not cited in argument. Nonetheless, it is clear that Lander J considered that he could deal with the bankrupt's failure to meet his statutory obligations as a contempt of Court rather than adjourn the hearing and await a decision by a prosecuting authority to lay charges, the conduct of a trial and the imposition of a penalty by another court. 33 Mr Nathan is strictly correct in submitting that s 264C of the Act did not empower the Federal Magistrate to deal with him for contempt. That power arose independently under the Federal Magistrates Act and the Federal Magistrates Court Rules in the same way as Lander J's power to deal with the bankrupt in Ambrose was derived from s 31 of the Federal Court of Australia Act 1976 (Cth) and O 40 of the Rules made thereunder. 34 In my opinion, the power to deal with a bankrupt for contempt is available notwithstanding that the bankrupt may also have committed a statutory offence under s 264C. There will be circumstances, such as occurred in the present case, where a person is defiant in the face of the Court and a prompt response is necessary in order to ensure that the administration of justice is not brought into disrepute. 35 In the present case the Federal Magistrate had given clear directions to Mr Nathan and Mr Nathan had repeatedly refused, despite having received legal advice, to comply with the directions. In doing so he committed a contempt of court and the Federal Magistrate was empowered by s 17 of the Federal Magistrates Act to deal with that contempt.

PROCEDURAL IRREGULARITIES 36 Mr Nathan argued that the Federal Magistrate's finding of contempt was procedurally flawed because the charge of contempt was not clearly stated and he was not given sufficient opportunity to defend it. He was entitled to these protections under Part 19 of the Federal Court Rules. 37 Relevantly, Rule 19.01(2) of the Federal Magistrates Court Rules provides that, once an alleged contemnor is before the Court, the Court is required to: "(a) tell the person of the contempt with which the person is charged; and (b) allow the person to state his or her defence to the charge; and (c) after hearing the defence, determine the charge; and (d) make an order for the punishment or discharge of the person." 38 These provisions effectively codify procedural requirements which were identified by the High Court in Coward v Stapleton (1953) 90 CLR 573. In that case, which bore many similarities to the present, the bankrupt was found guilty of contempt of court by a judge of the Federal Court of Bankruptcy when he made no serious attempt to answer questions asked of him in the course of an examination under the predecessor of s 81 of the Act. The Court held (at 579-80) that: "… it is a well-recognized principle of law that no person ought to be punished for contempt of court unless the specific charge against him be distinctly stated and an opportunity of answering it given to him … The gist of the accusation must be made clear to the person charged, though it is not always necessary to formulate the charge in a series of specific allegations … The charge having been made sufficiently explicit, the person accused must then be allowed a reasonable opportunity of being heard in his own defence, that is to say a reasonable opportunity of placing before the court any explanation or amplification of his evidence, and any submissions of fact or law, which he may wish the court to consider as bearing either upon the charge itself or upon the question of punishment." 39 In my view Mr Nathan's complaint that the Federal Magistrate failed to comply with Rule 19.01 lacks substance. An examination of the exchanges between the Federal Magistrate and Mr Nathan, set out above at [6], confirm that Mr Nathan agreed that he had refused to give sworn evidence before the Registrar. The Federal Magistrate then explained the operation of s 264C of the Act to Mr Nathan. More than once the Federal Magistrate directed Mr Nathan to return before the Registrar, to there be sworn or make an affirmation, to answer questions put and to produce any documents which he might be required to produce. It was made clear to Mr Nathan that, if he did not express his willingness to comply with the direction and do so, he would be in contempt of court. On each occasion Mr Nathan either failed or declined to comply with the direction. 40 His Honour gave Mr Nathan a number of warnings during the course of the hearing as to the consequences of his non-compliance with s 81(11); raised the issue of contempt with Mr Nathan on at least four occasions; and adjourned the Court so that Mr Nathan had the opportunity of referral to a duty solicitor for assistance. Mr Nathan could have been in no doubt as to why he was charged with contempt, and of the potential consequences should that charge be proven. He was given ample opportunity to defend the charge before the Court. 41 Mr Nathan was, in my view, plainly apprised of the contempt with which he was charged. Significantly, nowhere in the affidavit which he swore in support of this appeal does he depose that he was not aware, during his appearances before the Federal Magistrate, of the substance or gist of the accusation levelled against him. Rule 19.01(2)(a) of the Federal Magistrates Court Rules was complied with. 42 The Federal Magistrate went on to hear Mr Nathan's reasons for not complying with the requirements under s 81 of the Act. The Federal Magistrate thereby provided Mr Nathan with an opportunity of stating a defence to the charge: Rule 19.01(2)(b). In the event, the Federal Magistrate did not accept Mr Nathan's explanation. 43 His Honour went on to determine the charge and make the imprisonment order which is the subject of this appeal. 44 I am satisfied that the Federal Magistrate complied with Rule 19.01 of the Federal Magistrates Court Rules in discharging his procedural duties to Mr Nathan as an alleged contemnor.

FAILURE TO HEAR ON PENALTY 45 It was submitted by Mr Nathan that he was not given the proper opportunity to make submissions on penalty before his Honour determined that Mr Nathan was to be imprisoned. Having repeatedly sought a clear answer from Mr Nathan as to whether or not he was prepared to comply with the Federal Magistrate's direction to return before the Registrar and there be sworn, answer questions and produce documents and not being given a responsive answer by Mr Nathan, the Federal Magistrate addressed Mr Nathan as follows: "I take it that you are wilfully refusing to do what you have been directed to do. … 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?" Shortly afterwards, the Federal Magistrate again invited Mr Nathan "to say anything you feel that is relevant to me, as to the amount of time I should imprison you for." See above at [8]. 46 In exchanges earlier that day the Federal Magistrate had made it plain to Mr Nathan that, unless he was prepared to comply with the Federal Magistrate's directions, the Federal Magistrate's only option, in order to secure Mr Nathan's compliance, would be to order that he be imprisoned. This was because, as a bankrupt, he would not be in a position to pay any fine. See above at [6]. 47 It is clear, in my view, that the Federal Magistrate had determined, not long after the matter had been adjourned into his Court, that, if Mr Nathan refused to comply with his directions, the only practical option which was available to him was to find Mr Nathan guilty of contempt of court and imprison him. He so advised Mr Nathan on a number of occasions. When, ultimately, it was quite clear that Mr Nathan would not comply with the directions, the Federal Magistrate told Mr Nathan that he would hear him on the issue of penalty but only as to the length of any term of imprisonment which should be imposed. In doing so the Federal Magistrate confirmed that his earlier statements were not tentatively expressed for the purpose of encouraging submissions: cf Vakauta v Kelly (1989) 167 CLR 568 at 571 (per Brennan, Deane and Gaudron JJ). To adapt the words of Kirby J in Antoun v R (2006) 224 ALR 51 at 60, his Honour's view that imprisonment was the only available penal option was "stated peremptorily, repeated emphatically and given force by [his] later remarks and actions." 48 It remains to consider whether the Federal Magistrate thereby denied procedural fairness to Mr Nathan and, if so, what (if any) relief should be granted to Mr Nathan. 49 I have already held that the Federal Magistrate had power to deal with Mr Nathan for contempt under s 17(3) of the Federal Magistrates Act. It was not submitted that he should not, in the exercise of his discretion, have determined to proceed to deal summarily with Mr Nathan: cf Clampett v Attorney-General (Cth) (2009) 181 FCR 473 at 480-1 (per Black CJ with whom Finkelstein J agreed). Caution was, nonetheless, required, especially given that Mr Nathan was unrepresented. 50 Earlier in these reasons I have set out, at some greater length than normal, extracts from the transcript of the proceeding before the Federal Magistrate. I have done so for a number of reasons. One of them is that they demonstrate that the Federal Magistrate went to great lengths to explain to Mr Nathan his statutory obligations and to encourage him, voluntarily, to comply with them. There is no suggestion that Mr Nathan did not understand what was being explained to him. He did not, however, choose to deal with the issues at hand. Rather, he sought to reargue issues, such as the plea of res judicata and the alleged absence of a sealed order, which he had advanced, unsuccessfully, before Barnes FM during the hearing which led to the sequestration order being made. In these circumstances, it is hardly surprising that the Federal Magistrate saw the need to be emphatic about the consequences should Mr Nathan not comply with the directions which were given to him. 51 The responses the Federal Magistrate got from Mr Nathan on this point (as opposed to most others where Mr Nathan prevaricated) were equally emphatic. When the Federal Magistrate told him that he would proceed on the basis that Mr Nathan would not comply with his directives, Mr Nathan immediately asked: "Do I go to a New South Wales prison or a Victorian prison?". Shortly afterwards Mr Nathan was told again that he was required to answer questions before the Registrar. He responded by asking: "And if I fail to answer?" When the Federal Magistrate answered: "Then you will be back where you are now. There is no fudging it. I have directed you to do; you must either do it or not," Mr Nathan immediately said "I will go with them" (that is, the police who were present in Court). See above at [8]. 52 It is, in my view, clear from these exchanges that, throughout the hearing before the Federal Magistrate, Mr Nathan was determined not to comply with his obligations under s 81 of the Act or with the Federal Magistrate's directions and was prepared to go to prison rather than comply. 53 Courts are loath to find that the outcome of a particular proceeding would not have differed had a denial of procedural fairness not have occurred: see, for example, Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145-6. The High Court there held that "not every departure from the rules of natural justice at a trial will entitle the aggrieved party to a new trial." The Court continued: "By way of illustration, if all that happened at a trial was that a party was denied the opportunity of making submissions on a question of law, when, in the opinion of the appellate court, the question of law must clearly be answered unfavourably to the aggrieved party, it would be futile to order a new trial. Where, however, the denial of natural justice affects the entitlement of a party to make submissions on an issue of fact, especially when the issue is whether the evidence of a particular witness should be accepted, it is more difficult for a court of appeal to conclude that compliance with the requirements of natural justice could have made no difference." Their Honours further observed that, when an appellate court is invited by a respondent to conclude that a new trial should not be ordered where a denial of natural justice has impinged on fact finding, because the finding made or a different finding could have no bearing on the outcome, the reviewing Court should proceed with caution: "It is no easy task for a court of appeal to satisfy itself that what appears on its face to have been a denial of natural justice could have had no bearing on the outcome of the trial of an issue of fact." See also Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 122 (per McHugh J). 54 After some initial hesitation I have come to the firm view that the present is a case in which any denial of natural justice to Mr Nathan could not have affected the outcome of the case. The denial did not impinge on the Court's fact-finding function. Mr Nathan was adamant that he was not going to comply with the Federal Magistrate's directions. He was a bankrupt. Had he been left at large to make submissions as to an appropriate penalty for contempt in the face of the Court, it can hardly be supposed that he would have submitted that a fine should be imposed as an alternative to imprisonment. Had he done so, such a suggestion was bound to be rejected by the Federal Magistrate in the absence of any evidence that Mr Nathan had the means to pay such a fine. Imprisonment was the only realistic option open to the Federal Magistrate and Mr Nathan was given ample opportunity to submit that the term of any such imprisonment should be extremely short. Despite the opportunity to do so he made no such submission. In the affidavit which he swore in support of this appeal Mr Nathan did not depose that, had he had the opportunity to do so, he would have made any additional submissions on penalty. 55 I would, in any event, have dismissed the appeal because no substantial miscarriage of justice has occurred. It is open to the Court to so order pursuant to s 28 of the Federal Court of Australia Act. In Conway v The Queen (2002) 209 CLR 203 at 208 Gaudron A-CJ, McHugh, Hayne and Callinan JJ held that: "To construe s 28(1)(f) as authorising the dismissal of appeal on the basis that no substantial miscarriage of justice has actually occurred gives effect to the long established rule of the common law that a new trial is not ordered where an error of law, fact, misdirection or other wrong has not resulted in any miscarriage of justice." 56 For the reasons explained in the preceding paragraph I do not consider that the Federal Magistrate's failure to invite unconfined submissions on penalty led to any miscarriage of justice.

MANIFEST EXCESS 57 Mr Nathan faintly argued that the penalty imposed upon him by the Federal Magistrate was manifestly excessive. He contested the sentence in general terms, namely that he was "seized of an idea" that the procedure was "possibly unlawful or irregular"; the sentence was not "equivalent to the gravity of the offence"; that there were no reasons given by the Federal Magistrate for the imposition of imprisonment rather than a lesser penalty; and while his disobedience was wilful, Mr Nathan was unrepresented. 58 There is nothing in the material before me that suggests that the sentence was unreasonable or unjust, that it arose from an error of fact or law, or from a failure to take into account any material consideration, or from the giving of undue weight to any circumstance: House v King (1936) 55 CLR 499. In fixing the penalty the Federal Magistrate took into account that Mr Nathan was a bankrupt; the importance of compliance with s 81 of the Act; and the seriousness of contempt as an offence. Although no maximum penalty for contempt of court is prescribed, the Federal Magistrate was mindful that a breach of s 264C of the Act attracts a maximum penalty of six months' imprisonment. The period of one month on which he fixed was comfortably within the range available to him and was not excessive. 59 This ground must fail.

DISPOSITION 60 In normal circumstances the dismissal of all grounds of appeal would lead to an order that the appeal be dismissed. Were such an order to be made in this case the consequence would be that Mr Nathan would be required to return to prison and serve the rest of the term imposed by the Federal Magistrate. 61 Mr Nathan has been free on bail since 5 July 2010. He has, since then, faced the prospect of returning to prison should this appeal fail. He has also, in this time, I would hope, had the opportunity to reflect on the wisdom of persisting in his refusal to comply with his obligations under s 81 of the Act. One of the orders which the Federal Magistrate made was that Mr Nathan appear again before the Registrar, for further hearing and disposition of the proceeding. When he does so he will be obliged to take an oath or affirmation, answer questions and otherwise comply with the summons which was served on him. In the event that he fails to do so without a reasonable excuse he will be liable to prosecution for offences under s 264C of the Act or to again have the proceeding adjourned before a Federal Magistrate with the attendant risk that he may again be found in contempt. 62 Since his appearance before the Federal Magistrate Mr Nathan has been provided with further legal advice. He will have the opportunity to read these reasons and will, I trust, appreciate the gravity of his position were he again to refuse or fail to comply with his statutory obligations. 63 In these circumstances I am not minded to require Mr Nathan to return to prison. I will, therefore, vary Order 2, made by the Federal Magistrate, so that the period of imprisonment imposed on him will be limited to the period he has already served. Otherwise his appeal will be dismissed. 64 Mr Nathan was represented on this appeal by counsel who appeared pro bono. I record my gratitude for the willingness of counsel to appear on this basis and for the carefully prepared and argued submissions which he placed before the Court. I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey.