Pinto v Pinto (Bankrupt)
[2016] FCCA 831
•13 April 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PINTO v PINTO (BANKRUPT) & ORS | [2016] FCCA 831 |
| Catchwords: BANKRUPTCY – Application for review of decision of Trustees under s 178 of the Bankruptcy Act 1966 (Cth) – allowing travel – supervisory jurisdiction – whether proposed travel genuine – whether likely that the bankrupt will return to Australia – whether likely that proposed travel will hamper the administration of the estate – application granted – decision of the Trustee set aside. |
| Legislation: Bankruptcy Act 1966, ss.77(1)(a)(ii), 178, 178(1), 272(1)(c), 272(2) |
| Cummings v Claremont Petroleum NL [1966] HCA 19 Mio v Mitchell [2015] FCA 22 Pearce v Mulhern (No 4) [2012] FCA 54 Stillman v Pascoe [2010] FMCA 549 |
| Applicant: | MARIA CARMINDA PINTO |
| First Respondent: | MANUEL CARLOS PINTO |
| Second and Third Respondent: | PHILLIP MCGIBBON AND RODERICK SUTHERLAND IN THEIR CAPACITIES AS JOINT AND SEVERAL TRUSTEES OF THE BANKRUPT ESTATE OF MANUEL CARLOS PINTO |
| File Number: | MLG 2041 of 2015 |
| Judgment of: | Judge Hartnett |
| Hearing dates: | 25 November 2015 and 3 March 2016 |
| Date of Last Submission: | 24 March 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 13 April 2016 |
REPRESENTATION
| Counsel for the Applicant: | Ms Costello |
| Solicitors for the Applicant: | Blackwood Family Lawyers |
| Counsel for the First Respondent: | Mr Kohn |
| Solicitors for the First Respondent: | Frenkel Partners |
| The Second and Third Respondents: | No appearance |
THE COURT ORDERS THAT:
Pursuant to s.178(1) of the Bankruptcy Act 1966 (Cth) the Trustees decision of 25 November 2015 to allow Mr Pinto to leave Australia be set aside.
The Trustees are directed to refuse permission for the First Respondent Mr Pinto to leave Australia and to retain possession of Mr Pinto’s Australian passport and further acquire the Portuguese passport of Mr Pinto’s should he hold one and retain/or renew his Portuguese passport or apply for a further Portuguese passport which is granted to him.
Pursuant to s.178(1) of the Bankruptcy Act 1966 (Cth), until the bankrupt’s discharge from bankruptcy, 28 days prior notice of which is to be conveyed by the Trustees to Maria Carminda Pinto, or until further order of the Court, the First Respondent Manuel Carlos Pinto born 26 January 1947 be and is hereby restrained from leaving the Commonwealth of Australia and it is requested that all officers of the Australian Federal Police give effect to this order AND THE COURT NOTES that Manuel Carlos Pinto holds an Australian passport and Portuguese passport and/or entitlement to a Portuguese passport.
There be an order for costs in favour of the Applicant Mrs Pinto to be taxed and paid out of the Respondent’s bankrupt estate.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2041 of 2015
| MARIA CARMINDA PINTO |
Applicant
And
| MANUEL CARLOS PINTO |
First Respondent
| PHILLIP MCGIBBON AND RODERICK SUTHERLAND IN THEIR CAPACITIES AS JOINT AND SEVERAL TRUSTEES OF THE BANKRUPT ESTATE OF MANUEL CARLOS PINTO |
Second and Third Respondents
REASONS FOR JUDGMENT
Mr Pinto was made bankrupt on 30 January 2012 pursuant to a Debtor’s Petition filed by him with Insolvency and Trustee Service Australia. On 12 March 2012 Mr Philip McGibbon and Mr Roderick Sutherland were appointed the joint and several trustees (‘the Trustees’) of the bankrupt estate of Mr Pinto. Mr Pinto’s period of bankruptcy ends on 31 January 2020.
On 9 July 2015 Mr Pinto requested of the Trustees permission to travel to Portugal for compassionate reasons of visiting his sick and aging relatives. Pursuant to s.272(1)(c) of the Bankruptcy Act 1966 (Cth) (‘the Act’), a bankrupt is not entitled to leave Australia or do any act preparatory to leaving Australia without the consent of his trustee. In decisions dated 10 July 2015 and 23 October 2015 the Trustees refused permission. On 29 October 2015 Mr Pinto made application to the Court to review the decision of the Trustees of his estate pursuant to s.178(1) of the Act. On 18 November 2015, being after the filing of legal proceedings by the bankrupt, the Trustees consented to the bankrupt’s request to travel on condition that he would contact the Trustees office at his earliest convenience and inform the Trustees of his return to Australia. This followed Mr Pinto providing, to the Trustees, an undertaking to return to Australia. That undertaking provided:-
a)that Mr Pinto intended to travel for a period of up to two months; and
b)that Mr Pinto would return to Australia upon a date specified by him to the Trustees following the booking of return trip tickets, being a date pre-agreed with the Trustees or as ordered by the Court.
Mr Pinto had also provided the Trustees with an itinerary of his travels for their consideration and as requested by them. The Trustees were able to impose written conditions on this consent to travel pursuant to s.272(2) of the Act. The Trustees granted to Mr Pinto permission to travel outside Australia for the period from 30 November 2015 to 29 January 2016. Whilst that period has passed, it is acknowledged that Mr Pinto seeks to travel at the earliest opportunity. Accordingly, on 25 November 2015 the Trustees reissued a decision as follows:-
The Trustees permit the bankrupt to travel to Portugal for a period of eight weeks, subject to:-
i)the provision of an itinerary detailing the bankrupt’s travels to the Trustees satisfaction; and
ii)any contrary order of the Court.
Mrs Pinto is a creditor in the bankrupt estate of her former husband. She has lodged a proof of debt. By order of 17 December 2010, of the Family Court of Australia, Mr Pinto was required to pay her the sum of $2,096,807 on or before 21 January 2011. This judgment debt, together with penalty interest accrued, remains not paid by Mr Pinto to Mrs Pinto. Mr Pinto refers to this judgment debt in section 40 of his Statement of Affairs.
Mrs Pinto’s application
By application dated 20 November 2015 Mrs Pinto applied to be joined to Mr Pinto’s application. She opposed the Trustee’s, recently communicated to her, altered position to allow Mr Pinto to travel outside the Commonwealth of Australia. Mrs Pinto was joined to the proceedings by order of the Court dated 25 November 2015.
Others orders made by the Court on 25 November 2015 were as follows:-
“2. Until 4pm on the adjourned date (as described in order number 4 herein), the Applicant, Manuel Carlos Pinto, born 26 January 1947, be and is hereby restrained from leaving the Commonwealth of Australia and it is requested that all officers of the Australian Federal Police given effect to this order. The First Respondent to forthwith advise the Australian Federal Police Operations Coordination Centre that this order has been made this day and that the temporary suspension of the PACE alert for the period 30 November 2015 to and including 29 January 2016 must cease in operations as from the making of this order. AND THE COURT NOTES that Manuel Carlos Pinto holds an Australian passport and Portuguese passport and/or is entitled to a Portuguese passport.
3. The Applicant, Manuel Carlos Pinto, forthwith deliver up all of his passports to his Trustees in bankruptcy pending final determination of this proceeding.
4. Otherwise all extant application are adjourned for final hearing to a date to be fixed prior to 31 March 2016 (‘the adjourned date’)
5. There is leave to Maria Carminda Pinto to amend her Application within seven days hereof.
6. Maria Carminda Pinto file and serve any further affidavits on which she seeks to rely before 5pm on 31 January 2016.
7. Manuel Carlos Pinto file and serve any further affidavits on which he seeks to rely before 5pm on 29 February 2016.
8. Costs are reserved.
9. Liberty to apply.”
By her initiating application and amended application dated 29 January 2016 Mrs Pinto seeks orders pursuant to s.178 of the Act. That section is as follows:-
“(1) If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.
(2) The application must be made not later than 60 days after the day on which the person became aware of the trustee's act, omission or decision.”
Section 178 of the Act confers a “supervisory jurisdiction” in the Court over the conduct of the Trustees.[1]
[1] Cummings v Claremont Petroleum NL [1966] HCA 19.
The orders sought by Mrs Pinto are relevantly that:-
“1. Pursuant to section 178(1) of the Bankruptcy Act 1966 (Cth), this Honourable Court set aside the decision made by the First and Second Respondents, Philip McGibbon and Roderick Sutherland (in their capacities as joint and several trustees of the bankrupt estate of Manuel Carlos Pinto) (the trustees) on 25 and/or 26 November 2015 to permit Manuel Carlos Pinto born 26 January 1947 (Mr Pinto) to travel outside the Commonwealth of Australia for a period of 8 weeks, subject to:
a) The provision of an itinerary detailing Mr Pinto’s travel plans to the satisfaction of the trustee; and
b) Any contrary order of the court.
2. Pursuant to section 178(1) of the Bankruptcy Act 1966 (Cth), this Honourable Court makes an order that, until further order, the Applicant Manuel Carlos Pinto born 26 January 1947 be and is hereby restrained from leaving the Commonwealth of Australia and it is requested that all officers of the Australia Federal Police give effect to this order AND THE COURT NOTES that Manuel Carlos Pinto holds both Australian and Portuguese passports.
3. Pursuant to section 178(1) of the Bankruptcy Act 1966 (Cth), this Honourable Court makes an order that the Applicant, Manuel Carlos Pinto will forthwith deliver up all his passports to his trustees in bankruptcy pending determination of these proceeding.
4. That the Applicant, Manuel Pinto pay the costs of Maria Pinto associated with this application.
…”
Mr Pinto withdrew his application filed on 29 October 2015 and there was no order for costs. The Trustees will abide by any order of the Court. The costs of the litigation are now being borne by Mrs Pinto and the bankrupt. Mr Pinto seeks dismissal of Mrs Pinto’s application. The onus is on Mrs Pinto to satisfy the Court of a ground on which the Trustees administration of the affairs of the bankrupt ought be reviewed by the Court. Pursuant to s.178 of the Act the Court has a general power to review a Trustee’s decision and that section confers on the Court a very wide discretion.[2]
[2] McGoldrick v Official Trustee in Bankruptcy (1993) 47 FCR 547 at 552; and Maxwell-Smith v Donnelly [2007] FCA 894.
Nevertheless, the Court should only interfere with the Trustee’s exercise of discretion if it is shown by the Applicant that the impugned conduct of the Trustee was incorrect or that other conduct was or would be preferable and that justice and equity requires the Court’s intervention. It is not enough that a judge might have acted differently.[3]
[3] Healy v Prentice (No 2) [2000] FCA 1598 at [21] – [22].
At the hearing on 3 March 2016 Mrs Pinto and the parties son Nelson Pinto gave evidence in support of the application and were cross-examined. Mrs Pinto relied upon evidence as contained in her affidavit sworn on 29 January 2016 together with the affidavit of Nelson Pinto sworn on 2 February 2016. Affidavits of Manuel Pinto sworn on 7 September 2015 and 29 February 2016 (this affidavit as relied upon by Mr Pinto), were also in evidence before the Court. Mr Pinto was cross examined in the proceedings.
Evidence
Mrs Pinto’s evidence essentially goes to establishing that her former husband will not return to the jurisdiction, and that his departure from Australia will hamper the administration of the estate because he will access funds located overseas, being funds belonging to them both, but their whereabouts known only to him, and deal with such funds solely and without reference to her, or his Trustees, without satisfaction of her judgment debt pursuant to Family Court orders of 17 December 2010. Further no creditors in the bankrupt estate will have their claims paid out despite Mr Pinto’s estate having considerable funds available to it, being possibly at this time, well in excess of $4 million. Further that she will be unable to conduct a public examination of Mr Pinto. Whilst she is impecunious, her son Nelson gave evidence that he intended to assist his mother to seek a public examination of his father in circumstances where the Trustees have not done so and thus incurred this expense but only when he is able to, financially. The Court accepts that evidence.
Statements of fact in these reasons are findings of fact on the balance of probabilities.
Mrs Pinto has resided in Australia since she was twenty. She had already married Mr Pinto in Portugal in the year prior to her arrival. Her son, and daughter and grandchildren reside in Australia. Mr Pinto, throughout their marriage, was an experienced builder and property developer. Mrs Pinto was a machinist and engaged in home duties. She is now a part-time cleaner. By 2005, Mr Pinto had sold considerable parcels of real estate owned by the parties, jointly or solely and/or by companies owned and controlled by Mr Pinto and/or the husband and wife. The only real property remaining was the former matrimonial home which had a mortgage encumbrance. This home has since had to be sold to repay that encumbrance. The monies available to Mr and Mrs Pinto from the net sale proceeds of their various parcels of real estate were approximately $4,380,000. By agreement with his wife, Mr Pinto transferred these funds from joint accounts in the parties names in Australia, to joint accounts in the parties names in Portugal. Mr Pinto told his wife the purpose in so doing was to obtain higher interest rates and taxation advantages for a period of up to twelve months, after which time the monies would be returned to Australia to purchase a large property for the parties to live in. The Court finds there was no agreement between the parties, as alleged by Mr Pinto, that the parties would invest in a property in Portugal or Spain and live for one half of the year overseas. Mrs Pinto has lived in Australia nearly all her adult life. She is very close to her children and grandchildren. She has no real relationship with the husband’s relatives in Portugal and some relationship with her remaining family in Portugal. Her evidence was overwhelmingly that there had been no discussion nor any agreement between the parties as to living overseas and nor would she have any desire to live overseas, for any part of her retirement.
Mr Pinto opened an account in Portugal in joint names with the Millennium Bank. In July 2004, he transferred $1.5 million into this account. In February 2005 he transferred a further sum of $2 million. In July 2005, he transferred a further sum of $1 million. A total of $4.5 million was transferred to the joint account of the parties with the Millennium Bank. In March 2005 the parties travelled to Portugal for a visit of one month’s duration. Mr Pinto claims to have met a Mr Manuel De Sousa in this time. He claims his wife did also. Mrs Pinto denies that claim. In July 2005, the husband returned to Portugal alone.
Thereafter, Mr Pinto rang his wife regularly. At no time did he say to his wife that any of the parties monies had been stolen. He claims however that on 14 October 2005 he gave Mr De Sousa, whom he understood to be a property investor, five cheques, with four, in the sum of 500,000 euros, and one in the sum of $AUD 1,005,902.77. These monies were not invested in overseas property developments, but stolen by Mr De Sousa as claimed by Mr Pinto, as described hereafter.
Mr Pinto claims to have no knowledge of the whereabouts of approximately $4.5 million in matrimonial funds. He claims to have given Mr De Sousa, approximately $4.38 million and that he and Mrs Pinto are the victims of fraud. These funds represented the parties entire life savings. Mr Pinto’s evidence is that in October 2005, he completed negotiations for an investment in four property developments being promoted by Mr De Sousa. Without sighting or receiving a copy of the relevant contracts, Mr Pinto went to the Millennium Bank and on 13 October 2005 withdrew funds totalling approximately $4,380,000. These funds were provided to Mr Pinto on 14 October 2005 in the form of five separate bank cheques made payable to Mr Pinto, but endorsed to Mr De Sousa, in accordance with the instructions provided by Mr De Sousa to Mr Pinto. Mr Pinto gave to Mr De Sousa the cheques without receiving a receipt, and without receiving the contracts for the property developments. Thereafter there was no trace of Mr De Sousa or the funds and Mr Pinto contacted the local Spanish police who were unable to assist. Despite Mr Pinto’s efforts thereafter as claimed by him to locate Mr De Sousa, and his missing funds, they were all to no avail. Mr Pinto was deeply distressed. Despite this distress, his further evidence was that he made no attempt to stop the cheques or otherwise make pertinent enquires about the attempted fraud allegedly perpetrated upon him. He conveyed information as to the fraud to Mrs Pinto and his two children he claims, shortly thereafter. Mrs Pinto and the parties two children deny this. He returned to Australia days after he discovered that he was the victim of fraud and did nothing further. This account by Mr Pinto is implausible and the Court does not accept it. It is further contrary to the evidence of Mr Nelson Pinto, the parties’ son who impressed as a reliable even-handed witness. His evidence, accepted by the Court, is set out in detail and later in these reasons. It is contrary to the documentary evidence before the Court which was required to be obtained by the wife in the first instance as a result of the husband’s failure to co-operate. That evidence is that four cheques were drawn in favour of the husband, each for 500,012.50 euros, on 13 October 2005. A fifth cheque of $AUD 1,005,902.77, was not drawn, it also being in favour of the husband, until the 21 October 2005. This was at a time when, on the husband’s evidence, he was very concerned about whether Mr De Sousa was a fraudster.
Further, Spanish bank account documents show that four cheques for approximately 500,000 euros were deposited into Spanish bank accounts in Mr Pinto’s name on 14 October 2005. The Court does not accept Mr Pinto’s evidence that someone else opened Spanish bank accounts using his ID, name and address and/or a different ID. The banks were: Banco Santander, Caja de Ahorros Y Pensiones de Barcelona, BCO Bilbao Vizcaya and La Caixa. Mr Pinto could have made enquiries about where the money that he claims was stolen went, after it left the Spanish banks. He did not do so because the funds were under his control. Mr Pinto provided no acceptable evidence as to the fifth (AUD) cheque.
Mr Pinto’s evidence that he, an experienced property developer, handed over the parties life savings and being a very large sum of money, to a man he did not know, in circumstances where he had no contract, no legal advice, and no security interest, is as submitted by Counsel for the Applicant, far-fetched. This, when coupled with Mr Pinto’s lack of documentary evidence corroborating his claim as to any contact with Mr De Sousa being perhaps a property search or promotional material as claimed to be sighted by Mr Pinto, leads the Court to conclude Mr Pinto’s evidence is all a fabrication.
Mr Pinto’s account of what happened to the funds was rejected by the Family Court of Australia in a judgment delivered by the Honourable Justice Dessau dated 8 December 2010. The orders made by Her Honour in that proceeding were relevantly as follows:-
“That until 5.00 pm on 6 December 2011, the husband MANUEL CARLOS PINTO born 26 January 1947 shall be and is hereby restrained from leaving the Commonwealth of Australia and that his name shall be placed on the AIRPORT WATCHLIST and it is REQUESTED that the Marshal of the Family Court of Australia and the Australian Federal Police shall give effect to this order and it is noted that the husband may hold both Portuguese and Australian passports.
That for the purposes of Order 1, the wife’s solicitor shall forthwith arrange service of a sealed copy of this order on the Marshal of the Family Court of Australia and the Australian Federal Police.
That on or before 4.00 pm on 21 January 2011 the husband pay to the wife’s solicitors Messrs Holding Redlich on behalf of the wife the sum of $2,096,807.00.
That the court declares that all monies held now or in the future by Messrs Birch Ross and Barlow in trust on behalf of the parties from the proceeds of sale of the former matrimonial home belong to the wife, and the wife is hereby permitted to give full authority to Messrs Birch Ross and Barlow for the release of such monies directly to her solicitors Messrs Holding Redlich, on or after 21 January 2011.
That at 11.00 am on 20 January 2010 the husband deliver the 2002 Hyundai Accent motor vehicle registration number RVT 571 to outside the office of Holding Redlich at 277 William St Melbourne together with the keys and all necessary signed documents required to transfer the motor vehicle to the wife at her expense, and in the event that the husband fails to sign such documents, then a Registrar of the Family Court of Australia shall, pursuant to s 106A of the Family Law Act 1975 (as amended), sign them on his behalf.
…”
The Family Court of Australia also ordered Mr Pinto be placed in custody for three months for contempt of Court in relation to his failures to co-operate with efforts to obtain information about where the money had gone in overseas accounts. Those orders were made on the 17 December 2009. They are as follows:-
“That the wife shall have leave to withdraw her Contravention Application filed 7 December 2009.
That the wife’s Application for Contempt filed 7 December 2009 being proven, and it being found that the husband MANUEL CARLOS PINTO has contrary to s 112AP of the Family Law Act, contravened paragraph 3 of the Orders of this Court made on 25 March 2009, and has flagrantly challenged the authority of the Court, he is hereby sentenced to 3 months’ imprisonment, such sentence to start this day.”
Mr Pinto gave evidence in these proceedings that he has never signed a power of attorney for the Spanish banks.
None of the preceding matters lead the Court to conclude that Mr Pinto would abide any undertaking given by Mr Pinto to his Trustees or the Court.
The evidence of Mr Nelson Pinto is accepted by the Court. He was an impressive witness and his evidence is preferred to that of his father. Where it is able to, it corroborates the evidence of his mother. It is:-
i)My-father, Manuel has told me that he has no intention of telling my mother where my father has hidden their money. My father has told me that he will not give any of that money to my mother. My father was a self-employed property developer. He registered 2 companies through which he conducted his business: Canedo Constructions Pty Ltd and Aveiro investments Pty Ltd. My father was an astute businessman and was very successful financially. He was proud of the fact that he had arrived in Australia with $200 and a suitcase, and then, through hard work, had managed to create significant wealth.[4]
ii)In around early 2000, my father started selling all of the real estate owned by my mother and father; Canedo Constructions Pty Ltd; and Aveiro Investments Pty Ltd. My father told me on a number of occasions that he was tired of rental properties because they were high maintenance. My father told me that he wanted to consolidate his assets into one last major project and that was the reason the properties were being sold. My father told me that the monies derived from the sale of assets in Australia were being invested in Portugal because he could get more favourable interest rates and lower taxation rates. My father told me he was selling his property interests to benefit my mother and himself. From time to time thereafter my father told me he was transferring money to Portugal by sending it via the banking system and also physically taking large sums of money with him in cash and cheques when he went on trips to Portugal. In approximately July 2005 my father made a trip to Portugal. He was due to return to Australia in approximately late October 2005. My mother telephoned me and told me she had received a telephone call from my father who had told her he was going to stay in Germany for a further week and would therefore return to Australia a week later than planned. On the date my father was originally scheduled to return from Portugal, my sister Susana deSousa telephoned me. Susana told me that Susana and my mother had left the family home and gone shopping. They had been gone from the family home some hours when Susana, by chance, saw my father driving his car in Northcote, Melbourne. Susana and my mother returned to the family home and discovered that my father’s car and personal possessions were gone. Following Susana's call I contacted my father by mobile telephone and requested that my father come to Wonthaggi (where I was then living) so I could meet with him. I had a close relationship with my father and I wanted to speak to him to find out what he was doing.[5]
iii)After my father arrived in Wonthaggi, I organised a family meeting at my home. Susana and her husband, Joaquim deSousa drove from Melbourne to my home. My father, Susana and I spoke at length. My father told Susana and me that his marriage to our mother was over. My father alleged that my mother was having an affair. My mother has always denied that allegation. My father told me: (a) He had removed all of his personal money and company funds from Australia. (b) He would make sure that my mother never received any of the money. (c) If he was asked where the money was, he would say that he had gambled it all away. (d) He did not have to explain what he has done with the money. During the 2 weeks that my father was in Wonthaggi and at the family meeting, my father told me that if anything happened to him (i.e., if he died), that I should let "Portugal know" and a document would be sent to me telling me where the money is. I took this to mean that I should contact the village of Carvoeiro from where my father comes. My father told my sister the same thing in my hearing during the meeting at my home. I asked my father who specifically in Portugal I should contact, but he would not give me a name. My father always replied that I should "just contact Portugal". Carvoeiro, the village that my parents come from is very small. Everyone knows each other well. If I contacted one person in the village the news would quickly spread throughout the whole village. My father has made statements of similar effect to those described in paragraph 17 of this my affidavit to me in the presence of my wife Donna Marie Pinto. The day before my father left my home in Wonthaggi, he signed 2 VicRoads registration transfer documents for the 1997 C200 Mercedes Benz registration number OMM 995 and the 2002 Hyundai Accent registration number RVT 571. My father told me that if my mother tried to take possession of either of the vehicles, or if creditors tried to take the vehicles, then I should immediately transfer them: "to someone that we trust to protect the assets". I have not retained the signed transfer documents as they were provided to my mother's former family law solicitors: Westminster Lawyers some years ago… In approximately November 2005, my father returned to Portugal and left the C200 Mercedes Benz and a suitcase of his personal belongings with me. I continued to speak with my father several times each week by telephone. At no time did my father tell me that he had invested any money with "Manuel De Sousa" or any other person. My father did not once tell me that he had lost any of the money he had taken to Portugal.[6]
iv)At no time did my father ever tell me that he intended to move to Portugal and retire there. My mother has never told me that she intended to do so. My mother has lived the majority of her life in Australia. She is a family oriented person and loves her 2 children and 5 grandchildren (who all live in Melbourne). My parents had a traditional European marriage. My father was the family breadwinner and organised the family finances and paperwork.[7]
v)I lived with my parents until late 2001. During that time I observed that any documents that required my mother's signature were simply given to her for signing without explanation. On a number of occasions I observed that my mother signed any document that my father requested without reading the document first, or enquiring as to its purpose. In mid-2005, my father took a large overdraft with the Westpac Bank in the name of Canedo Constructions Pty Ltd. The security for the overdraft was my parents' former matrimonial home located at 22 Cameron Street, Richmond. No repayments were made to reduce the overdraft. After my father left my parents' former matrimonial home, I became involved in negotiations with the Westpac Bank, when they threatened to foreclose on the overdraft. I did so as to facilitate the sale of the property without the bank becoming involved as a mortgagee vendor. I feared that the involvement of the bank in a forced sale of the property would dramatically decrease the sale price. I also assisted with discussions and negotiations with the real estate agent in relation to the sale of my parents' former matrimonial home. My wife Donna and I explored the possibility of taking over the overdraft facility to enable my sister and mother to continue to reside in the former matrimonial home, but the $700,000 company overdraft was simply unmanageable, given our financial situation at the time. I remained in regular telephone contact with my father until late December 2005. During that time, and whilst he resided at my home in Wonthaggi for a week in November 2005, my father did not ever tell me that he was a victim of fraud in Portugal.
vi)On numerous occasions my father has said to me words to the effect that my mother had been having an affair and because of the affair my father had taken all their money and hidden it overseas where no one could find it. My father told me that he would make sure that my mother and her lover would never see a cent. My father claimed that he had done so to protect the inheritance for my sister and me. My father told me that should my mother try to pursue him for the money, he would "destroy" my mother and her family. Prior to my father staying with me for a week in November 2005, my father asked me to tell my mother that if she was prepared to grant him a divorce in Portugal and not pursue him for the money he had taken, he would give my sister and me $250,000 each.
[4] Affidavit of Nelson Pinto sworn on 2 February 2016 at [4] - [6].
[5] Ibid at [7] – [12].
[6] Ibid at [14] – [23].
[7] Ibid at [27] – [28].
Consideration
The decision to allow Mr Pinto to travel is not a day to day decision in the administration of his estate.[8] It involves a consideration of whether the bankrupt will be afforded an opportunity to deal with possible assets held overseas and not recovered by the Trustees which will then not be made available to the Trustees. It also involves a consideration as to whether the bankrupt will return to Australia.
[8] See Re Tyndall; Ex parte Official Receiver [1977] FCA 15; 17 ALR 182 at 187 per Deane J.
Where an Applicant seeks a review of the Trustee’s decision to allow a bankrupt to travel overseas the following issues (while not conclusive) are often considered by the Court in determining whether the Court should exercise its discretion pursuant to s.178 of the Act to interfere with the Trustee’s determination:
a)whether the proposed travel was for a genuine and legitimate reason;
b)whether the bankrupt is likely to return to Australia as promised; and
c)whether the proposed travel will interfere with the administration of the bankrupt’s estate.[9]
[9] See Re Hicks; Ex parte Lam (1994) 217 ALR 195; Re Tyndall; ex parte Official Receiver (1977) 17 ALR 182; Stillman v Pascoe [2010] FMCA 549; Pearce v Mulhern (No 4) [2012] FCA 54; Mio v Mitchell [2015] FCA 22 at [33]-[36].
The Court concludes the answers to the above are: a) in part yes; b) no; c) yes.
Mr Pinto’s evidence as to his travel is essentially:-
a)that he has “every intention of returning to and continuing to permanently reside in Australia.” To support that assertion:-
i)he gave evidence of having obtained Australian citizenship in March 2015 following a late 2014 application. The Court notes he had resided in Australia at the time of application for in excess of 40 years and had never previously sought Australian citizenship. He has an Australian passport issued to him on 24 August 2015. Mr Pinto had not, upon becoming bankrupt, surrendered his passport to the Trustees as required by s.77(1)(a)(ii) of the Act because he did not at that time have an Australian passport and claimed to have a Portuguese passport that had expired.
ii)he claims to have strong ties to Australia. The Court finds in fact his ties to Portugal are stronger. His family and friends are resident in Australia albeit he has no relationship with his ex-wife, his son and daughter and his grandchildren. He has never seen some of his grandchildren. He claims he wishes to reconnect with his family but on the evidence, in particular that of Mr Nelson Pinto, from whom he is estranged, that is highly unlikely to happen;
iii)he has employment in Australia albeit he claims to have health difficulties which restrict that employment. His employment is with Mr Rui Peixoto, the director of R & D Homes Pty Ltd where Mr Pinto has been employed since about 6 July 2015. He claimed to be in receipt of an annual gross income of $52,000. No income funds have been paid to the bankrupt estate. He also claimed to not be able to work much because he broke both wrists some time ago.
iv)he believes the quality of life available to him and health care system in Australia is significantly better than that available to him in Portugal. That evidence was not accepted by Mrs Pinto. The evidence before the Court as to the health care system currently operating in Portugal was that it is a European health standard system and that Mr Bento receives comprehensive medical care in that system. There was no evidence as to how it compared with the health care system in Australia either generally or specifically as it applied to the medical needs and financial circumstances of Mr Pinto.
b)that he wishes to visit his long time and close friend who is also his brother-in-law, Mr Bento. Mr Bento is 75 years old and in failing health. Mr Pinto himself is 69 years old and has deteriorating health. Mr Bento suffers from chronic kidney failure and has done so for over 24 years requiring haemodialysis treatment three to four times per week at a speciality centre. Mr Bento has other serious health problems including depression for which he is receiving psychological treatment. His illnesses are not said to be immediately life threatening. Mr Pinto’s sister cares for her husband as he now requires permanent care but she herself is in her 70s and also of ill health. There is no doubt that Mr Pinto is close to his sister and brother-in-law and that they are ill. Further that he genuinely desires to see them. Further that should he travel overseas to Portugal he shall stay with them for a while. Mr Pinto is otherwise a citizen of Portugal and can reside there indefinitely.
c)that Mr Pinto has provided a written undertaking to the Trustees. The Court notes this undertaking to the Trustees does no more than undertake to them to return to Australia. No security is provided. Mr Pinto has spent three months in prison for contempt of Court in an earlier piece of litigation in the Family Court of Australia. The Court places little weight on this.
Mr Pinto also argues that allowing him to travel overseas will not hamper the administration of the estate. He refers to the lack of a public examination to date funded either by the Trustees or by his ex-wife. The reality is neither has the funds currently to conduct such an examination, and having listened to the evidence of Mr Pinto and observed him in the witness box, I am not confident much would be achieved by that financial expenditure. Mr Pinto is not a reliable witness. I do accept however that Mrs Pinto intends to fund a public examination of Mr Pinto when she is able, on her salary as a cleaner and with her son’s assistance, in the absence of the Trustees preparedness to do so.
Finally Mr Pinto argues that a power of attorney has already been executed to require and receive data, information and details relating to all and any bank accounts held by Mr Pinto in Spain and Portugal. Of course Mr Pinto may well hold bank accounts in other countries now. That enduring power of attorney is in favour of Maria Pinto dated 19 March 2008 and there is a further power of attorney in favour of Maria Pinto and a number of Spanish lawyers dated 5 February 2010. Further Mrs Pinto has already obtained a judgment under the Portuguese law regarding the division of joint property and an entitlement to half of the property or money deposited in any banking institution whether Portuguese or Foreign.
Mr Pinto’s evidence is that he has no assets of any value. He lives modestly in shared rental accommodation in Australia. His evidence is that he has paid $77,268.07 to his lawyers out of his wages and has outstanding a further sum of $21,824.57 together with the costs of the hearing and $7,420 work in progress. He works a few hours a week. He owes money to his friends.
Conclusion
In the circumstances of this case, Mr Pinto should not to be allowed to travel. The decision of the Trustees was incorrect. Mr Pinto has closer ties to Portugal than to Australia. These include not only Mr Bento and his wife but other relatives, nieces and nephews of Mr Pinto. Mr Pinto’s last girlfriend was Mrs Pinto’s sister. She too resides in Portugal. Mr Pinto has not disclosed the true whereabouts of millions of dollars which he hid in European bank accounts. Mr Pinto has not paid his creditors in part or at all despite his claim to ongoing income and ability to purchase plane tickets and fund the litigation. The Commissioner of Taxation is owed $150,000 in the bankrupt estate. If he goes overseas and accesses the monies in Europe, it will be even harder for the money to be obtained for the benefit of creditors. Mr Pinto has proffered an undertaking to return that is unreliable. He is not a witness of truth and has a history of blatantly disregarding Court orders.
The Court is satisfied that Mr Pinto’s evidence as to having been defrauded by Mr De Sousa is not truthful evidence and that Mr Pinto has control over the missing monies that he claims to have given to a third party and lost. He failed to disclose such monies in his Statement of Affairs. If the Trustees decision to allow Mr Pinto to travel overseas remains, then Mr Pinto, the Court concludes, will leave the Commonwealth of Australia and not return. Further he will take steps whilst overseas to deal with assets that form part of the bankrupt’s estate. The Court is mindful that “restrictions upon such travel under the bankruptcy legislation must be seen as being aimed at ensuring the proper administration of the bankruptcy laws and of the bankrupt’s estate under such laws and not as a penalty imposed upon a citizen as a consequence of inability to pay debts leading to the making of a sequestration order.”[10] However here there is no purpose of the travel that will assist the administration of the bankrupt estate. Rather that administration will be hampered. Any compassionate reasons in favour of Mr Pinto’s travel are outweighed by the totality of the considerations herein and the conclusions reached by the Court. It would not be just and equitable to allow the Trustees decision to stand. Justice and equity requires the Court’s intervention in the particular circumstances of this proceeding.
[10] Re Tyndall; Ex parte Official Receiver (1977) 17 ALR 182, 190.
I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Judge Hartnett
Associate:
Date: 13 April 2016
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