Re Buggy, M.F. & Anor v Ex parte Morton

[1991] FCA 293

Re: MICHAEL FRANCIS BUGGY and LEONIE FRANCES BUGGY
Ex parte: ROBERT WILLIAM MORTON
And: CANOONA PTY LIMITED; RONALD DAVID SILVERSTEIN and RONALD EDWARD EGGERT
Nos. A B67 and 68 of 1990
FED No. 293
Contempt of Court

COURT

IN THE FEDERAL COURT OF AUSTRALIA

BANKRUPTCY DISTRICT OF THE AUSTRALIAN CAPITAL TERRITORY
GENERAL DIVISION
Neaves J.(1)

CATCHWORDS

Contempt of Court - Interference with course of justice - Bankruptcy proceedings pending at suit of the trustee in bankruptcy - Telephone call to trustee by bankrupt - Whether words used amounted to a contempt.

HEARING

CANBERRA

#DATE 31:5:1991

Counsel for the trustee : Mr J.K. Chippindall

Solicitors for the trustee : Higgins

Counsel for Michael Francis Buggy : Mr W.L. Donald

Solicitors for Michael Francis Buggy : Macphillamy Donald and Co.

ORDER

The Court declares that Michael Francis Buggy is guilty of contempt of court in that on 3 May 1991 in the course of a telephone conversation with Robert William Morton, the trustee of his bankrupt estate, he made statements which were calculated or had a tendency to interfere with the course of justice in connection with certain proceedings then pending in this Court numbered AB 67/90 and AB 68/90 in which the said Robert William Morton as such trustee and as trustee of the bankrupt estate of Leonie Frances Buggy was the applicant and the said Michael Francis Buggy was a respondent.

Orders that in respect of the said contempt Michael Francis Buggy pay a fine of $750.

Orders that the amount of the said fine be paid to the District Registrar of this Court at Canberra in the Australian Capital Territory within 21 days from the date of this order.

Orders that Michael Francis Buggy pay the costs of Robert William Morton of and incidental to the application filed herein on 6 May 1991.

Note: Settlement and entry of orders is dealt with in rule 124 of the Bankruptcy Rules.

JUDGE1

This is an application by Robert William Morton to have Michael Francis Buggy committed for contempt of court in relation to proceedings pending before this Court in the exercise of its jurisdiction under the Bankruptcy Act 1966 (Cth).

1. By force of s.55(4A) of the Bankruptcy Act and by virtue of the presentation of a debtor's petition against himself, Michael Francis Buggy became a bankrupt on 29 May 1990. Robert William Morton became, and remains, the trustee of Mr Buggy's bankrupt estate. On 30 May 1990, Mr Buggy's wife, Leonie Frances Buggy, became a bankrupt by virtue of the presentation of a debtor's petition against herself. Mr Morton became, and remains, the trustee of her bankrupt estate. On 12 September 1990, an order was made by the Court under s.53(1) of the Bankruptcy Act consolidating the proceedings in relation to the two bankrupt estates.

2. At the time of the alleged contempt, a proceeding was pending before this Court at the suit of Mr Morton, as trustee of the consolidated estates, in which he was seeking certain declarations and orders in relation to the administration of those estates. The proceeding was against Mr and Mrs Buggy, as first respondents, a company named Canoona Pty Limited, as second respondent, and one Ronald Edward Eggert, as fourth respondent.

3. The proceeding concerned a Crown lease of certain premises known as 3 Goode Street, Torrens in the Australian Capital Territory of which, at the date of their respective bankruptcies, Mr and Mrs Buggy were the registered proprietors under the Real Property Act 1925 (A.C.T.), a mortgage over those premises which Mr and Mrs Buggy had purported to grant on or about 4 April 1990 to Canoona Pty Limited, a company of which the sole shareholders and directors at the material time were Alan Christopher Buggy, a son of Mr and Mrs Buggy, and Ronald Edward Eggert, and a lease of part of those premises which Mr and Mrs Buggy had purported to grant to Mr Eggert on or about 13 January 1987. The proceeding also concerned a payment of $31,500 made on or about 16 May 1990 by Mrs Buggy to Canoona Pty Limited. It was asserted that the mortgage, the lease and the payment were void as against Mr Morton as trustee of the estates of Mr and Mrs Buggy.

4. The proceeding had also sought to set aside as void as against Mr Morton an option to purchase the premises at Torrens which Mr and Mrs Buggy had purported to grant to Ronald David Silverstein on or about 28 April 1989. Mr Silverstein was named as the third respondent to the proceeding. The proceeding, in so far as it sought relief against him, had, however, been dismissed on 19 March 1991.

5. The hearing of the proceedings to which I have referred commenced on 19 March 1991 and continued on 20 and 21 March 1991. On the last mentioned date, the proceedings were adjourned until 6 May 1991. Throughout the hearing on 19, 20 and 21 March 1991, Mr Buggy was represented by counsel. He was personally present in Court during most, if not all, of the hearing. He was well aware that the hearing was to resume on 6 May 1991.

6. The application at present before the Court is dated 6 May 1991. It alleges that "the conduct of the respondent Michael Francis Buggy in telephoning the applicant and saying the matters alleged by the applicant in his affidavit sworn on 6 May 1991 and filed herein" is a contempt of this Court. In his affidavit sworn on 6 May 1991, Mr Morton deposes to the following:
   

"2. On Friday 3rd May 1991 at approximately 5.20 pm in the afternoon I entered the Flight Deck Lounge of Australian Airlines at Sydney Airport. At 5.25 pm I was paged to attend a telephone call which was made to me at that lounge. At the time I was in the toilet area of the lounge and when I went to receive the telephone call I was advised by the personnel officer that the person who had telephoned me would telephone again in about 10 minutes.

3. I was paged again at 5.50 pm and I received the telephone call in the said lounge. I immediately recognised the voice at the other end of the telephone as that of Mr Michael Francis Buggy. I recognised his voice because he had spoken to me on many occasions previously and I was very familiar with his voice.

4. He said to me 'Your luck has just about run out. You've got the message. This is the last warning and I won't warn you again. Give up now or face the consequences.' I said "Who is this?'. He said 'You know who it is. I'm not going to tell you again.' I said 'Is that you Michael?' There was no answer and the caller whom I believe to be Mr Buggy had hung up."

Mr Morton also deposed to having reported what had occurred to one Karen McNeill at the service counter in the Flight Deck Lounge of Australian Airlines at Sydney and to the Senior Steward in that lounge. He also deposed to having reported the matter to officers of the Australian Federal Police upon his arrival at Canberra later on 3 May 1991.

1. Mr Morton was cross-examined.

2. In answer to questions put to him by counsel for Mr Buggy, Mr Morton said that he had travelled to Sydney on business on 3 May 1991 and had arrived at the airport at Sydney in sufficient time for the aircraft on which he had a return booking to Canberra. He was not informed on his arrival at the Flight Deck Lounge of Australian Airlines that there had been any telephone calls for him. He agreed that, either on 3 May 1991 or shortly before, he had had a discussion concerning certain property with Ronald David Silverstein, the person who had been named as the third respondent in the proceedings to which reference has been made, and that a certain suggestion had been made to Mr Silverstein, presumably in relation to that property. I infer that the discussion concerned the option over the premises at Torrens to which reference has been made and which Mr Silverstein was asserting had been validly granted and validly exercised.

3. Mr Morton did not agree with the suggestion put to him by counsel that, during the period of twelve months prior to 3 May 1991, he had spoken to Mr Buggy on the telephone on three occasions only. He said he believed that he had spoken to Mr Buggy on the telephone on more than three occasions and that he had kept a diary note of the conversations. Those records, he said, were available to be produced if required. He further said that he had had telephone conversations with Mr Buggy the details of which had not been recorded. He said that in about June 1990 he had refused to take telephone calls from Mr Buggy because he had become abusive.

4. In answer to further questions, Mr Morton said that the conversation at the airport lasted for "maybe a minute", that he was very familiar with Mr Buggy's voice which he regarded as distinctive. He swore in unequivocal terms that he recognised Mr Buggy's voice on the occasion in question. He said there was no possibility that the caller was someone other than Mr Buggy. He could offer no explanation as to how Mr Buggy could have been aware, at the time the telephone call was made, of his, Mr Morton's, arrival at the Flight Deck Lounge. He said the timing caused him some distress. Asked why it was, if he knew the caller to be Mr Buggy, that he asked the question "Is that you Michael?", Mr Morton replied:
   

"My mind was racing at the time and I wanted him to say that it was him because I was going to write the conversation down immediately, which I did."

He said he regarded what was said to him by Mr Buggy as a threat of physical danger to himself. He did not agree that what was said referred to the possibility of him losing the proceedings pending in this Court and having to pay costs. He strongly denied the suggestion put to him that the conversation in the terms alleged was simply a concoction by him to help discredit Mr Buggy in the pending proceedings.

1. No evidence was adduced on behalf of Mr Buggy. Submissions were, however, made to the Court by counsel on his behalf.

2. I accept Mr Morton's evidence. I am satisfied beyond reasonable doubt that the telephone call to which he has deposed took place at approximately 5.50 p.m. on 3 May 1991 and that the conversation that ensued was in the words set out in par.4 of his affidavit sworn on 6 May 1991. I also accept Mr Morton's evidence, and am satisfied beyond reasonable doubt, that the caller was Mr Buggy.

3. It remains to consider whether the words used amount to a contempt of court. In my opinion, they do so. I have no doubt that the words used related to the proceeding which was then pending in this Court at the suit of Mr Morton and to which reference has been made earlier in these reasons. That proceeding directly affected Mr Buggy and members of his family. It concerned transactions to which Mr and Mrs Buggy and their son had been privy.

4. In considering whether Mr Buggy's conduct amounted to a contempt of court, I have had regard to the fact that the pending proceeding was brought by Mr Morton not to vindicate any private right of his but in his capacity as trustee of the bankrupt estates of Mr and Mrs Buggy. As such trustee, he has duties and responsibilities under the Bankruptcy Act which are to be discharged under the general control of the Court. It has often been said that, in carrying out those duties and responsibilities, such a trustee is to be regarded as an officer of the Court. The position of a trustee under the Bankruptcy Act was adverted to by Sweeney J. in Re Lamb; Ex parte Registrar in Bankruptcy (1984) 1 FCR 391 in a passage cited with approval by Smithers A.C.J. on appeal sub nom. Lamb v. Registrar in Bankruptcy (Vic.) (1984) 4 FCR 269 at pp 270-1. Sweeney J. said, at p 396 of the report:
   

"Suffice it to say that a trustee plays a central role in the administration of estates under the Act and is under a general duty to exercise the powers committed to him in such a fashion that the objects of the Act, including those of equality between creditors and fairness to bankrupts and debtors, are served. The objects of the Act are of public importance and it is of great importance to the community that the role given by the legislature to a trustee, is fulfilled only by persons who are, and who are seen to be, completely independent."

It is equally important that the trustee be free, subject only to the supervision of the Court, to exercise his independent judgment in relation to the administration of an estate under his control without being subject to threat, harassment or intimidation or conduct which, objectively considered, has a tendency to deflect him from the proper performance of his duties.

1. In my opinion, the words used amounted to a threat to Mr Morton that, unless the pending proceedings were discontinued, certain unspecified consequences would befall him. The words were not words of persuasion or of reasoned argument as to why the proceeding could not succeed or should be discontinued in the general interests of the creditors of the bankrupt estates. They were clearly intended to convey a message by way of warning - and expressly so. I am unable to accept the submission of counsel for Mr Buggy that the words used may properly be seen as part of the negotiations for settlement of the proceeding. Nor am I able to accept that the reference to consequences is to be taken as a reference to the consequences in costs attendant upon a suggested lack of success by Mr Morton in the proceeding. The words used were, in my opinion, clearly calculated, and had a tendency, to deter Mr Morton from pursuing the course of action on which he had embarked in administering the estates of which he was the trustee and thus to interfere with the course of justice.

2. Counsel for Mr Buggy submitted that the Court could not be satisfied beyond reasonable doubt that the words complained of were spoken with the intention of interfering with the course of justice and that a finding to that effect was necessary before the conclusion could be reached that the conduct amounted to a contempt of court. The most recent statement of which I am aware upon the question whether intention to interfere with the course of justice is a necessary element of a contempt of the kind here in question is that of the Court of Appeal in New South Wales (Gleeson C.J., Kirby P. and Priestley J.A.) in Attorney-General for New South Wales v. Dean (1990) 20 NSWLR 650. At pp 655-6 the Court said:
   

"The opponent repeatedly laid stress upon the absence of any intention to interfere in the administration of justice. However, it is clear that although contempt is criminal in nature, proof of an intention to interfere in the administration of justice is not an ingredient of the charge...Although this area of the law has attracted criticism...and has been the subject of proposals for reform by law reform agencies...the present case may be thought to be a good example of why the law stands as it does. The matter of overriding importance is to prevent interference with the proper course of trials; that interference is just as real, and needs to be prevented, whether it is intentional or not. At all events, the law binding on and applied by this Court is clear. It is sufficient that the prosecution show that the alleged contemptor had the intention to make the statements which, objectively, had the requisite tendency to interfere in the fair trial of the accused. The statements must be looked at objectively to determine whether they were calculated to interfere with the course of justice. It is necessary for the prosecutor to prove that tendency beyond reasonable doubt. The absence of the specific intent, by those words, to interfere in the administration of justice is no answer or defence to a charge of contempt. On the other hand, the presence or absence of such an intention will be relevant to the Court's decision as to penalty."

1. Accepting, as I respectfully do, that the law is as there stated, it is unnecessary, in determining whether the conduct here in question amounts to a contempt of court, to consider what was Mr Buggy's intention. However, in the light of the words used, it is difficult to see that he could have had any other intention than to intimidate Mr Morton in such a way as to achieve the discontinuance of the pending proceeding.

2. For the reasons I have given, I declare that the conduct of Mr Buggy in telephoning Mr Morton on 3 May 1991 and using the words set out in par.4 of Mr Morton's affidavit sworn on 6 May 1991 amounts to a contempt of court. The words he used were calculated, and had a tendency, to interfere with the course of justice.

3. On the findings that I have made, Mr Buggy's conduct is clearly deserving of punishment. In all the circumstances, the imposition of a fine is, in my opinion, appropriate. I propose to impose a fine of $750. That fine is to be paid to the District Registrar of the Court within 21 days from the date of this order. Mr Buggy must also pay Mr Morton's costs of the application.

4. The application also seeks an order that Mr Buggy "by himself, his servants, agents, sub-contractors or employees be restrained altogether from threatening, harassing and/or intimidating" Mr Morton. It is inappropriate in proceedings for contempt to consider whether such an order should be made: see Lazar v. Taito (Australia) Pty Ltd (1985) 5 FCR 395 at p 414: New South Wales Bar Association v. Muirhead (1988) 14 NSWLR 173 at pp 182-3, 198, 199-201. But in any event, it would not, in my view, be appropriate to grant such relief. It should not be assumed that Mr Buggy will engage in further conduct of the kind now under consideration. He must realise that to engage in further conduct of a similar nature would be likely to result in the imposition upon him of a penalty by way of imprisonment.