Hugh Wily v Peter Gerald Fitz-Gibbon (including corrigendum dated 4 March 1998) [1998] FCA 121 (2 March 1998)

Last Updated: 13 May 1998

GENERAL DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7786 of 1997

BETWEEN:	hugh jenner wily Applicant
AND:	peter gerald fitz-gibbon Respondent
JUDGE(S):	HILL J
DATE:	2 MARCH 1998
PLACE:	SYDNEY

CORRIGENDUM

Amendment to the Reasons for Judgment of Justice Hill delivered on 2 March 1998.

Page 19, paragraph 3, line 2, insert the word "not" so that sentence reads as follows:

"It was not contained in Mr Hudson's affidavit ..."

Associate:

Date: 4 March 1998

FEDERAL COURT OF AUSTRALIA

BANKRUPTCY - demand by Trustee for delivery up of property allegedly held by bankrupt - delegation of duty by a trustee.

PRACTICE AND PROCEDURE - whether a civil or criminal burden of proof is applicable with respect to admissions made by a bankrupt when being officially questioned by a trustee - whether ss 84, 85 and 138 Evidence Act 1995 prevent acceptance of evidence of admissions made against the bankrupt's interest whilst being officially questioned by a trustee - joinder of third persons whose rights will be affected by an order.

Bankruptcy Act 1966 (Cth), ss 78(1), 30(5), 34A, 134(1), 162(6)

Evidence Act 1995 , ss 84, 85, 138

Neat Holdings Pty Limited v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449, applied

Witham v Holloway (1995) 183 CLR 525, referred to

News Limited v Australian Rugby Football League Limited [1996] FCA 1256; (1996) 64 FCR 410, applied

HUGH JENNER WILY v PETER GERALD FITZ-GIBBON

NG 7786 OF 1997

HILL J

SYDNEY

2 MARCH 1998

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7786 of 1997

BETWEEN:	hugh jenner wily Applicant
AND:	peter gerald fitz-gibbon Respondent
JUDGE(S):	HILL J
DATE OF ORDER:	2 March 1998
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. That the bankrupt, Peter Gerald Fitz-Gibbon comply with the requirement of the applicant that he deliver to the applicant a gold Rolex watch within seven days of the service upon him of a sealed copy of the order in the present proceedings.

2. That there be reserved as a separate question for consideration of the Court the question whether the paintings referred to in the letter dated 17 June 1997 from the applicant to the bankrupt are property of the bankrupt within the meaning of those words in the Bankruptcy Act 1966 and, if so, whether an order should be made pursuant to that Act that there be delivered up to the applicant those paintings.

3. For the purposes of the determination of the separate issue, Mrs Maree Fitz-Gibbon be joined as a party, that the applicant file an amended application accordingly and that the matter then be returnable before the Court for further directions on 1 April 1998 at 9.30 am.

4. That, save and except as herein dealt with, the application of the trustee dated 25 June 1997 be dismissed.

5. That, when the matter is listed before the Court for directions following the service of Mrs Fitz-Gibbon, the parties have leave to file submissions as to the appropriate orders as to costs which should be made.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7786 of 1997

BETWEEN:	hugh jenner wily Applicant
AND:	peter gerald fitz-gibbon Respondent

JUDGE(S):	HILL J
DATE:	2 MaRCH 1998
PLACE:	SYDNEY

REASONS FOR JUDGMENT

Mr Hugh Jenner Wily, the applicant in the present proceedings ("the Trustee") is the trustee of the estate of Peter Gerald Fitz-Gibbon ("Mr Fitz-Gibbon"). The trustee became the trustee of that estate in March 1996 as a result of a petition presented by Mr Fitz-Gibbon being accepted by the Court. The trustee seeks an order that Mr Fitz-Gibbon comply with the trustee's requirement that he deliver up to the trustee a Rolex watch, certain paintings and a Lladro figurine. The application seeks an order that in the event of failure to comply with the first order, pursuant to s 78(1)(d) and (f) Bankruptcy Act 1966 (Cth), a warrant issue for the arrest of the bankrupt and his committal to gaol. Alternative orders are foreshadowed pursuant to s 30(5)(a) and (d) of the Act.

It is Mr Fitz-Gibbon's case that he is unable to comply with the trustee's requirement to deliver up the various items because they are not his property nor is he entitled to possession of them. In amplification Mr Fitz-Gibbon says that he no longer owns an original Rolex watch but he had in the past owned such a watch which had been stolen and now owned but a fake copy. Mr Fitz-Gibbon claims that the paintings to which the trustee makes reference are owned by his wife as is the Lladro figurine and that accordingly he is unable to comply with the trustee's directions with respect to these items.

Before making finding of fact, it is necessary first to deal with various submissions directed at excluding a large deal of the evidence which the trustee had filed against Mr Fitz-Gibbon.

THE EVIDENTIARY OBJECTIONS

In addition to objections taken on the grounds of relevance or to material claimed to be expert evidence, made without the necessary expertise or experience, half a day was taken up by counsel for the respondent objecting to various accounts of conversations in which his client participated, relied upon as admissions made by Mr Fitz-Gibbon against his interest on the basis that the provisions of ss 84, 85 and 138 of the Evidence Act 1995 precluded that evidence from being admitted.

It is convenient to consider the submissions by reference to one particular passage objected to. It was not suggested that different outcomes might flow in respect of the particular evidence to which objections were taken. The question arose, for example, in the affidavit of Mr Andrew Wily, a partner (and son) of the trustee, who had the conduct of the bankruptcy of the applicant during the absence from Australia of the trustee.

By reference to Mr Wily's affidavit, evidence of the applicant taken on the voir dire and evidence admitted without objection, the following facts emerge relevant to the objections. The applicant became a bankrupt on 4 March 1996. The statement of affairs which the applicant filed disclosed, inter alia, that he owned a watch having a value of $300.00.

At a meeting of creditors held on 15 April 1996, questions were asked, inter alia, about the applicant's ownership of paintings and a Lladro figurine. The applicant said at that meeting that he had only had one piece of Lladro which he had transferred approximately three years earlier to his mother in full and final satisfaction of $1,500 which he had owed to her. He said that some paintings were in storage in his mother's garage and that they had been water damaged. He spoke of having had a print and that his wife had a Blue Mountains scene. He undertook to provide the trustee with details of the paintings.

Subsequently Mr Wily and an employee, Miss Halpin met with a Mr Hudson, without the knowledge of the applicant on 13 June. Mr Hudson provided information which, if true led to the conclusion that the applicant had a gold Rolex watch of some value, at least four paintings which he had purchased from his own funds and a Lladro figurine, also his property.

Prior to the meeting with Mr Hudson, Mr Wily wrote to the applicant on 10 June 1997 requiring him to attend his office on 17 June at 10 am. Reference is made in the letter to s 77(b) of the Bankruptcy Act 1966 and the applicant was required to confirm with Miss Halpin that he would attend. The applicant did so. No mention was made by Miss Halpin of the meeting with Mr Hudson.

Shortly before 10 June, Mr Andrew Wily spoke to his father, who was then still overseas, by telephone. As deposed to by Mr Andrew Wily the conversation proceeded as follows:

I said:

"Dad, some information has been provided to us in relation to the Fitz-Gibbon estate. It would seem Mr Fitz-Gibbon has not informed us of all the property he owns. According to the information we've been given, he owns a gold Rolex watch. I think Mr Fitz-Gibbon should be requested to attend a Section 77 interview. Do you agree?"

The Trustee said:

"Given the information that has been made available, yes, I agree. You can issue on my behalf a request for Mr Fitz-Gibbon to attend an interview at our office."

I said:

Mr Fitz-Gibbon should also be required to deliver the Rolex watch to his Trustee."

The Trustee said:

"Yes. I agree."

The applicant duly arrived at Mr Wily's office at 10 am on 17 June. He was shown into the board room and handed a letter signed by Mr Wily and bearing the date 17 June 1997. The letter, relevantly, read as follows:

"I have received a number of disturbing allegations regarding your conduct during your bankruptcy. In particular I would like to address the following areas:

1. FAILURE TO DISCLOSE PROPERTY

It has come to my attention that the following items of property have not been disclosed to me:

a. A gold Rolex watch

b. Household furniture.

c. Various paintings.

d. Lladro figurines.

Pursuant to Section 265 of the Bankrupt (sic) Act it is an offence for a Bankrupt to failure (sic) to disclose property to his Trustee. The penalty for contravention of this Section ranges from imprisonment for one year to three years.

Pursuant to Section 77 of the Bankruptcy Act I require you to forthwith deliver to me your Rolex watch, paintings, Lladro figurines and proceeds of sale of furniture."

The reference to penalties for contravention of s 265 might more accurately have been expressed as involving imprisonment up to three years. The relevant penalty might be thought to involve a maximum of one year. Be that as it may, the letter continues to deal with allegations that the applicant was deriving income and incurring debts without disclosure of his bankruptcy.

The applicant read the letter. At some time he signed a copy of it to acknowledge receipt. He said that he felt ambushed. Shortly thereafter the applicant went to the toilet. Prior to doing so he was observed wearing a Rolex watch of gold appearance. Upon his return he no longer appeared to be wearing a watch. Mr Wily then handed to the applicant another letter bearing the same date requiring delivery up of a Rolex watch. The letter suggests that failure to comply would result in contempt proceedings being taken in this Court. The letter referred to s 263 of the Bankruptcy Act 1966 and the penalty for concealment of three years in gaol. The following conversation, as deposed to by Mr Wily and to which objection is taken, then took place:

Mr Fitz-Gibbon said: "Alright, which matter do you wish to deal with?"

I said: "The first matter of the watch."

Mr Fitz-Gibbon said: "Okay. I did have a watch years ago, however, now I only have a false Rolex which is at home."

I said: "Come on Mr Fitz-Gibbon, you were wearing the watch when you went to the toilet."

Mr Fitz-Gibbon said: "I was not wearing a watch."

I said: "Rebecca, did you see Mr Fitz-Gibbon wearing his

watch?"

Rebecca Halpin said: "Yes".

I said "Mr Fitz-Gibbon, this is a joke and blatant disregard of Bankruptcy Act. Do you realise you are committing an offence under the Bankruptcy Act?"

Mr Fitz-Gibbon said: "You can say that if you like."

I said: "Alright, I am calling the Police."

The applicant concedes that the above passage, subject to a minor matter, gives the substance of what was said.

The police were subsequently called; and two police officers arrived. The applicant refused to permit himself to be searched and the police refused to intervene. After they had left a Mr Schneider, a solicitor engaged by the Trustee came to the boardroom and asked the applicant some further questions. Among the answers also objected to was a statement by the applicant that he did not wear a watch when he came to the interview. In so far as it matters, at some time when Miss Halpin was alone with the applicant, Mr Wily arranged for another accountant in his office to be present with her.

At no time during the interview did the applicant complain that the interview had been conducted in a way which was oppressive to him.

The relevant provisions of the Evidence Act 1966 relied upon are as follows:

84. (1) Evidence of an admission is not admissible unless the court is satisfied that the admission, and the making of the admission, were not influenced by:

(a) violent, oppressive, inhuman or degrading conduct, whether towards the person who made the admission or towards another person; or

(b) a threat of conduct of that kind.

(2) Subsection (1) only applies if the party against whom evidence of the admission is adduced has raised in the proceeding an issue about whether the admission or its making were so influenced.

Section 85 of the Evidence Act then provides:

(1) This section applies only in a criminal proceeding and only to evidence of an admission made by a defendant:

(a) in the course of official questioning; or

(b) as a result of an act of another person who is capable of influencing the decision whether a prosecution of the defendant should be brought or should be continued.

(2) Evidence of the admission is not admissible unless the circumstances in which the admission was made were such as to make it unlikely that the truth of the admission was adversely affected.

(3) Without limiting the matters that the court may take into account for the purposes of subsection (2), it is to take into account:

...

(b) if the admission was made in response to questioning:

(i) the nature of the questions and the manner in which they were put; and

(ii) the nature of any threat, promise or other inducement made to the person questioned.

Finally, s 138 provides:

(1) Evidence that was obtained:

(a) improperly or in contravention of an Australian law; or

(b) in consequence of an impropriety or of a contravention of an Australian law;

is not to be admitted unless the desirability of admitting the evidence outweighs the undesirability of admitting evidence that has been obtained in the way in which the evidence was obtained.

(2) Without limiting subsection (1), evidence of an admission that was made during or in consequence of questioning, and evidence obtained in consequence of the admission is taken to have been obtained improperly if the person conducting the questioning:

(a)...

(b) made a false statement in the course of the questioning even though he or she knew or ought reasonably to have known that the statement was false and that making the false statement was likely to cause the person who was being questioned to make an admission.

It is necessary to turn now to the argument said to apply to each of these sections.

Counsel did not shrink from asserting (although the assertion would clearly be indefensible) that each of the kinds of conduct described in s 84(1)(a) was present on the facts as I have described them. However, the major thrust of the submission was that the conduct of the meeting was oppressive. Four significant matters are relied upon to support oppression. First, the respondent relies upon the fact that he was asked to attend a meeting at which he was required to respond to the letter in circumstances where the letter was given to him only at the meeting, and where he was given no notice beforehand of the matters to be discussed nor any opportunity until the meeting itself to respond to the matters in the letter. Second, it is said that the letter disclosed no source of the allegations, nor indeed the material provided to the trustee in support of the allegations. Third, it is said that the letter mistakes the penalties applicable, was untrue to that extent and recklessly made and written. Fourth, the number of people called in at the meeting (Mr Wily, Miss Halpin, a partner of Mr Wily, two policemen and a solicitor) is relied upon to show oppression to the applicant. It is said to have been unnecessarily overwhelming and intimidatory to him. Finally, although it is accepted that Mr Hugh Wily could delegate to his partner in his absence the calling of a meeting, inadequate information had been provided to the father to exercise his discretion, so that for that reason there was also oppression.

A perusal of the Interim Report No 26 of the Law Reform Commission which recommended the adoption of a draft section (clause 71) not relevantly different from the now s 84 for present purposes, makes it clear that the underlying basis to the recommendation was twofold. First, the Commission was influenced by the rule that in criminal cases admissions must be voluntary to be admitted into evidence, subject to certain discretionary matters (see, eg para 128 of Volume 2). The word "oppression" echoes Lord Hailsham of St Marylebone in the House of Lords in DPP v Ping Lin [1976] AC 574 at 600, where his Lordship said:

"Have the prosecution proved that the (confession) was voluntary in the sense that it was not obtained by fear of prejudice or hope of advantage excited or held out by a person in authority, ... or by oppression?"

The High Court in The King v Lee [1950] HCA 25; (1950) 82 CLR 133, at 144, 146, in a passage cited by the Law Reform Commission saw involuntariness as involving two kinds of case:

"the typical case of a non-voluntary statement was the case of a statement induced by a threat or promise by a person in authority"

and a statement made:

"because the will of the accused has been overborne or ...made as the result of duress, intimidation, persistent importunity or sustained or undue insistence or pressure."

Other cases to which the Commission referred on the question of oppression include Cornelius v R [1936] HCA 25; (1936) 55 CLR 235, 245 and McDermott v R [1948] HCA 23; (1948) 76 CLR 501. Underlying the concept is the sense of voluntariness to which reference has already been made; the admission must not be affected by impropriety.

The second factor which obviously influenced the Commission was that the rule relating to voluntary admissions was a rule of the criminal law and that it ought to apply as well to admissions in ordinary civil cases (cf para 149). The Commission notes that it is doubtful in a civil case that a trial judge could exercise a discretion to exclude evidence obtained involuntarily, except, perhaps, where there has been an abuse of power.

The facts in the present case contain nothing to support the view that there was any violent, inhuman or degrading conduct towards the applicant by any person present at the meeting he attended, whether separately or together. Nor in my view even if the statements made by the applicant at the meeting adverse to the applicant's interest in the outcome of the proceedings (see Dictionary definition of "admission") could be said to have been induced by anything which happened at the meeting (and they were obviously a result of the questions put to the applicant) nothing which happened at the meeting could be said to be oppressive in the sense used in s 84 of the Evidence Act.

It is not necessary in this case to attempt an exhaustive definition of what constitutes "oppression". As the Macquarie Dictionary (3d ed) makes clear the ordinary meaning of the word involves the exercise of authority or power "in a burdensome, cruel or unjust manner". It may be possible, at least in some cases, to say that conduct will be oppressive when there is some impropriety in the way the admission is obtained. Be that as it may, there was nothing in the conduct of the meeting, including the handing to the applicant of the letter on that day which was in any way oppressive to him. To the extent that failure to give notice of the real subject matter of the meeting is at the gravamen of the argument there is nothing in the context of the Bankruptcy Act which suggests that a bankrupt must be given notice of matters about which the Trustee proposes to question. Indeed, surprise, may well be vital to the process.

The matter of an inadequate delegation hardly arises under s 84. The Bankruptcy Act is silent on the question of ability of a Trustee to delegate. The Act notes the appointment of a person to be the Trustee of the estate of a bankrupt. In the case of a person who becomes bankrupt as the applicant did by force of the acceptance of a petition which he presents, the appointment of the Trustee follows from s 55(5). The expression "the Trustee" is defined in s 5 so as to extend to more than one person if more than one person is appointed, but the definition contains no reference to persons acting on behalf of the Trustee.

However, s 134(1) of the Bankruptcy Act which lists the powers exercisable by the Trustee refers in s 134(1)(i) to the trustee obtaining, inter alia, such "assistance" as he thinks desirable relating to the administration of the estate or to the conduct or affairs of the bankrupt Having regard to the impracticability of a trustee in bankruptcy being required to take every step in the administration personally, s 134(1)(i) should not be given a narrow construction having regard to the nature of the powers vested in the trustee and the circumstances of the present case involving absence of the trustee from Australia: O'Reilly v The Commissioners of the State Bank of Victoria [1983] HCA 47; (1983) 153 CLR 1 at 11.

The view that delegation is permissible is reinforced by s 162(6) which is concerned to disallow a payment in respect of duties performed by another when the trustee has received remuneration for his services, but subject to a resolution of creditors or the committee of inspection authorising the charges.

In my view nothing in s 84 thus operates to prevent acceptance of evidence of admissions made against the applicant's interests.

The second submission is as to the operation of s 85. It is submitted for the Trustee that that section has no operation, both because the proceedings are not criminal and because there has been no official questioning to which the section applies. In my view both of these submissions are correct.

As I have already indicated, at common law a confession (or admission) by an accused was admissible if voluntary and inadmissible (but subject to discretion) if involuntarily given. Whatever the meaning of criminal proceeding might be in a particular context, it is a defined expression for the purposes of s 85. The definition in the Dictionary is as follows:

"criminal proceeding means a prosecution for an offence and includes:

(a) a proceeding for the committal of a person for trial or sentence for an offence; and

(b) a proceeding relating to bail;

but does not include a prosecution for an offence that is a prescribed taxation offence within the meaning of Part III of the Taxation Administration Act 1953."

It will be recalled that the Trustee seeks, in essence, two orders. The first, clearly in no sense criminal is an order that the applicant deliver up possession of the watch, paintings and figurines referred to in the 17 June letter. The second, is an order, relying on s 30 of the Bankruptcy Act that the applicant be committed to prison for not having complied with the direction of the Trustee to deliver up possession of the relevant items.

It is the second, but not the first, which counsel for the applicant regards as a criminal proceeding. It is the questioning by the Trustee which is said to be an official questioning for the purposes of s 85.

In my view the present proceedings can not fall within the definition of "criminal proceedings" in the Dictionary. The proceedings are not a prosecution for an offence; nor are they proceedings for the committal for trial or sentence for an offence. Nor, if it matters, can the proceedings be for bail. The proceedings are civil in nature, in not merely the ordinary sense of that word (that seems by the Dictionary definition to be irrelevant) but also in the defined sense, with the consequence that s 85 has nothing to do with the admissibility of any of the material. It is not necessary to consider in detail what is meant by the expression "official questioning". The expression obviously is intended to encompass police interrogation, although it might be wider than that. It does not cover an interview by a bankrupt with his Trustee at which the Trustee puts questions to the bankrupt. The context of criminal proceedings has relevance to the phrase "official questioning" in that it is clear that what is referred to is some form of questioning by a person holding an office which is tendered in criminal proceedings as defined. Had it been necessary to decide the matter I would have held, also, that the circumstances were not such as to make it unlikely that the truth of the admission was adversely affected.

The final argument turned upon s 138 of the Evidence Act. For the applicant to succeed it is necessary for the applicant to satisfy me that either the evidence sought to be excluded was obtained improperly or in contravention of an Australian law or in consequence of an impropriety. If I am so satisfied then the onus shifts to the respondent to show that the desirability of the evidence being admitted outweighs the undesirability of excluding it having regard to the way it was obtained.

At the heart of s 138 is the discretion discussed in the High Court in Bunning v Cross [1978] HCA 22; (1978) 141 CLR 54, made applicable by the Evidence Act both to criminal and civil proceedings.

The illegality relied upon by the applicant is that the meeting at which the questions were put was convened by Mr Andrew Wily, after inadequate information was conveyed to his father. It is said that the failure to supply all information on the subject to Mr Hugh Wily meant that the meeting was illegally held and in the result, the applicant's answers to the questions put to him should be excluded from evidence.

As I have already indicated there is no reason why the Trustee could not obtain the assistance of his son in collecting information. A submission that the Trustee could only delegate the power to ask questions where all information known to the person seeking the delegation was made known to the Trustee is, in my view misconceived. A practical approach must of necessity be taken to the assistance which a Trustee may seek in a particular case. Mr Wily was overseas. He was kept aware in a general way of the administration and of the need for questions to be put to the bankrupt. The fact that not every piece of information known to Mr Andrew Wily was communicated to Mr Hugh Wily does not, in the circumstances of the case, lead to the conclusion that the meeting was held in contravention of the Bankruptcy Act.

I should say that even if the meeting was invalidly convened I would admit the evidence, for in my view the desirability of admitting the evidence in the present case clearly outweighs the undesirability of the evidence being obtained by what is alleged to have been an invalid delegation.

I would accordingly admit the passage I have earlier set out into evidence and in so doing all other passages to which a like objection has been taken.

THE REQUIRED STANDARD OF PROOF

Counsel for the trustee submits that making the factual findings which I am required to make, I should be satisfied on the balance of probabilities having regard to s 34A of the Act. That section provides as follows:

"(1) Where, in proceedings in the Court (other than proceedings for an offence), it is necessary, for the purpose relating to a matter arising under this Act, to establish, or for the Court to be satisfied as to, a particular fact (including a contravention of this Act), it is sufficient if that fact is established, or the Court is satisfied as to that fact, as the case may be, on the balance of probabilities.

(2) Subsection (1) has effect except to the extent that this Act expressly provides otherwise."

While counsel for the trustee submits that the criminal onus should not be adopted, he accepts from Mason CJ, Brennan, Deane and Gaudron JJ in Neat Holdings Pty Limited v Karajan Holdings Pty Ltd (1992) 110 ALR 449-50 that, having regard to the fact that the matter to be proved involves an offence on the part of the bankrupt and might well lead to imprisonment if an order were made under s 30(5)(d), while the standard of proof would still be proof on the balance of probabilities, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities, might take into account the seriousness of the matters to be proved and their consequences, so that a court should not lightly make a finding on the balance of probabilities that the bankrupt was guilty of conduct constituting an offence under the Bankruptcy Act (cf Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 362).

Counsel for the respondent however submitted that I should treat the proceedings before me as proceedings for an offence as those words are used in s 34A and thus apply a more exacting standard of proof of beyond a reasonable doubt.

I was referred to a decision of the Appeal Division of the Prince Edward Island Supreme Court in Canada (McQuaid, Campbell and Mitchell JJ) in Re Petroleum Products Act (1986) 33 DLR (4th) 680 where it was held that the word offence as used in the Canadian Charter of Rights and Freedoms should be construed as relating to a statutory breach consequent upon a finding of mens rea and thus of a nature essentially criminal and not broadly involving a breach of statute, not involving any criminal importance. I find the case quite inapplicable to construing the provisions of s 34A of the Act.

I was referred also to Witham v Holloway (1995) 183 CLR 525 in which the High Court held that all proceedings for contempt whether for civil or criminal contempt should be realistically seen as criminal and both had to be proved beyond reasonable doubt.

Witham v Holloway may perhaps be treated, at least in the absence of a statutory provision to the contrary, as applicable by analogy to cases which, while not involving a contempt of court, might be treated similarly. Literally, Witham v Holloway is concerned only with proceedings for contempt of a court order. Failure on the part of a bankrupt to comply with a direction of the trustee to produce assets does not amount to any contempt of court at all in that the trustee's direction is not an order of the court. It is true that, if the Court made an order against the bankrupt requiring the bankrupt to provide to the trustee some asset, failure to comply with that order could involve proceedings thereafter arising by way of contempt, but it does not follow from that, that proceedings merely to deliver up an item to the trustee in accordance with a direction of the trustee should be treated as contempt proceedings.

There seems little doubt that the reference to proceedings for an offence in s 34A refers to proceedings under the Bankruptcy Act for an offence and that, while part 14 of the Bankruptcy Act contains a list of offences in respect of which proceedings might be brought, that part is not an exclusive code of all actions which constitute an offence. On the facts of the present case, as will be shortly noted, a failure to deliver up items of property to the trustee when required so to do, would constitute an offence under s 265(1)(c) punishable upon conviction by imprisonment for a period not exceeding one year. However, jurisdiction is not conferred upon this Court to hear a prosecution under that section.

In my view the combined effect of s 30 and s 34A is that, where proceedings are taken by a trustee for an order of the Court that a bankrupt deliver up property, those proceedings are not proceedings for an offence and, accordingly, the provisions of s 34A apply to them a standard of proof on the balance of probabilities. I think that the same result follows if proceedings are brought in the Court to commit a bankrupt to prison relying upon s 30(5)(d) as it is difficult to view those proceedings as being proceedings for an offence. Accordingly, it seems to me that the provisions of s 34A apply just as much if an order is sought under s 30(5)(d) as where an order was sought under s 30(5)(c). In neither case are the proceedings brought in the Court for an offence. They are proceedings brought having regard to the general powers of the Court enumerated in s 30.

I my view the correct approach to take is to treat the present proceedings as involving the civil standard of proof but to have regard to the seriousness of the charges made and the consequences of them in applying the civil standard in the same way as the High Court did in deciding Neat Holdings Pty Limited v Karajan Holdings Pty Limited, to which reference has been made.

THE ROLEX WATCH

The major part of the case for the trustee went to the question whether Mr Fitz-Gibbon owned, as at 17 June 1997, a real gold Rolex watch having, at least, considerable value.

At the time of filing his Statement of Affairs, Mr Fitz-Gibbon disclosed in that statement a watch showing a value of $300. It is not suggested that that watch, as disclosed, was the solid gold Rolex watch which the trustee alleges Mr Fitz-Gibbon owned. According to Mr Fitz-Gibbon, at the time of that Statement of Affairs, he owned three watches. The first was a watch he had received for his 21st birthday with a black face and gold band, to which reference will later be made (the "Dress Watch"); the second watch which Mr Fitz-Gibbon owned was a fob watch which he had received from his grandfather and the third was, he says, a fake Rolex watch.

It is common ground between the parties that Mr Fitz-Gibbon had purchased an original gold Rolex in Hong Kong when he was on honeymoon with his wife in 1973. However, it is Mr Fitz-Gibbon's case that that watch was stolen in circumstances which will later be narrated and thereafter the only Rolex watch which he owned was a fake.

The existence or potential existence of the Rolex watch came to the knowledge of the trustee as a result of conversations which Mr Andrew Wily and Miss Halpin had with a Mr Hudson who had for a long time before they fell out been a close friend of Mr Fitz-Gibbon.

According to Mr Hudson, he had sought an interview with the trustee to assist in recovering money which Mr Fitz-Gibbon owed him for rent. Mr Hudson said he was given the trustee's name and address around the time that an order was made in his favour by the Rental Tribunal. Mr Fitz-Gibbon paid Mr Hudson rent in approximately June 1997. He then met with Miss Halpin an employee of Mr Wily who, after advising that nothing could be done about the Rental Tribunal order asked various questions.

Mr Andrew Wily's evidence of at least a meeting he attended concentrated on the allegations that Mr Hudson had made rather than on Mr Hudson seeking assistance. I do not regard this as involving any real controversy between the two witnesses. It seems clear enough that the matter Mr Hudson raised with Mr Andrew Wily was in small compass. There is no doubt that the majority of the meeting related to allegations which Mr Hudson had made about the activities and acts of Mr Fitz-Gibbon. Mr Wily accepted that it appeared the major reason that Mr Hudson was there was to make allegations about Mr Fitz-Gibbon. That may well have been Mr Hudson's motivation in attending upon Mr Andrew Wily. I shall deal later with Mr Hudson's evidence and questions raised by Mr Fitz-Gibbon as to his credit..

Alerted by Mr Hudson to the existence of possible assets not disclosed to the trustee, Mr Andrew Wily caused a letter to be written requiring Mr Fitz-Gibbon to attend to answer questions. It seems clear enough that this letter was written with particular regard to the evidence that Mr Hudson had given. When the meeting occurred it should not, in my view, be seen as the "ambush" which Mr Fitz-Gibbon alleges it was. It involved, rather, an attempt on the part of Mr Andrew Wily to obtain relevant information about assets which he believed might well be held by the bankrupt.

On behalf of the trustee evidence was given by both Miss Halpin and Mr Andrew Wily concerning the meeting on 17 June. Miss Halpin, in the meantime, had moved to Hong Kong. The trustee offered to make her available in Hong Kong by video link. Ultimately, counsel for Mr Fitz-Gibbon agreed that she not be cross examined. There is no suggestion that her evidence is in any way challenged.

Miss Halpin was in the boardroom of Armstrong Wily & Co when Mr Fitz-Gibbon was shown in. It is common ground that, as soon as he took a seat in the boardroom, Mr Fitz-Gibbon was handed a copy of the letter of 17 June to which reference has already been made. Miss Halpin says that, when Mr Fitz-Gibbon entered the boardroom, she intentionally observed his wrists to determine whether he was wearing a wristwatch. This was obviously enough in the context of the allegation which she knew had been made by Mr Hudson that Mr Fitz-Gibbon was the owner of a gold Rolex watch. She says that she immediately noticed that Mr Fitz-Gibbon was "wearing on his left wrist a gold watch which had a rather chunky linked chain band".

A similar observation was made by Mr Andrew Wily whom counsel for Mr Fitz-Gibbon submitted "I should treat as a witness of truth". Indeed, I do accept his evidence. In his affidavit Mr Andrew Wily deposed to having made a point of observing Mr Fitz-Gibbon when the two met in the boardroom to ascertain whether Mr Fitz-Gibbon was wearing a watch which was, or looked like, a gold Rolex watch. He said that he observed Mr Fitz-Gibbon's wrists and noticed that he was wearing a gold coloured watch with a chain type band. In another affidavit sworn later, Mr Andrew Wily deposed to believing the watch to be a gold Rolex watch.

Mr Andrew Wily was cross examined, apparently with the view to demonstrating that Mr Wily had not really had an opportunity to form a view one way or the other as to the nature of the watch. However Mr Wily was adamant that Mr Fitz-Gibbon was wearing a Rolex and, given the context in which he made the observation, namely that he was looking to ascertain whether Mr Fitz Gibbon was or was not the owner of a gold Rolex watch. It is in my view quite clear that Mr Wily did observe the watch and formed the view that it was a gold Rolex. It seems not of great significance, although some time was taken up in cross examination about it, whether Mr Wily observed the watch when Mr Fitz-Gibbon was standing, when he was sitting in the circumstances where the sleeve of Mr Fitz-Gibbon's jacket was rolled up or both.

Mr Fitz-Gibbon had, so he says, and there is no reason to disbelieve him, a bladder complaint and, in the result, after quickly perusing the letter, went to the toilet. According to Mr Wily he was there approximately two minutes. Mr Fitz-Gibbon estimated the time as approximately five minutes. Nothing really turns on what time elapsed. What is important is, that when Mr Fitz-Gibbon re-entered the boardroom, no watch was visible on his wrist. Mr Fitz-Gibbon may have pushed the watch up his arm so that it was no longer visible, or removed it. I think it unlikely that he merely pushed the watch up his arm and thus out of sight, but again nothing turns on this. The watch could no longer be seen.

Both Mr Andrew Wily and Miss Halpin observed the absence of a watch on Mr Fitz-Gibbon's arm. They questioned why it was that he was wearing a watch when he went to the toilet and came out without one. Mr Fitz-Gibbon asserted that he had not worn a watch. In doing so, he lied, as he now admits. He said that he did not own a Rolex watch but had a false one at home. Mr Andrew Wily called the police. Subsequently, two police officers arrived. Mr Wily asked Mr Fitz-Gibbon if he would consent to a search and Mr Fitz-Gibbon replied that he would not. Ultimately the police left without a search being conducted. Later a solicitor, a Mr Schneider, questioned Mr Fitz-Gibbon about the watch and was told both that Mr Fitz-Gibbon did not own a gold Rolex watch and that he had not worn a watch when he came to the meeting and did not have a watch on him. Mr Fitz-Gibbon indicated that he had a fake gold Rolex watch at home which he would deliver to Mr Schneider but that he was not prepared to submit to a search or empty his pockets as a matter of principle.

Finally, Mr Andrew Wily showed Mr Fitz-Gibbon some photographs which Mr Hudson had provided and which Mr Hudson had said showed Mr Fitz-Gibbon wearing the gold Rolex watch at a function. Mr Andrew Wily said to Mr Fitz-Gibbon that the watch in the photo was the original gold Rolex, not a fake. Mr Fitz-Gibbon said that the watch in the photo was merely a fake.

Mr Fitz-Gibbon's evidence before the Court accepted that he was wearing a watch at the meeting with Mr Andrew Wily. However, he said that the watch he was wearing was a watch that he had been given for his 21st birthday ("the Dress Watch"). The watch had a black face and in no way remotely resembled a gold Rolex. The watch which Mr Fitz-Gibbon said he had been wearing was produced to me and, so far as is relevant, looks nothing like a gold Rolex watch of the kind shown in a catalogue in evidence nor would it be likely to be mistaken for a gold Rolex watch by an observer seeking to look at it, albeit from a distance. It is, however, fair to say that the band, close up, appears chunkier than it does at a distance.

It was Mr Fitz-Gibbon's case that both Miss Halpin and Mr Andrew Wily were mistaken if they thought the watch on his wrist was a gold Rolex. It was in this context that I asked Mr Wily to look at the fake Rolex watch which, in appearance, was indistinguishable from a real Rolex watch and to tell me whether the watch he saw on Mr Fitz-Gibbon's wrist looked like the fake Rolex. Mr Wily's evidence was: "I wouldn't be able to identify clearly your Honour whether that was or was not the watch. It looks similar to a watch like that but I would not know whether that was the one or not."

The substance of that evidence makes it clear beyond doubt that, so far as Mr Wily is concerned, what he saw on Mr Fitz-Gibbon's wrist was not the dress watch given to Mr Fitz-Gibbon on his 21st birthday but a watch which had the appearance of a gold Rolex whether fake or otherwise.

Since subsequently Mr Fitz-Gibbon went to his home with Miss Halpin and another employee of Armstrong Wily & Co and produced from a drawer in the bedroom the imitation Rolex watch, it must be concluded that the watch which Mr Fitz Gibbon wore at the commencement of the interview was neither the dress watch nor the fake Rolex but another watch which appeared to be a gold Rolex. The conclusion is inevitable that Mr Fitz-Gibbon must therefore have worn the original gold Rolex.

It is necessary, now, to refer to the evidence of Mr Hudson, the evidence of Mrs Fitz-Gibbon and Mr Fitz-Gibbon's account of what happened to the original gold Rolex.

Mr Hudson had known Mr Fitz-Gibbon for some 28 years in various social contexts. They were good friends and met for lunch on a weekly basis over much of that time. There hardly seems to be a dispute that Mr Fitz-Gibbon had shown to Mr Hudson the original gold watch many years earlier. Mr Hudson in his affidavit said that he had observed Mr Fitz-Gibbon regularly wearing the watch since then at various functions. As far as Mr Hudson was concerned, he had never observed Mr Fitz-Gibbon wearing an imitation Rolex watch.

Mr Hudson was the subject of extensive cross examination. I shall return later to make findings on credit. Although Mr Hudson was, and I think honestly, convinced that Mr Fitz-Gibbon always wore the original gold Rolex watch and not a fake, it seems clear from the evidence that it would not be easy to choose between a fake and an original gold Rolex watch, at least without holding the watch and seeing the inside of the back casing. I also think it is clear that Mr Fitz-Gibbon's persona was such that, even if he were wearing a fake Rolex watch, he would be unlikely to confess to that but rather to have allowed it to be understood that he was wearing an original.

There is however a part of Mr Hudson's evidence which is critical to the resolution of the present problem. It was contained in Mr Hudson's affidavit and, for that reason, counsel for Mr Fitz-Gibbon submitted that I should not accept it as truthful. However, I must say that Mr Hudson struck me as being a truthful witness and a person who was not likely to be lying on oath.

Mr Hudson said early in his cross examination that he had had a conversation with Mr Fitz-Gibbon approximately two years ago in the context of Mr Fitz-Gibbon's financial difficulties. The discussion proceeded to the question whether Mr Fitz-Gibbon should in the circumstances sell the Rolex watch and, in the course of that discussion, a figure of $12,000 was mentioned by Mr Hudson as the value of the watch and confirmed by Mr Fitz-Gibbon.

Later in the cross examination after Mr Hudson had observed that at no time had Mr Fitz-Gibbon mentioned an imitation Rolex watch and Mr Hudson's belief that, for Mr Fitz-Gibbon to wear a fake, would be out of character, the cross examiner returned to the conversation to which reference has already been made. The cross examination proceeded as follows:

Mr Watts: ... "you earlier told us that you had a conversation with the respondent where he was in financial circumstances and what did he say to you then? He mentioned the $12,000 figure you said?"

Mr Hudson: "We lunched regularly at the Lane Cove Businessmen's Club. I was aware that Peter was having problems with the Law Society. We had discussed those problems in general terms, rather than specific terms. Peter at that point in time was finding it difficult to pay rent and was residing in my home with a flat mate. A discussion came up with the watch which he was wearing at the time and I asked him at the time, why didn't he just sell the watch? My recollection of the conversation is that he had to maintain some sort of presentation as he was going for job interviews at the time and he would not sell the watch. The figure of $12,000 was initiated by me when I said: `Is it still worth $12,000?' I seem to recall that the figure that I was given was higher than $12,000 but I don't remember the figure that I was given so it interested me that you said $20,000 at that point and the watch was still in existence at that point of time and still considered to be worth $12,000 at that time by Mr Fitz-Gibbon."

Mr Watts: "I put to you that conversation never occurred, Mr Hudson?"

Mr Hudson: "Then you may do so but it did."

I accept that such a conversation did occur and it follows from that conversation that I would find that at the time the conversation occurred Mr Fitz-Gibbon did own a gold Rolex watch, whether or not he also at that time owned a fake.

Mr Fitz-Gibbon gave to the Court an account of the circumstances under which he said the original gold Rolex watch was stolen. The event according to Mr Fitz-Gibbon occurred around 1988 when Mr Fitz-Gibbon visited a place with a view to having a casual meeting with another man. Mr Fitz-Gibbon says that he was approached by a young man out of the blue who threatened him with a knife and stole the watch and some clothes. Mr Fitz-Gibbon says that he did not confide in Mr Hudson or his wife about the loss of the watch. His wife at that time was unaware that he was homosexual. Mr Hudson was of a similar sexual persuasion but, because the whole matter was embarrassing, Mr Fitz-Gibbon did not mention the loss of the watch to him.

Mrs Fitz-Gibbon gave evidence. She was fairly distraught and gave the impression that her life had been shattered by two events; the first, the fact that her husband had been struck off as a solicitor and in consequence she suffered financial hardship and, the second, that her husband and father of her children turned out to be homosexual. She remembered Mr Fitz-Gibbon having purchased an original gold Rolex watch on their honeymoon and, as far as she was concerned, he had always had it. She was not aware of a fake Rolex being owned by her husband, nor had she been told that it had been stolen.

Although I am prepared to accept that Mr Fitz-Gibbon would be embarrassed to relate the circumstances in which he lost a watch, I think it is more probable than not that Mr Fitz-Gibbon did not lose the watch as he said but rather continued to own it as he told Mr Hudson, at least two years ago.

In summary, I am of the view that the following findings of fact should be made:

1. Mr Fitz-Gibbon purchased, when on honeymoon with his wife, a gold Rolex watch.

2. At some stage he purchased as well a fake Rolex watch.

3. Whatever the circumstances might be when he wore the fake watch as against the solid gold watch (and from his own evidence, these obviously included circumstances of travel) Mr Fitz-Gibbon continued to own the solid gold Rolex watch up until the date of the meeting on 17 June.

4. The watch Mr Fitz-Gibbon wore at the meeting on 17 June and removed in the toilet was a Rolex watch and not the dress watch which Mr Fitz-Gibbon alleged it was.

5. Both Mr Wily and Miss Halpin make it clear that the watch they observed on Mr Fitz-Gibbon's wrist was a Rolex watch.

6. Mr Fitz-Gibbon discussed the possible sale of the Rolex watch with Mr Hudson in 1996, a matter quite antithetical to the evidence of Mr Fitz-Gibbon.

Before turning to deal with the question of the paintings and the Lladro figurine, I propose now to set out my findings on credit in relation both to Mr Fitz-Gibbon and Mr Hudson.

THE CREDIT OF MR HUDSON

I accept the submission of counsel for Mr Fitz-Gibbon that Mr Hudson was an intelligent witness. I do not, however, accept that Mr Hudson invented his oral evidence to bolster the case that he wished to put against Mr Fitz-Gibbon.

Counsel for Mr Fitz-Gibbon relied upon the fact that Mr Hudson at the commencement of cross examination had been asked whether there was any material fact or matter not included in his affidavit and had responded that there was not, according to his knowledge. From this I was asked to conclude that when Mr Hudson gave oral evidence of the conversation about the potential sale of the watch two years previously, a conversation not included in the affidavit filed, that evidence should be rejected because not included in the affidavit. With respect, most witnesses asked that question, will respond that the affidavit is complete although their memory may well be jogged by questions later put to them. I think that is the case with Mr Hudson.

In essence, I was asked to conclude that Mr Hudson deliberately set out to invent evidence to hurt Mr Fitz-Gibbon. That is not the impression Mr Hudson gave to me in the witness box. It is true that Mr Hudson's evidence suggests it was easier to tell the difference between a fake Rolex and an original than it seems to me to be the case. It is true also that he referred to having friends who, over the years, wore Rolex watches but refused to name those friends other than to say that most of them were persons he had seen at Mr Fitz-Gibbon's Australia Day party. In my view these were not matters of significance.

In my view, Mr Hudson believed that Mr Fitz-Gibbon at all times wore a gold Rolex watch and that he had done so at a function at which photos were taken and which photos were in evidence. It may be, and it is unnecessary to make a finding to this effect, that Mr Hudson was sometimes mistaken and that, at least on some occasions, Mr Fitz-Gibbon did wear a fake Rolex watch instead of an original. However, having regard to my observations of Mr Hudson in the witness box and the manner in which he gave his evidence, I am of the view that he did so truthfully. I accept of course that Mr Hudson and Mr Fitz-Gibbon have fallen out as friends. But I do not accept that Mr Hudson in consequence was prepared to lie under oath to hurt Mr Fitz-Gibbon.

MR FITZ-GIBBON'S CREDIT

There is no doubt that Mr Fitz-Gibbon had a real interest in the litigation. He made it clear that, whichever way I found, there was no way the watch could be returned. No doubt that is consistent with his evidence, if I accepted it, that he did not own a Rolex watch now and had not owned such a watch as at 17 June 1997. There are of course many matters which can be pointed to which affect adversely Mr Fitz-Gibbon's credit. Although not determinative of his lying under oath before me, counsel for the trustee pointed to the fact Mr Fitz-Gibbon had been struck off as a solicitor for offences involving dishonesty, particularly deceiving the Commissioner of Stamp Duties by altering amounts on contracts for sale of properties. It was common ground that Mr Fitz-Gibbon had not contested the proceedings taken by the Law Society against him and did not offer any evidence on his own behalf. He said the particulars in several matters were incorrect but it was pointless arguing them. However, it can be accepted that there is no suggestion that Mr Fitz-Gibbon had in the proceedings brought against him by the Law Society lied on oath.

Next, it is quite clear that Mr Fitz-Gibbon lied to Mr Andrew Wily and Miss Halpin about having a watch on his wrist at the commencement of the 17 June meeting. I find it difficult to accept that this lie was prompted by a fear that Mr Wily would demand surrender of the watch which was a 21st birthday present, a watch quite obviously of little or no value. The more likely explanation would seem to be that Mr Fitz-Gibbon was aware that he was to be asked questions about a gold Rolex watch, was wearing it and took steps to conceal it from the trustee.

It is also difficult to accept that, if Mr Fitz-Gibbon had had the original stolen, he would have failed to confide in his friend of long standing of similar sexual orientation even if it was quite understandable that he would not have confided in his wife.

I have formed the view from these matters and from listening to Mr Fitz-Gibbon's evidence in the witness box that I would not lightly accept his evidence except where corroborated.

THE PAINTINGS

The question of the existence of artworks appears to have arisen between Mr Fitz-Gibbon and Mr Wily around April 1996.

In a letter dated 23 April Mr Fitz-Gibbon referred to his tax returns which disclosed a number of paintings. He said in that letter:

"None of the paintings were by `known artists'. They were purchased because we liked them. A number of the paintings were purchased as gifts for my wife but, be that as it may, my wife and I divided the artworks between us at separation. The two paintings I received were stored on the floor in my mother's garage. I was unaware at the time that, after heavy rain, the garage floor was subject to flooding and both pictures were sufficiently damaged to be of no value and have been disposed of."

To the best of my recollection the remaining paintings could be described as follows:

(a) An artist's proof of birds in blue and orange

(b) A billabong scene

(c) A small girl in white disappearing into the distance."

The trustee obtained at some stage a valuation of six paintings (as at 8 July 1997). That valuation described the paintings as follows:

"I would like you to look at these photos and verify that the painting showing in the background is the painting presently on the wall in the lounge room of my wife's home and that you can identify various furniture in the photos that indicates that the wall is the wall in my wife's lounge room.

She said, "Yes, I can recognise the painting in the photographs and I can see from the photos that it was hanging in that location."

I accept that the two Canadian paintings were bought by Mrs Fitz-Gibbon and are not in any way assets of Mr Fitz-Gibbon.

There seems to be little doubt that on at least four occasions, Mr Hudson accompanied Mr Fitz-Gibbon when paintings were purchased from the Rotary Club annual art exhibition at Lane Cove Town Hall. It seems clear enough that on each occasion Mr Fitz-Gibbon paid for the paintings from his own funds. In response to a question from the bench, Mr Fitz-Gibbon agreed that at no time did he have any conversation with his wife about the ownership of the paintings and at least his evidence would suggest that he did not make any gifts of the paintings to his wife. That would be consistent with the income tax returns which showed the paintings as his assets and not assets of his wife. It is inconsistent that his wife's evidence that the paintings were given to her wrapped up as presents.

Mr Fitz-Gibbon carried on practice at home, that is to say, his office was in his home and paintings were from time to time obviously hung in that part of the home which was used as his office.

Shortly after Mrs Fitz-Gibbon had learnt of the investigation by the Law Society into her husband's affairs, she called Mr Hudson to the home. At that stage Mr Fitz-Gibbon was away skiing with his sons. Mrs Fitz-Gibbon asked Mr Hudson to take delivery of the paintings and store them at his house. Mr Hudson had a trailer which was available for use in this exercise. Mrs Fitz-Gibbon did so because she was of the view that it was likely that her house would be sold and she would lose everything. Apparently, at that stage, she realised also that the marriage was at an end. She was apparently, and understandably, visibly upset.

It is not quite clear from Mr Hudson's evidence how many paintings he took with him. Ultimately, he returned all the paintings to Mrs Fitz-Gibbon. Mr Fitz-Gibbon was questioned about the paintings at the meeting of 17 June. According to both Miss Halpin and Mr Andrew Wily, Mr Fitz-Gibbon admitted having purchased the painting from his own money but said, somewhat inconsistently:

"but the paintings were purchased using joint income and were jointly owned by me and my wife under the Family Law Act."

Apparently Mr Wily asked how many paintings were purchased; to which Mr Fitz-Gibbon replied:

"about eight paintings were purchased. Three or four of them were mine and three or four of them were my wife's. The paintings which were mine were damaged by flooding as the result of heavy rain and have been the subject of previous correspondence. I stored the paintings from my wife at Mr Hudson's about 18 months ago, however I returned them to her before I became a bankrupt."

In his affidavit filed in the proceedings Mr Fitz-Gibbon gave an alternative view of the conversation. His version was that he said:

"the three or four paintings in my wife's possession are paintings I purchased as birthday and other occasions presents for my wife (sic) and they represent approximately half the original paintings which were in the house and home office and, even if they had not been presents, my wife would have been entitled to half the artworks anyway as a joint owner of the home and its contents"

According to Mr Fitz-Gibbon it was Mr Andrew Wily who raised the question of the Family Law Act. Mr Fitz-Gibbon affirmed a version about the paintings in a letter dated 18 June 1997, the day after the 17 June meeting which letter was in the following terms:

"Various paintings: I had a number of prints on the wall of the rented premises and one original painting belonging to my wife. She had provided it to me to help `cheer up a rather dowdy rented premise'. That has now been returned to her and hangs on her lounge room wall.

I understand that Mr Hudson has alleged that certain paintings were stored by myself in his property and under his custody in the last few months. This is a total lie; the incident involving storage of paintings is as follows:

In September-October of 1995 while I was absent with my son skiing, my wife took it on herself to go through my personal papers and in consultation with Mr Hudson removed from the matrimonial home paintings and other items of value that she claimed exclusive ownership of. The paintings were stored in Mr Hudson's home. When I returned from my skiing trip I was extremely annoyed and demanded their return. My wife refused and, as our marriage was at that point breaking down, I chose not to pursue the issue. The paintings were subsequently delivered by Mr Hudson to my wife and remained in her possession. ... It was arguable that, even though I had given a number of the paintings to my wife as presents that I may have had some interest in them as part of a joint estate, however, as the division of the paintings that my wife claimed were hers and those that could be reasonably regarded as being owned by the `practice' was approximately equal, I did not pursue the matter."

It is clear from Mr Fitz-Gibbon's oral testimony that he neither made present to his wife of the paintings nor in any way agreed to some division of them. As far as his evidence is concerned, it seems fairly clear he regarded the paintings as his but no doubt was content to leave them in the possession of his wife rather than lose them to the trustees.

But for the fact that Mrs Fitz-Gibbon, who is not a party to the proceedings, claims to be entitled to the paintings by way of gift, I would have had little difficulty in finding as against Mr Fitz-Gibbon that the paintings were his.

There is, however, a real question as to whether it is appropriate where Mrs Fitz-Gibbon claims an interest in the paintings as owner and is not a party that I should make a declaration dealing with ownership or, for that matter, orders that Mr Fitz-Gibbon transfer the assets in question to his trustee.

In News Limited v Australian Rugby Football League Limited [1996] FCA 1256; (1996) 64 FCR 410 at 523ff a Full Court of this Court considered the problem arising where all parties necessary to determine a point in issue were not before the Court. While in Pegang Mining Co Limited v Choong Sam [1969] 2 MLJ 52 at 55-6 in a passage approved by the Full Court, Lord Diplock in delivering the opinion of the Judicial Committee of the Privy Council indicated that it was undesirable to lay down general propositions applicable to all cases, his Lordship expressed as a relevant test the question whether the rights of a person against all liabilities to any party to the action in respect of the subject matter of the action were directly affected by any order which might be made in the action. As the Full Court in the News case said:

"An order which directly affects a third person's rights against or liabilities to a party, should not be made unless the person is also joined as a party. If made, the order will be set aside."

It is clear as the Full Court in that case indicated that there will be cases where the question of whether a party ought to have been joined because a necessary party can sometimes be difficult. However, their Honours accepted that one such case would be where the orders sought establish or recognise propriety interests, inter alia, in chattels. The present in my view is such a case. In my view, for the ownership of the paintings to be established (and questions of setting aside any gift alleged to have been made under the Bankruptcy Act may also arise) as a matter of practical reality, it is necessary that Mrs Fitz-Gibbon be a party so that all matters in issue can be determined. In my view, for me now to make an order in these proceedings, without Mrs Fitz-Gibbon being joined, would involve the Court directly affecting her rights without her being a party.

Accordingly, I do not propose to proceed further in determining the question regarding the paintings but rather to adjourn. I will make directions that Mrs Fitz-Gibbon be joined to the balance of the proceedings involving the paintings to permit that question properly to be decided, on the assumption that the parties still wish to proceed with it.

THE LLADRO FIGURINE

According to the letter dated 18 June which Mr Fitz-Gibbon wrote to Armstrong Wily & Co following upon the meeting held the day before, there was only one figurine and it belonged to his wife as a present for her birthday. It was, Mr Fitz-Gibbon said, purchased in Vanuatu in September 1982. In evidence Mr Fitz-Gibbon produced a passport showing that he was indeed in Vanuatu in September 1982 and at the time it was his wife's birthday and their wedding anniversary. Mrs Fitz-Gibbon confirmed that evidence. Although if I were to find otherwise the question whether Mrs Fitz-Gibbon should have been joined would have arisen, since I am of the view that the evidence clearly makes it evident that the figurine belonged to Mrs Fitz-Gibbon there is no reason to do other than dismiss the application to the extent of the figurine.

There is however a minor discrepancy. There appear to have been two Lladro figurines not one. In a letter dated 23 April 1996 when the topic of a Lladro figurine was initially raised, Mr Fitz-Gibbon said that he had some six years earlier transferred a Lladro figurine to his mother but way of security for a debt of $1,000. He says that the Lladro figurine was later apparently returned to him but had been broken by a cat some three or four years earlier. The discrepancy appears therefore not to be relevant.

In the circumstances, it is my view that the trustee has not established to the requisite standard that Mr Fitz-Gibbon owned a Lladro figurine which, pursuant to the trustee's direction, should be delivered up to the trustee.

In the circumstances, I would make the following orders:

1. That the bankrupt, Peter Gerald Fitz-Gibbon comply with the requirement of the applicant that he deliver to the applicant a gold Rolex watch within seven days of the service upon him of a sealed copy of the order in the present proceedings.

2. That there be reserved as a separate question for consideration of the Court the question whether the paintings referred to in the letter dated 17 June 1997 from the applicant to the bankrupt are property of the bankrupt within the meaning of those words in the Bankruptcy Act and, if so, whether an order should be made pursuant to that Act that there be delivered up to the applicant those paintings.

3. For the purposes of the determination of the separate issue, Mrs Maree Fitz-Gibbon be joined as a party, that the applicant file an amended application accordingly and that the matter then be returnable before the Court for further directions on 1 April 1998 at 9.30 am.

4. That, save and except as herein dealt with, the application of the trustee dated 25 June 1997 be dismissed.

5. That, when the matter is listed before the Court for directions following the service of Mrs Fitz-Gibbon, the parties have leave to file submissions as to the appropriate orders as to costs which should be made.

I certify that this and the preceding twenty-eight (28)

pages are a true copy of the Reasons for Judgment

herein of the Honourable Justice Hill

Associate:

Dated: 2 March 1998

Counsel for the Applicant: J.K. Chippindall

Counsel for the Respondent: M.J. Watts

Solicitor for the Applicant: Michell Sillar

Solicitor for the Respondent: in person