Ritson v Commissioner of Police, New South Wales Police Force

Federal Court of Australia|2021-09-24|Before: Halley J

Order 3 made in these proceedings on 24 September 2021 is vacated.
The interlocutory application dated 2 September 2021 is otherwise dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 The appellant, Brendan Ritson is a bankrupt. 2 On 12 August 2021 the Federal Circuit Court made a sequestration order against Mr Ritson's estate (sequestration order) pursuant to a creditors' petition filed on 16 August 2019 and again on 5 December 2019 (creditor's petition) moved on by the New South Wales Commissioner of Police (Commissioner): Commissioner of Police (NSW) v Ritson (No 5) [2021] FCCA 1835 (Ritson 5). The primary judge also made an order on that date pursuant to s 52(3) of the Bankruptcy Act 1966 (Cth) (Act) that all proceedings under the sequestration order be stayed for a period of 21 days. 3 The hearing of the proceedings leading to the making of the sequestration order was conducted on 14 April 2021 and 5 May 2021, following which Mr Ritson filed further written submissions and judgment was reserved. 4 On 30 July 2021, Mr Ritson filed an interim application seeking leave to re-open his case to rely on an additional affidavit and an order pursuant to rule 14.04 of the Federal Circuit Court Rules 2001 (Cth) (FCCR) that he be ordered to produce to the Court certain documents in his possession that had been produced to him by Optus in separate proceedings (Optus Documents). 5 On 5 August 2021, the primary judge made orders granting Mr Ritson leave to reopen his case to rely on the further affidavit, a bundle of documents and a valuation document annexed to Mr Ritson's submissions filed on 4 August 2021, but otherwise dismissed Mr Ritson's interim application: Commissioner of Police (NSW) v Ritson (No 6) [2021] FCCA 1942 (Ritson 6). 6 On 2 September 2021, Mr Ritson filed a notice of appeal in which he appealed from the whole of the judgment and all of the orders made in Ritson 5 and orders 2 and 3 made in Ritson 6. The appeal has not yet been fixed for hearing. 7 By an interlocutory application, also dated 2 September 2021, Mr Ritson seeks pursuant to rule 36.08 of the Federal Court Rules 2011 (Cth) (FCR) an order that proceedings under the sequestration order made by the primary judge be stayed pending the determination of his appeal (Application). 8 The Application is supported by affidavits of Mr Ritson dated 3 September 2021, 9 September 2021 and 23 September 2021. The affidavits were unsworn but at the commencement of the hearing of the Application on 24 September 2021, after being sworn in, Mr Ritson confirmed that the contents of each affidavit was true and correct. 9 At the conclusion of the hearing of the Application on 24 September 2021 I made orders suspending the operation of the sequestration order to the extent necessary to permit Mr Ritson to pursue proceedings that he had instituted in the Queensland Civil and Administrative Tribunal. 10 These are my reasons for making those orders.

Relevant principles 11 Section 52(3) of the Act enables a court that has jurisdiction in bankruptcy, if it thinks fit, and upon such terms and conditions as it thinks proper, to stay all proceedings under a sequestration order for a period not exceeding 21 days. The stay granted by the primary judge therefore expired on 2 September 2021. 12 Where an appeal to this Court from another court has been instituted, s 29 of the Federal Court of Australia Act 1976 (Cth) gives this Court the power to order, on such conditions (if any) as it thinks fit, "a stay of all or any proceedings under the judgment appealed from" and to suspend the operation of any orders to which the appeal relates. 13 Rule 36.08 of the FCR provides that: Stay of execution or proceedings under judgment appealed from (1) An appeal does not: (a) operate as a stay of execution or a stay of any proceedings under the judgment subject to the appeal; or (b) invalidate any proceedings already taken. (2) However, an appellant or interested person may apply to the Court for an order to stay the execution of the proceeding until the appeal is heard and determined. … 14 As explained by Katzmann J in James v Commonwealth Bank of Australia (2015) 236 FCR 379; [2015] FCA 582 at [8]: The Court's discretion is broad, limited only by the subject matter, scope and purpose of the legislation. As Beach J observed in Endresz v Australian Securities and Investments Commission [2014] FCA 1139 at [14]-[16], generally, all that is required is that the applicant show that there is "a reason or an appropriate case" to warrant the exercise of the discretion in his or her favour (Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65 at 66), which in turn requires the consideration of two questions: first, whether there is an arguable point in the appeal (Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494 (Nolten) per Kenny J at [24]) or some "rational prospect of success" on any of the grounds of appeal (Burns v AMP Finance Ltd [2005] FCA 761 per Emmett J at [5]); and secondly, whether the balance of convenience favours the grant of a stay (Nolten at [24]).

Background 15 This proceeding has a complex procedural history, insofar as there are a number of related proceedings and intersecting claims. I set out below only so much of the background as is required for the purposes of this application. 16 On 27 September 2013, orders were made by Garling J in the Supreme Court of New South Wales in Ritson v Commissioner of Police [2013] NSWSC 1396 (Supreme Court proceedings), including an order that Mr Ritson pay the Commissioner's costs of the proceeding (Costs Order). A costs certificate was subsequently issued, which the Commissioner filed as a judgment in the Local Court of New South Wales (Local Court): Ritson v Commissioner of Police, New South Wales Police Force (No 2) [2021] FCA 93 (Ritson 2) at [6] (Markovic J). 17 On 30 October 2015, the Commissioner recovered a judgment of $43,966.79 against Mr Ritson in the Local Court: Ritson v Commissioner of Police, New South Wales Police Force (No 3) [2019] FCA 853 (FCA Appeal) at [1] (Lee J). 18 On 10 October 2016, Mr Ritson filed an application in the Queensland Civil and Administrative Tribunal (QCAT) against Mr Jonathan Ryan to recover debts owed by him to four persons who had assigned their interest in those debts to Mr Ritson (QCAT proceeding): see Ritson v Ryan [2021] QCATA 100 (Ritson v Ryan) at [6] (Gordon M). The amount claimed by Mr Ritson in aggregate was $16,513, inclusive of interest. 19 On 5 January 2017, the claim advanced in the QCAT proceeding was dismissed by an Adjudicator: Ritson v Ryan at [9]. A number of appeals were then advanced by Mr Ritson together with applications for the claim to be struck out by Mr Ryan, which are not necessary to explain in detail: Ritson v Ryan at [9]-[19]. 20 On or about 22 March 2017, the Commissioner served a bankruptcy notice on Mr Ritson (Bankruptcy Notice): Ritson v Commissioner of Police, New South Wales Police Force (2018) 332 FLR 182; [2018] FCCA 916 (FCCA Proceeding) at [11] (Judge Smith). The Bankruptcy Notice had been issued on 7 December 2016 in an amount of $47,782.64, comprising the judgment sum of $43,966.79 in the Supreme Court proceedings and interest of $3,815.85: FCA Appeal at [2] (Lee J). 21 Mr Ritson sought to have the Bankruptcy Notice set aside but his application before the Federal Circuit Court, and his subsequent appeal to the Federal Court, were unsuccessful. 22 In the FCA Appeal, Lee J made an order that time for compliance with the Bankruptcy Notice be extended to the date of publication of his Honour's reasons. 23 On 6 June 2019, Lee J published his reasons in the FCA Appeal. 24 Mr Ritson had not complied with the Bankruptcy Notice by 6 June 2019 and accordingly he thereby committed an act of bankruptcy. 25 On 2 August 2019, the QCAT proceeding was dismissed by the Adjudicator as an abuse of process: see Ritson v Ryan at [24]. 26 In the hearing before Judge Cameron in Ritson 5, Mr Ritson deposed that he had commenced proceedings in the District Court of Queensland on 23 September 2019 seeking "general, aggravated and exemplary damages" against Mr Ryan for malicious prosecution and abuse of process. This was in relation to applications that Mr Ryan had made to the Melbourne Magistrates Court in June 2012 and December 2016 for personal safety intervention orders against Mr Ritson (District Court proceedings). 27 On 12 August 2021 the sequestration order the subject of this Application was made: Ritson 5. 28 On 18 August 2021, the Appeal Tribunal of the QCAT granted leave for Mr Ritson to appeal the 2 August 2019 decision of the Adjudicator dismissing the QCAT proceeding, and allowed the appeal: Ritson v Ryan. The Appeal Tribunal made orders remitting the proceedings for a hearing on the papers and permitting the parties to file and serve further written submissions by 4.00 pm on 15 October 2021.

Application to stay sequestration order 29 In the Application, Mr Ritson sought a stay of proceedings under the sequestration order to permit him to continue to prosecute his claim against Mr Ryan in the QCAT proceeding and recover the amount of $16,513 from him. 30 At the time that he filed the Application, Mr Ritson also sought a stay of the proceedings under the sequestration order to permit him to enforce a determination made by the acting Information and Privacy Commissioner against Mr Ryan and recover from him an amount of $2,500 in the Federal Court of Australia (Federal Court proceedings). 31 This Application initially came before me as the Commercial and Corporations Duty Judge on Friday, 3 September 2021 at which time I drew Mr Ritson's attention to the provisions of s 60 of the Act, in particular s 60(3), which provides that if a trustee has not made an election within 28 days after notice of an action being served upon him or her by a defendant or other party to an action, he or she is deemed to have abandoned the action. Mr Ritson responded that he had not yet sought to determine if his trustee (Trustee) would prosecute the QCAT and Federal Court proceedings. I stood the matter over for seven days to give Mr Ritson an opportunity to make that enquiry. 32 The Application next came before Cheeseman J, as the Commercial and Corporations Duty Judge, on 10 September 2021, initially for case management and then subsequently for the hearing of the interlocutory application. Ultimately, Cheeseman J did not proceed with the hearing of the interlocutory application because it became apparent that Mr Ritson had still not ascertained from the Trustee whether the Trustee proposed to prosecute or abandon the QCAT and Federal Court proceedings. Her Honour stood over the matter for further case management before the Commercial and Corporations Duty Judge on 24 September 2021. 33 In the period between 13 and 22 September 2021, Mr Ritson exchanged a number of emails with the Trustee, limited to the QCAT proceeding. 34 On 13 September 2021 Mr Ritson provided documents to the Trustee with respect to the QCAT proceeding and stated that in the event that the Trustee elected to discontinue the proceeding, or did not notify him that the Trustee had elected to prosecute the proceeding, he would proceed with his application for a stay of the sequestration order pending the determination of the appeal that he had filed. 35 On 17 September 2021 the Trustee sought clarification of a number of matters in connection with the QCAT proceeding to which Mr Ritson provided a response later that day. 36 On 22 September 2021, the Trustee provided him with written notification that having considered the material provided by Mr Ritson, including relevant sections of the Act (including ss 19(1)(k) and 60(2)) and Inspector General Practice Statement 6 - Chose in Action), the Trustee had concluded that it was not commercially sound to continue to prosecute the QCAT proceeding. The reasons given were that: the Trustee was unfunded; there was no clear indication the claim would be successful; the value of the claim was small; and there would be no commercial benefit to creditors of the bankrupt estate from a successful outcome. The Trustee gave notice that it was the Trustee's intention to elect to discontinue the QCAT proceeding. 37 The Application then came back before me as the Commercial and Corporations Duty Judge on 24 September 2021. Given the response that Mr Ritson had received from the Trustee on 22 September 2021, Mr Ritson sought to move immediately on his Application for a stay of proceedings under the sequestration order in order to permit him to continue to prosecute the QCAT proceeding.

Consideration 38 Mr Ritson submitted at the commencement of the interlocutory hearing on 24 September 2021 that he was not in a position to establish that he had an arguable case with respect to all of the grounds in the Notice of Appeal, because he was not in a position to lead evidence of all of the factual matters that he relied upon to demonstrate the existence of each of the grounds of appeal. In the circumstances, I asked Mr Ritson to identify those grounds on which he believed he had sufficient evidence to demonstrate that he had an arguable case. 39 Mr Ritson referred the Court to the first two grounds of appeal in the Notice of Appeal. Those grounds are expressed in these terms: 1. The primary judge erred in the exercise of his discretion in refusing to make an order under rule 14.04 of the Federal Court Circuit Court Rules 2001 by: (a) failing to take into account material considerations, namely: (i) there was insufficient time for an application seeking to be relieved from the implied undertaking to be heard and determined by the District Court of Queensland before the petition lapses on 16 August 2021; (ii) the court's power in relation to its own proceedings will provide the necessary scrutiny and protection against misuse of the Optus documents; (b) acting upon wrong principles, namely: (i) the proper approach is to be relieved of the obligation by the second court so as to be free to use the documents in the first court; (ii) to do otherwise would seem to be a collateral attack on the implied undertaking of confidentiality; (c) allowing the implied undertaking to fetter or restrict the Court's power in relation to its own processes in the proceedings before it. 2. The primary judge denied the appellant natural justice in refusing to make an order under rule 14.04 of the Federal Circuit Court Rules 2001 by failing to ensure that the Court's decision is reached by reference to all material, including the Optus documents, that is necessary and probative in the discharge of the court's jurisdiction and powers. 40 In Ritson 6, Mr Ritson had sought to adduce evidence of the Optus Documents, comprising telephone records, to persuade the primary judge that there was probative evidence of malice and therefore he had reasonable prospects of success in his proceeding against Mr Ryan in the District Court. 41 The primary judge declined to make orders sought by Mr Ritson on 5 August 2021 requiring him to produce documents to the Federal Circuit Court pursuant to r 14.04 of the FCCR that had earlier been produced to him by Optus on 30 June 2021 in the District Court proceedings. The primary judge stated at [17]-[18] of his reasons in Ritson 6: 17 Although in his submissions today Mr Ritson has emphasised the potentially great value that the documents Optus has produced to the Qld DCt might have for his arguments in this case, with respect to him that is not really the issue, which is one that turns on the propriety of the orders sought. 18 That concern directs attention to the nature of the order itself: should the Court, on the application of applicant A, order applicant A to produce documents? That seems to me to be a challengingly unorthodox approach to the management of a proceeding and plainly begs the question why applicant A could not bring the documents to court him or herself. The reason is apparent in this case, namely, the implied obligation of confidentiality that Mr Ritson owes in relation to the documents produced to the Qld DCt. It is true, as Mr Ritson has argued, that if someone else had served on him a subpoena requiring production of his copies of the Optus documents he would have been obliged to produce them. However, the fact that the undertaking must give way to compulsory processes engaged by a third party is quite different from a person seeking one court's order so as to escape a confidentiality undertaking they owe to another court. The proper approach is to be relieved of the obligation by the second court so as to be free to use the documents in the first court. To do otherwise would seem to be a collateral attack on the implied undertaking of confidentiality because, amongst other things, it avoids appropriate scrutiny of the issue by the court in whose proceeding production has been made. 42 The first two grounds of appeal relied upon by Mr Ritson seek, in substance, to challenge the reasoning of the primary judge at [17]-[18]. Mr Ritson submitted that the reasoning of the primary judge was inconsistent with the decision of Barker J in Clifford v Vegas Enterprises Pty Ltd [2009] FCA 1204 (Clifford) in which his Honour stated at [30]: Even without the existence of the public domain exception, this Court has the power to grant leave for the documents used in the Family Court proceedings to be used in this Court: see Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd [2008] FCA 391; Holpitt Pty Ltd v Varimu Pty Ltd (1991) 29 FCR 576; Griffiths v Duggan (No 2) [2008] VSC 230. In Griffiths at [7] and [8], the Court noted: Whether a document which is subject to an implied undertaking can be used by a party in subsequent proceedings is a matter that may potentially impinge upon the integrity and authority of two sets of judicial processes. That situation is quite different from the case where the subsequent use of a document obtained with an implied undertaking restricting its use is subject only to the continuing authority of the court which first compelled its production. In that case the party wishing to use the document can only do so if permitted by the court to which the implied undertaking is given. That is not this case. Nor is this a case in which the use of Mr Lin's affidavit may adversely impact upon my hearing and consideration of the issues in dispute before me: that dispute is finalised on all issues except costs. Whether it should be used in the second proceeding is a question which is best dealt with by the judge in the second proceeding. 43 This is not a case in which the subsequent use of the document was subject "only to the continuing authority of the court which first compelled its production". Mr Ritson was asking the primary judge in the course of the hearing to determine whether the Sequestration Order should be set aside to excuse him from compliance with the implied undertaking given by him in the District Court proceedings. 44 The primary judge stated at [55] in Ritson 5: … The determination of whose account is to be believed will depend on an assessment of the credibility of the two versions of events and of Messrs Ritson and Ryan themselves, which this Court cannot essay with any confidence in light of the nature of the evidence led in this proceeding. Put another way, any attempt by me to determine which and who is more likely to be believed in the Qld DCt would be not much better than speculation. 45 The primary judge concluded at [66]: For the reasons I have given, those circumstantial matters do not persuade me that Mr Ritson is more likely than not to persuade the Qld DCt to the degree of satisfaction appropriate to the allegations that Mr Ryan acted maliciously in bringing and maintaining the [personal safety intervention order] actions or either of them. 46 The primary judge had otherwise found that there was insufficient evidence of malice to find that the District Court proceedings would have sufficient prospects of success that the creditor's petition should be set aside: see Ritson 5 at [67]-[83]. 47 Given the reasoning of Barker J in Clifford, the relevance of Mr Ritson's prospects of success in the District Court proceedings to his application to set aside the creditor's petition before the primary judge and the potential significance of the Optus Documents to those prospects of success, I am satisfied that at least ground 1 of the Notice of Appeal is "an arguable point in the appeal" or has some "rational prospect of success" in the appeal. In particular, I am not persuaded, contrary to the reasoning of the primary judge at [18] of his reasons in Ritson 6, that Mr Ritson's application, albeit perhaps unorthodox, was "a collateral attack on the implied undertaking of confidentiality" or an attempt to avoid "appropriate scrutiny of the issue by the court in whose proceeding production has been made". Further, I am satisfied that the balance of convenience favours the suspension of the sequestration order to the extent necessary to permit Mr Ritson to maintain the QCAT proceeding. Given the confirmation from the Trustee that he proposes to discontinue the QCAT proceeding, any potential recovery in the QCAT proceeding would otherwise be lost. 48 For the reasons outlined above, I am therefore satisfied that there is "a reason" or this is an "appropriate case" to warrant the exercise of the discretion in Mr Ritson's favour to suspend the Sequestration Order, but only to the extent necessary for Mr Ritson to continue to prosecute the QCAT proceeding.

Disposition 49 The Sequestration Order should be suspended to the extent necessary to permit the appellant to prosecute the QCAT proceeding and the interlocutory application should otherwise be dismissed. I note that order 3 made on 24 September 2021 was that the interlocutory application should be dismissed. In order to reflect more accurately the result of the appellant's application that order is now to be vacated and instead an order is to be made that the interlocutory application otherwise be dismissed. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Halley.

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