Ritson v Ryan[2024] QSC 76

SUPREME COURT OF QUEENSLAND

1. [1]
   This is an application brought by the Attorney-General for the State of Queensland, as intervener, seeking the dismissal, pursuant to s 48(1)(a) or, alternatively, s 48(1)(d), of the Judicial Review Act 1991 (Qld), of an application filed by the applicant, Mr Ritson, on 10 October 2023, for judicial review under the Judicial Review Act.  The basis of the application is said to be premised on the point that the applicant does not have standing to make the application as he is a bankrupt.  On that basis, the intervener argues that it would be inappropriate for the proceeding in relation to the application filed by Mr Ritson to be continued. 
2. [2]
   Mr Ritson’s application for judicial review seeks relief by way of an order in the nature of certiorari, or alternatively a statutory order of review to firstly, set aside a decision made by Adjudicator Katter on 21 October 2021, dismissing an application Mr Ritson had made to the Queensland Civil and Administrative Tribunal (QCAT) in respect of a minor civil dispute concerning a debt and secondly, for that matter to be remitted back to QCAT for determination and reconsideration by a different Tribunal Member.  In addition, Mr Ritson also seeks, as an alternative, an order in the nature of certiorari or, alternatively, a statutory order of review to set aside the decision made by Judicial Member McGill SC on 13 July 2023, dismissing his application for leave to appeal, or his appeal, dated 26 October 2021.  The decision of Judicial Member McGill SC was made in respect of an application by Mr Ritson for leave to appeal from the earlier decision of Adjudicator Katter.  If successful, Mr Ritson also seeks for that matter to be remitted back to QCAT for reconsideration by a different Tribunal Member. 

History of proceedings

3. [3]
   The QCAT proceedings which are the subject of Mr Ritson’s application in this Court have a long history.  There have been numerous proceedings over time since 2016.  The original proceedings were commenced in QCAT in October 2016.  The history of the background of those proceedings are detailed in the earlier decision by Member Gordon in Ritson v Ryan [2021] QCATA 100 at [5]–[25], delivered on 18 August 2021. 
4. [4]
   As was detailed by Member Gordon in that decision, on 10 October 2016, Mr Ritson brought his QCAT application. He claimed that the respondent to those proceedings, Mr Ryan, had provided courses to prepare students for pilot aptitude tests; that four individuals had paid course fees to Mr Ryan in advance; but Mr Ryan did not provide those persons with any services and thus, they were all entitled to refunds of their course fees as a debt. 
5. [5]
   Mr Ritson was subsequently assigned the rights of those students who had paid the course fees, in respect of the debt owed to them. The proceeding he commenced in QCAT was a claim seeking to recover that minor debt.  Along the way, through various decisions which had been made by QCAT, an issue arose as to whether the claim was one to recover a debt or a liquidated demand of money.  Ultimately, Member Gordon decided that it was.  As a result of Member Gordon’s decision, the matter was remitted for further hearing. That then led to the decision of Adjudicator Katter, who heard the matter on the papers on 21 October 2021 and dismissed Mr Ritson’s application. 
6. [6]
   In the course of the events subsequent to Member Gordon’s decision, it was necessary for Mr Ritson to obtain an order from the Federal Court so that he could proceed with his QCAT application.  That was because on 12 August 2021, Mr Ritson was made a bankrupt.  He currently remains a bankrupt and is not due to be discharged until August of this year.  Accordingly, Mr Ritson applied to the Federal Court. On 24 September 2021, Justice Halley suspended operation of the sequestration order that had been made, to the extent necessary to permit Mr Ritson to prosecute the proceeding in QCAT. 
7. [7]
   Mr Ritson then sought leave to appeal the decision of Adjudicator Katter. The matter was heard on the papers on 13 July 2023, by Judicial Member McGill SC, and Mr Ritson’s application for leave to appeal was dismissed.  Judicial Member McGill relevantly decided that the effect of Mr Ritson’s bankruptcy operated to stay the proceeding in respect of the appeal matter under s 60(2) of the Bankruptcy Act 1966 (Cth) and to vest his property in the trustee.  Judicial Member McGill considered that any appeal and application for leave to appeal was a separate proceeding and was not the same proceeding in respect of which Justice Halley had suspended operation of the sequestration order.  As a result, Judicial Member McGill considered that Mr Ritson was incompetent to commence the appeal or any application for leave to appeal.   

Intervener’s application

8. [8]
   It is in those circumstances that the intervener’s application has been made.  The application is said to rest upon three central propositions.  The first is that the applicant was made a bankrupt on 12 August 2021 and remains undischarged.  There is no issue in respect of that proposition.  Secondly, it is contended that the present proceeding for judicial review is properly characterised as “property” vested in the trustee in bankruptcy under the Bankruptcy Act.  Thirdly, the intervenor submits, it follows accordingly that Mr Ritson has no standing to bring the judicial review application he has filed and it ought therefore not be permitted to continue. 
9. [9]
   In response, Mr Ritson says the Attorney-General’s application should be dismissed.  He argues that the proceeding for judicial review that he has commenced is not one characterised as “property” vested in the trustee in bankruptcy under the Bankruptcy Act.  He says that the debt claim he had in respect of the chose in action that was the subject of the QCAT proceedings is also not “property” vested in the trustee in bankruptcy under the Bankruptcy Act.  He further says, in any event, that the order made by Justice Halley would permit this proceeding to be prosecuted by him as it is within the scope of the wording of the order, in particular, the words “to the extent necessary”.
10. [10]
    It is convenient to consider this application by reference to the issues as raised and framed by the applicant. 

Is the judicial review application “property”?

11. [11]
    The first issue is whether the judicial review proceeding amounts to property vested in the trustee in bankruptcy under the provisions of the Bankruptcy Act. 
12. [12]
    A number of provisions of the Bankruptcy Act are particularly relevant to this issue and the other issues raised by the intervener’s application.  The first section to note is s 58, which provides for the general rule for vesting of property upon bankruptcy. Under s 58(1)(a) where a debtor becomes a bankrupt, the property of the bankrupt vests forthwith in the official trustee. The subsection states:

13. [13]
    Next, under the s 5 definition of “the property of the bankrupt” in relation to a bankrupt means, under s 5(a)(i), “the property divisible among the bankrupt’s creditors.”  Furthermore, under s 5, the definition of “property”:

means real or personal property of every description, whether situate in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property.

14. [14]
    Section 116 is particularly relevant to the application and the arguments raised by Mr Ritson.  It provides for when property is divisible among creditors, and therefore relates back to the definition of the property of the bankrupt in s 5(a)(i).  Section 116(1) relevantly states:

15. [15]
    Section 116(2) then identifies what is not property divisible amongst creditors, as it makes plain, that subsection (1) does not extend to certain property.  It then sets out the numerous specified forms of property, in subsections (a) through to (s) that are not property divisible amongst creditors. 
16. [16]
    The argument for the Attorney-General, in short, is that the effect of s 116(1)(b) is that the judicial review proceeding commenced by the applicant is “property” as properly defined within that section and s 5 of the Act and, therefore, it has vested in the trustee. 
17. [17]
    In making that argument, the Attorney-General relies upon, in particular, the decision of Cummings v Claremont Petroleum NL.^[1] In that case, after considering a range of authorities in respect of the question of whether a right to appeal was property vested in the trustee, the plurality noted that though none of the cases that they had reviewed:

…establish the affirmative proposition that a right to appeal is property. They do establish the negative proposition that a bankrupt has no right to bring or prosecute proceedings to protect, enhance or add to the property of which he has been divested on bankruptcy.^[2]

18. [18]
    Their Honours then further noted that:

So far as a judgment entered in an action against a bankrupt creates or evidences a provable debt, we respectfully agree that the bankrupt has no financial interest which would confer locus standi to appeal in his own name against the judgment. That is because it is fundamental to the law of bankruptcy that the bankrupt is divested of both his interest in his property and liability for his provable debts.^[3]

19. [19]
    In a separate judgment, also agreeing that the appeal in that matter ought to be dismissed, Dawson and Toohey JJ reviewed the statutory scheme under the Bankruptcy Act in respect of property of a bankrupt and the operation of ss 58(1), 116(1), and 116(2).  Their Honours then stated:

The intent of the Act is clear, namely, that save for rights of action of a personal nature, everything answering the description of ‘property’ vests in the trustee, including after-acquired property.^[4]

20. [20]
    Their Honours also said:

The meaning of property in the Act, ‘real and personal property of every description’, is wide enough to include the right of appeal conferred by s 24 of the Federal Court of Australia Act. And that is so even where the appeal is against a judgment imposing a monetary obligation on the appellant.^[5]

21. [21]
    On the basis of those provisions of the Bankruptcy Act and the High Court’s decision in Cummings v Claremont, the intervener argues that it follows that Mr Ritson, as a bankrupt, does not have a financial interest in an appeal from, or judicial review of, a decision concerned with his attempt to enhance or add to the property of which he has been divested, so as to confer locus standi to appeal or to seek judicial review in his own name against the impugned decisions. The intervenor says that the judicial review application filed by Mr Ritson seeks to do just that, by challenging both the first decision of Member Katter and the subsequent decision by Judicial Member McGill in respect of his application for leave to appeal that decision. The argument is that that the judicial review application, in substance, constitutes legal proceedings in respect of a provable debt. The intervenor submits that in effect what Mr Ritson seeks by his present application is the same type of relief that would be availed to him on an appeal, that is, for the money claim to be redetermined by QCAT and, ultimately, for moneys to be paid to him that would form part of the bankrupt estate.  As a result, it is said that the right to seek judicial review by the application filed, ought to be considered as “property” which vests in the trustee. 
22. [22]
    Mr Ritson argues that the proceedings for judicial review, his right to bring those proceedings and, similar proceedings for prerogative relief, are not property divisible amongst creditors under s 116 of the Bankruptcy Act.  In making that argument, Mr Ritson relies upon numerous decisions which he has cited in his written submissions filed in response to the Attorney-General submissions.  I have read and considered those decisions.  I do not accept that they stand for the proposition being put by Mr Ritson.  Those cases were all decided in different contexts.  What was critical in each of them is a consideration of the nature of the application or the action in question and whether it, in substance, is of a kind that concerns something that will become property of the trustee, or whether it would remain a personal right exercisable by the bankrupt. 
23. [23]
    One of the cases in particular relied upon by Mr Ritson was the decision of Griffiths v Civil Aviation Authority.^[6] The applicant there sought to review an administrative decision that had been made in respect of the cancellation of pilot’s licences.  The Court ultimately determined that the definition of “property” in the Bankruptcy Act did not include a statutory right in the nature of an appeal, and did not comprehend the capacity to exercise and take proceedings, relating to the licences.  It was held not to be property divisible amongst creditors of the bankrupt.  The nature of the subject matter there was different to the subject matter in this case.  In my view, the circumstances in Griffiths are different and distinguishable from the present case. 
24. [24]
    However, a number of observations that were made, and authorities that were reviewed, in Griffiths are instructive and are of assistance in determining the present argument.  In particular, in his judgment, Einfeld J reviewed rights of appeal as property, considering both the legislative scheme under the Bankruptcy Act and previous English cases and Australian cases. 
25. [25]
    As to the English cases in respect of the way in which property divisible amongst creditors had been considered, Einfeld J referred to the decision in Beckham v Drake^[7] in which Erle J stated:

The right of action does not pass where the damages are to be estimated by immediate reference to pain felt by the bankrupt in respect of his body, mind or character and without immediate reference to his rights of property. Thus it has been laid down that the assignees cannot sue for breach of promise of marriage, for criminal conversation, seduction, defamation, battery, injury to the person by negligence ...^[8]

26. [26]
    After reviewing further authorities, Einfeld J stated:

The principle developed in these cases, ie. that where the cause of action and damage touch only the person of the debtor, they do not pass to the trustee upon bankruptcy, is an exception to the established intention of the bankruptcy laws that ‘every right vested in the bankrupt of which profit could be made, including rights of action, should pass to the assignees.’^[9]

27. [27]
    His Honour then went on to consider the Australian cases, noting that “The statement of Erle J in Beckham has been adopted by Australian courts as the test of whether a cause of action is in respect of a ‘personal injury or wrong’”^[10], citing in particular the decision of the High Court in Cox v Journeaux (No 2).^[11] 
28. [28]
    After considering what had been said in other Australian cases, his Honour concluded:

The common thread running through these cases is that where the primary and substantial right of action is direct pecuniary loss to the property or estate of the bankrupt, the right to sue passes to the trustee notwithstanding that it may have produced personal inconvenience to the bankrupt…  Where the essential cause of action is the personal injury done to the person or feelings of a bankrupt the right to sue remains with the bankrupt.^[12]

…In Australia some of the ‘common law of bankruptcy’ has been embodied in bankruptcy legislation. An example is s 60(4) of the Act...  Another example is s 116(2)(g) which gives statutory recognition to the principle evolved by the 'common law of bankruptcy' that rights of action in respect of the person or feelings of a bankrupt do not vest in the trustee.^[13]

29. [29]
    His Honour also noted that this meaning of the expression “personal wrong or injury” had been adopted in other cases including Daemar v Industrial Commission of New South Wales.^[14] 
30. [30]
    A further case which is instructive and relevant in determining this application is the decision of Fagan J in Kostov v Amelie Housing (NCAT appeal).^[15] In that case, after referring to s 116(2)(g) of the Bankruptcy Act, his Honour stated:

That exception is clearly not engaged by these proceedings. As recognised in Moss v Eaglestone [2011] NSWCA 404, a derivative proceeding based on some underlying cause of action or a lost right to pursue a cause of action takes its character from the underlying matter.^[16]

31. [31]
    In my opinion, that observation applies with equal force to an appeal. The passage that Fagan J had referred to from Moss v Eaglestone^[17] was a statement by his Allsop P, as he then was, where his Honour had stated:

In Daemar the summons for prerogative relief against the Industrial Commission was an action under s 60. Kirby P (with whose reasons Clarke JA agreed) concluded that the personal hurt of which the plaintiff complained from the reasons was inseverable from the claim concerning property. As Finn J said in Rana v Musolino [2009] FCA 1050 at [39] discussing Daemar, the action for prerogative relief takes its character in part from the rights sought to be vindicated in the underlying claim. This supports the view earlier expressed that the professional negligence action for the loss of the personal claim maintains or derives its character from that of the action that has been lost.^[18]

32. [32]
    Citing Kostov v Amelie Housing (NCAT appeal) and what was said there by Fagan J, the Attorney-General submits here that I ought to consider the substance of the judicial review application to determine whether it amounts to property.  I accept that that is so. 
33. [33]
    Ultimately, I consider that this issue of whether the right to bring a judicial review application is “property”, is intertwined with the second issue.  That is, whether the claim and the debt that is the subject of the QCAT proceedings is properly characterised as property vested in the trustee.  If it is, then I consider that the right to bring the application for judicial review is also property within the meaning of 116(1)(b) of the Bankruptcy Act. 

Is the subject debt “property”?

34. [34]
    The second issue, therefore, is whether or not the debt the subject of the QCAT proceedings is characterised as property vested in the trustee under the provisions of the Bankruptcy Act. 
35. [35]
    Mr Ritson’s argument is that his claim in QCAT in respect of the debt, or the chose in action, would be property within the meaning of s 5 of the Bankruptcy Act, but would not be property if it falls within one of the exceptions to property divisible amongst creditors within s 116(2).  He says there is an exception which applies, namely s 116(2)(n).  The argument that is put is followed this way. 
36. [36]
    Section 116(2)(n), provides:

    2. Subsection (1) does not extend to the following property:

…

14. property to which, by virtue of subsection (3), this paragraph applies;

37. [37]
    Subsection (3), then, states:

Where, at any time, the whole, or substantially the whole, of the money paid for the purchase, or used in the acquisition, of particular property is protected money, paragraph (2)(n) applies to the property.

38. [38]
    “Protected money” and “exempt money” are each then defined in s 116(2D) as follows:

protected money, in relation to a particular time, means:

1. exempt money

…

exempt money means money of any of the following kinds:

…

2. damages or compensation of a kind referred to in paragraph (2)(g)

39. [39]
    Finally, s 116(2)(g) provides that an exemption from property divisible amongst creditors is property in the nature of:

    7. any right of the bankrupt to recover damages or compensation:
       1. (i)
          for personal injury or wrong done to the bankrupt, the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt; or
       2. (ii)
          …and any damages or compensation recovered by the bankrupt (whether before or after he or she became a bankrupt) in respect of such an injury or wrong or the death of such a person;
40. [40]
    The argument put then is that while s 116(2)(g) would exempt the right to recover such damages or compensation or any such damages or compensation recovered by a bankrupt, because of the operation of s 116(2)(n), and subsection (3), any that “protected money” that is used to acquire other property is also protected. 
41. [41]
    Mr Ritson says the exemption is engaged here because he received a payment of $20,000 from the Defence Abuse Repatriation Scheme, which he then used to purchase the choses in action or the debts assigned to him which he sought to recover in the QCAT proceedings.  He says the $20,000 was “protected money” as it was “exempt money”.
42. [42]
    In that respect, Mr Ritson produced evidence of the payment that he received. Exhibited to one of his affidavits is a letter, dated 31 July 2014, from the Defence Abuse Response Task Force, which states that a final assessment had been made that he qualified for a reparation payment of $20,000.  It further states that in making that assessment, the decisionmaker was satisfied that he had suffered abuse at HMAS Kuttabul and the abuse included workplace bullying, harassment, and that qualified him for an abuse payment of $15,000 and, further, that there was mismanagement by Defence in relation to the abuse, which then qualified Mr Ritson for a further mismanagement by defence payment of $5,000. 
43. [43]
    Also exhibited to the same affidavit is a series of email correspondence between Mr Ritson and the official trustee in respect of the QCAT proceedings.  I note that amongst those emails, on 22 September 2021, the official trustee sent an email to Mr Ritson, stating that it was the trustee’s intention to elect to discontinue those proceedings. The next relevant email produced is an email from Mr Ritson dated 27 November 2023, more than two years later, in which he referred to the email of 22 September 2021.  It was there that he first raised the prospect that the choses in action, the subject of the QCAT proceedings, were purchased with protected money, and therefore did not vest in the trustee pursuant to ss 116(3) and (2)(n) of the Bankruptcy Act.  He provided a copy of the letter from the Defence Abuse Response Task Force as an attachment to his email, as evidence confirming the reparation payment had been made to him of $20,000, and he further advised the trustee that the reparation payment money was protected money and had been used by him used to purchase the chose in action amongst other things. 
44. [44]
    In response to those arguments, the Attorney-General submits there is no sufficient evidentiary basis upon which I would be satisfied that the reparation money, assuming it was “protected money”, had actually been used to purchase the choses in action the subject of the QCAT proceedings.  The Attorney-General further submits that, in any event, the reparation payment is not “protected money” when considering the proper ambit of the exceptions provided by s 116(2) of the Bankruptcy Act. In particular, it is said that it does not come within the scope of s 116(2)(g). 
45. [45]
    The Attorney-General referred me to a document exhibited to the affidavit of Mr Harris of 5 February 2024, being an information document produced by the Department of Veteran Affairs in respect of the principles for determining pension rates, in particular, Defence Abuse Reparation Scheme payments.  Within that document the following is stated:

A [Defence Abuse Reparation Scheme] payment is not compensation… Rather, a Reparation Payment is payment in acknowledgement that abuse itself is wrong and should not have occurred.^[19]

46. [46]
    The Attorney-General relies upon that statement in support of the argument that the reparation payment received and said to have been applied by Mr Ritson does not come within s 116(2)(g). 
47. [47]
    Mr Ritson also referred me to a relevant policy or administrative document in his affidavit material.  In his most recent affidavit of 23 March 2024, he has produced pages from the Australia Financial Security Authority website, in particular, the treatment of property in bankruptcy principles or policy statement, which notes certain types of compensation vest in the trustee and other types are protected.  The document commenced by stating:

While the trustee may need to conduct detailed investigations to determine whether particular compensation vests or not, some general guidelines are…^[20]

48. [48]
    The document then sets out a list of particular types of compensation or payments and indicates whether they do or do not vest in the trustee.  At point H, it notes:

Payments made under the Defence Abuse Reparation Scheme do not vest in the trustee.^[21]

49. [49]
    Mr Ritson says that this statement supports his argument that the payment that he received is “protected money” and its application, as I understand his argument, to acquire the choses in action means that it also comes within the scope of s 116(2)(g). 
50. [50]
    In my view, neither of these policy or administrative documents are determinative of the issue.  Whatever position may be taken by the authors of those documents with respect to the interpretation of the legislation or the administrative decision as to how particular payments are to be considered does not decide the question that is before me.  The question that I have to consider is whether the payment received and its application, as suggested by Mr Ritson, comes within s 116(2)(g). 
51. [51]
    In my view, it does not. 
52. [52]
    I do not consider that the reparation payment received by Mr Ritson is “compensation” or “damages.”  I consider that s 116(2)(g) is properly to be interpreted as referring to the right of a bankrupt to recover damages or compensation in an action, and that “any damages or compensation recovered by the bankrupt” is a reference to damages or compensation recovered by the bankrupt in such an action, being one in respect of personal injury or wrong done to the bankrupt, amongst other things.  I consider that is the way the subsection ought to properly be construed, having regard to the background to the Act as discussed, and to which I have referred to earlier, in Griffith and in the subsequent cases that have applied what was identified in Griffith by Einfeld J.
53. [53]
    I also am of that view because the word “right” that is used in subsection (g), in my view, is properly to be interpreted in the context of being an action for compensation of damages. I do not accept the argument put by Mr Ritson that a broader meaning ought to be applied to the language used in s 116(2)(g) and that it is not confined simply to traditional legal meanings of compensation of damages that may be recovered in an action.  For example, on Mr Ritson’s argument, something such as an ex-gratia payment would be included within the s 116(2)(g) exception. 
54. [54]
    The third matter I consider important in reaching my conclusion about the ambit of s 116 (2)(g) is that I agree with the submissions made on behalf of the Attorney-General that it is clear that the Parliament has determined particular payments are to be included as exempt from property divisible amongst creditors, those being payments under the National Redress Scheme for Institutional Child Sexual Abuse, referred to in s 116(2)(g)(a) and a payment made under the Territories Stolen Generations Redress Scheme, which is referred to in s 116(2)(g)(b).  There is no similar exemption in respect of payments made under the Defence Abuse Reparation Scheme and, to my mind, that further confirms that such payments are not to be treated as not within the scope of subsection (1) and that payments of the kind referred to here and its application, as submitted by Mr Ritson, do not come within the meaning of “protected money” and are not within s 116(2)(g). 
55. [55]
    Irrespective of the conclusion I have reached about the construction of s 116(2)(g), I also agree with the first submission made by the Attorney-General that there is an insufficient evidentiary basis for me to be satisfied that the money Mr Ritson received from the reparation scheme payment was used in the way that he contends.  In particular, as I have noted, the emails that were referred to and annexed to the affidavit of Mr Ritson show that the issue was not raised by him until recently in 2023, and the only proof of how the money was applied is his own correspondence and say-so. 

Does the Federal Court order permit this application to be pursued?

56. [56]
    The final issue for consideration is whether the order made by Halley J suspending operation of the sequestration order would permit this proceeding. 
57. [57]
    Mr Ritson argues that it does because a judicial review proceeding clearly comes within the scope of what was contemplated when that order was made.  The order made by Halley J states:

The operation of the sequestration order made against the estate of the appellant on 12 August 2021 be suspended to the extent necessary to permit the appellant to prosecute the proceedings MCDO2024/16 in the Queensland Civil and Administrative Tribunal. 

58. [58]
    Mr Ritson emphasises the words “to the extent necessary” and submits that would necessarily extend to permitting him to pursue the judicial review application that he has filed. 
59. [59]
    I do not agree.  In my view, that argument gives the words “to the extent necessary” far too wide an operation, particularly in circumstances where the order for the suspension of the sequestration order is a specific exemption from what would otherwise be the ordinary operation of the Bankruptcy Act, which has a clear purpose and intention in respect of the vesting of property in the official trustee upon bankruptcy. 
60. [60]
    I do not consider that the terms of the order should be read liberally as Mr Ritson submits. I am of the view, as properly construed, that the order is limited to permitting the applicant to pursue the particular proceedings in QCAT.  It does not extend to him having the right to continue or prosecute these proceedings for judicial review.

Conclusion

61. [61]
    I am satisfied Mr Ritson does not have proper standing to bring the judicial review application and I therefore accept it is appropriate to dismiss it under s 48(1)(a) of the Judicial Review Act, as it is not appropriate for it to continue.  I will, therefore, make an order in terms of the draft provided to me that the application for review is dismissed.