Tucker v State of Victoria

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2023 0002

TOBIAS JOHN TUCKER (ALSO KNOWN AS TOBY TUCKER)	Applicant
v
STATE OF VICTORIA	First Respondent
AND
PAUL BRODERICK (IN HIS CAPACITY AS COMMISSIONER OF STATE REVENUE)	Second Respondent

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JUDGES:	NIALL and OSBORN JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	10 May 2023
DATE OF JUDGMENT:	25 May 2023
MEDIUM NEUTRAL CITATION:	[2023] VSCA 126
JUDGMENT APPEALED FROM:	[2022] VSC 760 (McDonald J)

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PRACTICE AND PROCEDURE – Undertaking as to damages – Judge dismissed applicant’s application to be released from undertaking on ground of fraud – Judge dismissed application to stay the undertaking – Whether applicant established evidence of actual fraud – Applicant’s fraud case weak.

PRACTICE AND PROCEDURE – Judge stayed fraud proceeding until applicant complied with undertaking – Whether stay should have been granted – Weakness of fraud case not alone an abuse of process – Stay of different proceeding should not be used to enforce judgment unless refusal of stay would work relevant injustice – Strong grounds for stay of fraud proceeding not established – Application for leave to appeal granted – Order for stay of fraud proceeding set aside – Summonses filed by applicant dismissed.

Maritime Union of Australia v Patrick Stevedores Operations Pty Ltd [1998] 4 VR 143, distinguished; Rozenblit v Vainer (2018) 262 CLR 478, considered.

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Counsel
Applicant:		In person
Respondents:		Mr JL Bourke KC and Ms R Preston
Solicitors
Applicant:	—
Respondents:	Maddocks

NIALL JA
OSBORN JA:

The applicant instituted proceedings against his employer, the first respondent (‘the State’), with respect to the lawfulness of disciplinary actions taken against him (‘the disciplinary proceeding’). In order to secure an undertaking from his employer[1] not to finalise its internal disciplinary process and terminate his employment until the determination of the disciplinary proceeding (save for further order or unless otherwise agreed), the applicant gave an undertaking as to damages to the Court in the usual form.
[1]The undertaking was also given by Mr Darren Joyce, Executive Director Corporate Services at the State Revenue Office where the applicant was employed, who was the second defendant at the time the undertaking was given. See [10] below.
The disciplinary proceeding in which the mutual undertakings were given was ultimately dismissed,[2] and the State called on the undertaking as to damages. Following a trial on the enforcement of the undertaking and assessment of damages,[3] an order for the payment of $199,681.46 in damages was made (‘the damages order’). Despite a partially successful appeal of the decision dismissing the disciplinary proceeding and the damages judgment to this Court,[4] the damages order was not disturbed.
[2]See Tucker v State of Victoria [2019] VSC 420 (Ierodiaconou AsJ).
[3]See Tucker v State of Victoria (Undertaking as to Damages) [2020] VSC 121 (Ierodiaconou AsJ) (‘damages judgment’).
[4]See Tucker v State of Victoria [2021] VSCA 120, [16] (Kyrou, McLeish and Sifris JJA) (‘Appeal Reasons’).
In a separate proceeding the subject of the present appeal, the applicant alleged that due to conduct of the respondents in the disciplinary proceeding, the damages judgment was tainted by fraud and sought that the orders made by the associate judge and the Court of Appeal pursuant to which he was ordered to pay the State damages in the sum of $199,681.46, be set aside (‘the fraud proceeding’). In the fraud proceeding, the applicant sought a stay of the damages order, release from his undertaking and consequential orders. A judge in the Trial Division refused the orders sought by him, and stayed the fraud proceeding until the applicant complies with his undertaking by paying the damages. The applicant is yet to comply.
The applicant seeks leave to overturn the stay of the fraud proceeding. For the reasons that follow:
(a)the judge was correct to refuse the applicant’s applications for a stay of the damages order and to be released from the undertaking;
(b)the judge erred in staying the fraud proceeding.

The facts

The applicant was employed by the State as a solicitor in the Customer Service and Debt Recovery Management Branch of the State Revenue Office (‘SRO’) from November 2011 until 19 July 2019.
In June 2017, the applicant’s conduct as an employee was subject to two separate workplace investigations. The first investigation was into allegations of harassment towards a female colleague, ‘SM’, and was conducted by Ms Klug (‘the harassment investigation’). The second was an investigation into allegations that he improperly searched customer records, and was conducted by Mr Di Federico (‘the customer search investigation’).
On 25 October 2017, the applicant was informed of the outcome of the harassment investigation: that most of the allegations against him had been made out and that the proposed disciplinary action would be a formal warning and training.
On 11 December 2017, the applicant commenced the disciplinary proceeding in the Trial Division. In that proceeding, he sought declarations that the State had contravened the Victorian Public Service Enterprise Agreement 2016 and the Public Administration Act 2004 and interlocutory and permanent injunctions preventing the finalisation of the harassment investigation and any subsequent disciplinary action.
On 7 February 2018, the applicant was advised that, following the customer search investigation, his employment was to be terminated for serious misconduct. The misconduct took the form of unauthorised access of 24 customers’ records on the SRO e-Sys database, which were not related to any known SRO-business purpose; and the giving of misleading and untruthful responses in an investigation of his conduct concerning those allegations. The applicant was advised that his misleading and untruthful responses constituted serious misconduct and hence the SRO proposed to immediately terminate his employment.
On 2 March 2018, the Court made consent orders in the disciplinary proceeding. The applicant (as plaintiff) gave an undertaking as to damages, and the first respondent (as defendant) gave an undertaking that, save for further order or unless otherwise agreed, it would not finalise the proposed disciplinary outcomes (set out in the SRO’s letters to the plaintiff of 25 October 2017 and 7 February 2018) until the determination of the disciplinary proceeding. The undertaking was also given by the second defendant in the disciplinary proceeding at the time, Mr Joyce, Executive Director Corporate Services at the SRO. The second respondent in the present appeal was not added as second defendant until May 2018. The addition of Mr Broderick as second defendant — Mr Joyce having been removed in April 2018 — was unopposed as Mr Broderick exercises delegated powers in respect of SRO employees and had the power to terminate employment whilst Mr Joyce did not.[5]
[5]See Tucker v State of Victoria (Undertaking as to Damages) [2020] VSC 121, [5]–[6] (Ierodiaconou AsJ).
Following a trial before Ierodiaconou AsJ, on 16 July 2019 the disciplinary proceeding was dismissed and the State was released from its undertaking not to finalise the disciplinary process.[6]
[6]Tucker v State of Victoria [2019] VSC 420 (Ierodiaconou AsJ).
On 19 July 2019, the SRO terminated the applicant’s employment on the basis of the outcome of the customer search investigation. The termination letter stated that no final outcome had been reached in relation to the proposed disciplinary outcomes arising from the harassment investigation.
In response to his termination, the applicant lodged an unfair dismissal claim in the Fair Work Commission.
The State called on the undertaking as to damages which comprised the salary and other employment benefits paid to the applicant between the date of the undertaking and the date of his termination, claiming an amount of approximately $199,000. The issue of whether or not the undertaking was enforceable and if so, the assessment of damages was set down for trial (‘the damages trial’).
On 10 September 2019, the applicant applied for a stay of the damages trial in respect of the undertaking as to damages pending determination of the unfair dismissal proceeding in the Fair Work Commission. The stay was refused.[7]
[7]Tucker v State of Victoria [2019] VSC 635 (Ierodiaconou AsJ).
During the damages trial, the applicant cross examined Mr Joyce about whether or not SM had made a formal or written complaint of harassment. The applicant also sought the production of documents directed to that question. Senior counsel for the respondents informed the associate judge that there was no written complaint but a complaint by SM was recorded in an email from Mr McKee dated 9 June 2017 (‘the McKee email’).
On 19 March 2020, Ierodiaconou AsJ handed down the damages judgment[8] and following submissions on form, on 21 April 2020 made the damages order, which ordered, among other things, that the applicant pay the sum of $199,681.46 to the State with costs by way of enforcement of the undertaking.
[8]Tucker v State of Victoria (Undertaking as to Damages) [2020] VSC 121 (Ierodiaconou AsJ).
The applicant sought leave to appeal both the dismissal of the disciplinary proceeding (in which the applicant had sought to impugn both investigations and the termination of his employment) and the damages judgment and damages order in this Court.
The applicant had some success in the Court of Appeal.[9] In respect of the harassment investigation, the Court of Appeal held that there had been a denial of procedural fairness because the applicant had not been provided with an unredacted or less redacted copy of Ms Klug’s report in relation to the harassment investigation.
[9]Appeal Reasons, [16].
On the other hand, the applicant’s attack on the customer search investigation and the termination of employment failed. The order for damages was not disturbed. In reaching that conclusion, the Court of Appeal drew a distinction between the two investigations noting that the harassment allegations were not relied on to terminate the applicant’s employment. In other words, flaws in the harassment investigation did not impugn the termination which was based on the outcome of the customer search investigation. In respect of the customer search investigation, the Court said:
The Customer Search Allegations were unambiguous: the applicant was not authorised to access customer records unless it was for the purpose of carrying out his duties; there were a number of instances in which he had access to customer records for purposes other than the carrying out of his duties; and those instances of unauthorised access constituted serious breaches of his obligations to the SRO.
In order to establish those breaches, it was not necessary for the SRO to prove the purposes for which the applicant had access; all it needed to establish was that the access was not for the purpose of carrying out the applicant’s duties. Whether access was for a work-related authorised purpose could be determined by an analysis of whether the access was relevant to a taxpayer query or dispute that the applicant was handling on behalf of the SRO. The particulars that were provided to the applicant, and the inspection of his records which he and his solicitor were granted by the SRO, were sufficient to enable him to respond to the allegations. There was no reversal of onus.
The applicant responded to the Customer Search Allegations and Mr Di Federico’s questions on 6 October 2017 and he was given an opportunity to respond to the contradictory evidence. It appears from Mr Di Federico’s evidence at trial that he was not provided with a copy of the applicant’s statement of 1 August 2017, which was prepared prior to Mr Di Federico’s appointment as investigator. However, this omission is inconsequential, as that statement dealt mainly with the Harassment Allegations. The final form of the Customer Search Allegations was settled after Mr Di Federico’s appointment and the applicant responded to the allegations in his statement of 6 October 2017.
As a lawyer, the applicant was aware of the importance of maintaining confidentiality of taxpayer records and the need to limit access to those records to work-related purposes. The SRO was not obliged to explain to him why unauthorised access to customer records was improper.
For the above reasons, unauthorised access to customer records could constitute misconduct irrespective of whether any taxpayer was aware of the unauthorised access or, if a taxpayer was aware, he or she did not wish to complain about the unauthorised access.
By its very nature, the alleged unauthorised access effected by the applicant using his computer could be achieved in a clandestine fashion without any witnesses. In these circumstances, the allegations against the applicant could be proved in accordance with the principles in Briginshaw by showing that the applicant’s password-protected computer accessed the customer records and that those records were not relevant to any work being undertaken by the applicant. But, in any event, the ground upon which the applicant’s employment was terminated was narrow, namely, that he had misled Mr Di Federico in his specific responses with respect to customers B, E, G, Q, V and W. It follows that there is no substance to the applicant’s complaint about the non-provision of evidence given by witnesses or the complaint that Mr Di Federico disregarded the witness testimonies that corroborated his evidence. Those complaints did not relate to the ground upon which the termination decision was based.
The applicant was provided with an unredacted copy of the Customer Search Report. That report provided sufficient information to the applicant to enable him to understand why Mr Di Federico made adverse findings against him.
As we have already stated, the applicant’s complaints about the Privacy Act do not assist him because the allegation that he had breached that Act was not substantiated.
For the above reasons, the applicant has failed to establish that the respondents breached any provision of the VPSEA, the Misconduct Policy or the PAA in relation to the conduct of the Customer Search Investigation or the termination of his employment as a result of the findings of misconduct by that investigation.[10]
[10]Appeal Reasons, [283]–[291] (citations omitted).
In the application for leave to appeal, the applicant had sought to rely on fresh evidence including:
(a)the McKee email, which the SRO had contended embodied or evidenced SM’s complaint;
(b)the transcript of Mr Joyce’s evidence before the associate judge for the purpose of showing Mr Joyce had given false evidence when he asserted that SM had made a complaint; and
(c)a statement by Thomas Egan dated 13 September 2019 (‘the Egan statement’).[11] Mr Egan was one of the SRO customers whose file was accessed by the applicant. In short, Mr Egan said that he had no objection to the applicant accessing his file.
[11]Mr Egan was one of the taxpayers referred to in [137(h)] of the Appeal Reasons.
The Court of Appeal refused to receive the fresh evidence. The Court said that it was firmly of the opinion that, if the evidence had been available at the trial, it could not have made any difference to the associate judge’s decisions on the issues she determined.[12] The Court noted that Mr Egan’s evidence was to the effect that he was aware that the applicant was alleged to have accessed his records, he had provided the SRO’s investigator with two reasons why the applicant may have accessed his records and he would not object to the applicant accessing his records for those reasons. The two reasons suggested by that taxpayer did not have an SRO-business purpose.[13]
[12]Appeal Reasons, [168].
[13]Ibid [138(h)].
In relation to the McKee email, the Court of Appeal noted that the email was not relevant to either investigation.[14]
[14]Ibid [169].

The fraud proceeding

On 23 August 2022, the applicant commenced the fraud proceeding seeking orders to set aside orders in favour of the State made by Ierodiaconou AsJ on 16 July 2019 and 21 April 2020, and by the Court of Appeal on 23 June 2021, on the basis of an allegation of actual fraud.[15]
[15]In line with the procedure explained in Clone Pty Ltd v Players Pty Ltd (In Liq) (2018) 264 CLR 165 (‘Clone’).
In his statement of claim, the applicant alleged that during the trial of the disciplinary proceeding the respondents ‘contrived the keep the Court, and [the applicant], in ignorance of the real facts of the case’. In support of that allegation the applicant relied on three matters:
(a)despite the evidence of Mr Joyce that SM had made a complaint, SM had not made a written complaint which under SRO policy was required before an investigation could occur and the absence of a complaint was concealed from the applicant;
(b)the SRO had withheld investigation notes taken by Mr Di Federico in the customer search investigation and which the applicant had subsequently obtained through production in the Fair Work Commission (‘the Di Federico investigation notes’); and
(c)the report Mr Di Federico produced following the customer search investigation (‘the Di Federico Report’) had misrepresented the true position in relation to one of the customers, Mr Egan, who was identified as ‘V’ in the report. The applicant relies on a statement he had obtained from Mr Egan to debunk this aspect of the Di Federico Report.
On 15 November 2022, the applicant filed a summons in the fraud proceeding seeking that the damages order be stayed pending the hearing and determination of the fraud proceeding. On 2 December 2022, the applicant filed a second summons in the fraud proceeding seeking an order that he be released from the undertaking as to damages given in the disciplinary proceeding.
The two summonses were heard by a judge in the Trial Division. On 12 December 2022, the judge dismissed the summonses and stayed the fraud proceeding until such time as the applicant had complied with his undertaking as to damages.[16] The judge made orders reflecting his decision on 22 December 2022.
[16]Tucker v State of Victoria [2022] VSC 760 (McDonald J) (‘Reasons’).

The judge’s Reasons

After setting out the background, including extracts from the Appeal Reasons dealing with the customer search investigation,[17] the judge then turned to the central issue, namely whether the applicant had established a proper basis to be excused from his undertaking.
[17]The judge set out Appeal Reasons, [283]–[291] at Reasons, [16] extracted above at [20].
The judge noted that:
A court may vary an undertaking if a party who gave the undertaking establishes by evidence that, based on circumstances prevailing when the variation is sought, the interests of justice require the variation in order to avoid enforcement of the undertaking being unjust. If a party can establish that the enforcement and the undertaking has been enlivened by fraud this may require a variation of the undertaking to avoid the enforcement of the undertaking being unjust.[18]
[18]Reasons, [16] (citation omitted).
There was no dispute that fraud provides a basis to overturn an order of a superior court that has been perfected.[19] The judge observed that fraud in this context meant actual fraud in the sense of ‘actual positive fraud, a meditated and intentional contrivance to keep the parties and the Court in ignorance of the real facts of the case, and obtaining that decree by that contrivance’.[20]
[19]Ibid [20] citing Clone (2018) 264 CLR 165, 175 [2] (Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ).
[20]Reasons, [20] quoting Clone (2018) 264 CLR 165, 192–3 [55] (Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ).

The judge said:
A party asserting that a judgment was procured by fraud must establish that there has been a new discovery of something material in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment. It must be shown that the successful party was responsible for the fraud which taints the judgment in such a way as to render it inequitable that such party should take the benefit of the judgment.[21]
[21]Reasons, [21] (citations omitted).
The judge then addressed the allegations of fraud made by the applicant.
In relation to the customer search investigation, the judge noted that the Di Federico report was comprehensive and had found that the applicant had accessed customer records of 24 customers for an extraneous purpose, or at least not for a legitimate SRO-business purpose, and that he was given the opportunity to respond to contradictory evidence in his written statement however did not do so.[22] In short, the judge found that none of the matters relied upon by the applicant provided any basis for concluding that the Di Federico report, which provided the basis for the termination of his employment and the subsequent damages judgment, was tainted by fraud.[23]
[22]Ibid [23]–[24].
[23]Ibid [25].
In relation to the harassment investigation, the applicant relied on a transcript of a covert recording of SM in which, he says, SM denied making a complaint. That, so it was argued, established fraud because Mr Joyce had given sworn evidence that there was a complaint. The judge noted that there was other evidence that cast doubt on the veracity of the recording of SM’s denial.[24] More fundamentally, the judge held that whether SM had made a complaint of harassment was irrelevant to whether the damages judgment was the product of fraud.[25] That was because the decision to terminate Mr Tucker’s employment was based solely on the narrow ground that he had misled Mr Di Federico in respect of questions which were put to him regarding customers.[26]
[24]Ibid [26].
[25]Ibid [27].
[26]Ibid.
In relation to the Egan statement, the judge referred to the finding of the Court of Appeal that the production of the Egan statement did not assist the applicant because the Egan statement did not exculpate the applicant, as the two reasons identified by Mr Egan for the applicant to have been accessing his customer records did not have a legitimate SRO-business purpose.[27]
[27]Ibid [30].
After noting that the applicant’s fraud case was put forward as evidenced by ‘many strands of the cable’ with no document establishing fraud, the judge recorded that the applicant ‘ultimately conceded during the hearing on 5 December 2022 that on the material presently before the Court there was no proper basis for a finding of actual fraud’; and that ‘in order for the Court to be in a position to make a finding of fraud the Court would need to hear evidence from the applicant, Mr Di Federico, SM and Mr Joyce’.[28]
[28]Ibid [31].
The judge concluded that the applicant should not be relieved of his undertaking and that the damages order should not be stayed. The judge then went further and stayed the fraud proceeding until the applicant had complied with his undertaking and paid the damages.[29] He gave three reasons for taking this further step:
(a)First, the applicant had ‘failed to establish that the Damages judgment is tainted by fraud.’
(b)Second, in return for the undertaking which he proffered to the Court, the applicant had received the significant benefit of nearly $200,000 in salary and employment benefits.
(c)Third, the applicant’s breach of the undertaking was ‘egregious’. The applicant proffered the undertaking as an experienced legal practitioner and must have fully understood that he would be bound to comply with the undertaking if it was subsequently ‘enlivened’ by a damages award in favour of the respondents.[30]
[29]Ibid [40].
[30]Ibid [39].
As to the failure to comply with the undertaking, the judge said that the applicant had been in default of the undertaking for nearly 18 months.[31] Earlier in his Reasons, the judge had not accepted that the applicant’s failure to comply with the undertaking was solely attributable to his financial position, noting that the applicant had deposed to three reasons for the non-compliance: he considered that the judgment debt was obtained by fraud; he had counterclaims against the SRO which counterbalance the debt owed including his extant defamation claim; and the hardship of paying that amount on his family, which includes two dependent daughters.[32]
[31]Ibid.
[32]Ibid [35].
In his conclusion, the judge echoed these findings observing that during the period of non-compliance, the applicant had expended funds on other litigation, and his failure to comply with the undertaking involved ‘deliberate and very serious defiance of the authority of the Court’.[33] In deciding to stay the fraud proceeding, the judge referred to the decision of the Court of Appeal in Maritime Union of Australia v Patrick Stevedores Operations Pty Ltd,[34] to which it will be necessary to return.[35]
[33]Ibid [39].
[34][1998] 4 VR 143, 156 (Winneke P, Brooking and Charles JJA) (‘MUA’).
[35]See Reasons, [39].

Proposed grounds of appeal

If granted leave, the applicant seeks to appeal on two proposed grounds of appeal.
By proposed ground 1, the applicant says that the judge erred in summarily dismissing his application to be released from the undertaking proffered to the Court on 2 March 2018. He relies on five matters:
(a)there was sufficient evidence before the Court that the SRO engaged in ‘actual fraud’ within the meaning adopted by the Court of Appeal in Chancery in Patch v Ward,[36] and in particular, that the SRO had advanced a ‘false narrative’ that SM had made a complaint;
(b)the judge failed to adopt the maxim ‘fraud unravels all’;
(c)even if the merits of the termination of employment were relevant (which the applicant denies), the judge failed to consider: (i) that the documents obtained from the Fair Work Commission demonstrated a denial of procedural fairness which vitiated the decision to terminate; (ii) that the witness statement of Mr Egan demonstrated that the Di Federico report provided to the Court by the SRO was materially inaccurate; and (iii) SM’s alleged complaint was inextricably linked to the SRO’s decision to terminate the applicant’s employment;
(d)the judge erred in summarily making factual conclusions without hearing evidence;
(e)the judge erred in holding that compliance with the applicant’s undertaking was relevant to the application that the undertaking be set aside. The non-compliance with the undertaking was only relevant to any contempt or debt recovery proceedings brought against the applicant.
[36](1867) LR 3 Ch App 203, 212–13.
Proposed ground 2 contends that the judge erred in failing to refer certain allegations made by SM, to the Director of Public Prosecution and the Independent Broad-based Anti-Corruption Commission for ‘further investigation as thought appropriate’. No argument was addressed to this proposed ground, and it does not go to the correctness of the judge’s order and can be rejected on that basis.
In an economical oral submission, the applicant made four points:
(a)there is no requirement to comply with perfected orders, or to satisfy a perfected judgment, in order to have the Clone[37] claim heard;
(b)there is no requirement to comply with an undertaking to have an application to set that undertaking aside on the basis of fraud;
(c)the judge’s reliance on MUA[38] is inappropriate as it is not a fraud case; and
(d)the failure to satisfy the judgment is not a prerequisite to having a claim of this type heard.
[37](2018) 264 CLR 165.
[38][1998] 4 VR 143.
The applicant accepted that he had not complied with the undertaking and said that he was susceptible to an application for security for costs but a stay was too extreme and amounted to summary judgment against him.
The respondents submitted that the applicant’s argument proceeds on a misapprehension that the judge had given summary judgment. Senior counsel for the respondents addressed at some length why they contend the fraud allegations are hopeless.
The respondents submit that the transcript of the conversation between the applicant and SM is unreliable and, in any event, there was ample evidence before the SRO, before the associate judge, and before the judge in the fraud proceeding that showed that there was a complaint by SM. This included a document prepared by Ms Klug which records SM’s response to the applicant’s answers to questions asked of him by Ms Klug. In any event, as the Court of Appeal held, the harassment allegations were irrelevant to the termination and also irrelevant to the damages judgment.
The Egan statement was not new, and did not exonerate the applicant because it did not provide a SRO-business purpose for the applicant accessing Mr Egan’s file, it simply established that Mr Egan did not object to him doing so.
The Di Federico investigation notes were reflected in a draft report that was provided to the applicant for comment in the customer search investigation. There was no denial of procedural fairness and no concealment.
The respondents submit that the applicant continues to egregiously breach the undertaking and that he should not be entitled to seek relief from the Court for so long as he remains in default.

Decision

The decision to stay the fraud proceeding is an interlocutory decision. It did not finally determine the applicant’s rights. In order to overturn the decision it is necessary for the applicant to establish error of the kind described in House v The King.[39]
[39](1936) 55 CLR 499.
It is convenient to start by recalling that the judge had before him two summonses both of which had been issued by the applicant:
(a)the first, dated 15 November 2022, sought a stay of the damages order pending the determination of the fraud proceeding; and
(b)the second, dated 2 December 2022, sought an order releasing the applicant from his undertaking.
There was no appealable error in the judge refusing the orders that the applicant had sought by summons. Indeed, the decision to that extent was clearly correct.
As the judge’s Reasons show, the applicant’s case on the fraud proceeding was, by any measure, weak. The fraud proceeding sought to set aside the orders made by Ierodiaconou AsJ and the Court of Appeal pursuant to which the applicant was ordered to pay the State of Victoria the sum of $199,681.46, on the basis that the damages judgment was infected by fraud. The decision to terminate the applicant’s employment was made by reason of the adverse findings of Mr Di Federico in the customer search investigation. The applicant failed to dislodge those findings in the Court of Appeal. On their face, the findings of wrongdoing outlined in the Di Federico report following the customer search investigation provided a sound basis for the termination of the applicant’s employment. It follows that in order to impugn the termination decision, the decision of the Trial Division upholding it, the damages order and the decision of the Court of Appeal, the applicant would need to establish that the customer search investigation or the termination on which it was based was affected by fraud. He relies on the alleged absence of a complaint of harassment by SM; the withholding of the Di Federico investigation notes; and the Egan statement.
The applicant has failed to establish an arguable case on the material filed to date that the SRO conducted the harassment investigation on the fraudulent basis of a non-existent complaint. Bearing in mind that an allegation of fraud must be distinctly pleaded and proved, the covert recording of SM in which she apparently denies making a complaint does not establish fraud on the part of any officer in the SRO and may bear a different complexion on full examination. There is other evidence, including SM’s responses to Ms Klug during the investigation that show that an oral complaint was made. The evidence does not suggest that pursuing the investigation of the oral complaint was fraudulent. But even if the applicant got that far, he has not established an arguable case that the alleged wrongdoing in relation to the harassment investigation impugned the termination decision, which as the Court of Appeal held, was based on different misconduct. The idea that the harassment allegations provided an implicit and unexpressed reason for the termination appears, on the material presently before the Court, to be without foundation.
In answer to the quarantining of the harassment investigation, the applicant relies on the aphorism that ‘fraud unravels everything’.[40] That aphorism, like most, has its limitations as an analytical tool. In Clone, the High Court traced the relevant history noting that the general power to set aside a judgment on the ground of fraud required actual fraud; and the ‘essence of the action [was] fraud’.[41] The ground is a narrow one requiring a connection between the fraud and the obtaining of the judgment. For example, it has been said in the High Court that except in very exceptional cases, fraud constituted by perjury by a witness or witnesses acting in concert is not a sufficient ground for setting aside a judgment.[42] Reliance on the aphorism does not take the applicant very far in the absence of an evidential link between the two investigations.
[40]Lazarus Estates Ltd v Beasley [1956] 1 QB 702, 712–13 (Denning LJ); SZFDE v Minister for Immigration and Citizenship (2007) 232 CLR 189 (‘SZFDE’).
[41]Clone (2018) 264 CLR 165, 192 [55] (Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ), citing Wentworth v Rogers (No 5) (1986) NSWLR 534, 538 (Kirby P, with whom Hope and Samuels JJA agreed).
[42]SZFDE (2007) 232 CLR 189, 196 [16] (Gleeson CJ, Gummow, Kirby, Hayne, Callinan, Heydon and Crennan JJ), citing the remarks of Windeyer J in McDonald v McDonald (1965) 113 CLR 529, 544, citing those of Williams J in Cabassi v Vila (1940) 64 CLR 130, 147–8.
In relation to the Di Federico investigation notes, the applicant has failed to show that their non-disclosure amounted to a denial of procedural fairness. He did not point to any material fact that was withheld, and it appears that he was provided with the substance of the adverse material and that the substance of the case against him was conveyed to him before the Di Federico report was finalised. More fundamentally, a denial of procedural fairness would be insufficient to overturn the decisions in the Trial Division and Court of Appeal. Clone establishes that nothing short of fraud will be sufficient.
The Egan statement does not advance the fraud case. The statement was obtained by the applicant, and it may be inferred, could have been obtained by him during the proceedings in the Trial Division. The statement does not meet the case against the applicant because it does not provide a legitimate SRO-business purpose for him accessing the customer files.
It follows that the judge’s implicit characterisation of the fraud case as weak was well open to him. Incidentally, we do not read the judge as having finally determined that question.
The applicant took issue with the judge’s observation that the applicant had conceded that on the material presently before the Court there was no proper basis for a finding of actual fraud.[43] In his Reasons, the judge referenced the following passage of the transcript of argument in which the applicant said:
I do accept with Your Honour that to substantiate the fraud, to make the finding, there would have to be, as we discussed before, examination of myself, examination of Mr Di Federico, examination of [SM], examination of Mr Joyce, so forth etc.[44]
[43]Reasons, [31].
[44]Ibid.
That passage supports the judge’s observation. It remains the case that the evidence filed by the applicant, as it currently stands, would be insufficient to prove actual fraud. As the applicant frankly accepted, he will need to establish his case through evidence adduced at trial including by cross-examination of SRO witnesses.
It was for the applicant to establish an affirmative case for the stay of the damages order. The order had been upheld by the Court of Appeal. And, in the usual course, the State was entitled to the fruits of the order. The applicant’s case to overturn the order is weak. The fact that payment of the damages would cause financial hardship to the applicant, although a factor in the mix, did not justify the stay of the damages order.
In the circumstances, there was no error in refusing the applicant the interlocutory orders that he had sought.

The decision to stay

As already observed, the judge went on to stay the fraud proceeding until the applicant has complied with the undertaking preferred to the Court on 2 March 2018. Although there was no summons filed by the respondents seeking a stay listed for hearing before the judge, the issue was squarely raised by the judge during the hearing of the fraud proceedings.
The three reasons given by the judge were the weakness of the fraud case; the benefit obtained by the applicant pursuant to the undertaking; and that the breach of the undertaking was ‘egregious’.[45]
[45]Ibid [39].
Notwithstanding that the three matters relied on by the judge had some cogency, in our respectful view, the stay of the fraud proceeding should not have been granted.

The principles on stay

In Rozenblit v Vainer,[46] the High Court discussed the principles that attend the grant of a stay of a proceeding. That case concerned a stay under a rule of the Court that empowered the Court to stay a proceeding when a party had failed to comply with a costs order.
[46](2018) 262 CLR 478 (Kiefel CJ, Bell, Keane, Gordon and Edelman JJ) (‘Rozenblit’).
In Rozenblit, the High Court referred to the basal principle that generally speaking, a person is entitled to submit a bona fide claim for determination by the courts. A litigant is entitled to a determination unless to allow the claim to proceed would amount to an abuse of process or would clearly inflict unnecessary injustice on the party seeking the stay, in which case the proceeding should be halted. It is a significant step to stay a proceeding and it is necessary to assess whether there may be a less drastic means of securing the desired objective.
Rozenblit concerned costs orders imposed by reason of several incompetent attempts to plead a valid cause of action. The Court of Appeal had upheld a stay of the proceeding pending payment of the adverse costs orders. In allowing an appeal from this Court, the High Court recognised that an order that a proceeding be stayed subject to satisfaction of a costs order may have the effect of stultifying a proceeding in the case of an impecunious litigant. Kiefel CJ and Bell J noted that grave consequences may follow the exercise of the power and where the consequence of a stay order is the effective termination of the proceedings, there must be strong grounds for its exercise.[47]
[47]Ibid 484–5 [13] (Kiefel CJ and Bell J).
Influential to the judge’s Reasons in the present case was the decision of the Court of Appeal in MUA.[48] That decision stands for the proposition that an injunction cannot be made against the world but must be directed to named or identified persons but the judge relied on a different aspect of the decision.
[48]MUA [1998] 4 VR 143.
MUA arose in the context of a bitter industrial dispute that had seen large pickets at various docks in Melbourne ports.[49] The pickets prompted a proceeding in the Trial Division and, in turn, injunctions were issued against the union, certain identified picketers, and ‘all persons who were on 8 April 1998 or are now or have at any time since 8 April 1998 participated in the picket line at or in the vicinity of the premises of the plaintiffs … and all persons who participate in the picket line at or in the vicinity of the premises from the date of this order.’[50] The order against the union required it to take certain steps to discourage further pickets including by the placing of advertisements.
[49]See also Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1.
[50]MUA [1998] 4 VR 143, 143 (Winneke P, Brooking and Charles JJA).

Three appeals were initiated including by the union, and by various politicians and members of the public. The respondent objected to the union appearing to appeal the interlocutory injunction on the basis that it was in breach of the injunction directed to it and had taken no steps to comply. Faced with that argument, the union sought leave to discontinue its appeal. The Court of Appeal gave leave on the condition that the union pay the respondent’s costs. In doing so, the Court held that the union would not have been heard while it was in breach of the order. The Court said:
It is well established by long authority that an order of this court, although interlocutory, is binding on all parties to the order so long as it remains undischarged, and that it must be obeyed notwithstanding that the parties to whom it is directed believes that it is erroneous or wrong in principle. …
Having regard to these principles, we would have held that the M.U.A. appellants should not have been heard further without first giving a clear indication of their willingness to comply with the terms of the injunction…[51]
[51]Ibid 156.
MUA can be distinguished. The case was not concerned with a stay of a proceeding, let alone a stay that might have the effect of bringing the proceeding to an end. Rather, it was concerned with whether a party can appeal an interlocutory order when it is in breach of the order, and expressed no willingness to comply. It is going too far to treat MUA as establishing that a party cannot pursue a proceeding while they remain in breach of court orders, including an order requiring the payment of damages, obtained in another proceeding.
The applicable principles are those discussed by the High Court in Rozenblit.

Application of the principles

Although the judge was persuaded that the fraud case was very weak, it was not, on that account alone, an abuse of process. It was regularly commenced, and if successful, would have provided a means to set aside the damages judgment. On the applicant’s account, he is impecunious and satisfaction of the damages order would cause financial hardship. Although the judge was sceptical of that, the judge did not make a finding that the applicant could have satisfied the damages order. It is also relevant that the proceeding seeks to overturn the basis of the liability.
Once the judge refused the stay of the damages order, which he was correct to do, the question of enforcement of that judgment was a matter for the State deploying the usual mechanisms available to a judgment creditor and which the evidence suggested it had already began to utilise. In that respect, the applicant had deposed to a bankruptcy proceeding having commenced against him. In the usual course, a stay of a different, albeit related, proceeding should not be used as a means of enforcement, unless to allow the proceeding to continue would work a relevant injustice. Again, in the usual course, a judgment creditor does not enjoy immunity from suit by a judgment debtor until the debt is discharged. The risks that a respondent will incur further costs in circumstances where it has the benefit of an extant judgment can generally be addressed by an application for security for costs.
The judge was motivated by the fact that the applicant continues to be in breach of the undertaking. Although not the subject of argument, the question arises that, at least insofar as the State is concerned, any benefit or rights associated with the undertaking have merged in the judgment.[52] If that is so, the vindication of the undertaking is best left for the enforcement of the judgment debt.
[52]Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507, 516 [20] (French CJ, Bell, Gageler and Keane JJ).
That does not address the fact that the undertaking given by the applicant (who is an officer of the Court) was to the Court and the Court itself has an interest in compliance. In Cirillo v Citicorp Australia Ltd, a majority of the Full Court of the Supreme Court of South Australia explained the nature of the undertaking:
An undertaking as to damages is given to the court and not to an enjoined party. The termination of an injunction creates no right to damages in favour of an enjoined party. Enforcement and the extent of enforcement are discretionary matters for the court. It is for the court to decide whether an interlocutory injunction should have been granted. Only if it is decided that the interlocutory injunction should not have been granted does any question of an enquiry as to damages arise.
An undertaking as to damages does not found or create a cause of action. The right in issue, on which Mr Cirillo’s standing depends, is the right to apply to the court to request an exercise of discretion to order an enquiry as to damages. There is no ‘right’ to an enquiry until the court’s discretion is positively exercised in favour of ordering an enquiry. Even where it is determined that an injunction should not have been granted, the court retains a discretion not to enforce an undertaking.
The inquiry itself will not be held unless and until the Court exercises its discretion in favour of an applicant. Until such time, an applicant can only be said to have a mere hope, a spes, of being awarded compensation, or a mere right to apply. The right to damages does not come into existence until after an enquiry. A chose in action is an existing right, whether vested or contingent. A mere hope or spes is not a chose in action.[53]
[53][2004] SASC 293, [72]–[74] (Gray J with whom Bleby J agreed) (citations omitted).
However, there remains the ability of the State to enforce the judgment debt, and apply for security for costs. The outcome of such processes cannot be known but they represent a means by which the undertaking can be vindicated, and the interests of the State adequately protected. In our view, those steps should be exhausted before the Court adopts other means to enforce the undertaking including the serious step taken by the judge in this case. The respondents’ summons for summary judgment also remains on foot and nothing in these reasons should be taken to foreclose the respondents from having that summons heard and determined. Were it to succeed, the result would be judgment rather than a conditional stay of the proceedings.
We are conscious of the judge’s view of the weakness of the fraud case. It may be that the judge was also motivated to protect the applicant from himself and avoid him incurring further costs. However, neither of those considerations justified the stay of the fraud proceeding on the terms ordered by the judge.
In our view, strong grounds for a stay of the fraud proceeding were not established. We would grant leave to appeal in respect of proposed ground 1 of appeal only and set aside the order staying the fraud proceeding. In its place we would order that each summons filed by the applicant be dismissed.
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[2023] VSCA 126

25 May 2023