FEDERAL COURT OF AUSTRALIA

Mulhern v Bank of Queensland Limited (No 3) [2015] FCA 927

THE COURT ORDERS THAT:

1.    Each of the plaintiffs must not institute proceedings against the Bank of Queensland Limited in this Court without leave of the Court.

2.    The plaintiffs, other than the fourth and tenth plaintiffs, pay the costs of the Bank of Queensland Limited’s application dated 11 March 2015.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The Bank of Queensland Limited (“Bank”) seeks an order, pursuant to s 37AO(2)(b) of the Federal Court of Australia Act 1976 (Cth) (“Federal Court Act”), that each of the plaintiffs be prohibited from instituting proceedings against the Bank in this Court without obtaining the Court’s leave.

2    Section 37AO provides relevantly:

(1)  This section applies if the Court is satisfied:

(a)    a person has frequently instituted or conducted vexatious proceedings in Australian courts or tribunals; or

(b)    a person, acting in concert with another person who is subject to a vexatious proceedings order or who is covered by paragraph (a), has instituted or conducted a vexatious proceeding in an Australian court or tribunal.          

(2)  The Court may make any or all of the following orders:

…

(b)    an order prohibiting the person from instituting proceedings, or proceedings of a particular type, in the Court;

…

(3) The Court may make a vexatious proceedings order on its own initiative or on the application of any of the following:

(a)    the Attorney-General of the Commonwealth or of a State or Territory;

(b)    the Registrar of the Court;

(c)     a person against whom another person has instituted or conducted a vexatious proceeding;

(d)    a person who has a sufficient interest in the matter.

(4) The Court must not make a vexatious proceedings order in relation to a person without hearing the person or giving the person an opportunity of being heard.

(5)  An order made under paragraph (2)(a) or (b) is a final order.

(6)  For the purposes of subsection (1), the Court may have regard to:

(a)    proceedings instituted (or attempted to be instituted) or conducted in any Australian court or tribunal; and

(b)    orders made by any Australian court or tribunal; and

(c)    the person's overall conduct in proceedings conducted in any Australian court or tribunal (including the person's compliance with orders made by that court or tribunal);

including proceedings instituted (or attempted to be instituted) or conducted, and orders made, before the commencement of this section.

3    A “vexatious proceeding” is defined in s 37AM to include:

(a)    a proceeding that is an abuse of the process of a court or tribunal; and

(b)    a proceeding instituted in a court or tribunal to harass or annoy, to cause delay or detriment, or for another wrongful purpose; and

(c)    a proceeding instituted or pursued in a court or tribunal without reasonable ground; and

(d)    a proceeding conducted in a court or tribunal in a way so as to harass or annoy, cause delay or detriment, or achieve another wrongful purpose.

4    Since this matter was heard, the eleventh plaintiff (“Mr Mulhern”) has been found to be a person who has frequently instituted or conducted vexatious proceedings in Australian courts or tribunals in accordance with s 37AO(1)(a): Mulhern v Pearce (No 3) [2015] FCA 806 (“Mulhern v Pearce (No 3)”) at [109].

5    The Bank relies on s 37AO(1)(a) insofar as the order is sought against each of Mr Mulhern and his wife, the second plaintiff (“Mrs Mulhern”). Insofar as the order is sought against the other plaintiffs, the Bank relies on s 37AO(1)(b), contending that each of the other plaintiffs is a person who, acting in concert with Mr Mulhern, has instituted or conducted a vexatious proceeding in an Australian court or tribunal.

6    In Fuller v Toms [2015] FCAFC 91 at [31], the Full Court said:

Section 37AO of the Federal Court Act empowers a court to balance the right of one individual of access to justice with other rights namely, a correlative right on the part of the present respondents to finality and the separate right of other individuals also to access this Court. It is for this Court, the present manifestation of a recognition by the Australian Parliament, the origins of which may be traced to an earlier recognition by the United Kingdom Parliament, via the Vexatious Actions Act 1896 (UK) (59 & 60 Vict. C. 51), of a need for a power to effect just such a balance.

7    “Proceeding” is defined in s 4 of the Federal Court Act to mean a proceeding in a court, whether between parties or not, and to include an incidental proceeding in the course of, or in connexion with, a proceeding, and also to include an appeal. An interlocutory proceeding within a substantive proceeding directed to the attainment of final relief is a proceeding: Official Trustee in Bankruptcy v Gargan (No 2) [2009] FCA 398 at [10]; cf Agapis v Plumbers Licensing Board (No 2) [2014] FCA 1045 at [39]; HWY Rent Pty Ltd v HWY Rentals (in liq) (No 2) [2014] FCA 449 at [102].

8    In Garrett v Federal Commissioner of Taxation [2015] FCA 117 at [7], Pagone J said:

In considering whether a proceeding is a ‘vexatious proceeding’ within the meaning of s 37AM(1), it is necessary to look at whether the proceeding itself is vexatious, not whether it was instituted vexatiously: see Attorney-General (Vic) v Weston [2004] VSC 314 at [14]; Re Vernazza [1960] 1 QB 197, 208. In Attorney-General (Vic) v Horvath, Senior [2001] VSC 269, Ashley J said at [28] in relation to the comparable task required by the provision then found in s 21(2) of the Supreme Court Act 1986 (Vic):

It is one thing to know what the word “vexatious” means. It is another thing to apply s 21(2) to the circumstances of a particular case. In the latter task the following matters are, according to the authorities, relevant: first, where an order has been made dismissing an action as frivolous or vexatious, or striking a pleading out, it is not for a court considering a s 21 application to go behind the order and go into the merits of the argument as a court of appeal would do. Second, findings which are required do not depend on viva voce evidence or credibility of witnesses. The critical evidence is to be found in court files – documents, judgments, orders and reasons. For that reason, any hearsay material contained in an affidavit in support of an application, even though objectionable, should be treated simply as a distraction, and ignored. Third, the question is not whether the manner in which a proceeding is conducted is vexatious; it is whether, having regard to its nature and substance, it should be so characterised. Fourth, and this is a more general proposition with respect to s 21, in determining whether the Attorney-General has made out a case, the court is not concerned with a minute individual examination of each proceeding. It must consider the overall impression created by the number of proceedings, their general character and their results. [Footnotes omitted]

Section 37AO is not the same as the section with which his Honour was concerned in Horvath, but the observations made remain a useful reminder of the focus of attention.

9    In Attorney-General (SA) v Kowalski [2014] SASC 1 at [1044], Blue J said:

The words “without reasonable ground” suggest that the test under s 39(5)(b) [of the Supreme Court Act 1935 (SA), similar in terms to the definition of “vexatious proceeding” in s 37AM of the Federal Court Act] is purely objective: the motive or subjective state of mind of the litigant is irrelevant. This construction is reinforced by the contrast with s 39(5)(a) which focuses upon the litigant’s purpose of the proceedings. This construction is supported by authority: In re Vernazza [1960] 1 QB 197 at 208 per Ormerod LJ; Attorney-General v Wentworth (1988) 14 NSWLR 481 at 491 per Roden J; Attorney-General (WA) v Michael [1999] WASCA 181 at [126] per Anderson J.

10    The meaning and application of the word “frequently” in s 37AO(1)(a) were considered by Perry J in HWY Rent Pty Ltd v HWY Rentals (in liq) (No 2) [2014] FCA 449 at [110]-[114]. I respectfully adopt her Honour’s analysis noting her conclusion that, there being no numerical threshold prescribed by Part VAAA of the Federal Court Act (in which s 37AO appears) itself, the question of whether an applicant has “frequently” instituted or conducted vexatious proceedings for the purposes of s 37AO must be answered in the circumstances of the particular case.

11    In Brogden v Attorney-General [2001] NZCA 208; [2001] NZAR 809 at [21], it was said:

A litigant may be said to be persisting in litigating though the number of separate proceedings he or she brings is quite small if those proceedings clearly represent an attempt to re-litigate an issue already conclusively determined against that person, particularly if this is accompanied by extravagant or scandalous allegations which the litigant has no prospect of substantiating or justifying. The Court may also take into account the development of a pattern of behaviour involving a failure to accept an inability in law to further challenge decisions in respect of which the appeal process has been exhausted, or attacking a range of defendants drawn into the widening circle of litigation solely because of an association with a defendant against whom a prior proceeding has failed.

Background to application

12    Some of the background to the Bank’s application is set out in my judgment in Mulhern v Bank of Queensland [2015] FCA 44 at [13] and following.

13    It appears from that judgment that there has been a long history of litigation involving Mr and Mrs Mulhern and various entities associated with them, since before Mr Mulhern was made bankrupt in February 2010 and Mrs Mulhern was made bankrupt on 30 August 2012.

Mr Mulhern’s bankruptcy

14    Relevant facts concerning Mr Mulhern’s bankruptcy are set out in Mulhern v Pearce (No 3) at [10] and following.

15    Mr Mulhern’s bankruptcy resulted from a judgment of the Supreme Court of Queensland (“Supreme Court”) in Dodrill v The Irish Restaurant & Bar Co Pty Ltd [2009] QSC 317. Daubney J found that the affairs of The Irish Restaurant & Bar Co Ltd (“Irish Restaurant”) were conducted by Mr Mulhern and Mulhern Constructions Pty Ltd in a manner which was oppressive to the applicants, the Dodrills. Daubney J made orders that included orders requiring Mr Mulhern to pay each of the applicants the sum of $334,875.00 within 21 days of service of a copy of the order, and requiring Mr Mulhern to pay the applicants’ costs of and incidental to those proceedings, including reserved costs to be assessed on an indemnity basis.

16    On 3 February 2010, Registrar Belcher of the Queensland Supreme Court made a sequestration order against the estate of Mr Mulhern. The act of bankruptcy relied upon was a failure on the part of Mr Mulhern to pay the judgment sum in the orders of Daubney J, the subject of a bankruptcy notice issued by the Official Receiver on 26 October 2009.

Vexatious proceedings instituted or conducted by Mr Mulhern against his trustees in bankruptcy

17    Relevant facts concerning proceedings brought by Mr Mulhern in connection with his bankruptcy and against his trustees in bankruptcy are set out in in Mulhern v Pearce (No 3) at [17] and following.

18    In Mulhern v Pearce (No 3) at [104], Rangiah J found that the following nine proceedings were vexatious proceedings:

(1)    Federal Court proceeding QUD 208 of 2012;

(2)    Federal Court proceeding QUD 242 of 2012;

(3)    Interim application filed on 31 May 2012 in Federal Court proceeding QUD 244 of 2012;

(4)    Federal Court proceeding QUD 577 of 2012;

(5)    Federal Magistrates Court proceeding SYD 2805 of 2012;

(6)    Federal Court proceeding NSD 1888 of 2013 and two interim applications in that proceeding dated 12 February 2014 and 5 March 2014 respectively; and

(7)    Interim application dated 29 November 2014 in this proceeding (“29 November 2014 application”).

Mrs Mulhern’s bankruptcy

19    Mrs Mulhern’s bankruptcy arose from her failure to pay costs assessed at $24,181.60 pursuant to an order made in the Supreme Court of Queensland on 2 February 2012. The order followed a costs order made on 27 April 2011.

20    Shortly afterward, Mrs Mulhern made an unsuccessful application to the Federal Magistrates Court for an order under s 153B of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”) to annul the bankruptcy: Mulhern v Bank of Queensland Ltd [2012] FMCA 1266.

21    At [8] to [11], Burnett FM set out the following relevant background to Mrs Mulhern’s bankruptcy, and the disputes between the Mulherns and the Bank:

8.    …The debtor [Mrs Mulhern] had been, at least since January 2009, the sole director and shareholder of the five companies which make up the Mulhern Group. At least two of those companies were vehicles by which the Mulherns developed and expanded a Gladstone shopping centre between 1996 and 2010, when the respondent creditor [the Bank] appointed receivers.

9.    By May 2010 the Mulherns were under pressure from the creditor to pay down debts of the Mulhern Group which the bank asserted were in default. Investigating accountants had been appointed and a deadline was given (19 May 2010) to provide evidence of a sale contract for the Gladstone Shopping Centre. Plainly, none was produced. On 19 May 2010, that is, shortly before the appointment of receivers, Ms Mulhern withdrew a sum of $479,466.00 from the bank’s accounts belonging to the five Mulhern Group companies and transferred those funds into her personal account.

10.    When receivers were appointed on 24 May 2010 these withdrawals were immediately apparent to them. They promptly applied to the Supreme Court of Queensland the following day for Mareva orders freezing the funds in Ms Mulhern’s account and then commenced recovery proceedings. Those proceedings were commenced by the Bank of Queensland (the creditor) and the receivers on various grounds arising out of the rights associated with the company charges held by the bank over the assets of the Mulhern Group.

11.    The debtor applied to set aside or vary the Mareva orders. She attended that matter in person and was cross-examined on that occasion. The application was dismissed with costs, which gave rise to the costs order the subject of the Bankruptcy Notice….

22    Mrs Mulhern did not appeal against the decision of Burnett FM.

23    However, on 5 September 2013, Mrs Mulhern brought proceedings NSD 1815 of 2013 in this Court for an order under s 153B of the Bankruptcy Act to annul the sequestration order, or alternatively that the sequestration order be set aside. Jacobson J found that the application “could not have succeeded on its merits and in any event was doomed to fail as an abuse of process”: Mulhern v Bank of Queensland Ltd [2014] FCA 26 at [64]. At [62], Jacobson J found that Mrs Mulhern’s application was an abuse of process because it consisted of nothing more than an attempt to relitigate an application in which she had been unsuccessful in the Federal Magistrates Court.

24    On the basis of these findings, I find that proceeding NSD 1815 of 2013 was a vexatious proceeding in that it was an abuse of the process of this Court and it was instituted and pursued in the Court without reasonable ground.

Mulherns’ litigation against the Bank

25    The plaintiffs’ statement of claim in these proceedings includes an allegation of a conspiracy between the Dodrills (mentioned in paragraph 15 above) and the Bank. Although not pleaded precisely, the allegation involves an asserted agreement to cause a default of the Mulhern Group’s banking facilities by effecting a default of various personal guarantees executed in favour of the Bank by Mr and Mrs Mulhern.

26    According to the statement of claim, as at May 2006, the Mulhern Group had pre-existing loan facilities with the Bank of up to $53 million approved for a period of four years expiring on 29 May 2010. The Mulhern Group refers to the five companies mentioned in the extract from Burnett FM’s judgment set out above. The statement of claim alleges that, by reason of the Dodrills’ actions, Mr Mulhern was wrongfully made to default on the Bank’s loan facilities. It also alleges that, in May 2010, the Bank wrongly appointed the receivers to the Mulhern Group.

Proceeding NSD 2174 of 2012: First, second and third proceedings against the Bank

27    On 18 December 2012, the ninth plaintiff (“Mulhern’s Properties”) commenced proceedings NSD 2174 of 2012 in this Court against the Bank claiming $84.5 million (“Mulhern’s Properties proceeding”). On 3 May 2013, the statement of claim in those proceedings was struck out: Mulhern’s Properties Inc v Bank of Queensland Ltd [2013] FCA 401. Mr Mulhern appeared for Mulhern’s Properties on the strike out application.

28    On 23 January 2013, Mulhern’s Properties also caused to be filed an interlocutory application which sought summary judgment in the sum of $42 million.

29    On 11 March 2013, Mulhern’s Properties filed a second interlocutory application seeking orders including (without alteration):

(1)    Pursuant to Rule 1.32 and in accordance to Rule 1.34 Richard Mulhern is given leave to represent the applicant.

(2)    That the made Australian Bankruptcy of Michael Richard Mulhern on February 3rd 2010 be annulled pursuant to s 153 of the Bankruptcy Act for a compelling non compliance or alternatively pursuant to Rule 1.32 for clear abuse of process.

(3)    That pursuant to Rule 1.32 Richard Mulhern’s Irish Passport & United States of America Green Card seized from him on the 8th January 2012 at his entry at Sydney Airport be returned to him.

(4)    That pursuant to Rule 1.32 Richard Mulhern’s Australian Passport (now invalid) be returned to him so he can attend to his obligation with The Australian Department of emigration authorities.

(5)    That the made Australian Bankruptcy by Bank of Queensland of Jacqueline P. Mulhern on the 3rd of September 2012 be annulled pursuant to s 153 of the bankruptcy Act for non compliance or alternatively pursuant to rule 1.32 for deliberate abuse of process.

(6)    Pursuant to Rule 1.32 of the Applicants interlocutory application filed on 23 January 2013 (default judgment) be ordered by the NSW Honourable Federal Court of Australia with payment effected by 1st April 2013 mitigate further commercial damages been affected on the applicant.

30    At [18], Flick J noted that Mulhern’s Properties was seeking to re-agitate issues which had been determined by Reeves J in Pearce v Mulhern [2010] FCA 446 concerning the ownership of various companies in the Mulhern Group. His Honour said:

Even if there be no issue estoppel as between Mulhern’s Properties and the Bank of Queensland, the ability of a party with a common interest to re-litigate issues which have been judicially resolved is not a course to be encouraged.

31    At [20], his Honour concluded that the deficiencies in the statement of claim were such that it failed “with any degree of certainty to set forth ‘a reasonable cause of action’.” At [21], his Honour decided that “[t]he cumulative effect of the deficiencies in the existing Statement of Claim [was] such that the entirety of the Statement of Claim should be struck out”. His Honour did not decide whether Mulhern’s Properties lacked the necessary standing to claim the orders sought, or whether the whole of the proceeding was an abuse of process.

32    Flick J also dismissed the two interlocutory applications. His Honour explained that Mr Mulhern’s reliance on rule 1.32 of the Federal Court Rules 2011 (Cth) was misplaced and dismissed the interlocutory applications without further reasons.

33    In my view, the fact that the statement of claim was struck out in its entirety demonstrates that the proceeding was a vexatious proceeding, in that it was instituted without reasonable ground.

34    The 23 January 2013 application was plainly hopeless in light of the fact that the statement of claim was struck out in its entirety. Orders 2 to 5 sought in the interlocutory application of 11 March 2013 were misconceived as orders against the Bank, and order 6 duplicated the relief sought in the 23 January 2013 application. Consequently, the 23 January 2013 interlocutory application was vexatious.

35    The 11 March 2013 application was vexatious in that it was instituted without reasonable ground, except as to order 1 of the interlocutory application (by which Mr Mulhern sought leave to appear).

36    Neither Mr Mulhern nor Mrs Mulhern was a party to the proceeding. However, I find that, by appearing and arguing the applications on behalf of Mulhern’s Properties, Mr Mulhern conducted the three proceedings comprising the Mulhern’s Properties proceeding within the meaning of s 37AO(1)(a).

Proceeding NSD 2079 of 2013: Fourth proceeding against the Bank

37    On 9 October 2013, Mrs Mulhern and each of the Mulhern Group of companies commenced proceeding NSD 2079 of 2013 (“2013 proceeding”) for damages of over $50 million in this Court. The proceeding sought an order that Mrs Mulhern have leave pursuant to s 237 of the Corporations Act 2001 (Cth) (“Corporations Act”) to bring the proceedings on behalf of each of the Mulhern Group of companies.

38    The 2013 proceeding was struck out by Edmonds J on 5 February 2014.

39    By this time, Mrs Mulhern was an undischarged bankrupt. Further, according to the plaintiffs’ statement of claim in the proceeding currently before the Court, at least three of the Mulhern Group of companies were deregistered as from 3 February 2014. A company ceases to exist on deregistration: Corporations Act, s 601AD.

40    In those circumstances, the proceeding was hopeless, at least by the time that it was struck out on 5 February 2014. On this basis, I am satisfied that the proceeding was a vexatious proceeding conducted by Mrs Mulhern.

41    The evidence does not support a conclusion that this proceeding was conducted by Mr Mulhern.

Proceeding NSD 887 of 2014: Fifth, sixth and seven proceedings against the Bank

42    In the present proceeding, the plaintiffs sought relief that included damages or equitable compensation of over $428 million. The claims were extravagant in certain respects: a claim for damages of $200 million for Mr Mulhern’s alleged false imprisonment and $60 million for Mrs Mulhern’s loss of consortium.

43    The alleged false imprisonment concerned Mr Mulhern’s arrest upon his return to Australia on 8 January 2012 and his consequent inability to depart Australia, by reason of the fact that his trustees in bankruptcy did not permit that departure. The alleged loss of consortium arose out of Mrs Mulhern’s bankruptcy, which was alleged to have resulted in “loss of servitude for her husband” because Mr Mulhern cannot leave Australia (and she is living in Ireland) and a breach of her human rights to associate with her husband from 8 January 2012.

44    The statement of claim included allegations:

(a)    that agents of the Bank used threats and intimidation against the first plaintiff, causing her “to lose all faith in the Australian Courts to protect her rights and those of her family”;

(b)    that Mr Mulhern’s bankruptcy has imposed breaches of human rights upon him;

(c)    that the actions of Mr Mulhern’s trustees in bankruptcy have caused psychological damage and harm to Mr Mulhern and his family; and

(d)    that the Bank breached undertakings to the Supreme Court in contravention of the International Covenant on Economic, Social and Cultural Rights and the International Convention against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment.

45    On 5 February 2015, I ordered that the statement of claim be struck out in its entirety, and that judgment be given for the Bank against each of the first and third to tenth plaintiffs: Mulhern v Bank of Queensland [2015] FCA 44.

46    Concerning Mrs Mulhern, I also ordered that judgment be given for the Bank in relation to the following parts of the proceeding:

(1)    all claims for relief arising out of orders made by the Supreme Court of Queensland;

(2)    all claims for relief arising out of the sequestration order made against Mrs Mulhern’s estate.

47    Concerning Mr Mulhern, I also ordered that judgment be given for the Bank in relation to the following parts of the proceeding:

(1)    all claims for relief arising out of orders made by the Supreme Court of Queensland;

(2)    his claim for damages for false imprisonment.

48    At [87], I concluded that, to the extent that the plaintiffs’ claims were based upon contentions that orders were wrongfully obtained in Supreme Court, the proceedings were an abuse of process because they were a collateral attack upon a final decision of that Court.

49    At [93], I found that Mrs Mulhern’s claim for loss of consortium was bound to fail.

50    At [106], I concluded that Mrs Mulhern had no reasonable prospects of successfully prosecuting the proceeding insofar as she sought relief arising out of orders made by the Supreme Court, and the sequestration order made against her estate.

51    At [111], I concluded that Mr Mulhern’s position was relevantly similar to that of Mrs Mulhern, with one qualification not presently relevant. At [112], I concluded that Mr Mulhern’s claim for false imprisonment against the Bank had no prospects.

52    The claims in the proceeding, as formulated in the statement of claim, were hopeless. The majority of the proceeding was summarily dismissed.

Significance of the Mulherns’ bankruptcies

53    To the extent that the proceeding was not summarily dismissed, I stayed the proceeding until the conclusion of the bankruptcies of Mr and Mrs Mulhern, or until further order.

54    The stay concerned causes of action that, if they exist, have vested in Mr and Mrs Mulhern’s respective trustees in bankruptcy. It was not disputed that, in respect of those causes of action, Mr and Mrs Mulhern had no standing by reason of their bankruptcies.

55    At [110] and [111], I left open the possibility that Mr and Mrs Mulhern may have been able to pursue these causes of action following the conclusion of their bankruptcies. I have now considered the decision of the New South Wales Court of Appeal in Samootin v Shea [2010] NSWCA 371, which held (at [94] and [95], Campbell JA, Beazley and Hodgson JJA agreeing) that discharge of a bankrupt from bankruptcy does not cause any assets that have vested in the trustee in bankruptcy to revert to the bankrupt.

56    At [65], Campbell JA said:

The Court has power acting on its own motion to dismiss proceedings brought by a person who does not have standing to do so, as it is an abuse of process for a person who lacks the legal right to do so to commence or continue court proceedings. Because the Court should not permit an abuse of its process to occur, the Court should exercise its power to dismiss proceedings once it is satisfied that proceedings are incompetent.

57    On this basis, I find that the whole of proceeding NSD 887 of 2014 was a vexatious proceeding because, to the extent that the proceeding was brought by Mr and Mrs Mulhern it was either an abuse of process or brought without reasonable ground, and to the extent that the proceeding was brought by the other plaintiffs, it was brought without reasonable ground.

Interlocutory applications

58    In the course of proceeding NSD 887 of 2014, the plaintiffs filed an interlocutory application dated 21 October 2014 for orders to the effect that:

(1)    The Bank’s application to strike out the statement of claim or alternatively for summary dismissal be stayed until the Bank filed a defence and supporting evidence;

(2)    The plaintiffs be granted leave to file an amended statement of claim following receipt of the Bank’s defence and evidence;

(3)    The Bank pay the sum of $118,000.00 representing the overcharging of interest by the Bank; $30 million being Mr and Mrs Mulhern’s prior equitable interests in the Mulhern Group of companies; loss of commission to Andrew Quinert in the sum of $900,000 and $435,000 to Cougan Corporation Pty Ltd.

59    By application dated 29 November 2014, the plaintiffs applied for:

(1)    Leave to file an amended originating application and amended statement of claim;

(2)    Joinder of the Official Receiver of the Australian Financial Securities Authority to the proceeding and an order that the bankruptcy notice which founded Mr Mulhern’s bankruptcy be declared invalid;

(3)    An order that the sequestration order made against the estate of Mrs Mulhern be declared void;

(4)    An order that Mr Mulhern’s trustees in bankruptcy be ordered to produce to the Court documents including Mr Mulhern’s passports and United States of America Green Card; and

(5)    Summary judgment for the entire sum claimed by the plaintiffs as described in the amended statement of claim.

60    The plaintiffs, excluding the fourth and tenth plaintiffs, also filed an interlocutory application dated 4 June 2015 for orders including:

(1)    A declaration that the decision of the Official Receiver to issue a Bankruptcy Notice addressed to Mr Mulhern was an improper exercise of the power conferred because the judgment was not a final judgment; and/or

(2)    A declaration that the decision by the Official Receiver to issue a Bankruptcy Notice addressed to Mr Mulhern was an improper exercise of the power conferred because the Judgment was not a final Judgment and because the address provided on the Bankruptcy Notice was a false address; and/or

(3)    A declaration that the decision of the Official Receiver to issue a Bankruptcy Notice issued addressed to Mr Mulhern was an improper exercise of that power conferred because the Judgment was misleading;

(4)    A declaration that the decision of the Official Receiver to issue the Bankruptcy Notice at the request of the Petitioning creditor was void because the Petitioning of Mrs Mulhern based upon the Bankruptcy Notice was used by the Bank for an improper purpose namely to prevent Mr Mulhern from having any standing to complain to any authority with respect to the Bank’s overcharging of interest;

(5)    An Order that the Official Receiver cause the Court appointed Trustees Messer Pearce and Heers to forthwith release to Mr Mulhern or his solicitors the following:

(a)    All documents seized by Pearce and Heers as assisted by the Official Receivers as a result of the raid on Mulhern offices located in Cleveland Queensland on 5 March 2010;

(b)    All documents on or about Mr Mulhern's person and seized by the Australian Federal Police pursuant to an arrest Warrant issued by Justice Logan on or about 9 August 2011 and executed on 8 January 2012 at the Sydney Airport as a result of Mr Mulhern’s entry into Australia including but not limited to Mr Mulhern’s:

(i)     Renounced Australian Passport,

(ii)    Valid Irish Passport,

(iii)    The United States Permanent Residency Card (USA Green Card); and

(iv)    All other documents seized but not returned contrary to the undertakings provided to Justice Flick by Pearce and Heers as agent for the Official Receiver on 17 January 2012.

(c)    A declaration that the decision of the Official Receiver to issue a Bankruptcy Notice addressed to Mrs Mulhern was an improper exercise of the power conferred because the judgment was based upon was a debt for costs created by ex-parte Orders obtained by the Petitioning Creditor which were unenforceable as a consequence of the operation of Section 129(2) of the Uniform Civil Procedure Rules 1999 Queensland and therefore not a final judgment; and/or

(d)    A declaration that the Official Receiver was misled by the Bank into issuing the Bankruptcy Notice as against Mr Mulhern was because the Bank was at all material times aware of Mrs Mulhern’s prior equitable Australian interests of at least (Thirty Million Australian Dollars) $30,000,000.00 because the Petitioning creditor was Mrs Mulhern’s Australian banker.

(e)    A declaration that the decision of the Official Receiver to issue the Bankruptcy Notice at the request of the Petitioning creditor was void because the Petitioning of the Second Applicant based upon the Bankruptcy Notice was used by the Petitioning Creditor for an improper purpose namely to prevent Mrs Mulhern from having any standing to complain to any authority with respect to the Petitioning Creditor’s overcharging of interest.

(f)    A declaration that the Plaintiffs have the right to file and serve prior to 24 May 2016 (the damages crystallisation date) a further Application against the Bank seeking damages resulting from the overcharging of interest and other actions taken by the Bank from 15 March 2007 when the bank was first notified of the overcharging issues.

(g)    That the Bank be ordered to release to the Plaintiffs Solicitors within 14 days from the date of this order pursuant to Rule 7.23 the following documents:

(i)    All documents seized and removed by Korda Mentha as agents for the Bank following 24 May 2010 as a result of a raid on upon premises described as Dicey's Gladstone (Hotel), Dawson Highway Gladstone;

(ii)    All documents seized and removed by Korda Mentha as agents for the Bank following 24 May 2010 as a result of a raid on upon premises described as Mrs Mulhern's Office located at Masthead Drive, Cleveland, Queensland;

(h)    That the Bank be ordered to account to the Court and Mrs Mulhern’s solicitors for all money’s [sic] generated or expended, and all capital funds seized and/or converted between 24 May 2010 until 24 May 2015 with respect to all Australian companies of the Mulhern Group over which the bank caused Receivers and Managers to be appointed on 24 May 2010;

(i)    That the Bank be ordered by way of Interlocutory relief damages to return Mrs Mulhern forthwith to the position she and her Australian companies would have been in prior to 24 May 2010 including:

(i)    Mrs Mulhern’s bank acknowledged prior equitable interest as of July 2005 in the sum of $30,000,000.00;

(ii)    All moneys seized in Australian bank accounts in Mrs Mulhern’s name as at 30 August 2012 including accounts with Westpac and Bankwest in the sum of $515,165.14;

(iii)    Costs in relation to Orders of the Queensland Court of Appeal No 4289/12 as ordered by Justice Gotterson on 17 August 2012 in the sum of $1,700,000.00;

(iv)    Interest on pursuant to the Federal Court of Australia Act 1976 from 24 May 2010 until 12 June 2015.

61    The 21 October 2014 and 29 November 2014 applications were summarily dismissed with costs on 26 February 2015.

62    As to the 21 October 2014 application, there was no reasonable ground for any of the relief sought in that application. The claims for payment mirrored claims made in the statement of claim. There was no reasonable ground for the Bank’s application to be stayed: as I explained in Mulhern v Bank of Queensland [2015] FCA 44 at [66], the plaintiffs had no entitlement to a response from the Bank to their claim unless and until they were able to articulate it with sufficient clarity and precision. As to the proposal to file an amended statement of claim, the only proposed amendment did not make any substantive change to the pleading. Accordingly, I conclude that the 21 October 2014 application was a vexatious proceeding.

63    As to the 29 November 2014 application, that was found to be a vexatious proceeding in Mulhern v Pearce (No 3), as noted above.

64    As to the 4 June 2015 application, that application was brought following the commencement of proceeding NSD 371 of 2015 in which Mr and Mrs Mulhern seek relief against the Official Receiver in Bankruptcy. The 4 June 2015 application disregards the fact that the proceeding had been substantially summarily dismissed, and otherwise stayed. The relief sought against the Bank includes (again) an extravagant claim for damages in the millions of dollars. The application also seeks relief directed against persons who are not parties to the proceeding, being the Official Receiver and Mr Mulhern’s trustees in bankruptcy.

65    At the hearing, Mr McClelland, the solicitor for the plaintiffs (except the fourth and tenth plaintiffs) acknowledged that the application duplicated claims for relief in proceeding NSD 371 of 2015, but said that the application was made in order to obtain an early hearing date. That is not a satisfactory explanation for what is a plain abuse of process, bringing identical claims in separate proceedings.

66    I find that the 4 June 2015 application is a vexatious proceeding in that it was brought without reasonable ground and that, in significant respects, it is an abuse of process.

Summary of vexatious proceedings instituted or conducted by Mr and Mrs Mulhern

67    In addition to the nine proceedings found by Rangiah J to have been vexatious proceedings, I have found that Mr Mulhern has instituted or conducted the following vexatious proceedings (in chronological order):

(1)    Federal Court proceeding NSD 2174 of 2012;

(2)    Interim Application dated 23 January 2013 in Federal Court proceeding NSD 2174 of 2012;

(3)    Interim Application dated 11 March 2013 in Federal Court proceeding NSD 2174 of 2012;

(4)    Federal Court proceeding NSD 887 of 2014;

(5)    Interim Application dated 21 October 2014 in Federal Court proceeding NSD 887 of 2014; and

(6)    Interim Application dated 4 June 2015 in Federal Court proceeding NSD 887 of 2014.

68    I have found that Mrs Mulhern has instituted or conducted the following vexatious proceedings:

(1)    Federal Court proceeding NSD 1815 of 2013;

(2)    Federal Court proceeding NSD 2079 of 2013;

(3)    Federal Court proceeding NSD 887 of 2014;

(4)    Interim Application dated 21 October 2014 in Federal Court proceeding NSD 887 of 2014;

(5)    Interim Application dated 29 November 2014 in Federal Court proceeding NSD 887 of 2014; and

(6)    Interim Application dated 4 June 2015 in Federal Court proceeding NSD 887 of 2014.

Section 37AO(1)(a)

69    A Court has already found that s 37AO(1)(a) applies to Mr Mulhern.

70    To the extent that I am required to make a separate finding about that matter, I am satisfied that s 37AO(1)(a) applies to Mr Mulhern having regard to the nine proceedings mentioned in [18] above and the six proceedings mentioned in [67] above.

Section 37AO(1)(a) applies to Mrs Mulhern

71    I have no hesitation in concluding that the six vexatious proceedings instituted or conducted by Mrs Mulhern over the period 2013 to date warrants a conclusion that she has frequently instituted or conducted vexatious proceedings.

72    Accordingly, I am satisfied that s 37AO applies to Mrs Mulhern.

Section 37AO(1)(b) applies to the other plaintiffs

73    As to the first and the third to tenth plaintiffs in this proceeding, I am satisfied that each of them is a person who acted in concert with each of Mr and Mrs Mulhern in instituting and conducting the following vexatious proceedings:

(1)    Federal Court proceeding NSD 887 of 2014;

(2)    Interim Application dated 21 October 2014 in Federal Court proceeding NSD 887 of 2014; and

(3)    Interim Application dated 29 November 2014 in Federal Court proceeding NSD 887 of 2014.

74    I am satisfied that each of the first, third, and fifth to ninth plaintiffs is a person who acted in concert with each of Mr and Mrs Mulhern in instituting and conducting a further vexatious proceeding, that is the Interim Application dated 4 June 2015 in Federal Court proceeding NSD 887 of 2014.

75    In the case of Mulhern’s Properties, I am also satisfied that that company is a person who also acted in concert with Mr Mulhern in instituting and conducting the following vexatious proceedings:

(1)    Federal Court proceeding NSD 2174 of 2012;

(2)    Interim Application dated 23 January 2013 in Federal Court proceeding NSD 2174 of 2012; and

(3)    Interim Application dated 11 March 2013 in Federal Court proceeding NSD 2174 of 2012.

76    Accordingly, I am satisfied that s 37AO applies to each of each of the first and the third to tenth plaintiffs.

Appropriate relief

77    The power to make an order under s 37AO requires the exercise of discretion. In Singh v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] FCA 833; (2011) 282 ALR 56, Bromberg J considered the relevant principles prior to the enactment of s 37AO, but which continue to be relevant:

[76] In the exercise of the discretion it is important to bear in mind that the making of orders that diminish a person’s capacity to access justice through the courts is a decision which is never made lightly: Soden v Kowalski at [35]; Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2007] FCA 1069; (2007) 242 ALR 370 at [44]; Ramsey v Skyring at [51]; and Attorney General v Wentworth at 484. It is a decision which requires the careful balancing of a number of considerations.

[77] The vexatious litigant sanction aims to strike a fair balance between the right of applicants to access justice (to bring valid disputes before a court for conclusive determination) and the countervailing right of respondents to finality of litigation and protection from further unmeritorious litigation. Another significant countervailing factor weighing in that balance is the need to safeguard scarce judicial resources so that other litigants before the Court are not unfairly prejudiced and court resources are not unnecessarily wasted.

[78] The Court’s overarching purpose as set out in s 37M of the Federal Court Act ‘is to facilitate the just resolution of disputes (a) according to law; and (b) as quickly, inexpensively and efficiently as possible.’ Section 37N provides that parties are to act consistently with the overarching purpose. The just resolution of disputes requires considering the rights of both parties to the litigation: Soden v Kowalski at [200] (Stone J). Where serial litigants persistently bring vexatious claims before the Court, repeatedly targeting and harassing the same respondents, the administration of justice as well as the Court’s overarching purpose is effectively subverted as vexatious litigants use “the process of the court as an instrument of injustice and oppression”: Scott v Human Rights and Equal Opportunity Commission [2010] FCA 1323 at [226] (North J). The “efficiency” referred to in s 37M includes the efficient utilisation of the court’s resources and the need to provide to other litigants before the Court timely access to justice: Aon Risk Services Australia Ltd v Australia National University [2009] HCA 27; (2009) 239 CLR 175 at [93].

78    Mr and Mrs Mulhern have repeatedly sought to litigate against the Bank, raising a variety of claims in respect of which they either lacked standing, or had no prospects of success, or sought relief relating to their bankruptcies, being matters with which the Bank had no concern. The litigation has been characterised by multiple applications seeking identical relief and extravagant claims including extravagant claims for damages on a summary basis. I have found that all of the proceedings that have been brought by them against the Bank (including the proceedings brought by Mulhern’s Properties and conducted by Mr Mulhern) were vexatious proceedings.

79    In his submissions on behalf of the plaintiffs, Mr McClelland identified the primary questions as the necessity and the utility of the relief sought by the Bank. He submitted that the Bank had other remedies available to it, such as pleading estoppels (presumably in answer to future attempts by the Mulherns to vindicate their claim that they are victims of the Bank’s practices).

80    Mr McClelland contended that the relief sought, if granted, would deny that the Bank has anything at all to answer for insofar as Mr and Mrs Mulhern are concerned. That contention is not correct. The proposed order would require its objects to satisfy a judge that a proper basis exists for any prospective application. The order would serve as a filter to ensure that the Bank is not harassed by proceedings without substance and that court time and resources are not wasted: cf Singh v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] FCA 833; (2011) 282 ALR 56 at [79] citing Jones v Skyring (1992) 109 ALR 303 at 312; Ramsey v Skyring (1999) 164 ALR 378 at [52].

81    Mr McClelland also noted that Mr Mulhern had given an assurance that he would not commence further proceedings against his trustees in bankruptcy without leave, and that this assurance had not been broken. This submission appears to refer to the order made by Collier J, referred to in Mulhern v Pearce (No 3) at [56] that:

Until further order Michael Richard Mulhern must not start or continue any other court proceeding against Mark William Pearce and Andrew John Heers without the leave of the court except for any appeal that may be brought against the judgment delivered by the court on 1 August 2014.

82    I am doubtful that Mr McClelland’s submission is factually correct having regard to paragraph (v) of the 4 June 2015 application, set out above. I also note that, in Mulhern v Pearce (No 3) at [61], Rangiah J found that the 29 November 2014 application “may be in breach of the interlocutory injunction granted by Collier J on 1 August 2014 restraining Mr Mulhern from starting court proceedings against the trustees without the leave of the Court”. However, I do not make any finding about these matters.

83    Particularly having regard to the extensive terms of the 4 June 2015 application, following the orders made on 5 February 2015, and the terms of the written submissions lodged on behalf of the plaintiffs, I have concluded that Mr and Mrs Mulhern are not likely to cease attempting to litigate against the Bank and are not likely to restrict their claims to matters based on reasonable grounds. I accept the Bank’s submission that any costs they inflict on the Bank are likely to be irrecoverable, as a result of their bankruptcies, and that this is a relevant consideration in the exercise of the Court’s discretion: cf Attorney General in and for the State of NSW v Gargan [2010] NSWSC 1192 at [130].

84    As a result, in my view, Mr and Mrs Mulhern’s right to access justice should now be restricted to the extent of the order sought by the Bank, in order to protect the Bank from further unmeritorious litigation and to protect the Court’s limited resources.

85    Concerning the other plaintiffs, I accept the Bank’s submission to the effect that there is a legitimate concern that those other plaintiffs may be co-opted by Mr and Mrs Mulhern to bring further proceedings against the Bank unless the proposed order is made. In the circumstances, I will include those parties as objects of the order sought. Again, I reiterate that the order will not prevent any party with a legitimate claim against the Bank from commencing proceedings. They will simply need to demonstrate to a judge that they have grounds justifying a grant of leave to commence proceedings.

Associate:

Dated:    25 August 2015