Federal Court of Australia

Shanahan as trustee of the bankrupt estate of Hall v Hall, in the matter of Hall [2025] FCA 1020

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application filed on 7 August 2024 by John Leighton Hall and Caroline Charmaine Hall (respondents) be dismissed.

2.    The costs of John Gervase Shanahan as Trustee in Bankruptcy of John Leighton Hall (A Bankrupt) of and incidental to the proceeding be paid by the respondents, such costs to be taxed if not otherwise agreed.

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

REASONS FOR JUDGMENT

COLLIER J:

1    Before the Court is an interlocutory application (Application) filed by the respondents, John Leighton Hall and Caroline Charmaine Hall (the Halls), on 7 August 2024, seeking summary dismissal, or alternatively a permanent stay, of the substantive proceedings. By an application and statement of claim filed on 11 July 2024, the applicant, John Gervase Shanahan (Mr Shanahan), sought various orders relating to a property owned by Mrs Hall, and, importantly, claimed that Mrs Hall owns that property on a resulting trust for Mr Shanahan (substantive proceedings). Mr Shanahan is the trustee in bankruptcy of Mr Hall.

2    In summary, the Halls seek summary dismissal against Mr Shanahan as they allege the substantive proceedings are an abuse of process. By the Application, the Halls seek the following orders:

1.    That the proceeding be summarily dismissed, pursuant to the inherent jurisdiction of the Court or alternatively rule 26.01(1)(d) of the Federal Court Rules 2011 (Cth) or section 23 of the Federal Court Act 1976 (Cth), on the ground that the proceeding is an abuse of process.

2.    Alternatively to order 1 above, pursuant to the inherent jurisdiction of the Court or alternatively section 23 of the Federal Court Act 1976 (Cth), the proceeding be permanently stayed on the ground that the proceeding is an abuse of process.

3.    The Applicant pay the costs of the Respondents of and incidental to the proceedings including the costs of and incidental to the stay application, on:

(a)     the indemnity basis; or

(b)     alternatively, the ordinary basis.

4.    Such further or other orders or directions as the Court considers appropriate.

3    In my view, the Halls’ Application should be dismissed with costs. I have formed this view for the reasons outlined below.

background

4    On or about 6 November 2020, Mrs Hall purchased a property at 171 Campbell Street, Bundall, in the State of Queensland, for the amount of $1,120,000 (Campbell Street Property).

5    On 24 March 2021, Mr Hall was made bankrupt.

6    On 12 January 2022, Mrs Hall was served with a summons for examination pursuant to the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) in a separate proceeding in this Court.

7    On 13 January 2021, Mr Shanahan caused a caveat to be lodged over the Campbell Street Property.

8    On 7 February 2022, Mrs Hall gave Mr Shanahan a notice under s 126(2)(a) of the Land Title Act 1994 (Qld) (LTA), requiring Mr Shanahan to commence proceedings within 14 days, failing which the caveat over the Campbell Street Property would lapse.

9    On 9 February 2022, the parties’ solicitors had a teleconference, during which it was agreed that:

(a)    Mrs Hall would withdraw the notice given on 7 February 2022 and take the necessary steps to enable the lodgement of a consent caveat over the Campbell Street Property; and

(b)    the consent caveat would expire three months after the conclusion of Mrs Hall’s statutory examinations unless Mr Shanahan commenced proceedings before the expiry of that period.

10    For one reason or another, the Registrar of Titles did not permit a consent caveat to be lodged over the Campbell Street Property. On 21 March 2022, the parties agreed that:

(a)    Mr Shanahan would file proceedings in the Queensland Supreme Court with respect to his asserted right over the Campbell Street Property;

(b)    Mr Shanahan would refrain from serving that proceeding in the Supreme Court until the completion of the public examinations. Within two months of the conclusion of those examinations, Mr Shanahan would:

(i)    serve the Supreme Court proceedings (or an amended version); or

(ii)    discontinue the Supreme Court proceedings; and

(c)    a notice of action pursuant to s 126(2)(b) of the LTA would be lodged in the Land Titles Registry,

(the Interim Agreement).

11    The Interim Agreement was the result of various negotiations over a period of several weeks.

12    On 30 March 2022, Mr Shanahan commenced proceedings in the Queensland District Court referable to the Interim Agreement (QDC Proceeding). A copy of the QDC Proceeding was sent to the Halls’ solicitors on 14 April 2022 as a courtesy (and expressly not by way of service).

13    On 14 April 2022, the parties agreed to draft consent orders to have the District Court Proceeding adjourned to a date not before 25 July 2022. Those consent orders were made by the District Court on 19 April 2022.

14    On 21 April 2022, Mrs Hall produced documents pursuant to the summons of 12 January 2022. On 10 May 2022, Mrs Hall was examined in the Federal Court before a Registrar of the Court.

15    On 21 July 2022, the Halls’ solicitors wrote to Mr Shanahan’s solicitors stating their belief that, in circumstances where the QDC Proceeding was not served on them by 10 July 2022, Mr Shanahan did not intend to progress the QDC Proceeding.

16    Further on 21 July 2022, Mr Shanahan’s solicitors wrote to the Halls’ solicitors stating that Mr Shanahan intended to relist the examination of the Halls, and proposing that the QDC Proceeding be adjourned to permit that re-examination.

17    At 3.57pm on 21 July 2022, the Halls’ solicitors agreed in principle to the adjournment of the District Court Proceeding to allow the Halls to be re-examined. The Halls’ solicitors proposed that the Interim Agreement be varied such that Mr Shanahan be required to serve or discontinue the QDC Proceeding by 30 September 2022 (Varied Interim Agreement). The rationale for the Varied Interim Agreement, as stated in the email sent by the Halls’ solicitors, was as follows:

These changes are intended to ensure that any consent orders contain a clear and certain deadline for the service of any proceedings by your client, whilst ensuring that your client has ample time to consider whether or not to proceed with his application.

18    At 4.34pm on 21 July 2022, Mr Shanahan’s solicitors agreed to the Varied Interim Agreement with a caveat that Mr Shanahan agreed to the proposal:

“…to the extent that it is not intended to act as a guillotine order”.

19    On 22 July 2022, following further correspondence between the parties’ solicitors, the QDC Proceeding was adjourned by consent to 7 October 2022.

20    On 31 August 2022, Mrs Hall was again examined in the Federal Court. That examination was adjourned by orders of a Registrar of the Court to:

…a date to be fixed, to be concluded at the expiration of two months from today, unless the trustee seeks to have it re-listed.

21    As at 30 September 2022, Mr Shanahan had neither served nor discontinued the QDC Proceeding.

22    On 6 October 2022, Mr Shanahan’s solicitors wrote to Mrs Halls’ solicitors, indicating that they expected the QDC Proceeding would be served “in the next two weeks”.

23    Also on 6 October 2022, Mr Shanahan’s solicitors wrote to the Civil List Manager of the QDC requesting that the QDC Proceeding again be adjourned to the Registry of that Court. By reply email, the Civil List Manager adjourned the QDC Proceeding and stated, relevantly:

Please note that this is the third adjournment sought for the hearing of the Application. Should further adjournments be requested, it will be referred to the Court for direction.

24    Between 6 October 2022 and 1 March 2024, there was no communication between the parties as to Mr Shanahan’s asserted claims over the Campbell Street Property, nor was there any progression of the QDC Proceeding.

25    On 1 March 2024, Mr Shanahan’s solicitors wrote to the Halls’ solicitors, foreshadowing an intention to have the QDC Proceeding transferred to this Court. That letter enclosed a draft statement of claim in almost identical terms as the statement of claim filed in the QDC Proceeding.

26    On 23 April 2024, the Halls’ solicitors wrote to Mr Shanahan’s solicitors, asserting their clients’ position that, inter alia, Mr Shanahan required leave of the District Court to transfer the proceeding, and that they would object to any relief sought by Mr Shanahan in the QDC Proceeding.

27    On 17 June 2024, Mr Shanahan’s solicitors wrote to the Halls’ solicitors, stating they did “not require the leave of the District Court, or any other court, to commence a fresh proceeding.” That letter did acknowledge that the QDC Proceeding would need to be discontinued before a new proceeding was commenced. Further, the letter stated Mr Shanahan’s intention to apply for freezing orders or similar over the Campbell Street Property if the Halls sought to have the caveat over that property removed once the QDC Proceeding was discontinued.

28    On 2 July 2024, the Hall’s solicitors responded to Mr Shanahan’s solicitors, asserting that they would object to Mr Shanahan’s proposed course of action on the grounds that it would constitute an abuse of process.

29    On 11 July 2024, Mr Shanahan discontinued the QDC Proceeding.

30    Also on 11 July 2024, Mr Shanahan filed the originating documents in this proceeding. Those documents were served on the Halls (via their solicitors) on 12 July 2024.

31    On 7 August 2024, the Halls filed the Application currently before the Court.

The Halls’ submissions

32    The Halls seek to have the substantive proceeding summarily dismissed, or alternatively permanently stayed, on the grounds that the substantive proceeding is an abuse of process.

33    In relation to Mr Shanahan’s conduct of the dispute, the Halls submitted, in summary, that:

    Contrary to Mr Shanahan’s Genuine Steps Statement, filed 11 July 2024, Mr Shanahan has taken no steps to attempt to resolve the dispute, other than by litigating it.

    Mr Shanahan breached the Interim Agreement by not serving or discontinuing the QDC Proceeding by 11 July 2022.

    Mr Shanahan breached the Varied Interim Agreement by not serving or discontinuing the QDC Proceeding by 30 September 2022.

    Mr Shanahan did nothing to progress the QDC Proceeding for a period of nearly seventeen months, from 6 October 2022 to 1 March 2024.

    Mr Shanahan has not given, or attempted to give, any explanation for his delay in progressing the dispute or to justify the breach of the Interim Agreement, or Varied Interim Agreement (together, the Interim Agreements).

    The commencement of proceedings in this Court was a tactical manoeuvre intended to avoid:

•    the need to obtain leave of the District Court to proceed with the QDC Proceeding;

•    the challenges associated with transferring the QDC Proceeding to this Court, which would have required Mr Shanahan to explain his delays and breaches of the Agreements; and

•    the possibility of the Halls applying for the dismissal of the QDC Proceeding for want of prosecution.

34    In relation to the consequences of Mr Shanahan’s conduct of the dispute, the Halls submitted, in summary, that:

    Mrs Hall’s evidence makes clear that Mr Hall (and consequently Mr Shanahan) had no interest in the Campbell Street Property. This is evident from Mrs Hall’s evidence that:

•    since about 2007, the Halls pursued separate investment strategies due to a difference in their respective appetites for risk;

•    she planned to make improvements to the Campbell Street Property and then sell it for a capital gain, the funds for such improvements were to come from a refinance of the property;

•    as a result of Mr Shanahan not progressing the QDC Proceeding she incurred expenses related to improving the Campbell Street Property and understood that Mr Shanahan had decided not to pursue the QDC Proceeding; and

•    she had begun undertaking improvement works to prepare the Campbell Street Property for sale.

    Mrs Hall suffered prejudice as a result of Mr Shanahan’s breach of the Interim Agreements in that:

•    the caveat being lodged over the Campbell Street Property impeded Mrs Hall’s ability to raise funds and generate wealth from the property;

•    since early 2023, Mrs Hall had begun managing her financial affairs in reliance on an expectation that Mr Shanahan no longer intended to pursue his claim;

•    the costs of the litigation have put the Halls in a difficult financial position, causing Mrs Hall anxiety;

•    the delay in bringing this proceeding has compounded the difficulty in recalling and responding to the allegations advanced by Mr Shanahan and in obtaining records relevant to the issues in dispute; and

•    the ongoing uncertainty and stress of litigation has had a significant impact on Mrs Hall’s personal life.

35    In relation to the proceeding before this Court being an abuse of process, the Halls submitted that the Interim Agreements constituted a contract between the parties. In that respect, the Halls submitted, in summary, that:

    The Court should not approve a breach of contract, particularly where Mr Shanahan’s conduct is inconsistent with his obligations under s 37N of the Federal Court Act 1976 (Cth) (Federal Court Act).

    Mr Shanahan had lodged a caveat over the Campbell Street property. Lodgement of a caveat required that proceedings be commenced within 14 days of the date of lodgement. After the caveat had been lodged, the Halls agreed that they would waive that requirement. The consideration given by Mr Shanahan for that right being waived was his promise to make a decision following the public examinations about whether to proceed with a claim that justified the caveat. The Halls made this bargain because they recognised that any proceeding would be more efficiently conducted if it was informed by the outcome of the examinations.

    While generally parties are free to discontinue one proceeding and commence another, it was a term of the Interim Agreement that the QDC Proceeding be discontinued. Objectively, the intention of the parties was that this would be the end of Mr Shanahan’s claims referable to the Campbell Street Property. Any other interpretation would render the Interim Agreement commercially ineffective.

    Mr Shanahan breached his obligations under the Interim Agreements in not serving or discontinuing the proceedings in accordance with those agreements.

36    The Halls further submitted that the substantive proceeding was an abuse of process because it was a deliberate tactical manoeuvre seeking to avoid the consequences of Mr Shanahan’s own delays. In that regard, the Halls submitted, in summary, that:

    By his solicitors’ letter of 1 March 2024, Mr Shanahan foreshadowed having the QDC Proceeding transferred to this Court. At that stage, Mr Shanahan clearly thought that was the appropriate procedural course to follow.

    The only change between believing that the QDC Proceeding could be transferred to this Court, and the eventual decision of Mr Shanahan to commence fresh proceedings in this Court, was the Halls requesting Mr Shanahan to explain the delay in progressing the QDC Proceeding and foreshadowing an application to have that proceeding dismissed for want of prosecution.

    Mr Shanahan has not sought at any time to justify or explain his delay in progressing the dispute between the parties.

    The efficient and cost effective conduct of civil litigation is not advanced by tactical manoeuvres designed to avoid examination of a litigant’s conduct in breach of his statutory obligations and agreements with other parties to the litigation.

    Failing to foreshadow an intention to bring other claims in future proceedings against a party supports a finding of an abuse of process. It is clear from the Interim Agreement and subsequent delay that Mr Shanahan expressly or impliedly communicated to the Halls that he did not intend to press the claims referable to the Campbell Street Property.

37    The Halls further submitted that Mr Shanahan’s conduct caused real prejudice to the Halls. In that regard, the Halls submitted, in summary, that:

    A degree of prejudice may always be inferred in a case of significant delay.

    Mrs Hall’s evidence demonstrates that Mr Shanahan’s actions here lead to specific prejudice suffered by Mrs Hall.

    Mrs Hall was relying on an inducement that Mr Shanahan was not progressing a claim over the Campbell Street Property and organised her financial affairs accordingly. Had Mr Shanahan performed the Interim Agreement, Mrs Hall would have focused her attention and financial resources on defending the QDC Proceeding, an opportunity she has now lost.

    The delay has also caused a loss of evidence and caused Mrs Hall to suffer from the stress and anxiety of litigation.

38    Finally, the Halls submitted that unless the statements of high authority about the importance of a party’s obligation to act consistently with the overarching purpose of resolving civil disputes quickly are mere lip service, the proceeding must be dismissed or permanently stayed.

mr shanahan’s submissions

39    Mr Shanahan submitted that the proceeding is not an abuse of process, and should not be dismissed, nor stayed. In relation to whether these proceedings were barred by operation of the Interim Agreements, Mr Shanahan submitted, in summary, that:

    The Interim Agreements did not contain any term that precluded Mr Shanahan from commencing this Proceeding.

    The only relevant terms of the Interim Agreements were that Mr Shanahan would either serve, amend or discontinue the QDC Proceeding within two months of the completion of the public examinations.

    The Interim Agreements were not a settlement agreement or compromise of Mr Shanahan’s claim. In fact, the letters from Mr Shanahan’s solicitors to the Halls’ solicitors, dated 4 March 2022 and 17 March 2022, expressly reserved Mr Shanahan’s rights. Those rights included the right to commence proceedings in this Court.

    The email from Mr Shanahan’s solicitors to the Halls’ solicitors dated 21 July 2022 stated that Mr Shanahan’s agreement to the Varied Interim Agreement was given to:

the extent that it is not intended to act as a guillotine order. It is also agreed on the basis that the timeline may be further extended depending on the information obtained at the examinations and whether the examinations are relisted again in the future.

    The email from the Halls’ solicitors to Mr Shanahan’s solicitors dated 22 July 2022 further stated that:

We confirm that our clients’ proposal is not intended to act as a guillotine order.

40    In any event, Mr Shanahan submitted that as at 11 July 2024, he had complied with the Interim Agreements. In this regard, Mr Shanahan submitted, in summary, that:

    The Court would not be approving of a breach of contract by allowing this proceeding to continue, as submitted by the Halls.

    The QDC Proceeding was never served on Mrs Hall and the QDC Proceeding has been discontinued. Accordingly, the filing of a notice of discontinuance does not result in the claim being dismissed or give rise to a res judicata or issue estoppel. There was nothing in the Interim Agreements preventing Mr Shanahan from commencing this proceeding and there has been no decision on the merits of the claims the subject of this proceeding.

41    Mr Shanahan also submitted that the express terms of the Interim Agreements could not have given rise to an expectation on behalf of the Halls that the applicant no longer intended to pursue a claim over the Campbell Street Property. In that regard, Mr Shanahan submitted, in summary, that:

    Rather than taking steps to have the caveat over the Campbell Street Property removed, or to have the QDC Proceeding disposed of, Mrs Hall agreed, on several occasions, to have the QDC Proceeding adjourned to the Registry.

    As a result of agreeing to those adjournments, Mrs Hall could have no expectation that Mr Shanahan had abandoned his claims referable to the Campbell Street Property.

    Considering the QDC Proceeding was never served on Mrs Hall, she would not be vexed by having to relitigate matters in this proceeding.

    By 6 October 2022, the QDC Proceeding was held in abeyance and Mrs Hall had foreshadowed the possibility, at some unspecified time, of seeking to compel Mr Shanahan to have the QDC Proceeding served or discontinued.

    During the time she was allegedly acting on reliance of an assumption Mr Shanahan had abandoned his claims, Mrs Hall only incurred expenses related to the Campbell Street Property of $6837.25. The proceeding should not be dismissed or stayed based on expenses of that amount being incurred.

    The continuing existence of the caveat over the Campbell Street Property was a clear indication to Mrs Hall that Mr Shanahan did not intend on abandoning any of his claims over that property.

42    Mr Shanahan further submitted that there is a sensible explanation for the commencement of these proceedings. In that regard, Mr Shanahan submitted, in summary, that:

    That explanation is such that this Court (together with the Federal Circuit and Family Court) has exclusive jurisdiction in relation to bankruptcy matters.

    The parties agreed to have the QDC Proceeding adjourned to the Registry of that Court while Mr Shanahan undertook investigations. The result of those investigations was that Mr Shanahan sought relief under s 120 of the Bankruptcy Act, proceedings which the QDC does not have jurisdiction to determine.

    Those actions were not “tactical manoeuvring”, as submitted by the Halls.

    It is not possible, pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Qld), to have proceedings transferred from the QDC to this Court.

43    Finally, Mr Shanahan submitted that the Halls make no submission referable to these proceedings being out of time or otherwise barred, nor do they make any submission contending that the substantive proceedings are defective, not arguable or otherwise amenable to summary dismissal.

consideration

44    Section 23 of the Federal Court of Australia Act 1976 (Cth) (FCA Act), provides a broad power for the Court to make orders in the following terms:

The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate.

45    As Deane J explained in Jackson v Sterling Industries Ltd; (1987) 162 CLR 612 at 622:

Section 23 of the Federal Court of Australia Act 1976 (Cth) confers upon the Federal Court a broad power to make orders of such kinds, including interlocutory orders, as it "thinks appropriate". Wide though that power is, it is subject to both jurisdictional and other limits. It exists only "in relation to matters" in respect of which jurisdiction has been conferred upon the Federal Court. Even in relation to such matters, the power is restricted to the making of the "kinds" of order, whether final or interlocutory, which are capable of properly being seen as "appropriate" to be made by the Federal Court in the exercise of its jurisdiction.

46    Rule 26.01(1)(d) of the Federal Court Rules 2011 (Cth) (Federal Court Rules), provides that:

(1)     A party may apply to the Court for an order that judgment be given against another party because:

…

(d)     the proceeding is an abuse of the process of the Court; or

    …

47    Principles relevant to applications for summary judgment for abuse of process pursuant to r 26.01(d) of the Federal Court Rules were set out by White J in Matson v Attorney-General (Cth) [2021] FCA 161 as follows:

66.    The categories of abuse of process which may be encompassed by r 26.01 (d) of the FCR are not closed. However, as noted by McHugh J in Rogers v The Queen [1994] HCA 42; (1994) 181 CLR 251 at 286, “ abuses of procedure usually fall into one of three categories: (1) the court’s procedures are invoked for an illegitimate purpose; (2) the use of the Court’s procedures is unjustifiably oppressive to one of the parties; or (3) the use of the Court’s procedures would bring the administration of justice into disrepute”. Earlier, at 256, Mason CJ noted that there are two aspects to abuse of process: first, the aspect of vexation, oppression and unfairness to the other parties to the litigation and, secondly, the fact that the matter complained of will bring the administration of justice into disrepute.

67.    In the circumstances of this case, the respondents rely upon the circumstances stated by Mason CJ, Deane and Dawson JJ in Walton v Gardiner (1993) 177 CLR 378 at 393, namely:

[P]roceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and are oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings. The jurisdiction of a superior court in such a case was correctly described by Lord Diplock ... as “the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people.

68.    The respondents also referred to Tomlinson v Ramsey Food in which French CJ, Bell, Gageler and Keane JJ said:

[25]    Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel.

[26]     Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel ...

(Citations omitted)

48    Further, Cheeseman J in Przybylowski v Australian Human Rights Commission [2021] FCA 1398 observed:

32    Turning to the principles relating to abuse of process, in Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 256 CLR 507, French CJ, Bell, Gageler and Keane JJ stated at [25] that “abuse of process is capable of application in any circumstances in which the use of a court’s procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute”.

33    In Victoria International Container Terminal Ltd v Lunt [2021] HCA 11; (2021) 388 ALR 376, Kiefel CJ, Gageler, Keane and Gordon JJ (with whom Edelman J agreed) stated at [18]:

The fundamental responsibility of a court is to do justice between the parties to the matters that come before it. In the performance of that function, the doing of justice may require the court to protect the due administration of justice by protecting itself from abuse of its processes. The power to stay, or summarily dismiss, proceedings because one party has abused the processes of the court is concerned to prevent injustice, and that power is properly exercised where the conduct of the moving party is such that the abuse of process on its part may prevent or stultify the fair and just determination of a matter.

(Footnotes omitted.)

49    It is well settled that the Court should exercise with caution the power to dismiss proceedings as an abuse of process: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91, General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 at 129; Webster v Lampard (1993) 177 CLR 598 at 602-603, Ridgeway v R (1995) 184 CLR 19 at 62; Walton v Gardiner (1993) 177 CLR 378 at 392.

50    Turning to the contentions of the parties, key questions requiring consideration in respect of the issue whether the proceedings should be dismissed as an abuse of process are:

(1)    Did the Interim Agreements constitute a contract which included a term barring Mr Shanahan from commencing proceedings in the Federal Court?

(2)    If yes to (1), was that contract breached by Mr Shanahan?

(3)    If no to either (1) or (2), is there any other reason the substantive proceedings should be dismissed or stayed as an abuse of process?

51    It is appropriate to consider each of these issues in turn, noting the principle explained by Dixon J in Dey at 91 that:

The application is really made to the inherent jurisdiction of the court to stop the abuse of its process when it is employed for groundless claims. The principles upon which that jurisdiction is exercisable are well settled. A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.

(emphasis added)

(1) Did the Interim Agreements constitute a contract which included a term barring Mr Shanahan from commencing these proceedings

52    The key correspondence between the lawyers in this matter relevant to the Interim Agreements appears to be the following:

(1)    A letter from Enyo Lawyers, acting for Mr Shanahan, to Hopgood Ganim Lawyers, acting for the Halls, dated 4 March 2022, in the following terms:

We refer to your email on 9 February 2022 at 5: 19pm, by which you provided Mrs Hall's undertaking that she would, inter alia, "do all things necessary to enable four} client to lodge a consent caveat on [Mrs Hall's] property which will expire no later than three months after the conclusion of the examinations unless four} client commences proceedings before the expiration of that period. "

Titles Queensland will not permit a consent to be lodged subsequent to lodgement of a caveat (section 126(l)(b) of the Land Title Act 1994). As such, we request Mrs Hall's agreement to the following proposal:

1.    prior to 12 April 2022, we file an application in the Queensland Supreme Court with respect to the right our client believes he has in Mrs Hall's property, and sought to protect with the caveat;

2.     neither our office, nor our client, will serve your clients with the application until following the completion of the examinations, at which time our client will serve the application in the form already filed, amend the application to reflect any relevant matters disclosed in the course of the examinations or discontinue the proceeding; and

3.     in the meantime and prior to 12 April 2022, a notice of action be lodged on title to Mrs Hall's property to prevent the caveat from lapsing.

We note the above accords with the agreement between the parties and the undertaking given by Mrs Hall. As a consent cannot be lodged, we consider the above an appropriate course.

We look forward to your confirmation that the above proposal is agreed .

Our client's rights are reserved in all respects.

(2)    A letter from Hopgood Ganim to Enyo Lawyers dated 9 March 2022, in the following terms:

1.     We refer to your correspondence dated 4 March 2022.

2.     Our clients have no objections in principle to the approach which has been set out in your correspondence.

3.     However, they do consider that some minor changes are necessary in order to:

(a)     provide that no notice of action is lodged prior to the foreshadowed application being filed; and

(b)     ensure that your client acts promptly in serving or dismissing the foreshadowed application once the examinations have been completed.

3.2     To that end, our clients propose the following (substantive changes from your original proposal underlined for reference):

(a)     prior to 12 April 2022, the Trustee files an application in the Queensland Supreme Court with respect to the right the Trustee believes he has in Mrs Hall's property, and sought to protect with the caveat;

(b)    neither Enyo Lawyers, not the Trustee, will serve Mr Hall or Ms Hall with the application until following the completion of the examinations;

(c)     within 14 days after the completion of the examinations, the Trustee will serve the application in the form already filed, amend the application to reflect any relevant matters disclosed in the course of the examinations or discontinue the proceeding; and

(d)     in the meantime and prior to 12 April 2022, but not prior to the filing of any initial application by the Trustee, a notice of action be lodged on title to Mrs Hall's property to prevent the caveat from lapsing.

3.3    Please confirm whether your client is agreeable to this amended proposal.

4.     Our clients reserve all of their rights in all respects.

(emphasis in original)

(3)    A letter from Enyo Lawyers to Hopgood Ganim dated 17 March 2022, in the following terms:

We refer to your letter dated 9 March 2022 and the telephone conversation between Mr Lord and the writer on 10 March 2022.

As discussed, your client previously agreed and undertook to, "do all things necessary to enable [our] client to lodge a consent caveat on her property which will expire no later than three months after the conclusion of the examinations. "

We do not consider 14 days to be adequate time for our client and our office to consider all that transpires from the examinations and, if required, prepare affidavit material or a statement of claim to be filed in the Court.

However, we will agree to a shorter time frame of two months to serve the application on your clients in the form filed, amend the application to reflect any relevant matters disclosed in the course of the examinations or discontinue the proceeding.

For the sake of clarity, we propose the following:

1.     prior to 12 April 2022, the Trustee files an application in the Queensland Supreme Court with respect to the right the Trustee believes he has in Mrs Hall's property, and sought to protect with the caveat;

2.     neither our office, nor the Trustee, will serve Mr or Mrs Hall with the application until the completion of the examinations;

3.     within two months of the completion of the examinations, the Trustee will serve the application on Mr and Mrs Hall in the form already filed, amend the application to reflect any relevant matters disclosed in the course of the examinations or discontinue the proceeding; and

4.     in the meantime and prior to 12 April 2022, but not prior to the filing of any initial application by the Trustee, a notice of action be lodged on title to Mrs Hall's property to prevent the caveat from lapsing.

Would you please provide your clients' instructions as a matter of priority?

Our client's rights are reserved in all respects.

(4)    An email from Mr James Lord of Hopgood Ganim to Ms Laura Hagen of Enyo Lawyers dated 21 March 2022 in the following terms:

Dear Colleagues,

We refer to your correspondence dated 17 March 2022.

We are instructed to agree to the proposal set out in numbered paragraphs 1 to 4 of that correspondence on our clients' behalf.

(5)    An email from Mr James Lord of Hopgood Ganim to Ms Laura Hagen of Enyo Lawyers dated 21 July 2022 in the following terms:

We refer to the abovementioned proceeding before the District Court of Queensland, and to the directions hearing which is scheduled for next Monday, 25 July 2022.

We note that paragraph 3 of the agreed timetable set out in your letter dated 17 March 2022 provided as follows (emphasis from letter):

"within two months of the completion of the examinations, the Trustee will serve the application on Mr and Mrs Hall in the form already filed, amend the application to reflect any relevant matters disclosed in the course of the examinations or discontinue the proceeding; ... "

Given that the examinations occurred on 10 May 2022, our clients' position is that your client had until 10 July 2022 to take one of the steps contemplated in that paragraph.

We have not received service of any application or amended application and, accordingly, we assume that your client no longer intends to pursue this Proceeding and will instead take the necessary steps to discontinue the proceeding. Please let us know as soon as possible if this is not the case.

In the event that your client does still intend to progress this proceeding, please urgently write to us with a draft copy of any orders that your client proposes.

In the interests of ensuring that we have sufficient time to consider any proposed orders in advance, and with the view of avoiding the need for any appearances on Monday if that can be avoided, we ask that you circulate any draft consent orders as soon as possible.

Our clients reserve all of their rights in all respects.

(6)    A letter from Enyo Lawyers to Hopgood Ganim dated 21 July 2022 in the following terms:

Examinations

We refer to the examinations held on 10 May 2022.

We are instructed to relist the examinations of both Mr and Mrs Hall for no longer than one day (total).

Would you please provide your clients' availability for the examinations on one of the following dates:

l.    any date in the week commencing 8 August 2022;

2.    15 August 2022; or

3.    30 or 31 August 2022.

Once we have your response, we will write to the Federal Court Registry. We will, of course, copy you to that correspondence.

District Court of Queensland proceeding numbered 730 of 2022

Given that the examinations have not concluded, it is appropriate to seek a short extension of the District Court application. We propose the following:

1.     within 21 days of conclusion of the examinations, our client will either serve the application as filed, amend the application to reflect any relevant matters disclosed in the examinations or discontinue the proceeding;

2.    the directions hearing listed for 25 July 2022, be adjourned to 20 September 2022, to allow time for the examinations to occur, and consideration of any matters disclosed in the examination for the purposes of paragraph 1 above.

Would you please provide your clients' instructions?

Our client's rights are reserved in all respects.

(7)    An email from Mr James Lord of Hopgood Ganim to Ms Laura Hagen of Enyo Lawyers dated 21 July 2022 in the following terms:

We refer to your below correspondence of today's date. Our clients have instructed us to respond as follows.

Federal Court proceeding

We are instructed that our clients' preference is for any further examination to occur on 31 August 2022.

We consent to you writing to the Federal Court Registry requesting that the examination be relisted on that date.

District Court proceeding

Whilst our clients have no objections in principle to the proposal set out in your correspondence, they propose minor changes such that:

1. your client is required to either serve his application or amended application, or discontinue the proceeding, by no later than 30 September 2022; and

2. the directions hearing listed for 25 July 2022 be adjourned to a date not earlier than 7 October 2022.

These changes are intended to ensure that any consent orders contain a clear and certain deadline for the service of any proceedings by your client, whilst ensuring that your client has ample time to consider whether or not to proceed with his application.

Please let us know whether this proposal is agreeable to your client.

(8)    An email from Ms Laura Hagen of Enyo Lawyers to Mr James Lord of Hopgood Ganim dated 21 July 2022 in the following terms:

District Court proceeding

We are instructed that our client agrees to your clients' proposal in principle and to the extent that it is not intended to act as a guillotine order. It is also agreed on the basis that the timeline may be further extended depending on the information obtained at the examinations and whether the examinations are relisted again in future.

As previously set out to your office, our client has a right as the trustee in bankruptcy of Mr Hall to examine Mr Hall and his wife in respect of their affairs. If your clients believe they may suffer any particular prejudice, please outline what that prejudice may be.

Attached is a draft consent adjournment of application. If satisfactory, please sign and return a copy to us.

We reserve all our client's rights.

(9)    An email from Mr James Lord of Hopgood Ganim to Ms Laura Hagen of Enyo Lawyers dated 22 July 2022 in the following terms:

We confirm that our clients' proposal is not intended to act as a guillotine order.

Whilst we will put any request for a further extension of time to our clients for their consideration, our clients also reserve the right to seek orders which compel your client to take one of the contemplated steps in the event that your client does not do so prior to close of business on 30 September 2022 (including at the next listing date, should that become necessary).

Our clients do not dispute that your client has the right to examine our clients with respect to the examinable affairs of Mr [Hall].

However, it is also trite that your client cannot file or maintain proceedings against our clients, or maintain a caveat over Ms [Hall’s] property, unless and until your client is satisfied that his application has a reasonable prospect of success. Nor can your client delay the service of his application in perpetuity, in the hopes of eventually discovering a viable claim which justifies that application.

Our clients have been willing to indulge a considerable amount of delay by your client in progressing his application. They have done so in the hopes that further investigations will allow your client to satisfy himself as to why he has no tenable claim, and will thereby avoid the need for litigation altogether. Nonetheless, their patience is only so limited. At some point soon, your client will need to either serve his proceeding, or discontinue it. Our clients' present view is that this should be done no later than 30 September 2022.

If, come 30 September 2022, the progression of your client's application is contingent upon things that your client is still unable to ascertain (despite the benefit of two days of examination, and despite your client's application being on foot for six months) it would follow that his application was either filed prematurely, or never had any prospect of success. Alternatively, if your client has by 30 September 2022 formed the view that his application has a reasonable prospect of success and should progressed, we do not see how he could have a reasonable basis for refusing service of that application. Either way, a decision must be made.

Noting that the draft consent orders provide for an adjournment only and do not impinge upon the rights set out above, they are agreeable to our clients. Accordingly, and in the interests of avoiding an unnecessary hearing, please find a signed copy of those draft consent orders attached.

Our clients reserve all of their rights in all respects.

53    While there appeared to be an agreement between the parties that the QDC Proceeding would be either served or discontinued, none of this correspondence contemplated any agreement by Mr Shanahan that he would not commence proceedings in the Federal Court of Australia relevant to claims arising from the bankruptcy of Mr Hall. In particular:

    At all times Enyo Lawyers for Mr Shanahan specifically reserved Mr Shanahan’s rights (which included the right to commence proceedings in the Federal Court); and

    Both parties in correspondence agreed that the proposals referable to discontinuance of the QDC Proceedings were “not intended to act as a guillotine order”.

54    Therefore, the answer to question (1) is no.

If yes to (1), was that contract breached by Mr Shanahan?

55    In light of my answer to question (1), it is unnecessary for me to consider this question. However, even if I am wrong in relation to (1), I would also find that the answer to (2) is no.

56    The use of the word “discontinue” in the Interim Agreements is of particular importance. To lawyers, that word has a specific meaning. Discontinuance specifically does not have the effect of creating an issue estoppel or giving rise to res judicata. If any agreement by the parties was intended to cause Mr Shanahan to entirely abandon his claims in relation to the Campbell Street Property, more precise wording ought have been used in the Interim Agreements.

If no to either 1 or 2, is there any other reason the substantive proceedings should be dismissed or stayed as an abuse of process?

57    In circumstances where the Federal Court of Australia is the proper Court for legal proceedings to be commenced in respect of bankruptcy matters, I am not persuaded that the proceedings commenced by Mr Shanahan in this Court should be dismissed or stayed as an abuse of process notwithstanding earlier – subsequently discontinued – proceedings in the District Court of Queensland.

58    I am not persuaded that Mr Shanahan has sought to “forum shop” as between the District Court of Queensland and the Federal Court of Australia. As Mr Shanahan has submitted, the parties agreed that the QDC proceedings be adjourned to the Registry while Mr Shanahan conducted further investigations, and on completion of those investigations, the QDC proceedings were discontinued. The correspondence between the parties did contemplate discontinuance of the proceedings in the District Court of Queensland, which did ultimately occur. There was no agreement however that this discontinuance was to preclude commencement of proceedings in the Federal Court, particularly where specific proceedings could only be commenced in the Federal Court. As a matter of law, the Federal Court is the proper Court in which to commence proceedings related to bankruptcy, including any relief Mr Shanahan might seek under s 120 of the Bankruptcy Act. To that extent, it is not plausible that Mr Shanahan would abrogate any right to seek relief in this Court, and I am not satisfied that he did so.

59    Mr Russell for the Halls drew my attention to the unexplained delay in commencement of proceedings in the Federal Court by Mr Shanahan. In correspondence, the lawyers for the Halls noted that their clients did not possess limitless patience in respect of the progress of investigations by Mr Shanahan and in turn any proceedings he might seek to instigate, including by reference to the indulgence given by the Halls in respect of the filing of the caveat over the Campbell Street Property, and Mrs Hall continuing to order her own affairs.

60    While such concerns on the part of the Halls are perhaps understandable:

    it is not in dispute that Mr Shanahan’s substantive proceeding in the Federal Court is not out of time;

    the QDC Proceeding was never actually served on the Halls;

    the evidence of Mrs Hall in her affidavit of 6 August 2024 of the financial prejudice she has experienced because of delays is not persuasive. For example, about half of the total amount allegedly expended on the reliance that Mr Shanahan had abandoned his claims over the Campbell Street Property were actually incurred for the purchase of an Alfa Romeo Motor Vehicle. I further note the submission of Mr Tooth for Mr Shanahan that the expenses incurred during November and December 2022 make up the vast majority of Mrs Hall’s purported expenditure. However, Mrs Hall’s affidavit states (at [67] and [82]) that she began managing her financial affairs in reliance on an expectation that Mr Shanahan had abandoned his claims in respect of the Cambell Street Property from “early 2023”; and

    notwithstanding the evidence of Mrs Hall of her separate investment arrangements concerning properties, there is a prospect at this interlocutory stage that property in the name of Mrs Hall could be the subject of relief in favour of Mr Shanahan in terms of the Statement of Claim filed on 11 July 2024.

61    As matters presently stand, I am not satisfied that the circumstances of this case constitute an abuse of the process of the Court such that Mr Shanahan’s proceeding should be dismissed or stayed.

conclusion

62    The interlocutory application filed on 7 August 2024 is dismissed. Costs should follow the event.

Associate:

Dated:    27 August 2025