Mulhern v Pearce (No 3)

Case [2015] FCA 806

FEDERAL COURT OF AUSTRALIA

Mulhern v Pearce (No 3) [2015] FCA 806

Citation: Mulhern v Pearce (No 3) [2015] FCA 806
Parties: MICHAEL RICHARD MULHERN v MARK WILLIAM PEARCE AND ANDREW JOHN HEERS AS FEDERAL COURT OF AUSTRALIA APPOINTED TRUSTEES OF THE AUSTRALIAN ESTATE OF MICHAEL RICHARD MULHERN , JOSEPH MICHAEL DODRILL, JOHN ANTHONY DODRILL and BANK OF QUEENSLAND LIMITED ACN 009 656 740
File number: NSD 1888 of 2013
Judge: RANGIAH J
Date of judgment: 10 August 2015
Catchwords:

PRACTICE AND PROCEDURE – application for vexatious proceedings order – whether proceedings vexatious – meaning of “vexatious” – whether proceedings instituted frequently – meaning of “proceedings” – meaning of “frequently” – whether Court’s discretion should be exercised – application allowed

PRACTICE AND PROCEDURE – application for leave to reopen case to adduce further evidence following conclusion of hearing and judgment reserved – where evidence highly relevant to reserved judgment – application allowed

Legislation: Bankruptcy Act 1966 (Cth) s 58, 77(1), 78(1), 309(2) and 43(1)(b)
Federal Court of Australia Act 1976 (Cth) ss 31A(3), 37AM(1), 37AO(1), (2), (3), (4), (6) and Part VAAA
Federal Court Rules 2011(Cth) r 6.02, 26.01
Cases cited:

Attorney General (NSW) v Gargan [2010] NSWSC 1192 cited
Attorney General (NSW) v Wilson [2010] NSWSC 1008 cited
Attorney-General (NSW) v Chan [2011] NSWSC 1315 cited
Bing! Software Pty Ltd v Bing Technologies Pty Ltd (No 2) [2008] FCA 1761 cited

Dodrill v The Irish Restaurant & Bar Co Pty Ltd & Ors [2009] QSC 317 cited

Fuller v Toms [2015] FCAFC 91 cited
Gargan v Kippin Investments Pty Ltd [2009] FCA 398 cited
Garrett v Commissioner of Taxation [2015] FCA 117 cited
Garrett v Make Wine Pty Ltd (2014) 110 IPR 244; [2014] FCA 1258 cited

HWY Rent Pty Ltd v HWY Rentals (in liq) (No 2) [2014] FCA 449 cited

Kowalski v MMAL Staff Superannuation Fund Pty Ltd (2007) 242 ALR 370; [2007] FCA 1069 cited

Mulhern v Bank of Queensland [2015] FCA 44 cited
Mulhern v Pearce & Anor [2012] FMCA 1186 cited
Mulhern v Pearce & Anor [2013] FMCA 229 cited
Mulhern v Pearce (No 2) (2014) 143 ALD 67; [2014] FCA 805 cited
Mulhern v Pearce [2012] FCA 631 cited
Mulhern v Pearce [2012] FCA 884 cited
Mulhern v Pearce [2013] FCA 1138 cited
Mulhern, in the matter of Mulhern (Bankrupt) v Pearce (Trustee) [2012] FCA 570 cited

National Australia Bank Ltd v Freeman [2005] FCA 1895 cited

Pearce (Trustee) v Mulhern (Bankrupt) (No 2) [2012] FCA 7 cited
Pearce (Trustee) v Mulhern (Bankrupt) (No 3) (2012) 124 ALD 420; [2012] FCA 16 cited
Pearce (Trustee) v Mulhern (Bankrupt) (No 4) [2012] FCA 54 cited

Pearce (Trustee) v Mulhern (Bankrupt) [2011] FCA 930 cited
Ramsay v Skyring (1999) 164 ALR 378; [1999] FCA 907 cited
Date of hearing: 29 October 2014, 5 February 2015 and 10 March 2015
Place: Brisbane
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 120
Solicitor for the Applicant: Mr D McClelland of Platinum Lawyers
Solicitor…

Continue reading Mulhern v Pearce (No 3)

Sign in free to access the full text

Details
AGLC
Mulhern v Pearce (No 3) [2015] FCA 806
Case
[2015] FCA 806
Decision Date

CaseChat Overview and Summary

In Mulhern v Pearce (No 3), the trustees of Mr Mulhern’s bankruptcy estate sought two orders from the Court. First, they applied for leave to reopen the proceeding to adduce further evidence. Second, they sought a vexatious proceedings order, prohibiting Mr Mulhern from instituting proceedings against them without leave of the Court. The application was heard by Collier J in the Federal Circuit Court of Australia. The central issue before the court was whether the proceedings were vexatious and whether the Court’s discretion should be exercised in favour of making the orders sought by the trustees. The court found that the proceedings were vexatious, as they were instituted without reasonable ground and caused delay and detriment. The court also found that the requirements of s 37AO of the Federal Court Act were satisfied and that the Court’s discretion should be exercised in favour of making the orders sought by the trustees. The court allowed the trustees’ application for leave to reopen the proceeding to adduce further evidence and granted a vexatious proceedings order prohibiting Mr Mulhern from instituting proceedings against the trustees without leave of the Court.

Orders

Orders of the court

1. The first respondent be given leave to reopen the proceeding to adduce further evidence.

2. Michael Richard Mulhern must not institute proceedings against Mark William Pearce and Andrew John Heers or either of them in this Court without leave of the Court.

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

Background

Background to the litigation

Part 6 of the Federal Court Rules also deals with vexatious proceedings. Rule 6.02 grants power to the Registrar to issue a certificate of vexatious proceedings order. The trustees also bring their application under this rule, but, for the reasons given by Perry J in HWY Rent Pty Ltd v HWY Rentals (in liq) (No 2) [2014] FCA 449 (“HWY Rentals”) at [96], it is unnecessary for me to consider this aspect of the application.Background In order to place the trustees’ application into context, it is necessary to describe something of the background to the application. Mr Mulhern is an Irish citizen and was also, and perhaps still is, an Australian citizen. In 2013, he purported to relinquish his Australian citizenship by surrendering his passport to the Department of Foreign Affairs and Trade. He is also a permanent resident of the United States of America. He is the holder of an Irish passport and a US Permanent Residence Card (or “Green Card”). On 2 October 2009, Daubney J of the Supreme Court of Queensland ordered that Mr Mulhern pay John Anthony Dodrill the sum of $334,875 and costs on an indemnity basis: Dodrill v The Irish Restaurant & Bar Co Pty Ltd & Ors [2009] QSC 317. A bankruptcy notice was issued against Mr Mulhern seeking payment of the judgment sum. An order for substituted service was made. The bankruptcy notice was not complied with. An order was also made for substituted service of the creditor’s petition. Mr Mulhern did not appear at the hearing of the creditor’s petition, nor do anything to oppose it. On 3 February 2010, a Registrar of the Federal Magistrates Court made a sequestration order against Mr Mulhern’s estate. The trustees estimate that Mr Mulhern has liabilities of more than $60 million, principally to Bank of Queensland Ltd. Mr Mulhern had interests in a number of properties in Australia and continues to have interests in properties in the United States. On 9 August 2011, Logan J ordered that a warrant be issued for Mr Mulhern’s arrest under s 78(1) of the Bankruptcy Act 1966 (Cth) and that he be transported to a gaol in Brisbane and be kept in custody there until the Court otherwise ordered: Pearce (Trustee) v Mulhern (Bankrupt) [2011] FCA 930. The warrant was issued on the grounds that Mr Mulhern had failed to comply with a summons to attend a public examination and had failed to comply with his obligations under the Bankruptcy Act. His Honour held at [5]:The trustee’s evidence also discloses a pattern of a failure on the part of the bankrupt to fulfil the various duties cast on a bankrupt by s 77 of the Bankruptcy Act in terms of giving to the trustee various books of account and disclosing to the trustee items of property and otherwise aiding the trustee in the administration of his bankrupt estate. There is also reason to believe, on the material read, that the bankrupt has not disclosed property fully and truly to his trustee which would comprise, in terms of the Bankruptcy Act, property of the bankrupt.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The trustees do not seek an order prohibiting Mr Mulhern from instituting any proceedings in Australia. The particular form of order they seek would only prohibit the institution of proceedings against the trustees. I take into account Mr Mulhern’s belated concession that he does not object to an order of this kind being made. Conclusion I consider that the Court’s discretion should be exercised in favour of making an order that Mr Mulhern must not start or continue a proceeding in the Court against the trustees or either of them without the leave of the Court. The final matter that remains to be determined is the question of costs of proceedings NSD 1888 of 2013. Collier J dismissed Mr Mulhern’s originating application summarily, but reserved costs. The trustees have now been successful in obtaining an order under s 37AO(2) of the Federal Court Act. I will hear from the parties as to costs.

Ratio Decidendi

Legal Principle Established

At the hearing of the trustees’ application, Mr McClelland stated that Mr Mulhern would not bring another application against the trustees. Mr McClelland then made the following concession:He doesn’t object to an order preventing him bringing an action against the trustees. He doesn’t. The Court may make that order, but to expand the order out to say that he cannot bring proceedings against anyone in Australia without coming back to Court for leave, seeking leave first, in all the circumstances…Consideration Although Mr Mulhern no longer objects to an order preventing him from bringing proceedings against the trustees without the leave of the Court, it is nevertheless necessary to consider whether the requirements of s 37AO of the Federal Court Act are satisfied and whether the Court’s discretion should be exercised in favour of making such an order. A vexatious proceedings order is made to protect the public and the Court, and not to impose punishment for litigious conduct: HWY Rentals at [100] (and the cases cited therein). Such an order is not lightly made: Kowalski v MMAL Staff Superannuation Fund Pty Ltd (2007) 242 ALR 370; [2007] FCA 1069 at 380 [44]. It is necessary to take a cautious approach both to the question of whether the requirements of s 37AO are met and the exercise of the discretion. Plainly, the trustees have standing to bring the application, pursuant to s 37AO(3) of the Federal Court Act. Mr Mulhern has been provided with, and he has availed himself of, the opportunity to be heard as required by s 37AO(4) of the Federal Court Act. Are the proceedings “vexatious proceedings”? Section 37AO applies if, relevantly, “a person has frequently instituted or conducted vexatious proceedings in Australian courts or tribunals.” Section 37AO(6) allows the Court to take into account not only proceedings instituted in any Australian court, but orders made by any Australian court and a litigant’s overall conduct in proceedings, including his or her compliance with orders. Section 4 of the Federal Court Act defines “proceeding” as “a proceeding in a court, whether between parties or not, and includes an incidental proceeding in the course of, or in connexion with, a proceeding, and also includes an appeal”. For the purposes of civil proceedings before a court, s 37AM(1) defines “institute” to include “the taking of a step or the making of an application that may be necessary before proceedings can be started against a party”. In my opinion, the words “instituted…proceedings” encompass not only originating applications, but also interlocutory or interim applications: cf National Australia Bank Ltd v Freeman [2005] FCA 1895 at [23], Ramsay v Skyring (1999) 164 ALR 378; [1999] FCA 907 at [59]. Those words also encompass an application for an extension of time within which to appeal: HWY Rentals at [102], Fuller v Toms [2015] FCAFC 91 at [37]. As to whether the various proceedings are “vexatious proceedings”, it is necessary to have regard to the definition of that expression in s 37AM(1) of the Federal Court Act. The definition is inclusive and identifies four specific bases upon which a proceeding may be found to be vexatious, namely:(a)a proceeding that is an abuse of the process of a court or tribunal; (b)a proceeding instituted in a court or tribunal to harass or annoy, to cause delay or detriment, or for another wrongful purpose; (c)a proceeding instituted or pursued in a court or tribunal without reasonable ground; (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.