McEwan v Mactaggart[2022] QSC 258

SUPREME COURT OF QUEENSLAND

1. [1]
   Ms McEwan seeks leave to file an amended Statement of Claim. The defendants oppose leave being given and seek orders, among other things, staying the proceedings.
2. [2]
   This litigation has a chequered history and, in order to understand some of the arguments, it is necessary that some of the relevant events be set out. It is complicated by the fact that Ms McEwan is a bankrupt.

The First and Second McEwan proceedings

3. [3]
   Ms McEwan commenced proceedings against 14 defendants (“the First McEwan proceeding”). They could be split into three groups: the Commonwealth defendants (persons employed by the Commonwealth), the State defendants (persons employed by the State of Queensland and the State of Queensland itself) and the BAN defendants. The BAN defendants are the defendants in this matter.
4. [4]
   I heard a strike out application by all the defendants and made orders which included striking out some paragraphs of the Statement of Claim. In my reasons, I briefly described the events which gave rise to that proceeding:

5. [5]
   After giving judgment, I heard the parties and made further orders which relevantly included:

“(1) The plaintiff has leave to replead, within 21 days, those parts of the Amended Statement of Claim which relate to Claims 3 and 5.

2. (2)
   The plaintiff may not file any amended Statement of Claim until the expiry of 14 days of the service of any amended Statement of Claim upon the Commonwealth and BAN Defendants.

3. (3)
   Upon being served with any amended Statement of Claim, the Commonwealth and BAN Defendants are at liberty to file an application seeking an order that the plaintiff not be allowed to file any such amended Statement of Claim. …”^[2]

6. [6]
   Ms McEwan did not produce an amended pleading against the BAN defendants. Rather, on 7 June 2022 (some four days after those orders were made), she purported to discontinue the First McEwan proceeding against the BAN defendants and commence this proceeding (“the Second McEwan proceeding”).
7. [7]
   On 16 June 2022, Hindman J set aside the notice of discontinuance in the First McEwan proceeding. Her Honour then made these orders in the Second McEwan proceeding:

“(1) The Claim and Amended Statement of Claim is struck out, with leave to replead.

2. (2)
   The Plaintiff has leave to discontinue proceeding 971/22 against the Twelfth, Thirteenth and Fourteenth Defendants in that proceeding.

3. (3)
   The Plaintiff must serve a draft Amended Claim and Second Amended Statement of Claim on the Defendants in this proceeding within 14 days.

4. (4)
   The Defendants must advise the Plaintiff, within 14 days of being served, if they consent to the draft Amended Claim and Second Amended Statement of Claim being filed.

5. (5)
   If the Defendants consent to the draft Amended Claim and Second Amended Statement of Claim being filed, the Plaintiff has leave to file the Amended Claim and Second Amended Statement of Claim.

6. (6)
   If the Defendants do not consent to the draft Amended Claim and Second Amended Statement of Claim being filed, the Plaintiff must bring an application seeking leave to file the Amended Claim and Second Amended Statement of Claim within 14 days of order 4…”

8. [8]
   On 2 August 2022, Ms McEwan filed an application seeking leave to amend “an originating process and statement of claim under the Orders of Hindman J dated 4 July 2022.” The application was heard by Hindman J on 5 August 2022.
9. [9]
   Hindman J dismissed the application for leave. In her reasons for doing so, her Honour said that the proposed amended Statement of Claim contained a restatement of the claims that I had struck out on the basis that they rested upon claims that were vested in Ms McEwan’s trustee in bankruptcy. I had given leave to replead the malicious prosecution and misfeasance in public office claims advanced by Ms McEwan. Her Honour went on to describe the second part of the proposed amended pleading as having “morphed into what, I think, in general terms, can be described as a conspiracy claim or a fraud claim.” Hindman J then said that she would “provide Ms McEwan with a further opportunity to attempt to plead the cause of action that she wants to, and have an opportunity to persuade the Court as to why that new pleading should be permitted to proceed.” Orders similar to those made on 16 June 2022 were then made about the service on the defendants of a further proposed amended pleading. Notably, the Plaintiff was ordered to serve a claim and statement of claim on the defendants by no later than 26 August 2022.
10. [10]
    On 25 August 2022, Ms McEwan served a fourth proposed pleading on the defendants. An “updated” pleading was served on the following day. It was not in dispute that, on 8 September 2022, Ms McEwan served a further proposed amended pleading which removed a claim in defamation.
11. [11]
    When this matter came on for hearing on 12 September 2022, Ms McEwan handed up a new version of her proposed pleading (“the 12 September pleading”). It was first provided to the defendants on the morning of the hearing. It was, obviously, outside the time limit set by Hindman J. Ms McEwan said that, while she relied upon the document served on 26 August, she now sought leave (under r 5 UCPR) to amend that pleading and provide further particulars.  The 12 September pleading did not contain claims for defamation or for fraud causing a detriment to the plaintiff. The only relief it sought was for “damages for conspiracy to injure the plaintiff by unlawful means”.
12. [12]
    The defendants objected to Ms McEwan’s application to amend the document which had been served on 26 August, but recognised that it would be a better use of time to deal with both documents – 25 August and 12 September – in this hearing.
13. [13]
    Ms McEwan’s application, under r 5, to “amend” and provide further particulars was misguided. There was no document which could be amended as leave had not been granted to file the 26 August pleading. The approach taken by Ms McEwan confused the matter.
14. [14]
    A better characterisation of what was sought to be done was that, by seeking leave to file the 12 September pleading, Ms McEwan was abandoning the claims based on fraud and defamation which were in the 26 August pleading. There is, in those circumstances, no need to consider those claims.
15. [15]
    The only other change was the addition of further particulars on the conspiracy claim. It is a better use of the time of the parties and of the court to proceed on the basis that Ms McEwan seeks leave to file the 12 September pleading. The defendants are not disadvantaged by that course.

The 12 September pleading

16. [16]
    The 12 September pleading may be summarised in the following way:

    1. (a)
       In paragraphs 1 – 5 the identity of, relationships between and the dealings of the parties are pleaded. The dealings included the arrangements between the parties about the “therapeutic” and the “investment” by the defendants of $185,000.
    2. (b)
       In paragraph 6 it is pleaded that the defendants knew that the investment had been spent in accordance with the agreements.
    3. (c)
       In paragraphs 7 – 13 it is pleaded that:

       1. Notwithstanding the knowledge pleaded in paragraph 6, the defendants demanded that the investment be returned.
       2. The defendants had legal advice to the effect that the investment did not have to be repaid.
       3. The defendants knew that there was no basis for any obligation on Ms McEwan’s part to repay the investment.
       4. In or about August 2018, the defendants agreed to make a complaint to the Queensland Police Service (QPS) that Ms McEwan had misappropriated the investment, that the amount of the investment would be sought as “restitution/compensation” and that those actions be undertaken with “the intention of causing harm to Ms McEwan and obtaining a financial benefit”. This is defined as “the Conspiracy”.
       5. Mr Hoult, with the knowledge of the other defendants, made the complaint to the QPS. The defendants gave statements to the QPS in support of the complaint. The defendants did that knowing, or with reckless disregard of the fact that, Ms McEwan had acted in accordance with the various agreements and that all expenditure of the investment was properly made.
       6. The representations made by the defendants to the QPS were fraudulent because the defendants knew them to be untrue or were recklessly indifferent as to their truth. The defendants acted dishonestly or with reckless disregard as to the provision of information. The defendants were motivated by:

       1. gaining a benefit or advantage by seeking the restitution of $185,000 to which they were not entitled; and
       2. a desire to cause harm and injury to Ms McEwan by way of “pecuniary and reputational detriment”.
    4. (d)
       In paragraphs 14 – 17 it is pleaded that:

       1. As a result of the complaint, QPS charged Ms McEwan with one count of fraud under s 408C of the Criminal Code.
       2. The silence of the defendants as to the basis of the fraud complaint was itself fraud.
       3. The course undertaken by the defendants was designed to and did cause harm to Ms McEwan.
       4. In the alternative, the defendants initiated the fraud complaint to dishonestly obtain $185,000 by way of restitution/compensation.
    5. (e)
       Ms McEwan claims damages for conspiracy to injure her by unlawful means.
17. [17]
    The 12 September pleading differs from the earlier versions provided by Ms McEwan in two ways:

    1. (a)
       it does not maintain the claims for damages for defamation or for “fraud causing a detriment”; and
    2. (b)
       in addition to the particulars which were earlier provided as to the “improper purposes” of the defendants in initiating the complaint, it is alleged that the defendants initiated the fraud complaint with the improper purpose of “causing distress, anxiety and mental anguish to Ms McEwan” and “emotional, hurt feelings and psychological damage to Ms McEwan”.
18. [18]
    The 12 September pleading is mostly concerned with the knowledge and intention of the defendants. Ms McEwan does not, for example, plead that she suffered any “distress, anxiety and mental anguish” or “emotional, hurt feelings and psychological damage”. The only harm which is pleaded is in paragraph 16 where it is alleged that the actions of the defendants caused the following:

“(i) The defendants well knew that if there had been a criminal charge initiated against Ms McEwan that directly related to seed funding received from an investor into one of her companies, she would be compelled to disclose that information to a potential investor, who would become aware of that information and decline to invest in any of Ms McEwan’s companies for the development and exploitation of the Therapeutic;

2. (ii)
   Ms McEwan has been denied the opportunity of securing alternative investors who would provide funding to support the development and exploitation of the Therapeutic;

3. (iii)
   Ms McEwan has been deprived of earning an income through the development and exploitation of the Therapeutic;

4. (iv)
   Ms McEwan would have to properly disclose to a potential investor into the Therapeutic that she was the subject of a criminal charge that involved dishonesty.”

19. [19]
    Ms McEwan argues that, notwithstanding her bankruptcy, she is able to bring this type of action because it is a “cause of action … for personal damages for wrong done.”

Can a bankrupt bring an action for damages for conspiracy to injure the bankrupt by unlawful means?

20. [20]
    So far as is relevant, s 58 of the Bankruptcy Act 1966 (Cth) provides:

“Vesting of property upon bankruptcy--general rule

1. (1)
   Subject to this Act, where a debtor becomes a bankrupt:

(a) the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee; and

2. (b)
   after-acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee or, if a registered trustee is the trustee of the estate of the bankrupt, in that registered trustee.

…”

21. [21]
    The substantive question which might arise on this type of pleading is whether this proposed action is based upon property which has vested in Ms McEwan’s trustee in bankruptcy. If it has, then she cannot bring this action because “ … a bankrupt has no right to bring or prosecute proceedings to protect, enhance or add to the property of which he has been divested on bankruptcy.”^[3]
22. [22]
    Before that question can be considered, it is necessary to deal with the elements of the cause of action proposed by Ms McEwan.

Elements of the tort of conspiracy to injure by unlawful means

23. [23]
    The elements of this tort are accurately summarised in Halsbury’s Laws of Australia:

“[415-1605]

Regardless of whether the tort has been committed by lawful or unlawful means to injure the plaintiff, the onus is on the plaintiff to show that:

24. [24]
    At this point, it is worth observing that the 12 September pleading contains allegations which would satisfy the requirement to plead the first three elements. But there is no pleading that Ms McEwan has suffered loss.
25. [25]
    In paragraph 16 of the 12 September pleading, it is alleged that the course undertaken by the defendants “was designed to and did cause harm to Ms McEwan” (emphasis added). I summarise the particulars of that allegation which form part of paragraph 16:

1. (a)
   the defendants knew that if a criminal charge was commenced against Ms McEwan related to seed funding, then she would be compelled to disclose that information to a potential investor and that, upon becoming aware of that information, such an investor would decline to invest in any of Ms McEwan’s companies,

2. (b)
   Ms McEwan has been denied the opportunity of seeking alternative investors to provide funding to support the development and exploitation of the therapeutic,

3. (c)
   Ms McEwan has been deprived of earning an income through the development and exploitation of the therapeutic,

4. (d)
   Ms McEwan would have to disclose to a potential investor into the therapeutic that she was the subject of a criminal charge that involved dishonesty.

26. [26]
    These, the defendants said, were additional particulars and a claim for damages which differed from what had previously sought to be pleaded.
27. [27]
    Ms McEwan was adamant, in both her written and oral submissions, that her claim was “for personal damages for wrong done”. In her written submissions she argued:

“15. There is no relief claimed for loss. Consequently, the defendants’ objection is misconceived.

16. The cause of action in the SOC relate [sic] to damage or compensation for personal wrong due to the abusive and unlawful conduct of the defendants by making a false complaint to the police, knowing it was unjustified.

17. Those damages sought are to be estimated by immediate reference to pain felt by the plaintiff in respect of her mind, body or character and without reference to her rights to property. In this case, the right to sue remains with the plaintiff.”

28. [28]
    In her oral submissions, after the issue of loss was raised in the light of paragraph 16, she said:

“I’m not claiming damages anywhere.”

29. [29]
    Later, she submitted:

“Nowhere am I claiming loss and any particulars that the paragraph 16 talks about – what they’re doing – they’re trying to rake – muck-rake me to investors. Now, that’s not loss. That’s just the practical reality of what they did to me. I’m not saying that I want money for that. I’m saying, it’s what they did to me to cause me damage. I have made no claim for property, and that is pursuant to the orders of her Honour that it has to be only damage to me.”

30. [30]
    Ms McEwan formulates her description of the cause of action in a way that would, if it were otherwise available, avoid the application of s 58 of the Bankruptcy Act. The words she uses in paragraph 17 of her written submission are those which appear in the decision of Dixon J in Cox v Journeaux (No 2)^[8] which, coincidentally, was a case in which a bankrupt pleaded that the defendants had conspired to punish and ruin him and to inflict injury and damage upon him personally and to discredit him in the minds of shareholders, the business community and the public generally. Dixon J held that the case was sufficiently hopeless to justify staying the action and noted that, as a bankrupt, there was no prospect of the plaintiff satisfying any order for costs. He went on to say:

“…Notice was given under sec. 63 (3) of the Bankruptcy Act 1924-1933 to the official receiver requiring him to elect to prosecute or discontinue the action and he has elected not to prosecute it. The plaintiff says that he himself is entitled to prosecute it under the proviso as an action for personal injury or wrong done to himself. The test appears to be whether the damages or part of them are to be estimated by immediate reference to pain felt by the bankrupt in respect of his mind, body or character and without reference to his rights of property (Wilson v. United Counties Bank Ltd. (1920) AC 102 at 111, 128-133).

The plaintiff's pleader has done his best to bring the claim within the description of injury which remains actionable at the suit of a bankrupt. An attempt to go behind the formulation of the claim for damages and look at the actual facts inevitably leads back to an examination of the cause of action, and, as my conclusion is that none exists or could be discovered, I have felt it better not to engage in a futile consideration of the hypothetical question which classification it would fall under if it had a real or colourable existence.”^[9] (emphasis added)

31. [31]
    The material shortcoming of the 12 September pleading is that Ms McEwan does not assert that she has suffered any damage whether it be in respect of her mind, body or character or of a kind which might otherwise be available to her as a bankrupt.
32. [32]
    In particular, Ms McEwan explicitly eschews any claim for non-personal damages. This formulation of her action must fail. As Cooper J said in Australian Liquor, Hospitality and Miscellaneous Workers Union v Liquorland (Aust) Pty Ltd:^[10]

“[53]Actual pecuniary damage is the gist of the civil tort of conspiracy and the cause of action is not complete until such damage is suffered: Lonrho v Shell Petroleum Co (No 2) at 188 per Lord Diplock; Marrinan v Vibart [1963] 1 QB 234 at 238 - 239 per Salmon J; Midland Bank v Green (No 3) [1979] 1 Ch 496 at 524 per Oliver J; affirmed [1982] 1 Ch 529 at 538, 542.”

33. [33]
    In an effort to bring herself within the exemption laid out in Cox v Journeaux (No 2), her proposed pleading does not allege all of the elements necessary to establish the tort of conspiracy to cause harm. On that basis alone, I would refuse leave to file the proposed pleading. Given Ms McEwan’s insistence that she is not pleading (what would amount to) pecuniary loss, there is no point in giving leave to replead.
34. [34]
    I will deal, briefly, with some of the other arguments advanced by the defendants.

Bifurcation of the cause of action

35. [35]
    An earlier version of the proposed pleading contained claims for damages for defamation and damages for “fraud causing a detriment to the plaintiff”. These were not maintained in the 12 September pleading but led the defendants to make submissions about the ability, or lack of, to bifurcate a claim for damages. Mr Schriiffer said that that arose, in part, because Ms McEwan, in an email of 8 September 2022, stated: “The fraud cause of action has been removed however it remains pleaded.” Ms McEwan did not dispute the sending of that email, but what she intended by that statement is difficult to ascertain.
36. [36]
    The argument advanced by the defendants was that a cause of action for conspiracy vested in Ms McEwan’s bankruptcy trustees because:

    1. (a)
       the particulars of the loss claimed by the plaintiff include a loss of a valuable commercial opportunity to develop the therapeutic and derive an income from it, and the claim for damages to her reputation (in the earlier proposed pleading) was merely a consequence of the alleged pecuniary loss;
    2. (b)
       an indivisible cause of action cannot be bifurcated by way of heads of damage – the entire cause of action either vests or it does not vest in the trustees;
    3. (c)
       tortious conspiracy protects the “economic interest” of plaintiffs and a plaintiff is not entitled to any damages unless they can demonstrate pecuniary loss; and
    4. (d)
       damages cannot be awarded for injury to reputation arising from an action in conspiracy.
37. [37]
    The difficulty in dealing with this argument is that there is no assertion in the 12 September pleading that Ms McEwan has suffered loss or damage.
38. [38]
    The issue of whether damages for loss of reputation may be recoverable in a conspiracy to injure case has been the subject of consideration in a number of authorities. In Ballard v Multiplex Ltd^[11] and McKellar v Container Terminal Management Services Ltd^[12] general damages for reputation and injury to feelings were not recoverable in a claim for conspiracy to injure. Observations to the contrary can be found in Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots (No 2)^[13] and Larkin v Long.^[14]
39. [39]
    In Lee v Abedian,^[15] Bond J, on a strike out application, declined to resolve the conflict in those authorities as, having given leave to replead, it was more appropriate for that question to be determined at trial. In these circumstances, a similar cautious approach should be taken given that there has been no pleading of loss or damage of the kind considered in those decisions.
40. [40]
    As to the question of possible bifurcation, the defendants rely upon the decision of the Full Court of the Supreme Court of South Australia in Sands v State of South Australia.^[16] The Full Court said:

“[137]  On the proper construction of sections 60(4) and 116(2)(g) of the Bankruptcy Act, when a bankrupt sues on an indivisible cause of action, the action is not bifurcated: it either vests in the trustee or remains with the bankrupt according to whether it is properly characterised as being “in respect of any personal injury or wrong done to the bankrupt.” This is supported by and consistent with most of the authorities that have considered these or other provisions. The limited authorities that support bifurcation do not afford good reason to adopt a different construction of those provisions.”

41. [41]
    Once again, given the nature of the 12 September pleading, it is not possible to determine whether the statement relied upon should be applied in this case. There is no adequate pleading in this case which would allow that to be done.

Other applications

42. [42]
    The defendants applied for summary judgment or a stay of the proceedings.
43. [43]
    Summary judgment is not available.
44. [44]
    The relevant rule is r 293(1) of the UCPR which provides: “A defendant may, at any time after filing a notice of intention to defend, apply to the court under this part for judgment against a plaintiff.”
45. [45]
    The defendants filed a conditional notice of intention to defend after the first version of the claim was filed. That is not sufficient to allow for an application for summary judgment. As Daubney J held in Vantage Holdings Pty Ltd v JHC Developments Group Pty Ltd^[17] in relation to the equivalent rule 292(1):

“[19]  It is clear from the terms of r 292(1) that a defendant must serve a notice of intention to defend prior to a plaintiff being able to make an application under r 292.

[20]  The UCPR distinguish between a notice of intention to defend and a conditional notice of intention to defend. Rule 139 specifies that a notice of intention to defend must be in the approved form and must have the defendant’s defence attached to it.”

46. [46]
    The defendants also sought a stay of proceedings on these bases:

    1. (a)
       the proceeding is an abuse of process;
    2. (b)
       the plaintiff does not have standing to bring the claims as they have vested in her bankruptcy trustee; and
    3. (c)
       the plaintiff has breached the Harman undertaking.
47. [47]
    There is no proceeding. The claim was struck out by Hindman J and I have not given leave to file a new claim. There is, then, no process which can now constitute an abuse.
48. [48]
    I have dealt with the trustees in bankruptcy issue.
49. [49]
    The reference to the Harman undertaking is drawn from the decision in Harman v Secretary of State for the Home Department.^[18] The meaning of the “undertaking” was explained in Hearne v Street:^[19]

“[96] Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence. The types of material disclosed to which this principle applies include documents inspected after discovery, answers to interrogatories, documents produced on subpoena, documents produced for the purposes of taxation of costs, documents produced pursuant to a direction from an arbitrator, documents seized pursuant to an Anton Piller order, witness statements served pursuant to a judicial direction and affidavits… (citations omitted)” 

50. [50]
    As I understand the argument advanced by the defendants, Ms McEwan has said that she intends to use some documents (emails) which she could only have obtained through the disclosure process in other proceedings. If the documents were obtained in that way, then Ms McEwan would not be able to use them without leave. But she has not yet used them – she has signalled an intention to do so. I think it is reasonable to expect that an unrepresented litigant, who might not be aware of the implied undertaking, would not, upon becoming aware of it, expose herself to the possibility of contempt proceedings. On the material before me, a breach of the implied undertaking has not been demonstrated.

Communication after the hearing

51. [51]
    I understand that Ms McEwan sent two emails to my Associate after these proceedings were concluded. I have not referred to them. If a party wishes to supplement evidence or argument then that should be done by way of an application. A party cannot rely upon evidence or submissions which are sent after a hearing has concluded without leave.

Orders

52. [52]
    The application by Ms McEwan to file a new claim and a statement of claim is dismissed.
53. [53]
    The applications by the defendants are dismissed.
54. [54]
    I will hear the parties on costs.