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McEwan v The Commissioner of Taxation of the Australian Taxation Office[2022] QSC 81

McEwan v The Commissioner of Taxation of the Australian Taxation Office[2022] QSC 81

SUPREME COURT OF QUEENSLAND

CITATION:

McEwan v The Commissioner of Taxation of the Australian Taxation Office and Ors [2022] QSC 81

PARTIES:

Julie McEwan

(Plaintiff)

v

The Commissioner of Taxation of the Australian Taxation Office

(First Defendant)

And

Anthony Rains

(Second Defendant)

And

The Director of the Commonwealth Department of Public Prosecutions

(Third Defendant)

And

Roman Micairan

(Fourth Defendant)

And

Katie Lukin

(Fifth Defendant)

And

Jessica Williams

(Sixth Defendant)

And

Roberta Devereaux

(Seventh Defendant)

And

The Director of Public Prosecutions

(Eighth Defendant)

And

Emily McGregor

(Ninth Defendant)

And

Adrian Holt

(Tenth Defendant)

And

The State of Queensland

(Eleventh Defendant)

And

John Dugald Mactaggart

(Twelfth Defendant)

And

Alan James Monaghan

(Thirteenth Defendant)

And

Frederick Richard Hoult

(Fourteenth Defendant)

FILE NO/S:

BS 971 of 2022

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

11 May 2022

DELIVERED AT:

Brisbane

HEARING DATE:

22 March 2022

JUDGE:

Martin SJA

ORDER:

  1. Claim 1 is set aside.
  2. Claim 2 is set aside.
  3. Claim 3 and paragraphs 29 to 48 of the ASOC are struck out.
  4. Claim 4 is set aside and paragraphs 54 and 55 of the ASOC are struck out.
  5. Claim 5 is struck out.
  6. Claims 7, 8, 9 and 10 are set aside.
  7. Pursuant to r 293 Uniform Civil Procedure Rules 1999, judgment be given for the 8th and 9th defendants.
  8. Pursuant to r 69 Uniform Civil Procedure Rules 1999, the 10th defendant be removed as a party.
  9. I will hear the relevant parties on whether consolidation is still sought, and if so, the appropriate order to make consolidating the two matters.
  10. I will hear the parties on costs.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ENDING PROCEEDINGS EARLY – SUMMARY DISPOSAL – SETTING ASIDE – where the plaintiff makes various allegations against the defendants of a malicious prosecution, perverting the course of justice, fraud, an abuse of office and misconduct in public office – where the plaintiff claims various forms of relief including removal of documents from the public record, apologies, return of confidential information, damages and orders that certain of the plaintiffs be referred to prosecution or to the Legal Services Commissioner – where the 1st-7th and 12th-14th defendants (Commonwealth and BAN Defendants) apply to have the plaintiff’s claim set aside – whether the claim for relief is so clearly untenable that summary termination on the grounds of an abuse of process is justified – whether the plaintiff’s claim should be set aside pursuant to r 16(e) of the Uniform Civil Procedure Rules 1999

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – DISCLOSING NO REASONABLE CAUSE OF ACTION OR DEFENCE – where the Commonwealth and BAN Defendants apply for orders that the plaintiff’s amended statement of claim be struck out – whether the amended statement of claim discloses no reasonable cause of action – whether the amended statement of claim is vexatious – whether the amended statement of claim is an abuse of process – whether all or part of the amended statement of claim should be struck out pursuant to r 171 Uniform Civil Procedure Rules 1999

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ENDING PROCEEDINGS EARLY – SUMMARY DISPOSAL – SUMMARY JUDGMENT FOR DEFENDANT OR RESPONDENT: STAY OR DISMISSAL OF PROCEEDINGS – where the plaintiff makes claims against the 8th and 9th defendants – where the 8th defendant is the Director of Public Prosecutions – where the 9th defendant is a prosecutor in the employment of the Office of the Director of Public Prosecutions – where the 8th and 9th defendants apply for orders removing them as parties to the proceeding by reason of s 25 of the Director of Public Prosecutions Act 1984 or s 26C of the Public Service Act 2008 – whether the plaintiff has no real prospect of succeeding on its claim against the 8th and 9th defendants – whether there is no need for a trial of these claims – whether summary judgment should be given for these defendants pursuant to r 293 of the Uniform Civil Procedure Rules 1999

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PARTIES AND REPRESENTATION – PROPER OR NECESSARY PARTY AND STANDING – where the plaintiff makes claims against the 10th defendant – where the 10th defendant is a police officer employed in the Queensland Police Service – where the 10th defendant applies for orders removing himself as a party to the proceeding by reason of s 10.5 of the Police Service Administration Act 1990 – whether the 10th defendant was improperly or unnecessarily included as a party – whether the 10th defendant should be removed as a party pursuant to r 69 of the Uniform Civil Procedure Rules 1999

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SEPARATE DECISION OR DETERMINATION OF QUESTIONS AND CONSOLIDATION OF PROCEEDINGS – CONSOLIDATION OF PROCEEDINGS – where the 12th, 13th and 14th defendants are also defendants in other proceedings in this Court (Stockingham Proceedings) – where plaintiff in the Stockingham Proceedings is different – where the plaintiff is a company of which the plaintiff’s husband is the sole director, and the plaintiff is a former director – whether the Stockingham Proceeding involves the same or substantially the same question as this proceeding – whether the decision in the Stockingham Proceeding will decide or affect the other proceeding – whether the proceedings should be consolidated pursuant to r 78 of the Uniform Civil Procedure Rules 1999

BANKRUPTCY – ADMINISTRATION OF PROPERTY – PROPERTY AVAILABLE FOR PAYMENT OF DEBTS – PROPERTY DIVISIBLE AMONGST CREDITORS – PROPERTY BELONGING TO OR VESTED IN BANKRUPT AT COMMENCEMENT OF BANKRUPTCY – CHOSES IN ACTION – where the plaintiff makes claims against the 12th, 13th and 14th defendants, seeking orders for the return of confidential information – where the plaintiff is an undischarged bankrupt – whether the claims made by the plaintiff have vested in her bankruptcy trustee pursuant to s 58 of the Bankruptcy Act 1966 (Cth) – whether the plaintiff has a right to seek this order

Bankruptcy Act 1966 (Cth), s 58

Criminal Code, s 92, s 92A, s 408C

Director of Public Prosecutions Act 1984 (Qld), s 25

Police Service Administration Act 1990 (Qld), s 10.5

Public Service Act 2008 (Qld), s 26C

Uniform Civil Procedure Rules 1999, r 16, r 69, r 78, r 171, r 658

A v State of New South Wales (2007) 230 CLR 500

Agar v Hyde (2000) 201 CLR 552

Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256

Boyapati v Rockefeller Management Corporation (2008) 77 IPR 251; [2008] FCA 995

Colbran v State of Queensland [2007] 2 Qd R 235

Cox v Journeaux (No 2) (1935) 52 CLR 713

Cummings v Claremont Petroleum NL (1996) 185 CLR 124

Faulkner v Bluett (1985) 52 FLR 115

Graham & Linda Huddy Nominees Pty Ltd & Anor v Byrne & Ors [2016] QSC 221

Northern Territory v Mengel (1995) 185 CLR 307

Palmer v Magistrates Court (2020) 3 QR 546

Richardson v State of Queensland [2015] QDC 30

Robert Bax & Associates v Cavenham Pty Ltd [2011] QCA 53

Samootin v Shea [2010] NSWCA 371

Santos Ltd v Fluor Australia Pty Ltd (No 1) [2020] QSC 372

Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507

UBS AG v Tyne (2018) 265 CLR 77

Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538

COUNSEL:

The plaintiff appeared on her own behalf

SA McLeod QC and MR Wilkinson for the first to seventh defendants

DM Favell for the eighth to eleventh defendants

AJ Schriiffer for the twelfth to fourteenth defendants

SOLICITORS:

The plaintiff acted on her own behalf

Australian Government Solicitor for the first to seventh defendants

Crown Law for the eighth to eleventh defendants

Cronin Miller Litigation for the twelfth to fourteenth defendants

  1. [1]
    The plaintiff, Ms McEwan, has commenced proceedings against 14 defendants. For the purposes of these applications, they may be split in to three groups – the Commonwealth Defendants (1st to 7th defendants), the State Defendants (8th to 11th defendants) and the BAN Defendants (12th to 14th defendants). Each of the defendants has brought an application in which orders are sought for summary judgment or that the pleadings be struck out or for associated relief.
  2. [2]
    Ms McEwan’s action is complicated but the allegations in it may be roughly summarised in the following way:

In the period from about July 2016 to about March 2018 –

  1. (a)
    Ms McEwan was introduced to Brisbane Angels (BA) – a name adopted by a collection of entities which had an interest in providing funding for start-up investment projects;
  2. (b)
    Brisbane Angels Nominees Pty Ltd (BAN) was the entity through which BA operated to invest in early-stage technology companies with a particular focus on health products in the medical treatment industry;
  3. (c)
    Ms McEwan possessed information concerning a “therapeutic” that was said to have positive effects for weight loss, cancer, diabetes and Alzheimer’s disease (the Therapeutic);
  4. (d)
    the information possessed by Ms McEwan was confidential;
  5. (e)
    pursuant to an arrangement between BAN and Ms McEwan, that information was provided to BAN;
  6. (f)
    BAN agreed to invest in an associated project with Stockingham Pty Ltd (Stockingham) – a company of which Ms McEwan was the sole director and majority shareholder – called the Carbstarver Project, which involved the commercialisation of the Therapeutic for weight loss treatment;
  7. (g)
    the entities which made up BA knew that the confidential information had only been provided for the purposes of using it in the development and application of the Therapeutic;
  8. (h)
    it was an implied term of the agreement that in the event the commercial relationship between Ms McEwan and BAN came to an end, that the confidential information would be destroyed or returned to Ms McEwan; and
  9. (i)
    the commercial relationship in respect of the Carbstarver Project came to an end and the BAN defendants were obliged to return the confidential information;

In the period from about March 2018 –

  1. (j)
    Mr Rains (the 2nd defendant) spoke to the BAN Defendants and told them that Ms McEwan had defrauded the sum of $185,000 from BA;
  2. (k)
    the Queensland Police Service became involved;
  3. (l)
    on 22 August 2018 Ms McEwan was charged with one count of fraud pursuant to s 408C of the Criminal Code;
  4. (m)
    the gist of the charge was summarised in a prosecution document:

“An Auistralian [sic] Taxation Office investigation identified that the money paid to the Defendant by the Victim was not used as per the condition of the investment. It had been used to pay a personal loan and other personal expences [sic].”

  1. (n)
    the charge against Ms McEwan was pursued until 12 May 2021 when a nolle prosequi was entered.
  1. [3]
    Ms McEwan alleges that:
    1. (a)
      the conduct by the Commonwealth and State Defendants amounted to malicious prosecution;
    2. (b)
      the 3rd, 5th, 6th, 7th and 9th defendants perverted the course of justice by withholding evidence;
    3. (c)
      the BAN Defendants committed a fraud by making a complaint to the police;
    4. (d)
      the 2nd, 3rd, 4th, 5th, 6th, 7th and 9th defendants engaged in abuse of office and committed an offence under s 92 of the Criminal Code;and
    5. (e)
      the 2nd, 3rd, 4th, 5th, 6th, 7th and 9th defendants engaged in misconduct in public office contrary to s 92A of the Criminal Code;
  2. [4]
    As a consequence of all that alleged conduct, Ms McEwan seeks damages in the sum of $12,800,000.
  3. [5]
    The full claim made by the plaintiff needs to be set out:

“The plaintiff claims the following relief –

  1. An order that the defendants to remove from public record all details and documents relating to the Fraud Complaint, Summons and prosecution dated 22 August 2018 pursuant to s 408C(1)(a)(ii) and (2)(c) and (2)(d) of The Criminal Code Qld (QPS Charge):-
    1. (a)
      Includes all Google searches relating to the criminal prosecution and court hearings.
    2. (b)
      Apologise for initiating and continuing with the prosecution where there was no reasonable basis for doing so.
    3. (c)
      An apology be provided and a statement issued to the Brisbane Angels investors clearing the name of the plaintiff, Justin Trembath and Melinda Trembath.
  2. An order requiring the Brisbane Angels, BAN, John Mactaggart, Richard Hoult, and Alan Monaghan to return all Confidential Information for the IP Companies (as defined) in their power or possession or order their control to the plaintiff which is in a form which renders the confidential information of being physically capable of being returned to the plaintiff, and an undertaking the Confidential Information is not being used or shared and used by third parties.
    1. if the IP and Confidential Information and Therapeutic is or has been used, an order the details of the disclosure and use be disclosed to the plaintiff.
  3. Damages as a consequence of Malicious Prosecution $2,500,000.
    1. Compensatory damages $1,000,000;
    2. aggravated damages $950,000;
    3. exemplary damages $550,000.
  4. Damages for Injury to the Plaintiff for the loss of opportunity to progress Therapeutic $10,300,000 due to the criminal charge.
  5. Damages for misfeasance and malfeasance in public office of Mr Rains, Ms Lukin, Ms McGregor, Ms Devereaux, Ms Williams and Ms McNaughton.
  6. Interest pursuant to s. 58 of the Civil Proceedings Act 2011 (Qld).
  7. An order for a direct referral for prosecution Sarah McNaughton, Katie Lukin, Roman Micairan, Jessica Williams, Roberta Devereaux and Emily McGregor pursuant to: -
    1. Attempting to Pervert Justice Criminal Code 1899 s 140A; and or in the alternative
    2. Abuse of Office Criminal Code 1899 Section 92; and or in the alternative
    3. Misconduct in relation to public office Criminal Code s 92A.
  8. An order for a direct referral to the Legal Services Commission for investigation and prosecution against Sarah McNaughton, Katie Lukin, Roman Micairan, Jessica Williams, Roberta Devereaux and Emily McGregor.
  9. A direct referral for prosecution Anthony Rains pursuant to:
    1. Attempting to Pervert Justice Criminal Code 1899 s 140; and or in the alternative
    2. Offences under the Tax Administration Act 1953 s 355-25 “disclosure of protected Information”; and or in the alternative
    3. Misconduct in relation to public office Criminal Code 1899 s 92A; and or in the alternate
    4. Abuse of Office Criminal Code 1899 s 92; and or in the alternative
    5. Disclosure of official secrets Criminal Code s 85.
  10. A direct referral for prosecution against John MacTaggart, Richard Hoult and Alan Monaghan for:
    1. false accusation pursuant to the Crimes Act s 314;
    2. Fraud offence Criminal Code 1899 s 408C;
    3. Conspiring to defeat justice Criminal Code 1899 s 132.”

Application by the Commonwealth Defendants

  1. [6]
    This group consists of:
    1. (a)
      The Commissioner of Taxation – Ms McEwan asserts that the Australian Taxation Office is a “prosecuting authority” for taxation offences against the Commonwealth;
    2. (b)
      Mr Rains – an employee in the Australian Taxation Office;
    3. (c)
      The Commonwealth Director of Public Prosecutions – this office is held by Ms McNaughton who is sometimes referred to by that name in the Statement of Claim; and
    4. (d)
      Mr Micairan, Ms Lukin, Ms Williams and Ms Devereaux (the 4th to 7th defendants) – persons employed in the Office of the Commonwealth Director of Public Prosecutions as prosecutors.
  2. [7]
    The Commonwealth defendants apply to strike out the Claim and Statement of Claim. They rely upon rules 16 (e), 16 (i), 171 and 658 of the Uniform Civil Procedure Rules 1999 (UCPR) .
  3. [8]
    Those rules provide:

16 Setting aside originating process

The court may –

  1. (e)
    set aside an originating process;

  1. (i)
    make another order the court considers appropriate.

171 Striking out pleadings

  1. (1)
     This rule applies if a pleading or part of a pleading—
  1. (a)
    discloses no reasonable cause of action or defence; or
  1. (b)
    has a tendency to prejudice or delay the fair trial of the proceeding; or
  1. (c)
    is unnecessary or scandalous; or
  1. (d)
    is frivolous or vexatious; or
  1. (e)
    is otherwise an abuse of the process of the court.
  1. (2)
    The court, at any stage of the proceeding, may strike out all or part of the pleading and order the costs of the application to be paid by a party calculated on the indemnity basis.
  1. (3)
    On the hearing of an application under subrule(2), the court is not limited to receiving evidence about the pleading.

658 General

  1. (1)
     The court may, at any stage of a proceeding, on the application of a party, make any order, including a judgment, that the nature of the case requires.
  1. (2)
    The court may make the order even if there is no claim for relief extending to the order in the originating process, statement of claim, counterclaim or similar document.”

Principles relevant to an application to set aside a claim

  1. [9]
    An order setting aside a claim is an order which summarily terminates the proceedings. There must be “a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way” to justify summary termination.[1]
  2. [10]
    Where, as here, an applicant says that a claim is an abuse of process and, thus, an order striking it out is justified, the applicant must demonstrate that the claim for relief is so clearly untenable that summary termination on grounds of an abuse of process is justified.[2] If an arguable claim for relief can be found, then that precludes the capacity to summarily terminate the claim.

Principles relevant to an application to strike out pleadings

  1. [11]
    Any pleading which is difficult to follow or objectively ambiguous, or which creates difficulty for the opposite party insofar as the pleading contains inconsistencies, is liable to be struck out because it can be said to have a tendency to prejudice or delay the fair trial of the proceeding.[3]
  2. [12]
    The relevant principles have been conveniently collected by Bradley J in Santos Ltd v Fluor Australia Pty Ltd (No 1)[4] and I respectfully adopt his summary:

“[21] The ways in which a party may challenge an opponent’s pleading under r 171, and their derivation, were explained by Jackson J in Callide Power Management Pty Ltd v Callide Coalfields (Sales) Pty Ltd.

[22] The Fluor parties submit the paragraphs pleading the MC Delay Costs Claim do not disclose a reasonable cause of action, because they are not capable in law of giving rise to an entitlement to the relief Santos claims or proposes to claim.

[23] The power to strike out a pleading is used “sparingly and only in clear cases” with a view to not improperly depriving a party of the opportunity for a trial.  As the majority observed in Agar v Hyde:

“a court whose jurisdiction is regularly invoked in respect of a local defendant … should not decide the issues raised in those proceedings in a summary way except in the clearest of cases”.

[24] To justify summary termination of the proceedings, there must be “a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way”.

[25] It has also been said that “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”, the power to strike out cannot be exercised. However, the court should not shrink from striking out a pleading which does not disclose a reasonable cause of action. The court may do so even if prolonged argument is necessary in order to expose the defect in the pleading.

[26] The court’s power to strike out a pleading is discretionary. The factors that tend in favour of its exercise include that striking out may make a trial unnecessary or may substantially reduce the burden of preparing for a trial or the burden of the trial itself.

[27] As in other respects, the court is to avoid undue technicality. A pleading affected by a formal defect, omission or inaccuracy may be healed by amendment. When a defendant’s challenge to such a pleading is successful, the court must consider whether allowing the plaintiff to deliver a new or amended pleading in its place facilitates the just and expeditious resolution of the real issues at a minimum of expense. When a pleading is struck out, the court would ordinarily give leave to replead, where adding missing elements or amending erroneous ones seems possible.

[28] Where the material before the court does not suggest that the party could plead a reasonable cause of action, leave to replead would ordinarily be refused. Indeed, a logical consequence may be to give summary judgment for the defendant on the claim or the relevant part. The time, resources and opportunities available to such a plaintiff, as well as the extent of care and skill required to formulate a properly pleaded case, may be relevant to this consideration. (Citations omitted).”

  1. [13]
    I turn now to the individual claims made in the Claim.

Claim 1

  1. [14]
    This is a claim made against all defendants. It seeks an order that:
    1. (a)
      they remove from the “public record” all details relating to the fraud complaint, including all Google searches relating to the prosecution;
    2. (b)
      they apologise for initiating and continuing with the prosecution; and
    3. (c)
      they provide an apology and issue a statement to BA investors clearing the name of the plaintiff, Justin Trembath and Melinda Trembath.
  2. [15]
    No basis for any of the parts of this claim has been pleaded. Ms McEwan was unable to identify any cause of action which might, if properly pleaded, give rise to the capacity to make any of these orders.
  3. [16]
    There is no power available to any of the defendants by which they could remove information from the public record. Nor can they be required to expunge “Google searches”. Nor can they be required to apologise. This claim is vexatious. It is clearly untenable.
  4. [17]
    It is set aside.

Claim 2

  1. [18]
    This part of the claim seeks an order for the return of confidential information to the plaintiff. The order is sought against the BAN Defendants, as well as BA and BAN themselves. The latter two entities are not parties to this action.
  2. [19]
    This claim is unrelated to the allegations of malicious prosecution or misfeasance in public office. The Commonwealth Defendants argue that it is oppressive and an abuse of process to litigate in this proceeding unrelated claims which have no connection to the issues to be decided in the proceeding and when those other claims already appear to be the subject of litigation in other proceedings.
  3. [20]
    The BAN Defendants have applied for an order setting aside the Claim so far as it concerns them on a number of bases.
  4. [21]
    First, Ms McEwan is an undischarged bankrupt. She became bankrupt in November 2019 and is not due to be discharged from that bankruptcy until 5 May 2028.
  5. [22]
    The BAN Defendants contend that the claims that she has made in this proceeding against them have vested in her bankruptcy trustee pursuant to s 58 of the Bankruptcy Act 1966 (Cth) and she may not pursue them.
  6. [23]
    Section 58 of the Bankruptcy Act provides:

Vesting of property upon bankruptcy--general rule

  1. (1)
    Subject tothis Act, where adebtorbecomes abankrupt:

(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

  1. (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.

Note 1: This subsection has a limited application if there are orders in force under the proceeds of crime law: see section 58A.

Note 2: Even if property has vested under this section, it may, under the Proceeds of Crime Act 2002:

(a)become subject to a restraining order; and

  1. (b)
    be taken into account in making a pecuniary penalty order; and
  1. (c)
    become subject to a charge to secure the payment of an amount under a pecuniary penalty order, if it is subject to a restraining order; and
  1. (d)
    be dealt with by the Official Trustee, if it is subject to a restraining order and a court has directed the Official Trustee to pay the Commonwealth an amount under a pecuniary penalty order out of property subject to the restraining order.
  1. (2)
    Where a law of the Commonwealth or of a State or Territory requires the transmission of property to be registered and enables the trustee of the estate of a bankrupt to be registered as the owner of any such property that is part of the property of the bankrupt, that property, notwithstanding that it vests in equity in the trustee by virtue of this section, does not so vest at law until the requirements of that law have been complied with.
  1. (3)
    Except as provided by this Act, after a debtorh as become a bankrupt, it is not competent for a creditor:
  1. (a)
    to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or
  1. (b)
    except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.
  1. (4)
    After a debtor has become a bankrupt, distress for rent shall not be levied or proceeded with against the property of thebankrupt, whether or not the bankrupt is a tenant of the landlord by whom the distress is sought to be levied.
  1. (5)
    Nothing in this section affects the right of a secured creditor to realize or otherwise deal with his or her security.

(5A) Nothing in this section shall be taken to prevent a creditor from enforcing any remedy against a bankrupt, or against any property of a bankrupt that is not vested in the trustee of the bankrupt, in respect of any liability of the bankrupt under:

  1. (a)
    a maintenance agreement; or
  1. (b)
    a maintenance order;

whether entered into or made, as the case may be, before or after the commencement of this subsection.

  1. (6)
    In this section, after-acquired property, in relation to a bankrupt, means property that is acquired by, or devolves on, the bankrupt on or after the date of the bankruptcy, being property that is divisible amongst the creditors of the bankrupt.”
  1. [24]
    In the amended statement of claim (ASOC), Ms McEwan claims to be the owner of the intellectual property in the Therapeutic. The term “Confidential Information” is defined in the ASOC by reference to certain patents, trade secrets and other information relating to the Therapeutic. The claim appears to be based upon the alleged ownership by Ms McEwan of the Confidential Information. Any proprietary right, such as ownership of intellectual property, vests in the trustee in bankruptcy as divisible property under s 58. See Boyapati v Rockefeller Management Corporation.[5] Further, any chose in action which Ms McEwan might have possessed to allow her to seek return of the Confidential Information would have also vested in the trustee in bankruptcy. See Cummings v Claremont Petroleum NL[6] where Brennan CJ, Gaudron and McHugh JJ said:

“ … 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.”[7]

  1. [25]
    It follows, then, that Ms McEwan has no right to seek this order. It is set aside.

Claim 3

  1. [26]
    This is a claim for damages in the sum of $2,500,000 said to arise out of the “malicious prosecution”. It appears to rely upon paragraphs 29 to 48 of the ASOC. In those paragraphs Ms McEwan sets out her narrative of events and asserts that various defendants undertook her prosecution with the intention of causing harm to her.
  2. [27]
    The first thing that falls to be considered is whether any of the defendants is a “prosecutor” for the purposes of this cause of action.
  3. [28]
    In order that a person might become liable as a “prosecutor” that person must play an active role in the conduct of the proceedings, as by “instigating” or setting them in motion.[8]
  4. [29]
    Then, there are four elements which need to be pleaded (and then established) in order that a plaintiff might succeed on the basis of the tort of malicious prosecution. They are:
    1. (a)
      that proceedings of the kind to which the tort applies (generally, as in this case, criminal proceedings) were initiated against the plaintiff by the defendant;
    2. (b)
      that the proceedings terminated in favour of the plaintiff;
    3. (c)
      that the defendant, in initiating or maintaining the proceedings, acted maliciously; and
    4. (d)
      that the defendant acted without reasonable and probable cause.[9]
  5. [30]
    It is common ground that a criminal prosecution was commenced against Ms McEwan and that those proceedings “terminated” in her favour.
  6. [31]
    The balance of the relevant part of the ASOC concerning the allegation of malicious prosecution falls well short of satisfying the requirements of the pleading rules. In paragraphs 29 to 48 the plaintiff makes assertions against the Commonwealth and State Defendants without distinguishing between any of them. If Ms McEwan wants to pursue this cause of action against a defendant, then there must be a complete pleading of the cause of action against each individual defendant. As it stands, the pleading does not allow each defendant to plead in response to the allegations. For example, part of paragraph 29 sets out:

“(h)The QPS charged the Plaintiff with fraud and the QPS, ATO, CDPP and DPP prosecuted the plaintiff for BA’s fraud complaint because they alleged the Plaintiff spent the BA’s $185,000 on a personal loan and other expenses when:

(i) Knew this to be false because the $185,000 was acquitted on the Carbstarver project and BA’ IP protection in accordance with the Investor agreements;

(ii) the defendants were able to verify payments the payments were recorded in bank statements and directly with payees against the Acquittal Email;

(iii) There was no evidence any payments listed on the Acquittal Email dated 16 August 2017 were made “dishonestly”;

(iv) The payments made and listed on the Acquittal spreadsheet was absent of criminality.

(l) The QPS Fraud charge and prosecution was instigated by Mr Mactaggart and Mr Hoult, supported by Mr Monaghan, the QPS, Mr Holt QPS, the ATO and Mr Rains;

(m) Ms Lukin, Ms Devereux, Ms Williams, Mr Micairan and Ms McGregor were prosecutors who at all material times had an active role in the conduct of the prosecution against the plaintiff;

(n) The CDPP Director Ms McNaughton was aware of the material facts of the fraud complaint and the evidence that exculpated the charge and cleared the plaintiff of any wrong doing against the complainant the BA;

(o) The prosecution was maintained without reasonable and probable cause for some illegitimate or oblique motive;

(p) there were no reasonable grounds for BA’s fraud complaint and prosecution against the plaintiff and therefore destitute of reasonable cause;

(q) that the aforesaid was undertaken with the intention of causing harm to the plaintiff because the State, DPP, ATO, and the CDPP maintained the prosecution in the absence of any evidence of the element of dishonesty; (‘malicious prosecution’)”.

  1. [32]
    The balance of the pleadings in this part of the ASOC are repetitive, vague and consist, to a large extent, of broad accusations against numerous defendants without any particularisation. It contains statements such as:
    1. (a)
      in paragraph 34(e): “upon review of all of the documents held in the possession of the defendants, there was an absence of reasonable and probable cause for the charge and prosecution;”
    2. (b)
      in paragraph 35: lengthy allegations about advice certain defendants received with respect to a civil claim; and
    3. (c)
      in paragraphs 40 to 42: allegations of ignoring representations by the plaintiff’s lawyer.
  2. [33]
    There are also numerous instances of “rolled up” allegations against all of the defendants without differentiating between them and identifying the basis for the claims against them.
  3. [34]
    Ms McEwan has not pleaded, in any intelligible way, the material facts necessary to support the elements of the cause of action of malicious prosecution.
  4. [35]
    This claim and paragraphs 29 to 48 of the ASOC are struck out.

Claim 4

  1. [36]
    Ms McEwan seeks $10,300,000 as damages for injury to her for the loss of opportunity to progress the Therapeutic due to the criminal charge.
  2. [37]
    If Ms McEwan had such a claim available to her, it would vest in her bankruptcy trustee. She pleads that certain patents expired in January 2019 and that she was unable to renew them due to the criminal charges she was facing. It is unclear whether she claims to own the patents as the pleading refers to the “plaintiff’s IP Company patents”. It is also unclear as to the nature of the lost opportunity alleged.
  3. [38]
    In any event, any proprietary right she might have had in the intellectual property, including a right to renew a patent, is property which has vested in her bankruptcy trustee. The cause of action for damages for lost opportunity is based upon some right in property, or otherwise, which could not be engaged. It is not a right in respect of her mind, body or character.[10] As Lockhart J put it in Faulkner v Bluett:[11]

“The common thread running through these cases is that where the primary and substantial right of action is direct pecuniary loss to the property or estate of the bankrupt, the right to sue passes to the trustee notwithstanding that it may have produced personal inconvenience to the bankrupt …”

  1. [39]
    Further, even if Ms McEwan were otherwise entitled to bring this type of claim, she has not satisfied the requirements of the pleading rules for this type of cause of action. Those requirements are conveniently summarised by Jackson J in Graham & Linda Huddy Nominees Pty Ltd & Anor v Byrne & Ors:[12]

“[50] First, it is necessary for a plaintiff who alleges loss of a valuable commercial opportunity to plead that the loss it has suffered is a loss of a valuable commercial opportunity, identifying the opportunity with some particularity. Second, it is also necessary that the plaintiff pleads what it would have done, where what the plaintiff would have done if the defendant had not been in breach of duty is a necessary causal condition to deciding factual causation. Third, it is necessary for a plaintiff who alleges such a loss to plead the percentage or proportion of the opportunity that was lost, in assessing value on the possibilities, in order to plead the amount of the damages claimed, as is specifically required. Fourth, where a plaintiff alleges a loss of a 100 per cent possibility or the certainty that they would have obtained the hoped for or expected benefit under a transaction which did not occur, it is to be expected that the plaintiff will allege with some particularity the facts by which that certain outcome would have been achieved.”

  1. [40]
    The ASOC does not comply with those requirements.
  2. [41]
    This claim is set aside and paragraphs 54 and 55 of the ASOC are struck out.

Claim 5

  1. [42]
    In this claim, Ms McEwan seeks damages for misfeasance and malfeasance in public office against the 2nd, 3rd, 5th, 6th, 7th, and 9th defendants.
  2. [43]
    Where a party seeks to recover damages for misfeasance in public office, then the allegation of misfeasance must be carefully pleaded and with particularity. Rule 150 of the UCPR requires that motive, intention or other condition of mind must be specifically pleaded. The five elements of the tort of misfeasance in public office are:
    1. (a)
      an invalid or unauthorised act;
    2. (b)
      which was done maliciously;
    3. (c)
      by a public officer;
    4. (d)
      in the purported discharge of his or her public duties;
    5. (e)
      which causes loss to the plaintiff.[13]
  3. [44]
    Those elements have not been pleaded with particularity or at all.
  4. [45]
    This claim is struck out.

Claims 7, 8, 9 and 10

  1. [46]
    Under each of these claims, the plaintiff seeks orders for “direct referral” for prosecution or to the Legal Services Commission (for investigation and prosecution) of various of the defendants. This Court cannot direct the prosecution or investigation of any party. Nor can the plaintiff obtain orders of this kind as there is no cause of action which would entitle the plaintiff to that form of relief. This is a clear abuse of the Court’s process.
  2. [47]
    This claim is set aside.

Application by the State Defendants

  1. [48]
    This group consists of:
    1. (a)
      The Director of Public Prosecutions;
    2. (b)
      Ms McGregor – employed in the Officer of the Director of Public Prosecutions as a prosecutor;
    3. (c)
      Mr Holt – a police officer employed in the Queensland Police Service; and
    4. (d)
      The State of Queensland.
  2. [49]
    The State Defendants seek orders:
    1. (a)
      pursuant to r 293 UCPR, that judgment be given in favour of the 8th and 9th defendants;
    2. (b)
      alternatively, removing the 8th and 9th defendants as parties to the proceeding by reason of s 25 of the Director of Public Prosecutions Act 1984 (the DPP Act) or s 26C of the Public Service Act 2008;
    3. (c)
      removing the 10th defendant as a party to the proceeding by reason of s 10.5 of the Police Service Administration Act 1990 (the PSA Act); and
    4. (d)
      striking out those parts of the relief claimed which seek referrals of the State Defendants for prosecution or to the Legal Service Commissioner.
  3. [50]
    The ASOC makes no specific allegation against the Director of Public Prosecutions. There are a few random references made to the DPP and about the Director’s state of knowledge, but little more than that. It is pleaded by the Plaintiff that Ms McGregor was a prosecutor and it is common ground that she was the prosecutor who appeared at the committal hearing of this matter in December 2019.
  4. [51]
    These two defendants rely upon s 25 of the DPP Act which provides:

“25. No act or thing done or omission made by the Minister, the director or any person assisting the director for the purpose of giving effect to this Act or discharging, exercising or performing any function, power, authority or duty under this Act shall subject the Crown, the Minister, the director or any person to liability at law in respect thereof.”

  1. [52]
    Section 25 appears to have been the subject of consideration in only one decision – Richardson v State of Queensland[14] – by Judge McGill SC. The case bears some similarity to this one. In Richardson, an indictment was presented in the District Court against the plaintiff charging him with dishonestly applying to his own use and to the use of others property belonging to a company while he was an employee of that company, and the property was of a value of more than $30,000. The trial commenced on 17 February 2014, and on 25 February 2014 a jury found him not guilty of the charge. The second defendant, who was employed as a prosecutor in the Office of the Director of Public Prosecutions, was the Crown prosecutor at the trial.
  2. [53]
    The defendants relied upon s 25 and, after consideration of the reasons in Colbran v State of Queensland [15], McGill DCJ said:

“[22] …  In substance the claim made against the second defendant is in relation to his conduct as Crown prosecutor of the prosecution. That in my opinion falls within the terms of s 25 of the Act, and as such he is protected by it from any liability at law. This is so, whether the cause of action relied on against him is malicious prosecution, "misleading and deceptive conduct or false pretences", or indeed any other action in tort. It follows in my opinion that there can be no cause of action against the second defendant, and the plaintiff's claim against him is bound to fail. There is no need for a trial of that claim. Judgment can be given for the second defendant under r 293, and an order can be made for the removal of the second defendant from the proceeding under r 69(1)(a).”

  1. [54]
    I respectfully agree with what his Honour said. The situation in this case is not different in any relevant sense. For the purposes of this application, the allegations about the conduct engaged in by Ms McGregor are accepted. It is alleged, in paragraph 3(i)(i) of the ASOC, that she was “[a] public officer appointed as a State Prosecutor of the DPP, for the purpose of assisting the director in the discharge of the director’s duties.”  She was, in those circumstances, engaged in performing a function under the DPP Act and for the purpose of giving effect to that Act. Section 25 operates to protect both the DPP and Ms McGregor.  It follows, then, that the plaintiff has no prospect of succeeding on this part of her claim and judgment should be given for the 8th and 9th defendants.
  2. [55]
    The State Defendants also seek the removal, as a party, of the 10th defendant. Mr Holt was a police officer employed in the Queensland Police Service. It is alleged against him that he took part in the investigation of Ms McEwan and that he was the charging officer.  That is not in dispute.
  3. [56]
    Section 10.5 of the Police Service Administration Act 1990 relevantly provides:

10.5 Civil liability of police officers and others for engaging in conduct in official capacity

  1. (1)
    This section applies to each of the following—

(a) an officer;

(b) a staff member;

(c) a recruit;

(d) a volunteer;

(e) a person who, at the time the person engaged in conduct in an official capacity, was a person mentioned in any of paragraphs (a) to (d).

  1. (2)
    A person to whom this section applies does not incur civil liability for engaging, or the result of engaging, in conduct in an official capacity.
  1. (3)
    If subsection (2) prevents liability attaching to a person, the liability attaches instead to the Crown.

  1. (6)
    In this section—

civil liability, of a person to whom this section applies for engaging, or for the result of engaging, in conduct in an official capacity, means liability of any type for the payment of an amount by the person because of—

  1. (a)
    a claim based in tort, contract or another form of action in relation to the conduct or result, including, for example, breach of statutory duty or defamation and, for a fatal injury, includes a claim for the deceased’s dependants or estate; or
  1. (b)
    a complaint made under a law that provides a person may complain about the conduct or result to an entity established under the law, other than a complaint to start criminal proceedings, including, for example, a complaint under the Justices Act 1886; or
  1. (c)
    an order of a court to pay costs relating to a proceeding for an offence against a law in relation to the conduct or result, unless the proceeding was for an offence by the person.

Examples of types of liability—

a liability because of an agreement or an order under the Anti-Discrimination Act 1991 or the Australian Human Rights Commission Act 1986 (Cwlth) requiring payment of an amount to a complainant (however described) under the Act

a liability because of an obligation under an agreement to settle a proceeding, or an order of a court or tribunal, to do something that involves paying an amount, including an obligation to publish an apology in a newspaper

conduct means an act or an omission to perform an act.

engage in conduct in an official capacity, by a person to whom this section applies, means engage in conduct as part of, or otherwise in connection with, the person’s role as an officer, a staff member, a recruit or a volunteer (as is applicable), including, for example, engaging in conduct under or purportedly under an Act.

volunteer means a person appointed by the commissioner to perform duties for the service on an unpaid voluntary basis on conditions decided by the commissioner.”

  1. [57]
    Mr Holt comes within the protection of that provision. If he were to be found liable, then the liability attaches to the State of Queensland, which is already a party. There is no need for Mr Holt to be a party, and he should be removed under r 69 of the UCPR.

Application by the BAN Defendants

  1. [58]
    I have already dealt with the incapacity of Ms McEwan to maintain certain of the causes of action because she is a bankrupt. There are other matters raised by Ms McEwan in the ASOC. Ms McEwan was a director of Stockingham from 10 November 2016 to 27 April 2017, and the sole director from 20 July 2017 until 20 April 2020. On 20 April 2020, Peter van Eps (Ms McEwan’s husband) became the sole director of Stockingham.
  2. [59]
    On 5 November 2020, Stockingham commenced an action (BS 11902/20) in which it sued BAN and the BAN Defendants in this matter (the Stockingham Proceeding). The issues raised in this proceeding involve allegations which are the same as or substantially similar to the allegations in the Stockingham Proceeding. It is unnecessary to descend into great detail, as it is sufficient to identify the following broad issues as being the subject of allegations in both proceedings:
    1. (a)
      that the BAN Defendants made an investment of $185,000 with Stockingham in order to develop the Therapeutic;
    2. (b)
      the parties agreed on the same terms;
    3. (c)
      the parties agreed on a Shareholders Agreement;
    4. (d)
      confidential information was provided to the BAN Defendants and its return has been demanded by Ms McEwan; and
    5. (e)
      the BAN Defendants made false statements to the Queensland Police alleging that Ms McEwan committed fraud.
  3. [60]
    Ms McEwan knew about the Stockingham Proceeding – she swore an affidavit in that proceeding – before she commenced this proceeding. There has been no sensible reason advanced for her not being joined to the Stockingham Proceeding. And she has, in correspondence, made statements which could be construed as demonstrating that she has some involvement in the conduct of the Stockingham Proceeding.
  4. [61]
    The plaintiffs in the two actions are, of course, different. But, the defendants are the same, it involves allegations about the same property and behaviour, and relies upon similar causes of action. Should the two matters proceed, it could occur that different findings were made about the same sets of facts.
  5. [62]
    Proceedings have been held to be an abuse of process where the use of the Court’s processes is unjustifiably oppressive to one of the parties or vexatious – Voth v Manildra Flour Mills Pty Ltd.[16] The categories of abuse of process are not closed – Tomlinson v Ramsey Food Processing Pty Ltd.[17] It was recognised in Batistatos v Roads and Traffic Authority of New South Wales[18] that the doctrine of abuse of process is fluid and adaptable.
  6. [63]
    The manner in which an abuse of process might arise was considered in UBS AG v Tyne[19] where Kiefel CJ, Bell and Keane JJ said:

“[1] … The varied circumstances in which the use of the court’s processes will amount to an abuse, notwithstanding that the use is consistent with the literal application of its rules, do not lend themselves to exhaustive statement. Either of two conditions enlivens the power: where the use of the court’s procedures occasions unjustifiable oppression to a party, or where the use serves to bring the administration of justice into disrepute.” (citations omitted)

  1. [64]
    In the circumstances, the fact that the BAN Defendants would face the same types of allegations and have to meet the same evidence amounts to an unjustifiable oppression. Those defendants would be required to defend the same factual allegations and would, of course, incur the extra cost in doing so. These two proceedings, if allowed to continue, would unnecessarily take up the time of the Court and its limited resources.
  2. [65]
    I am satisfied that the same or substantially the same question or questions are involved in the two proceedings, and that the decision in one of those proceedings would affect the other proceedings. But, the orders that I have made with respect to large parts of the Claim and the ASOC have changed the state of play. In particular, Ms McEwan’s status as an undischarged bankrupt and the consequences of that have meant that the claim she has made has been greatly diminished. So far as any part of the action survives, it should be consolidated with the Stockingham Proceeding.
  3. [66]
    I will hear the relevant parties on:
    1. (a)
      whether consolidation is still sought, and, if so,
    2. (b)
      the appropriate order to make consolidating the two matters.

Costs

  1. [67]
    I will hear the parties on costs.

Footnotes

[1] Agar v Hyde (2000) 201 CLR 552 at [57], adopted in Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256 at [46].

[2] Palmer v Magistrates Court (2020) 3 QR 546 at [26] and [30].

[3] Robert Bax & Associates v Cavenham Pty Ltd [2011] QCA 53.

[4]  [2020] QSC 372.

[5]  (2008) 77 IPR 251, [2008] FCA 995 at [88].

[6]  (1996) 185 CLR 124.

[7] At 136.

[8] A v State of New South Wales (2007) 230 CLR 500 at [34].

[9] A v State of New South Wales (2007) 230 CLR 500 at [1].

[10] Cox v Journeaux (No 2) (1935) 52 CLR 713 at 721; Samootin v Shea [2010] NSWCA 371 at [78]-[79].

[11]  (1981) 52 FLR 115 at 119.

[12]  [2016] QSC 221.

[13] Northern Territory v Mengel (1995) 185 CLR 307 at 370.

[14]  [2015] QDC 30.

[15]  [2007] 2 Qd R 235.

[16]  (1990) 171 CLR 538.

[17]  (2015) 256 CLR 507 at 518-520.

[18]  (2006) 226 CLR 256; [2006] HCA 27 at [9].

[19]  (2018) 265 CLR 77 at [1].

Close

Editorial Notes

  • Published Case Name:

    McEwan v The Commissioner of Taxation of the Australian Taxation Office and Ors

  • Shortened Case Name:

    McEwan v The Commissioner of Taxation of the Australian Taxation Office

  • MNC:

    [2022] QSC 81

  • Court:

    QSC

  • Judge(s):

    Martin SJA

  • Date:

    11 May 2022

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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