Bankrupt allowed to continue $60m claim on BOQ

Another step towards what is threatening to become a long-running blot on the Bank of Queensland's balance sheet was taken in the Federal Court in Sydney last week.

In this latest action, Jacqueline Mulhern, wife and business partner of property developer, Richard Mulhern, is seeking to have BOQ return almost A$60 million, which she contends are loans that were repaid to her from companies in the group.

These accounts had been seized in 2011, after receivers were called in by the bank to take control of certain Mulhern Group companies, when BOQ declared loans to these companies were in default.

The case has highly contentious origins, as the Mulherns contend the bank acted without warning, while the bank has asserted plenty of warnings were given.

Mulhern is also seeking to have her bankruptcy annulled later this month, which would clear the way for her to continue her action to have her family's fortune restored.

George Lucarelli, representing BOQ, argued for the action to be dismissed, stating that his client is "a publicly listed company, subject to audit and prudential regulation" and would have to declare "there was a claim in the Federal Court of Australia for some time," if the case went ahead as envisaged.

Justice Richard Edmonds, presiding over the case last week, commented that while there is no express provision against a bankrupt bringing such proceedings, he was inclined to wait for the outcome of Mrs Mulhern's action as, "if [successful], the painting changes colour."

"I'm not inclined to dismiss this action out of hand although it looks like a dog's breakfast to me," he said, in relation to the lack of clarity as to who were directors of the group at the relevant times.

Justice Edmonds ordered the two sides to return in February, and for the Mulherns to keep BOQ informed of their proposed statement of claim in time for the bank to be able to respond in court.