Australian Real Estate Relation Pty Ltd (in liquidation) v Farha Diba

The plaintiff's claim

1. The plaintiff seeks a variety of relief including the imposition of a constructive trust, a permanent injunction, damages including what seems to be damages for a psychiatric injury and declarations arising out of the demise of the real estate agency business of Australian Real Estate Relations Pty Ltd (in liquidation) ("ARER"), the first plaintiff. It should be pointed out immediately that the pleading and particulars contained within the Statement of Claim which was filed on 22 March 2023 make express averments only against the first and second defendants. Except for the deployment of the plural, "the defendants", and whatever it may imply, there is no express averment against the fourth to sixth defendants. In these circumstances, the natural meaning of the expression "the defendants" where deployed in the pleading is a reference to the first and second defendants who are expressly referred to from time to time.
2. The breakdown and demise of ARER's business is the subject of orders made by Black J and his Honour's reasons for those orders in Ratul v Islam; In the matter of Australian Real Estate Relation Pty Ltd [2023] NSWSC 78. Those reasons deal with two proceedings. The first proceedings were for the winding up of ARER brought by Mr Ratul against Mr Islam as first defendant and ARER as second defendant. His Honour made a winding up order appointing Mr David Levi as liquidator of ARER on the just and equitable ground under ss 461(1)(k) and 467(4) Corporations Act 2001 (Cth).
3. The second proceedings were commenced by Mr Islam, naming ARER, Mr Ratul and Ms Diba as defendants. Both proceedings were heard at the same time. Mr Islam sought wide ranging relief (Black J's judgment [28]-[31]) principally for oppression under ss 232 and 233 Corporations Act. Black J dismissed Mr Islam's proceedings. It is obvious from his Honour's reasons that Mr Islam made substantially the same complaints in those proceedings as in these. An application for leave to appeal from the winding up order was refused by the Court of Appeal (Ward P; Griffith AJA) in Islam v Australian Real Estate Relations Pty Ltd [2023] NSWCA 131. A proposed appeal from the dismissal of Mr Islam's proceedings was stood over before the Registrar of the Court of Appeal for directions. No appeal has been determined and it is unclear on the evidence before me whether it has progressed any further. There seems to have been no appearance when the matter was before the Court of Appeal Registrar on 17 June 2023. A search of NSW Caselaw website turns up much other apparently related litigation. It is not necessary to refer to all of it.
4. Prior to the commencement of the proceedings in the Equity Division, Mr Islam had commenced proceedings against Mr Ratul and Ms Diba in the District Court (Matter No: 2022/00303169). Those proceedings were the subject of an application by the defendants under UCPR 13.4 for summary dismissal or alternatively UCPR 14.28 for the Statement of Claim to be struck out. In his judgment dated 31 May 2023, his Honour Judge Andronos SC (Islam v Ratul unreported 31 May 2023; Annexure E Affidavit of Emma Breanne Watt affirmed 27 June 2023; CB 121) found that the proceedings arose out of the conduct of the affairs of ARER. It is obvious from his Honour's reasons for judgment (at [6]) that the allegations made in the District Court proceedings were substantially the same as those litigated before Black J in the oppression proceedings. His Honour formed the view (at [44]) that the District Court proceedings ought to be struck out as disclosing no reasonable cause of action. His Honour regarded the matters alleged as claims Mr Islam may have against ARER, if they are accepted at their highest, or claims that ARER, rather than Mr Islam, might have against Mr Ratul and/or Ms Diba. He did not grant leave to Mr Islam to replead in the circumstances as he found them to be.
5. Mr Islam also commenced another set of proceedings in the Equity Division on 10 March 2023. In his own name and purporting to sue in the name of ARER, he sued the third, fourth, fifth and sixth defendants in the case at hand. The matter came before Black J in the Corporations List on 21 June 2023 and the proceedings were dismissed with an order that Mr Islam pay costs. His Honour observed that "Raine Horne Corporation" was not an existing legal entity ([1]). Black J noted that the liquidator of ARER, Mr Levi, had not consented to the proceeding and referred to Mr Islam's lack of capacity to represent ARER, bearing in mind the provisions of s 198G Corporations Act ([10]). His Honour having inferred that the directors of ARER had not authorised the commencement of the proceedings given the breakdown of the relationship between them, and that in any event, such authorisation would have contravened s 198G and bearing in mind that there was no suggestion that the proceedings could continue as derivative proceedings requiring leave under the general law and in the absence of "a proper pleading" ([14]) his Honour dismissed those Equity Division proceedings as an abuse of process because by then Mr Islam had also commenced these proceedings in the Common Law Division, which were not then before Black J. His Honour contemplated that the common law proceedings would continue.
6. While, as I have said, it is not necessary to refer to all of the other proceedings brought by Mr Islam, of particular relevance is 2023/195738 brought against the third, fourth and sixth defendants in the case at hand. Harrison J (as the Chief Judge then was) summarily dismissed those proceedings as an abuse of process because they propounded the same alleged causes of action as had been dealt with by Back J referred to in the immediately preceding paragraph: Islam v Raine & Horne Corp [2023] NSWSC 1184 (Harrison J).
7. It is possible that Mr Islam has commenced yet other proceedings in other courts ventilating this same dispute, but there is no direct evidence of that. This background of a multiplicity of proceedings is, however, relevant to my determination of the applications for dismissal or strike out.

The nature of the case

1. From the Statement of Claim in the present matter, the claims for relief brought by Mr Islam as against the first and second defendants, which as I have said are the only claims articulated in the averments, are in reality identical in substance to those ventilated in the first equity proceedings before Black J (2022/277860; [2023] NSWSC 78) and in the District Court proceedings before Andronos SC DCJ (unreported 31 May 2023; 2022/303169). The only difference here is that the second defendant, Real Estate Macarthur Group Relations Pty Ltd is named as a defendant. It is said to be the corporate vehicle for the first defendant's, Ms Diba, business activities. Ms Diba was the second defendant in the proceedings in the District Court before Andronos SC DCJ.
2. As I have indicated no claim is pleaded against the third, fourth and sixth defendants. For that reason alone these proceedings must be dismissed as against them either because they are frivolous or they are an abuse of process in that each of those defendants named as a party to the litigation have no identifiable cases pleaded against them.
3. Mr S Philips of Counsel, who appeared for the fourth and sixth defendants argued that as Mr Islam had commenced the proceedings which were ultimately dismissed by Harrison J (2023/195738) the commencement and continuance of these parallel proceeding was an abuse of process: Moore v Inglis (1976) 9 ALR 509 at 515. However, those proceedings have now been dismissed on that ground and I doubt that it is available again now in these proceedings. However, what I have said earlier is sufficient to justify the summary dismissal of the proceedings against those defendants.
4. So far as the first and second defendants are concerned, Mr R Perla of Counsel who appeared on their behalf made a number of points, similar to some of those taken before Black J in the first proceedings before his Honour. First ARER is in liquidation, the liquidator has taken control of its property and he alone is entitled to bring proceedings. The liquidator has not consented. Secondly, Mr Islam has not obtained leave to bring a derivative action in ARER's name: Chahwan v Euphoric Pty Ltd (t/as Clay & Michel) [2008] NSWCA 52; 245 ALR 780 at [124]. Thirdly, he has not been shown to have any prospect of obtaining leave. Fourthly, as Andronos SC DCJ found, in the present case the substantive relief sought by Mr Islam at their highest are claims that ARER, rather than Mr Islam, might have against Ms Diba or her company. Finely, there are also defects in as much as the pleading does not comply with Part 14 of the UCPR and for that reason would be liable to be struck out under UCPR 14.28.
5. I accept Mr Perla's arguments that the proceedings against the first and second defendants disclose no reasonable cause of action and are an abuse of process given that they are in substance the same as those ventilated before Back J and Andronos SC DCJ.
6. The third defendant is a non-existent entity, so far as it is named as a defendant the proceedings should be dismissed. Further as I have said, no cause of action is pleaded. The fifth defendant has taken no part in these proceedings, but I am of the view that the statement of claim should be dismissed as against him. In common with the third, fourth and sixth defendants, no cause of action against him is pleaded.
7. For these reasons, my order is: 1. Under r 13.4 Uniform Civil Procedure Rules 2005 (NSW) the whole of the proceedings against each defendant is summarily dismissed. 2. The plaintiff is to pay the costs of the first, second, fourth and sixth defendants. 3. Liberty to apply in respect of any special order as to costs on 3 days' notice to each active party and to the associate to Campbell J.

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