Islam & Ors v McCarrolls of Moss Vale Pty Ltd & Ors

District Court of NSW|2023-08-17

The applicant's evidence and submissions

The first, second and third defendants (hereafter referred to as 'the Applicants') relied upon two affidavits. These were from Emily Hills (7 June 2023) and David Levi (7 June 2023). Ms Hills is the Senior Corporate Counsel of Toyota Finance Australia Limited (the second defendant). Mr Levi is, to repeat, the third defendant.

Ms Hills' evidence

Relevantly, Ms Hills annexed to her affidavit the documents which she contended constituted the loan agreement for finance for the motor vehicle that Mr Islam complained had been repossessed.
Materially, the agreement indicated that the borrower of finance for the acquisition of a Maserati was ARER. Mr Islam was one of two guarantors (the other being Abu Ratul).
Standard terms of the loan agreement were that: 1. an event of default was when the borrower became 'legally incapacitated' (cl 10.1(i)); 2. being 'legally incapacitated' included the borrower lacking full legal capacity and this included being 'insolvent') (cl 1.1(j)); 3. 'insolvency' included winding up (cl 1.1(i)).

Consideration

As indicated in my reasons in Islam v Khan, referred to earlier, applications for summary dismissal are not determined by form, but by substance; although I hasten to add that the inability to prepare a statement of claim according to Part 14 of the UCPR may be symptomatic of a claim that should be dismissed.
I referred to the applicable principles relating to summary dismissal applications in Islam v Khan. It is unnecessary to repeat them.
I have indicated that the Summons does not indicate any right or interest affecting the two corporate plaintiffs, Gulf Bridge or Mortgage Plus. They are not properly joined and they should be removed as the third and fourth plaintiffs from the proceeding. ARER should not be a plaintiff, as its liquidator did not consent to commence (or carry on) the proceeding (see also paragraph54 below).
I have reviewed the amended summons that was recently rejected by the Court registry. This version ran for 24 pages. Unfortunately, it cannot be said that the document represents any material improvement on the original iteration. In its form, it is effectively an amalgam of a statement of relief, a bare reference to causes of action expressed at an immensely high level of generality, and inserts propositions of law, with express citation of certain hallowed decisions. The allegations themselves are of the 'high wide and handsome' variety which obscure what it is that Mr Islam is complaining about. Many are serious in nature with the liberal choice of expressions such as misrepresentation, and fraud.
The balance of the document contains a litany of grievances that are unintelligible and vague. It is bereft of meaningful content. In Islam v Fahim Khan & Ors [2023] NSWDC 478, I adopted the description of what Harrison J had said with reference to the state of Mr Islam's pleading in Islam v Raine & Horne Corp [2023] NSWSC 1184 at [12]. The same description is apposite to the summons, and the rejected Amended Summons, that Mr Islam filed in this particular proceeding.
As a matter of substance, and conscious as I am of the high threshold for summary dismissal of causes of action, and the high degree of certainty that the Court requires to be satisfied that such order should be made, I am satisfied that (a) the vehicle is owned not by Mr Islam personally (or by Mr Islam as a trustee) but by ARER; (b) ARER is in liquidation; (c) it is Mr Levi, as the liquidator of ARER, who has the exclusive standing to bring or maintain a legal proceeding in the name of the company (per s 477 of the Corporations Act), but (d) has elected not to do so. As to this last matter, I note for completeness, Weinstein J in the Supreme Court had referred to the same legal consequences of liquidation in Islam v Ul Karim [2023] NSWSC 717 at [17]). But still, Mr Islam continued to oppose the defendants' application.
Subject to his complaint about a breach of privacy or confidentiality, Mr Islam has no proprietary interest in the Maserati, without which his effective action in tort for detinue (ie the return of the Maserati to him) must inevitably fail.
As to his complaint about breach of privacy or confidentiality, Australian law, as yet, has not developed to the stage where an action for breach of privacy or confidentiality generates a cause of action in common law (tort). Mr Islam did not refer the Court to any statutory right to compensation for any breach of privacy [4] . Even if (contrary to what I have found) he had standing to sue on a breach of contract (entered between the financier with ARER) and although the standard conditions of that arrangement were before the Court (in Ms Hills' affidavit), he did not cite any contractual term or promise about privacy or confidentiality. No equitable right, or right of restitution, was articulated in any coherent way. Putting aside these legal difficulties, however, there is no clear articulation of the material facts relied upon to establish that privacy or confidentiality was infringed.
In relation to conduct by Mr Levi prior to his appointment, if the point was good, this, in my view, may have provided some basis for the objection to Mr Levi as liquidator or (perhaps remotely) some basis for objecting to the winding up of ARER. That however, is now water under the bridge. This Court has no authority to adjudicate on the correctness or otherwise of Mr Levi's appointment, or the winding up of the company.
In relation to Mr Islam's complaint about Mr Levi's conduct since his appointment, the District Court had no jurisdiction to adjudicate upon such complaints. By sections 90-5 to 90-20 of Schedule 2 to the Corporations Act 2001 (Cth) a 'Court' has the power to inquire into conduct by a liquidator. Amongst other powers, the Court could make an order in relation to any loss sustained by the company because of a breach of duty by a liquidator (s 90-15(3)(e)), to make good some or all loss (s 90-15(6)(a) and, in the process, consider whether the liquidator has performed his duties and can even make a costs order against the liquidator (s 90-15((5)(a). The District Court, however, is not a "Court" for those purposes. The appropriate forum is the Supreme Court or the Federal Court of Australia. As was pointed out in a not dissimilar context [5] , this is something Mr Islam was also previously made aware about.
Nor does this Court have the jurisdiction to hear any complaint ventilated in his recent affidavit that he has against his former director, Mr Ratul, or even Mr Levi himself (under, for example, s 598 of the Corporations Act). Such action again must be agitated in the Supreme Court or Federal Court.

Further opportunity to plead?

Numerous opportunities have been extended to the plaintiff to try to present a complaint in a way that satisfies pleading requirements and facilitate the defendants' respective understandings of the cases they would have to meet. The last opportunity was for Mr Islam to file and serve a statement of claim. Mr Islam sought to file the functional equivalent, an 'Amended Summons,' which the Court registry rejected. Notwithstanding that rejection (for formal reasons), having considered the document, which was prepared after Mr Islam had obtained pro bono legal advice, it would not have sufficed to satisfy the pleading requirements in Part 14 of the Uniform Civil Procedure Rules 2005 (NSW).
I am satisfied, however, that each of the bases in Part 13 r 4(a)-(c) have been made out such that the proceeding should be dismissed. In reaching that conclusion, I have concluded that the court process is beyond salvation by the filing of a statement of claim that complies with Part 14 of the UCPR.
In reaching that conclusion, I am not oblivious to the circumstance that Mr Islam represents himself and do not question the sincerity of the grievances he expresses. This motion has, however, been around for a long time, has occasioned inconvenience and costs in all of the defendants (without there being any indication that they can realistically be recovered from Mr Islam). Further, as remarked upon at greater length in Islam v Khan, Mr Islam appears unable to abide by pleading rules I am not persuaded that there is any utility in allowing Mr Islam to plead a case. Moreover, whilst acknowledging his status as a self-represented litigant, as indicated in certain parts of these reasons, he appears unable to learn from previous judicial decisions which identify legal prohibitions upon law suits against companies in external administration and their administrators.
The proceedings against the applicants on the motions should be summarily dismissed.
There is no obvious reason why costs should not follow the event but, if the parties wish to contend to the contrary, they have the facility of applying to set aside or vary the costs orders.

The costs applications of the Commonwealth defendants

Liability to pay costs of the Commonwealth defendants

The Commonwealth defendants sought orders that their costs be payable on an indemnity basis. They also applied for a gross lump sum costs order.
Anterior to this, however, is the question of liability for costs. On 3 November 2023, Mr Islam resisted any order that he pay the Commonwealth's costs after consenting to the withdrawal of those proceedings against those defendants.
At the hearing on 3 November 2023, Mr Islam submitted that when he commenced the proceedings against those Commonwealth defendants, he was ignorant of his rights or obligations; but from late October 2023 he had effectively been set right from the advice that he had received from the pro bono law firm who advised him. Having received that advice, he did the right think in withdrawing his claims. He pointed out that despite his indication of withdrawing his claims against the Commonwealth defendants (or perhaps some of them) he still believed that they had wronged him: it appeared from the exchange that he contemplated he might bring a later suit against them. At any rate, he submitted that he should not be punished by having a costs order visited upon him.
Mr Islam subsequently supplied written submissions on 9 November 2023. This was done without the Court's leave: the directions that I made on 3 November 2023 were more confined to allowing him the opportunity to respond to the Commonwealth's defendants' applications that he pay their costs on an indemnity basis and for a gross lump sum costs order; not on the question of any liability he had on the issue of his liability to pay costs.
Be that as it may, having had the opportunity to provide a supplementary submission as to costs, Mr Islam instead made further submissions, in effect, as to why he might be given further opportunity to file a statement of claim.
Although the Court would be entitled to disregard those submissions, for completeness, I note that there is nothing in those submissions which alters the conclusions already expressed.
These submissions misunderstand the policy rationale for costs orders. Contrary to Mr Islam's submission, they are not intended to punish the party who withdraws a claim. They are intended, rather, to compensate the party against whom the proceeding is withdrawn for the legal costs incurred to defend the claim until it was withdrawn (Oshlack v Richmond River Council (1998) 193 CLR 72). It is no more relevant that the party withdrawing the claim is 'ignorant' or mis-informed about his, her or its rights against a party or parties whom the plaintiff sues than it is relevant that the plaintiff is impecunious [6] . The effect is still the same: the defendants have been put to the expense, proven to be unnecessary, of incurring legal costs.
No proper basis has been advanced for why costs should not follow the event. Mr Islam is to pay the costs of the proceeding of the fourth to eighth defendants, respectively.

Application for indemnity costs

For both of the remaining costs applications, the Commonwealth defendants rely upon an affidavit of Sean Behringer, who is a Senior Lawyer with the Australian Government Solicitor, sworn on 4 October 2023. The Commonwealth defendants bring two costs applications. The first is a partial order for costs to be paid on an indemnity basis.
The application for a partial order for indemnity costs is based upon Mr Islam's lack of acceptance of an offer made pursuant to r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (the 'rules offer').
Such offer was contained in a letter that was emailed to Mr Islam on 28 July 2023. This was the same day that the Commonwealth defendants filed a motion seeking to have the proceeding dismissed or alternatively struck out.
In the letter, Mr Behringer explained that the terms of the offer were: 1. Judgment in favour of the Commonwealth defendants; 2. No order as to costs.
This is a 'walk away' offer.
In the same letter, Mr Behringer referred Mr Islam, indirectly, the effect of Part 13.4 of the Uniform Civil Procedure Rules, asserted that the Summons was liable to be dismissed upon any of those grounds, and explained that from the perspective of the Commonwealth defendants, they were offering to forego their entitlement to costs incurred to the date of the offer whilst pointing out that there were likely to be further costs incurred. The letter also explained that if the offer of compromise was regarded as not satisfying the requirements of r 20.26 of the UCPR, it was relied upon as a 'Calderbank' letter.
The offer complies with r 20.26. That provision contemplates a walk-away offer (r 20.26(3)(a)). By the operation of r 42.15A, subject to the Court's discretion to otherwise order, the Commonwealth defendants achieved an outcome no less favourable than the terms that were offered to Mr Islam.
Having been given the opportunity to make submissions on the Commonwealth defendants' application for indemnity costs, as indicated earlier, the gist of Mr Islam's response was non-responsive. He did (and apparently cannot) explain any deficiency in the offer of compromise (as per the requirements of r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW). He did not supply any reasoned basis for inviting the Court to exercise its discretion to alter the operation of r 42.15A(2) of the UCPR.
It follows that Mr Islam should pay the costs of the fourth to eighth defendants: 1. up to 28 July 2023, on the ordinary basis; 2. thereafter, on an indemnity basis.

Application for gross lump sum costs order

Another part of Mr Behringer's affidavit concerned this application under s 98(4)(c) of the UCPR.
Mr Behringer's affidavit indicated that he has over 13 years of experience in litigation and dispute resolution.
Mr Behringer explained that the AGS invoices professional fees and disbursements in representing the Commonwealth defendants on a special statutory basis (Judiciary Act 1903 (Cth), s 55N(1)(e)). The amounts claimed were exclusive of GST.
Mr Behringer set out a table of voluminous correspondence and documentation he deposed to the AGS receiving from Mr Islam. At this point, I would interpolate that it would not come as a surprise if the AGS received voluminous correspondence and documentation from Mr Islam: as noted throughout the hearings of this motion, the Court Registry itself has been inundated with voluminous correspondence and documentation which I have had to parse to ascertain relevance to the motion that had been brought. To return to Mr Behringer's point, however, his evidence indicates that the AGS had received 2,987 pages of attachments to the date of the affidavit.
Mr Behringer then indicated that a costs summary had been prepared on a time-cost basis. Further, the time spent by AGS lawyers was charged only on a costs recovery basis; excluding any profit component.
Mr Behringer acknowledged a difficulty in his estimate. Mr Islam had commenced other proceedings against Commonwealth entities. He confessed that it was not always clear as to which proceeding documents or correspondence related to. This evidence is also similar to my experience of having to sift through correspondence and court process that Mr Islam has sent to the Court to determine whether it applies or is relevant to a proceeding before me or some other proceeding.
Mr Behringer then performed calculations on the two bases, of the Commonwealth receiving costs on an ordinary basis, or costs partially on an indemnity basis. On the latter basis, the costs were calculated to be $15,683. Those costs were discounted by 25% to factor in any 'solicitor-client' component).The work was performed by Zita Rowling (a Senior Executive Lawyer with more than 20 years' experience) and himself.
Mr Behringer set out what is, in effect, a timesheet, based upon categories of work, divided into the work performed before and after the date that the Commonwealth defendants served their rules offer.
He also set out the singular disbursement (the filing fee for the motion filed on behalf of the fourth to eighth defendants).
Mr Islam did not give evidence or provide submissions on this application when afforded the opportunity to do so.
This is not an especially complex piece of litigation, from the perspective of the Commonwealth defendants. Such litigation is apt for the imposition of a gross costs sum. But the absence of that feature does not disqualify this action from being regarded as an appropriate vehicle for such orders. What is more material is the value of orders of that kind saving expense and delay to the successful litigant. As remarked in these reasons and elsewhere Mr Islam strikes me as having a voracious appetite for litigation and I expect that he would probably fight, with some vigour, any costs assessment process (I have also assumed he would not agree to the Commonwealth's claim, discounted though that is).
Noting the significant discount that Mr Behringer has identified, recognising that the costs do not include additional costs which doubtless the Commonwealth defendants have incurred since the date of the application (4 October 2023) and accepting, as I do the plausibility of his calculations, on the broad-brush approach favoured in applications of this, I accede to the Commonwealth defendants' applications.

Orders

For the foregoing reasons: 1. The second, third and fourth plaintiffs are removed pursuant to r 6.29 of the Uniform Civil Procedure Rules 2005 (NSW) and the first plaintiff is to pay those parties' costs of the proceeding on the ordinary basis. 2. the first plaintiff's proceedings against the fourth to eighth defendants (incl) are dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) on the bases that: 1. costs up to 28 July 2023 are payable on the ordinary basis; and 2. costs after 28 July 2023 are payable on an indemnity basis. 1. Pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW), the costs award in order 2 is quantified in the sum of $15,517. 2. the first plaintiff's proceeding against the first, second and third defendants are dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW). 3. the first plaintiff is to pay the costs of the first, second and third defendants on the ordinary basis. 4. If any application is brought to set aside or vary orders 1 and/or 5, such application should be brought within 14 days.

Endnotes

Islam v Australian Real Estate Relations Pty Ltd [2023] NSWCA 47 (appeal dismissed: Islam v Australian Real Estate Relations Pty Ltd [2023] NSWCA 131)
Islam v Australian Securities & Investments Commission [2023] NSWSC 1188
Islam v Raine & Horne Corp [2023] NSWSC 1184
The right under s 93 of the Privacy Act 1988 (Cth) is limited (by s 89)
Ratul v Islam [2023] NSWSC 78 at [1]
As to which, see Northern Territory v Sangare (2019) 372 ALR 117 at [32]-[33] DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 November 2023

(Judiciary Act 1903(Cth)

REASONS FOR JUDGMENT

These reasons should be read in conjunction with my reasons in Islam v Fahim Khan & Ors [2023] NSWDC 478, because of the similarity in procedural circumstances affecting both proceedings. Particularly pertinent are the references in that judgment to the Court's involvement in procuring legal representation of Mr Islam through the Pro Bono panel schemes operated by the NSW Bar Association and Law Society of NSW and the delay that has been caused in procuring such representation; and also Mr Islam's involvement in serial other proceedings, principally, although not exclusively, in the Supreme Court of New South Wales.
Before the Court are applications for summary disposal or strike out of the proceeding.

Mr Islam's relationships to the corporate plaintiffs

In this proceeding, commenced by summons on 24 May 2023, Mr Islam, and purportedly three other plaintiffs, sued three defendants. The three other plaintiffs purportedly joined were: Second Plaintiff: Australian Real Estate Relations Pty Ltd (ARER) Third Plaintiff: Gulf Bridge Finance Pty Ltd Fourth Plaintiff: Mortgage Plus Australia Pty Ltd
There has already been significant litigious history involving the plaintiff and the second plaintiff, ("ARER"), in the Supreme Court of New South Wales. Mr Islam is one of two directors of ARER, a company that has been in liquidation since February 2023. The other director and shareholder was Mr Abu Ratul. Mr David Levi was appointed as liquidator to ARER on 10 February 2023 (Ratul v Islam [2023] NSWSC 78).
ARER was wound up on the just and equitable ground in one of two applications that came before Black J (Supreme Court of New South Wales proceeding 2022/277860). The application for winding up was brought by Mr Ratul. Mr Islam and Mr Ratul (and Mr Ratu's wife, Ms Diba) had been in frequent disputation from about the middle of 2022. The other application was Mr Islam's personal member's claim, as a shareholder against Mr Ratul. (Supreme Court of New South Wales proceeding 2022/325554). Mr Islam has tried unsuccessfully to stay the winding up orders against ARER [1] .
In relation to Gulf Bridge Finance Pty Ltd, Mr Islam and another person (Sarah Anwar Khan) are directors and Ms Khan is the sole shareholder. As to Mortgage Plus Australia Pty Ltd, Mr Islam is the sole director and majority member of this entity.

At a glance

Court

Decision date

Source

Judgment (11 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (9)