Meagher v Zanjani

1. The plaintiff's interlocutory application filed 5 October 2016 be dismissed.
2. The defendant file and serve his Genuine Steps Statement on the plaintiff by 20 October 2016.
3. The matter be listed for directions on a date after 9 November 2016.
4. The defendant pay the costs of the plaintiff of the interlocutory application filed 5 October 2016. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

EDELMAN J: 1 This matter is in the docket of Greenwood J. In his Honour's absence, the application by the plaintiff Liquidators has come before me. In the circumstances of delays by the defendant, Mr Zanjani, these short reasons record, for the future progress of the matter, (i) why the principal orders sought by the Liquidators were not made this afternoon, and (ii) what the parties have been told about the circumstances leading up to and beyond January 2017 for the progress of this matter. 2 The Liquidators seek orders that Mr Zanjani give standard discovery, with springing, or self-executing, orders for judgment if he fails to do so. 3 The Liquidators seek orders requiring Mr Zanjani (i) to file and serve a list of documents and an affidavit verifying their disclosure within five business days, and (ii) to comply with a request for inspection of any document that is included in the Liquidators' list of documents, and that is in Mr Zanjani's control, within three business days of service of the request. Mr Zanjani failed to comply with similar orders when the list of documents was due by 19 September 2016. He provided 250 pages of documents which were located by associates in Australia but the Liquidators say that these documents are not relevant. The Liquidators are also concerned that Mr Zanjani's absence from Australia means that he is unable to verify on affidavit that he has discovered all relevant documents that are in his possession in Australia. In late September 2016 Mr Zanjani changed solicitors. His new solicitors have not yet complied, nor responded to, the most recent communication from the Liquidators on 27 September 2016. 4 Mr Zanjani says that he cannot comply with the orders. He says that in July 2016 he urgently flew to Iran to take care of his ill and elderly parents, and he says that he will remain there until January 2017. He says that his limited resources make it difficult, if not impossible, to communicate meaningfully with his newly-appointed solicitors. Although he claims (through an affidavit by his solicitor) that the documents that he provided are all of the relevant documents that he possesses, this is disputed and, as I have explained, Mr Zanjani is unable to provide a list of documents, which is verified on affidavit, until he returns to Australia in January 2017. 5 Mr Zanjani says that the Liquidators will not be prejudiced by any delay that results from his absence from Australia. He says that it is not in the interests of justice to make a springing order because: (i) he is unable properly to instruct his lawyers until he returns to Australia; (ii) he has a prima facie defence; (iii) he has endeavoured to comply with the orders for discovery; and (iv) he intends fully to comply with any Court directions when he returns. 6 On the other hand, there are concerns that I have about deferring the progress of this proceeding until January 2017: (1) Mr Zanjani has delayed in complying with earlier orders. For instance, he was two weeks late in filing his defence. (2) Mr Zanjani has not provided any evidence that he will return in January 2017. However, his statement that he will do so will be taken as an assurance and this matter is likely to be managed on the basis of his assurance that he will return. (3) It is not entirely clear why Mr Zanjani is unable meaningfully to communicate with his solicitors in Australia. His solicitor properly accepted this afternoon that he is able to make contact with Mr Zanjani and can do so, and can provide advice, albeit constrained by distance, prior to 9 November 2016. (4) Mr Zanjani's suggestion that he is unable to attend the mediation scheduled for 9 November 2016 is unsatisfactory. I accept that he is unable to attend in person. But I do not accept that communication difficulties will make it difficult for him to attend by telephone. He did not provide any evidence for this assertion and I do not accept it. At the very least, if he wishes the indulgence in relation to discovery until January 2017 he should ensure that he is capable of making an international telephone conference call or attending somewhere where he can make such a call. His solicitor is also able to attend in person. 7 Rule 5.23(2) of the Federal Court Rules 2011 (Cth) gives the Court broad powers to order default judgment including self-executing orders for failure to comply with orders of the Court. These broad powers should be exercised cautiously: Engineered Thermal Systems Pty Limited v Salmon, In the Matter of Salmon & Speck Pty Ltd (In Liq) [2012] FCA 1159 [36] (Foster J) citing Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 [15]-[26] (Flick J). The Court must consider both the expeditious conduct of litigation as well as the desirability of litigants having a proper opportunity to be heard: Wu v Avin Operations Pty Ltd (ACN 076 956 913) [2006] FCA 36 [51] (Kenny J); Ferella v Official Trustee in Bankruptcy [2013] FCA 1319 [30] (Jacobson J). 8 Taking all of the circumstances into account, I am not presently satisfied that it is in the interests of justice to make discovery orders with which it seems likely that Mr Zanjani cannot comply, nor self-executing orders which would inevitably result in judgment against him. Apart from the matters I have mentioned, this matter is not a large dispute in the context of the usual run of cases in this Court and it was not in dispute this afternoon that Mr Zanjani has a possible defence. However, two qualifications should be emphasised. First, it is very unlikely that further delays will be countenanced after January 2017 if, at that time, Mr Zanjani cannot or does not wish to return to Australia. Secondly, the matter should not remain dormant until January 2017. As to the second qualification, three matters are relevant. 9 First, Mr Zanjani has not filed a Genuine Steps Statement. Order 2 of the Orders made by Greenwood J on 1 July 2016 required this to be filed by 5 July 2016. This should be done by 20 October 2016. 10 Secondly, a mediation is scheduled for 9 November 2016. Mr Zanjani can attend by telephone. His solicitor can also attend the mediation in person. If any matter arises at the mediation which requires further documents from one of Mr Zanjani's associates in Australia then it may be that the mediation can be adjourned briefly to accommodate this. 11 Thirdly, a further directions hearing can be listed after 9 November 2016 to make programming orders so that upon Mr Zanjani's return to Australia in January the remaining steps before trial can take place in short succession. 12 For these reasons, I do not make the orders proposed by the Liquidators. However, this application was necessary because of defaults by Mr Zanjani. This oral hearing was short and would have been necessary in any event to deal with assertions by Mr Zanjani that he could not attend a mediation even by telephone. Mr Zanjani's solicitor accepted that he should pay the Liquidators' costs of this application and I make that order. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edelman.