Mehajer (A Bankrupt) v SC Lowy Primary Investments, Ltd

Mehajer (A Bankrupt) v SC Lowy Primary Investments, Ltd - [2020] FCA 125 - FCA 2019 case summary — Zoe

Background 2 That application first came before me for case management hearing on 11 December 2019. At that time, I made a number of orders for the preparation of the application for hearing and listed the application for hearing before me on a date to be notified to the parties. The parties were subsequently notified by my associate by email that the matter would be listed today at 10.15 am. 3 In anticipation of that hearing, a number of steps were taken, including the following: (1) Mr Mehajer filed an amended application for an extension of time joining as the second respondent Paul Weston, his trustee in bankruptcy (Trustee); and (2) the respondents, SC Lowy Primary Investments, Ltd (SC Lowy) and the Trustee each filed an affidavit and submissions. 4 On Friday, 31 January 2020, the registry of this Court received an email from Mr Mehajer, which was not copied to the respondents, in which he said: I refer to the below email of the first respondent. I confirm that submissions have not yet been lodged by myself due to restraints caused by the trustee in bankruptcy. One of a few reasons, is the trustee has been the subject to not returning me approximately $5,000.00 in funds (hindering my application); which was money confiscated from me by Police, (and given to the Trustee in Bankruptcy). The money was taken by NSW Police, because the trustee in bankruptcy has asked Police to place on their system and database:- "that any money found in my possession of $2,000.00 or more is to be confiscated" Such condition is imposed and currently appears on the system and database of NSW Police. It is to the point that if I am stopped on the road by Police, the Police are able to search me and if cash is found of $2,000.00, the money is ALL taken away from me and given to the trustee. I provided evidence to the trustee to where these funds had come from. The money was lawfully obtained and my dealings (as always) are arms length transactions. To date, the trustee has not yet returned this money to me, despite my evidence provided to the trustee in December 2019. On Friday 24 January 2020, I have been advised by lawyers representing the Trustee in bankruptcy that the money will be returned to me. Until this day, this has yet happened. The money was initially being used for another matter/ cause, however, the return of the money sooner (in this one instance) would have seen it used to pay my legal fees. I am not on legal aid for any matter nor am I on any government incentives. It is my position that I am not insolvent and I am fully restrained because the trusstee in bankruptcy has possession of all my assets. Alternative arrangements are being made to arrange for funding following the trustees lack of care in leaving me with zero dollars and zero cents. I have not mentioned my savings account closed by the trustee in bankruptcy to avoid extending this email. Associate, would Her Honour be in a position to agree to have the matter listed any time on or after 14/02; and that my submissions be accepted to be filed on or before 10/02? Thanks & Regards, Salim Mehajer 5 That email was forwarded by the registry to the solicitors for the respondents and to Mr Mehajer and the respondents were asked to indicate their attitudes to Mr Mehajer's application for an adjournment. In response, the Trustee indicated that he neither consented to nor opposed the adjournment, and SC Lowy indicated that it opposed any adjournment of the hearing date of the application for an extension of time. Mr Mehajer was a recipient of each of these email responses sent respectively by the solicitors for the Trustee and SC Lowy. 6 On Monday, 3 February 2020 at 9.45 am the registry sent a further email to Mr Mehajer and the solicitors for the respondents which included the following: Dear parties, I confirm receipt of Mr Winston's and Mr Whitbread's emails of 31 January 2020, noting their positions regarding the applicant's request for an adjournment. In the absence of consent from the respondents, this matter remains listed for hearing at 10.15 am on 4 February 2020. If the applicant intends to make an application for an adjournment, he may do so tomorrow at the hearing before her Honour. 7 The matter was thus listed before me this morning at 10.15 am. At that time, as Mr Mehajer was not present in court, the matter was called three times outside, but there was no appearance by him or on his behalf. Accordingly, I adjourned for 15 minutes until 10.30 am in order to enable Mr Mehajer further time to be present in court and requested that the solicitors for the respondents attempt to contact him in the interim. 8 During the period of the adjournment the solicitor for SC Lowy, Mr Whitbread, sent an email to Mr Mehajer informing him that the matter was currently before me, and that it had been called and adjourned to 10.30 am. In that email, Mr Whitbread noted that the parties had been expecting his appearance and asked him to confirm as a matter of urgency whether he would be appearing today, or to contact Mr Whitbread on the number provided. I was also informed by the solicitor appearing for the Trustee, Mr Calabria, that he had attempted to contact Mr Mehajer on the telephone number he had for him during the period of the adjournment, with no success. 9 At 10.30 am, after the adjournment, the matter was once again called outside the courtroom. There was no appearance by or for Mr Mehajer. Mr Leopold SC, senior counsel for SC Lowy, applied for the Court to hear both Mr Mehajer's application for an adjournment and the application for an extension of time on an ex parte basis, in lieu of an application to dismiss the application for failing to appear. The Trustee joined in those applications. 10 Having heard and considered the submissions of the parties, I accept that the orders sought today by the respondents should be made, that is, Mr Mehajer's application for an adjournment and his application for an extension of time should be dismissed. 11 My reasons for reaching that conclusion follow.

[4]

The adjournment application 12 I will first deal with the adjournment application. However, before proceeding to do so, I note the following further matters. 13 In the course of argument before me, an email timed at 11.08 am was received from Mr Mehajer by the solicitors for the respondents. In that email, Mr Mehajer says the following: Dear All, Just to further explain. I did not see the email that the matter will be ongoing and listed. It is critical to know, I have bail conditions (which are subject for an urgent and immediate change); that, I cannot use a computer. The bail conditions to not use a computer and have internet access have zero relevance to my allayed offences. It is ever so difficult to operate from just a cell phone. I do not have the Leisure if seeing emails from my compute and or a computer screen, and from time to time, emails on my cell phone appear to be scrambled and very difficult to locate. In the event the matter continues, I rely on my short submissions previously provided to you (late last year). Again, I am operating through a cell phone, and this document is difficult to relocate. I trust you have a copy of such document. 14 There was also evidence given by Mr Whitbread, the solicitor from Corrs Chambers Westgarth with carriage of the matter on behalf of SC Lowy, who, during an adjournment of the proceeding today, had a telephone conversation with Mr Mehajer. As I understand his evidence, Mr Whitbread called Mr Mehajer in response to an email he received from Mr Mehajer which included Mr Mehajer's telephone number. In their conversation Mr Whitbread informed Mr Mehajer that he was currently in the Federal Court at the hearing of the matter and that he wished to ascertain Mr Mehajer's reason for non-attendance. In response, Mr Mehajer informed Mr Whitbread that he did not know the hearing was on, in effect, because of the problems he had with his inability to access emails on a computer and only being able to access emails on his mobile phone as a result of his bail conditions. Mr Mehajer was informed by Mr Whitbread that the hearing was ongoing. 15 One further email was received from Mr Mehajer in the course of the hearing before me at 11.41 am. That email, which was addressed to the solicitors for the respondents and my associate, provided as follows: Dear all, To elaborate further on the below. I am currently on bail predominantly for offences commencing from a motor vehicle Collision and recently, offences (as referred to by the prosecution) as "traffic- ticket infringement offences". My bail conditions in relation to not using a computer with internet access read along the line of : (the conditions have no relevance to my offences and I have never been charged with cyber related offences to be restricted like such). • Not to have internet access connected to a computer. • Not to have wifi connected to my home. • To only operate through ONE mobile phone and to have internet access and emails operated through that mobile phone only. • not to have a mobile phone that has the capacity to hold two SIM cards or more includkgn a e-sim (such as the iPhone X,10, or 11). • not to use Face time on iPhone device. • not to use social media. • not to speak from any other persons phone. • not to have a land line connected to the home or office. I am in the process of varying these bail conditions. An application was made to the Supreme Court on or around November 2019. Following rule changes, applications are now required with final submissions. Solicitor Ian McGuinness ( Ph: (02) 8688 3953 ) is helping me lodge this application I have applied to have the services of Lawyer Adam Houda SC Greg James to run the bail variation. Again, I am terribly Sorry for overlooking the email. I do not have any other reason besides overlooking my emails on my cell phone. From time to time the iOS mobile phone would have emails Jumbled not allowing me to easily identify reading my unreal mail. I am far very used to operating through a computer. He has been an immense change and very difficult to operate through mobile phone hence my application to make a bail variation. I also have to print through my cell phone due to limited wifi access. 16 The respondents submit that they ought not be put to any further delay and that any further adjournment would cause them to suffer prejudice, given the ongoing cost both of appearing today and on another occasion, which, given that Mr Mehajer is a bankrupt, is unlikely to be recovered. They also submit that, given the prospects of success of the application, an adjournment ought not be granted. I address the question of prospects, in the context of the application for an extension of time, below. However, I note, in the meantime, that I accept the respondents' submissions that, in the circumstances, there should be no adjournment. 17 It is patently clear from the correspondence that has passed between the Court and the parties that Mr Mehajer was aware of the listing this morning. It was Mr Mehajer who sought to have the matter adjourned so that he could arrange for funding and, I infer, seek legal advice, although that is not made clear in his email seeking an adjournment (see [4] above). The subsequent emails from the respondents' lawyers, and ultimately from the Court, informing the parties that the matter would proceed today were sent to Mr Mehajer's email address notified to the Court and appearing on his application for an extension of time. 18 Mr Mehajer's explanation for not having seen the registry's email which was sent on the morning of the day before the hearing (see [6] above) is that he is not able to see emails from his computer or on a computer screen, and that he is restricted to looking at emails on his mobile phone. He said that his emails appear to be scrambled and very difficult to locate. In another email (see [15] above) Mr Mehajer further explained that his present position was brought about by his bail conditions which include that he can only operate through one mobile phone and that he can have internet access and emails on that phone only. In that email Mr Mehajer also apologised for overlooking the email from the Court and said that he did not "have any other reason besides overlooking my emails on my cell phone" and that from "time to time the iOS mobile phone would have emails Jumbled not allowing me to easily identify reading my unreal mail". Mr Mehajer said that it has been an immense change and difficult for him to operate through a mobile phone, and, for that reason, explained that he was going to make an application to vary his bail conditions. 19 Despite that it has been demonstrated, from the evidence before me, that Mr Mehajer is able to send emails from his mobile phone and that, even if he did not see the email from the Court sent on 3 February 2020, he was aware that the matter was listed today. He should have properly understood that, in the absence of hearing further, the matter remained listed. Further, even if I was to accept that Mr Mehajer did not see the email from the Court dated 3 February 2020, he does not say in any of his emails sent today or in his conversation with Mr Whitbread, that he did not see the emails from the respondents' solicitors and, in particular, the email from the solicitor for SC Lowy noting that their client opposed the application for an adjournment.

[5]

Application for an extension of time 20 I turn then to the application for an extension of time. 21 As set out above, the respondents sought that I deal with that application in the absence of Mr Mehajer, rather than to dismiss it for his non-appearance. I proceeded to hear the application on that basis. 22 For that purpose I was provided with a copy of Mr Mehajer's submissions dated 11 December 2019 which had not been filed but had been served and I had before me both Mr Mehajer's amended application for an extension of time by which he joined the Trustee and two affidavits sworn by Mr Mehajer. In his first affidavit, sworn on 11 October 2019, Mr Mehajer says that at the time the order was made by the primary judge, he was not legally represented and was in custody. That seems to be the extent of the explanation given for the delay in filing his application. Although there was no evidence before me, I was informed from the bar table that Mr Mehajer was in custody until about 21 May 2019. 23 The respondents submit that I would refuse the application for an extension of time for several reasons. First, they submit that Mr Mehajer's explanation for the delay in bringing the application is both unconvincing and superficial. Secondly, they submit that there is prejudice to them in defending the proceeding caused by the delay, and finally they submit that the appeal is hopeless. 24 In BQQ15 v Minister for Home Affairs [2019] FCAFC 218 a Full Court of this Court (Yates, Wheelahan and O'Bryan JJ) set out the principles applicable to an application for an extension of time in which to appeal. At [33] their Honours said: Under rule 36.05, the Court may grant an extension of the time within which an appeal is to be filed. The principles applicable to the exercise of the Court's discretion were set out in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348-9, which were adopted by the Full Federal Court in Parker v R [2002] FCAFC 133 at [6]: (a) Applications for an extension of time are not to be granted unless it is proper to do so; the legislated time limits are not to be ignored. (b) There must be some acceptable explanation for the delay. (c) Any prejudice to the respondent in defending the proceedings that is caused by the delay is a material factor militating against the grant of an extension. (d) The mere absence of prejudice to the respondent is not enough to justify the grant of an extension. (e) The merits of the substantial application are to be taken into account in considering whether an extension is to be granted. Leave will not be granted where there are no reasonable prospects of success on the appeal: Kalanje v Minister for Immigration and Multicultural Affairs [2006] FCA 1618 at [5]. The applicant will have no real prospects of success where the case is devoid of merit or clearly fails; is hopeless; or is unarguable. In making an assessment the Court is not required to go into too great a detail, but is to "assess the merits in a fairly rough and ready way": Jackamarra v Krakouer (1998) 195 CLR 516 at [7] - [9]. (f) The discretion to extend time is given for the purpose of enabling the Court to do justice between the parties. Special circumstances often arise in immigration cases. Where the delay is short and no injustice will be occasioned to the respondent, justice will usually be done if the extension of time is granted: WAAD v Minister for Immigration and Multicultural Affairs [2002] FCAFC 399 at [7]. This will be so particularly if the applicant is in immigration detention, requires the assistance of an interpreter and has limited knowledge of law and practice including the time for any appeal: Ariaee v Minister for Immigration and Multicultural Affairs [2001] FCA 1627 at [14]; N1202/01A v Minister for Immigration and Multicultural Affairs (2002) 68 ALD 21 at [12] (N1202/01A). Further, where an applicant is an asylum seeker, the gravity of the circumstances that may confront him or her may be a reason for not applying the time rule too strictly: Applicants M160/2003 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 223 FCR 441 at [5]. Nevertheless, the merits of the appeal will remain a relevant factor: N1202/01A at [13]. 25 In Martin v Norton Rose Fulbright Australia [2019] FCAFC 234 a Full Court of this Court (Besanko, Flick, and Abraham JJ) also considered an application for an extension of time in which to appeal made under r 36.05 of the Rules. In relation to the question of explanation for delay, their Honours said, at [20]-[21], the following: 20 The nature of the discretion conferred upon the Court to make such an order is well-settled. Although it is routinely accepted that the discretion has been described as "unfettered", the starting point for any exercise of discretion is that the requirement to file an appeal within time is a manifestation of the public interest in bringing disputes to finality; any exercise of discretion to depart from that starting point must be soundly based: cf. Reaper v Baycorp Collections PDL (Australia) Pty Ltd [2014] FCA 426 at [12] per Tracey J ("Reaper"); AZAEY v Minister for Immigration and Border Protection [2015] FCAFC 193 at [10] per North, Besanko and Flick JJ. 21 Of relevance to the exercise of the discretion to extend time in the present proceeding is the clear failure on the part of Mr Martin to progress his claims with any degree of diligence and his failure to comply with prior orders or directions to ready his case for hearing. 26 At [25] their Honours observed that, as a general principle, an absence of explanation for delays is not, of itself, a conclusive reason for refusing leave. Although, in the circumstances before their Honours they found that it was conclusive. Their Honours also addressed the question of appellable error and the merits of the proposed appeal. At [27] they noted that the question of merits should be "briefly addressed" and that even assuming that delay was not, of itself, a sufficient basis upon which to refuse an extension of time, in that case, the merits of the arguments sought to be advanced presented insufficient prospects of success to warrant leave being granted given the nature of the application before them. 27 As noted above, the application for an extension of time was filed on 11 October 2019. Even accepting the difficulty Mr Mehajer might face in filing an application for an extension of time whilst in custody, there is no explanation given for the further delay from about late May 2019, when it seems that he was released from custody, until October 2019. 28 Putting that issue to one side, based on the material before me and the respondents' submissions, the proposed appeal has, in my opinion, no reasonable prospects of success. 29 The orders made by the primary judge included: THE COURT DECLARES THAT: 1. Pursuant to s 90-15 of Schedule 2 to the Bankruptcy Act 1966 (Cth) (Act) and s 23 of the Federal Court of Australia Act 1976 (Cth), that the Property (as defined in Schedule A to this order) vested on or before 25 January 2019 in the Second Respondent pursuant to s 58(1)(a) of the Act. 30 Schedule A defines "Property" for the purposes of the declaration by reference to seven subparagraphs and expressly excludes any cause of action falling within s 116(2) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act). 31 Section 116 concerns property divisible among creditors. Subsection (1) sets out, subject to the Act, the property which is divisible among creditors. Subsection (2) sets out the property to which subs (1) does not extend including relevantly at s 116(2)(g): (g) any right of the bankrupt to recover damages or compensation: (i) for personal injury or wrong done to the bankrupt, the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt; or (ii) in respect of the death of the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt; and any damages or compensation recovered by the bankrupt (whether before or after he or she became a bankrupt) in respect of such an injury or wrong or the death of such a person; 32 That is, the declaration made by the primary judge states the effect of ss 58 and 116(2) of the Bankruptcy Act. In his submissions prepared for the purpose of this application, Mr Mehajer accepts that to be the case. He submits at [16]-[17] that: 16. It is accepted that the Orders of Justice Lee (as submitted by the First Respondent) does no more than reflect the position that obtains by reason of the operation of s 58 of the Bankruptcy Act- that, with the exception recognised by the Order, all the purported causes of action alleged by the Applicant as set out in Schedule A to the order have vested in the Applicant's trustee in Bankruptcy. The current orders need to be appealed and amended as the way they stand as they are causing interference with the Applicant lodging any claims against the First Respondent, as "Property" as defined in Schedule "A" of the Orders, refers to the following: "Property" referred to in "Schedule A" is defined as follows: 17. "Property" means any and all purported cause of action alleged by the Applicant in relation to, arising out [of] or in connection with (a list of items from (a) to (g) as referred to in that document (Orders). 33 While, by that submission, it appears that Mr Mehajer accepts that the primary judge's order reflects the effect of s 58 of the Bankruptcy Act, he cavils with it because he wishes to bring a proceeding. 34 Mr Mehajer is not precluded by the operation of the primary judge's order from bringing any proceeding that falls within s 116(2)(g) of the Bankruptcy Act. That is a claim for personal injury. To the extent he wishes to do so, as seems to be suggested in his first affidavit, he is free to do so. However, Mr Mehajer is precluded from bringing any claim that does not fall within s 116(2) of the Bankruptcy Act by operation of, among others, s 58 of that Act. Mr Mehajer does not disagree that his Honour's order simply reflects the effect of the Bankruptcy Act on him, but challenges the order because he wishes to bring a proceeding which may be precluded by operation of s 58 of the Act. 35 The transcript of the hearing before the primary judge was also before me. SC Lowy submitted that, similarly, one might glean from that transcript that Mr Mehajer understood the effect of the Bankruptcy Act and the effect of the relief sought by SC Lowy in that proceeding from the following exchanges between the primary judge and Mr Mehajer: HIS HONOUR: … What you're seeking to achieve is this, as property of a particular type, these causes of action that you have and which you gave evidence about in cross-examination stand outside the property which is being controlled by the trustee in the course of your bankruptcy. MR MEHAJER: Correct. HIS HONOUR: And I think that's why you were relying on section 116, because you were trying to achieve that end. All I'm saying to you is it may be - it may not be the particular section you're talking about rather than the - it may be that what you're seeking is a more unusual order which you have to find support in in different sections of the act, but the more I think about it, the more it seems to me there's less debate about the fact that these causes of action - - - MR MEHAJER: Vest in the trustee. HIS HONOUR: - - - properly vest in the trustee and you can't run them at the moment, but what you're asking is an opportunity to run them in the future by getting either these types of orders or an annulment. Is that - - - MR MEHAJER: Correct. That is correct. HIS HONOUR: All right. Thank you. Yes. I think … HIS HONOUR: Well, what I draw from that summary is that you say you've got - you believe that these claims have merit and you want them pursued, and you recognise you're going to need some sort of order or change your status in order to allow you to do so. Is that correct? MR MEHAJER: That's correct. Exercising the discretion of the court as in relation to granting the stay, the court will consider the following: the merits of the case and the financial circumstances. HIS HONOUR: What were you reading from? MR MEHAJER: Page 4 of my submissions where it says - page 4, paragraph 1, 2, 3, 4, 5, 6, 7, 8 - page 4. It's the only two point forms there, where I've said: However, in exercising the discretion of the court the court has in relation to granting the stay, the court will consider the following: the merits of the case and the financial circumstances. HIS HONOUR: Yes. Yes. No. MR MEHAJER: And just - - - HIS HONOUR: I see that. Well, if that's the case, do you oppose the relief that's sought by the plaintiff then to give to - to make the position which is currently the case clear and allow you then an opportunity to make whatever application you wish to make to allow you to maintain the claim notwithstanding those orders? MR MEHAJER: Yes. If the court permits me to, I would like to do that, and to protect the creditors and everybody else in between, the court can impose whatever restrictions and/or conditions to allow a fair outcome. That's all I ask for … 36 Although Mr Mehajer was unrepresented before the primary judge I accept SC Lowy's submission about Mr Mehajer's comprehension of the effect of the relevant sections of the Bankruptcy Act and the nature of the relief sought before the primary judge. So much can be gleaned from those exchanges, particularly when coupled with the submission made by Mr Mehajer and referred to at [32] above. 37 In any event, in my opinion, the declaration made by the primary judge does no more than state the effect of ss 58 and 116(2) of the Bankruptcy Act generally and on Mr Mehajer. In those circumstances, it seems to me that the proposed appeal which seeks to challenge the declaration that was made by the primary judge has no reasonable prospects of success. 38 In the circumstances, the application for an extension of time should be dismissed.

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