Mehajer v SC Lowy Primary Investments Pty Ltd - [2022] NSWSC 689 - NSWSC 2021 case summary — Zoe

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Mehajer v SC Lowy Primary Investments Pty Ltd

[2022] NSWSC 689

Supreme Court of NSW|2021-10-12|Before: Lindsay J

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Source facts

Court

Supreme Court of NSW

Decision date

2021-10-12

Before

Lindsay J

Source

Original judgment source is linked above.

Judgment (19 paragraphs)

[1]

BACKGROUND

The current proceedings, and many of the other proceedings considered in this judgment, have their origins in the same set of commercial dealings, in or about 2016, involving Mr Mehajer and various parties including many of the defendants in the current proceedings.
Mr Mehajer was the sole shareholder of S.E.T Services Pty Limited and Sydney Project Group Pty Limited, the registered proprietors of properties at 36-44 John Street, Lidcombe NSW. This site was proposed to be developed into a mixed residential and commercial development known as "SkyPoint Tower".
The first defendant ("SC Lowy"), by a Syndicated Construction Loan Note Subscription Agreement dated 29 April 2016 ("the Loan Note"), became the lender through which finance was provided for the construction of SkyPoint Tower.
The second defendant ("LIM Opportunistic Fund") lent part of the sum that was the subject of the Loan Note by a separate commercial agreement with SC Lowy.
The third defendant ("Auckland LID") was the borrower to which funds were advanced under the Loan Note. Both S.E.T Services Pty Limited and Sydney Project Group Pty Limited guaranteed the obligations of Auckland LID under the Loan Note. Those guarantees were secured by a General Security Deed dated 29 April 2016 and real property mortgages dated 29 April 2016.
On 22 December 2017, the creditors of S.E.T Services Pty Limited and Sydney Project Group Pty Limited resolved that each of the two companies be placed in liquidation.
The fourteenth defendants (Todd Andrew Gammel and Barry Anthony Taylor) were appointed as joint and several receivers and managers of S.E.T Services Pty Limited and Sydney Project Group Pty Limited on 16 June 2017 by virtue of the two companies defaulting on security provided.
Mr Mehajer was declared bankrupt on 20 March 2018 and a trustee in bankruptcy was appointed. Mr Mehajer remains an undischarged bankrupt.
Mr Mehajer blames SC Lowy and other defendants for conduct which, he says, caused him to be unable to pay the petitioning creditors on whose application he was declared bankrupt.

[2]

PRINCIPLES GOVERNING A VEXATIOUS PROCEEDINGS ORDER

Section 8(1)(a) of the Vexatious Proceedings Act provides that an authorised court may make a vexatious proceedings order in relation to a person if the court is satisfied that "the person has frequently instituted or conducted vexatious proceedings in Australia."
Section 8(2) is in the following terms: (2) For the purposes of subsection (1), an authorised court may have regard to: (a) proceedings instituted or conducted in any Australian court or tribunal (including proceedings instituted or conducted before the commencement of this section), and (b) orders made by any Australian court or tribunal (including orders made before the commencement of this section), and (c) evidence of the decision, or a finding of fact, of any Australian court or tribunal hearing such proceedings or making such orders, even if that evidence would otherwise not be admissible by virtue of section 91 of the Evidence Act 1995.
Section 3 provides that the Supreme Court of NSW is an "authorised court".
Section 4 defines "proceedings" to include: (a) any civil proceedings, criminal proceedings or proceedings before a tribunal, and (b) any cause, matter, action, suit, proceedings, trial, complaint or inquiry of any kind within the jurisdiction of any court or tribunal, and (c) any proceedings taken in connection with or incidental to proceedings pending before a court or tribunal, and (d) any interlocutory proceedings or applications, or procedural applications, taken in connection with or incidental to civil proceedings, criminal proceedings or proceedings before a tribunal, and (e) any calling into question of a decision, whether or not a final decision, of a court or tribunal, and whether by appeal, challenge, review or in another way.
Section 6 defines "vexatious proceedings" to include: (a) proceedings that are an abuse of the process of a court or tribunal, and (b) proceedings instituted to harass or annoy, to cause delay or detriment, or for another wrongful purpose, and (c) proceedings instituted or pursued without reasonable ground, and (d) proceedings that are conducted to achieve a wrongful purpose, or in a way that harasses, or causes unreasonable annoyance, delay or detriment, regardless of the subjective intention or motive of the person who instituted the proceedings.
If satisfied of the matters set out in section 8(1) the court may make any one or more of the orders set out in section 8(7) as follows: (a) an order staying all or part of any proceedings in New South Wales already instituted by the person, (b) an order prohibiting the person from instituting proceedings in New South Wales, (c) any other order that the Court considers appropriate in relation to the person.
In Zepinic v Chateau Constructions (Aust) Limited [2018] NSWCA 317 at [13]-[15], Simpson AJA (with whom McColl and Macfarlan JJA agreed) set out the steps necessary for determining an application for orders under the Vexatious Proceedings Act: "The task assigned to a judge asked to make orders under the VP Act is not simple. The first step is to identify the "proceedings" the subject of the application, and said to be "vexatious". The second step is to determine (applying s 6) which, if any, of those proceedings is: (a) an abuse of the process of the court or tribunal in which it is brought; or (b) instituted to harass or annoy, to cause delay or detriment, or for another wrongful purpose; or (c) instituted or pursued without reasonable ground; or (d) conducted in such a way as to achieve a wrongful purpose, or in a way that harasses, or causes unreasonable annoyance, delay or detriment, and therefore "vexatious". (To the extent that it has not been clear before, since the 2018 amendment, it is now clear that a proceeding may be determined to have been conducted to achieve a wrongful purpose, or in a way that harasses or causes unreasonable annoyance, delay or detriment without regard to the subjective intention or motive of the person who instituted the proceedings). The third step is to determine whether the person has "frequently" instituted or conducted vexatious proceedings in Australia, or has acted in concert with such a person (whether or not subject to a vexatious proceedings order) or who is the subject of a vexatious proceedings order (s 8(1)). (The requirement for frequency does not apply if the court is satisfied that the person has acted in concert with a person who is subject to a vexatious proceedings order, or who has frequently instituted or conducted vexatious proceedings in Australia (see s 8(1)(b)). The power conferred by s 8(7) being discretionary, the final step is to determine the manner in which the discretion is to be exercised, bearing in mind the wide scope of the power, particularly as stated in s 8(7)(c)."

[3]

IDENTIFIED PROCEEDINGS

The defendants have identified ten proceedings as "vexatious proceedings" commenced and pursued by Mr Mehajer: 1. An appeal from a judgment of Robb J in In the matter of Sydney Project Group Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) [2017] NSWSC 881, referred to in these reasons as "the Court of Appeal Proceedings"; 2. An application by Mr Mehajer to annul his bankruptcy commenced in the Federal Court of Australia in April 2018, referred to in these reasons as "the First Annulment Application"; 3. A further application by Mr Mehajer to annul his bankruptcy, heard by Lee J in the Federal Court of Australia in October 2019, culminating in a judgment styled Mehajer v Weston in his capacity as trustee of the bankrupt estate of Salim Mehajer [2019] FCA 1713, referred to in these reasons as "the Second Annulment Application"; 4. An application by Mr Mehajer for an extension of time to appeal against orders regarding the vesting of certain property in his Trustee, heard by Markovic J in the Federal Court of Australia, culminating in a judgment styled Mehajer (A Bankrupt) v SC Lowy Primary Investments Ltd (A Company Incorporated in Hong Kong) [2020] FCA 125, referred to in these reasons as "the First EOT Application"; 5. An application by Mr Mehajer for an extension of time to appeal against orders made by Lee J in the Second Annulment Application, heard by Markovic J in the Federal Court of Australia, culminating in a judgment styled Mehajer (Bankrupt) v Weston (Trustee) [2020] FCA 596, referred to in these reasons as "the Second EOT Application"; 6. An application by Mr Mehajer to review a decision by his Trustee that certain cash was after-acquired property, heard by Rares J in the Federal Court of Australia, culminating in a judgment styled Mehajer v Weston [2020] FCA 924, referred to in these reasons as "the Trustee Review Application"; 7. An application by Mr Mehajer for the removal of a caveat lodged by Portcullis Capital Pty Limited on the title of a property of which Mr Mehajer was the registered proprietor, referred to in these reasons as "the Portcullis Proceeding"; 8. Defamation proceedings initiated by Mr Mehajer against Seven West Media seeking damages for publication of certain materials, heard by Gibson DCJ, culminating in a judgment styled Mehajer v Seven West Media [2021] NSWDC 379, referred to in these reasons as "the Seven West Media Proceeding"; 9. An email on 7 October 2021 from an agent of Mr Mehajer making procedural applications four days before the listed commencement of the current proceedings, referred to in these reasons as "the Sydney Building Email"; 10. The current proceedings, commenced by the statement of claim filed on 9 April 2020.

[6]

The First Annulment Application

The First Annulment Application was brought by Mr Mehajer seeking an order for the annulment of his bankruptcy pursuant to section 153B(1) of the Bankruptcy Act 1966 Cth.
Mr Mehajer also sought interim orders that, inter alia, a sequestration order made against him on 20 March 2018 be stayed.
Lee J dismissed Mr Mehajer's interim application.
At the final hearing of the First Annulment Application on 21 June 2018, counsel for Mr Mehajer informed Lee J that he was instructed to seek an adjournment of the hearing. Lee J inquired of counsel whether there was any cogent evidence to put Mr Mehajer's solvency in issue. The following excerpt from the transcript of the hearing outlines the lack of evidence able to be put forward relating to what was sought by Mr Mehajer (Transcript, 21 June 2018, p 44-45): HIS HONOUR: Mr Robinson, just so we identify where we are, prior to that interlude, we had got to the stage where I had adjourned for you to get instructions in relation to what, if anything, you wished to put to me concerning the reasonable basis for bona fide putting the issue of insolvency - sorry, whether there was a bona fide basis for putting insolvency in issue and hence why it was necessary to get a report in circumstances when it was last raised, you didn't have instructions. Has your position changed over the adjournment? Have you anything you want to put to me about any basis upon which there should be an adjournment in relation to obtaining an insolvency report? MR ROBINSON: Your Honour, I don't think I have more to say about that except that I've identified who the - - - HIS HONOUR: Yes. MR ROBINSON: - - - expert firm is, and so on - - - HIS HONOUR: Yes. But you've got no basis on the - on your instructions to indicate to me that there is anything in relation to your client's financial position that wasn't the subject of the previous evidence? Is that right? MR ROBINSON: I can't assist further on that issue. HIS HONOUR: Yes. All right. Well, thank you for that. In those circumstances, I decline the application for an adjournment and will proceed. MR ROBINSON: May it please, your Honour. HIS HONOUR: And I will deliver reasons at the time I deliver reasons in relation to the matter. MR ROBINSON: Your Honour, my instruction at this point is to seek to discontinue the proceedings.
A finding that the First Annulment Application was brought without reasonable grounds (which I make) is reinforced by the course of events leading to the judgment of Lee J, in the Second Annulment Application.

[7]

The Second Annulment Application

On 2 July 2019, Mr Mehajer filed another Originating Application in the Federal Court of Australia seeking, inter alia, orders annulling his bankruptcy under s153B(1) of the Bankruptcy Act. An amended application was filed on 19 July 2019 dispensing with any claim for interim relief.
The Second Annulment Application was heard by Lee J on 8, 9 and 10 October 2019. Lee J dismissed the Second Annulment Application on 10 October 2019 and noted at [17] and [18] that: "… a threefold case was advanced by Mr Mehajer in his first application in order to justify his annulment. Nothing was heard further on the Defects Contention and, as I have explained, it was the Ability to Pay Contention which was focussed on during the course of the interlocutory stages of his application (and also during the course of opening submissions). With commendable candour, however, by the time of final submissions, senior counsel for Mr Mehajer conceded that he was not in a position, on the basis of the evidence at the hearing, to gainsay the proposition that Mr Mehajer was insolvent at the time the sequestration order was made. Prior to that time, much of the hearing had been consumed (and vast amounts of paper had been deployed) in an attempt (successfully as it turned out) to prove that Mr Mehajer was insolvent at that time. Schedule 1 of this judgment is an aide-mémoire identifying the assets and liabilities of Mr Mehajer as at 20 March 2018, prepared by the Trustee. Included in that document are various evidentiary references where the material contained in the aide-mémoire is established. It demonstrates beyond peradventure that according to the Trustee's estimate of assets and liabilities, the Trustee's estimate of the net total deficiency of assets over liabilities was negative $24 million."
Mr Mehajer also contended that, notwithstanding a finding about his solvency, the hearing relating to the sequestration order ought to have been adjourned because he had access to sources of funds which he would have used to pay the claim of the petitioning creditor and other various creditors.
Lee J dealt with this submission at [38] to [47] of his reasons. His Honour determined that these claimed sources of funding were insufficient to displace a finding that Mr Mehajer was insolvent, and his claimed litigation assets were of "no value whatsoever."
The litigation assets referred to in the Second Annulment Application bear resemblance to the claims pursued by Mr Mehajer in the current proceedings.
It was found, at [65] of Lee J's reasons, that: "Balanced against this, however, was the fact that the true financial position of Mr Mehajer was that he was hopelessly insolvent at the time any such application for an adjournment would have been made and indeed had a deficiency in liabilities over assets in an amount in excess of $24 million."
It flows from the finding of Mr Mehajer having been "hopelessly insolvent" that both the First Annulment Application and the Second Annulment Application were pursued without reasonable grounds and can be said to have been vexatious by operation of section 6(c) of the Vexatious Proceedings Act. By reason of Mr Mehajer's hopeless insolvency it can be said that any application to annul a sequestration order made against him was "foredoomed to fail": Walton v Gardiner (1993) 177 CLR 378 at 393.

[8]

The First EOT Application

By an Originating Application filed in the Federal Court of Australia on 12 October 2018, SC Lowy sought an order that certain property had vested in the Trustee on the date that Mr Mehajer became bankrupt or, alternatively, had subsequently vested in the Trustee by operation of section 58 of the Bankruptcy Act. The property included causes of action alleged by Mr Mehajer against SC Lowy and other defendants in the current proceedings. Those alleged causes of action are largely reflected in the allegations made by Mr Mehajer in the current proceedings.
On 25 January 2019, Lee J delivered an ex tempore judgment in favour of SC Lowy.
On 11 October 2019, Mr Mehajer filed an Application for Extension of Time and Leave to Appeal in respect of Lee J's orders of 25 January 2019. On 2 January 2020, he filed an Amended Application for Extension of Time and Leave to Appeal. This application constitutes the First EOT Application. It was dealt with in Mehajer (A Bankrupt) v SC Lowy Primary Investments, Ltd (A Company Incorporated in Hong Kong) [2020] FCA 125.
In the affidavit filed with the First EOT Application Mr Mehajer identified his grounds of appeal as being "Arising Fresh Evidence" and "New Witnesses who have come forward in support of the Appellant."
Mr Mehajer did not appear at the hearing of the First EOT Application on 4 February 2022. Markovic J accepted that it was patently clear from the correspondence that Mr Mehajer was aware of the listing and as such did not adjourn the proceedings.
Markovic J determined that there was no explanation for Mr Mehajer's delay in filing the application and that, even if that issue was put aside, the proposed appeal had no reasonable prospects of success. Her Honour noted at [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."
Mr Mehajer submits in the current proceedings that the First EOT Application cannot be deemed vexatious as it only relates to an application for appeal whilst out of time and does not constitute an actual appeal.
This submission is contrary to section 5(1)(d) of the Vexatious Proceedings Act, which includes the "taking of a step … necessary to start an appeal" in the definition of instituting proceedings.
Having regard to the reasoning of Markovic J, I am satisfied that the First EOT Application was initiated without reasonable grounds and can be said to be vexatious by operation of section 6(c) of the Vexatious Proceedings Act.

[13]

The Sydney Building Email

On 7 October 2021, four days before the commencement of the hearing in the current proceedings, an email was sent to my staff and representatives of the defendants from an unidentified email address ending in @sydneybuilding.net purporting to have been sent on behalf of Mr Mehajer.
The Sydney Building Email, in its unamended form, reads as follows: "Dear Associates, I write to you on behalf of Salim Mehajer (the plaintiff) in proceedings 2020/108037. As his Honour is aware , this matter returns for hearing on the 11th of October 2021. As a matter arising , Mr. Mehajer would like to issue summons, I already informed Mr. Whitbread regarding the summons that Mr. Mehajer wants to issue to at least 4 persons from SC LOWY and Madison Marcus law firm ( the respondent's in this proceedings ) . Mr. Mehajer late notice to issue summons arises from the damning submissions received by party SC LOWY. These summons should not impact the 11th of October 2021 hearing date , however , it will sensible if an additional half a day is added to the existing timetable. This will allow Mr. Mehajer to promptly cross examine the relevant persons that are subject to the summons. The cross examination process will not be a lengthy one , as Mr. Mehajer anticipate to only briefly address the critical issues. Now since Mr. Mehajer is in custody filing and serving relevant Summons Application Forms may take greater time than anticipated , in lights of the above Mr. Mehajer proposes the following : 1- That the court grants Mr. Mehajer leave to file and serve summons on short notice ( via this email address) and allow a further half a day to the hearing timetable. 2- That the court adjourn the matter for at least 4 weeks to allow Mr. Mehajer to properly issue the summons to each party. 3- That the court carries out the above points either one or two on their own or one and two together in chambers. Can you please respond to this email at your earliest convenience. Kind Regards, On behalf of Salim Mehajer"
During cross-examination, Mr Mehajer confirmed that he had authorised and instructed the sending of the Sydney Building Email and clarified that it mistakenly used the word "summons" in place of the word "subpoena" throughout.
Counsel for the defendants submit that the Sydney Building Email constituted a procedural application and is therefore a proceeding which can be relied upon in the present application.
I am satisfied that the Sydney Building Email falls within the definitions of "proceeding" in section 4(d) of the Vexatious Proceedings Act insofar as it is an application for the issuing of subpoenas, to cross-examine witnesses, to amend the timetable of hearing dates, and for an adjournment.
I am also satisfied that the Sydney Building Email was calculated to annoy the other parties in the current proceedings insofar as it foreshadowed making multiple procedural applications a few days prior to a hearing which had been set down for approximately eight months.

[14]

The Current Proceedings

The current proceedings were initiated by a statement of claim filed by Mr Mehajer on 9 April 2020.
The statement of claim makes a number of serious allegations against the defendants relating to their conduct in the commercial dealings which ultimately led to Mr Mehajer's bankruptcy.
Two main contentions have been advanced by the defendants as pointing to the current proceedings having been initiated without reasonable grounds.
The first contention of the defendants is that the each of the claims are the subject of two Deeds of Release signed by Mr Mehajer which expressly preclude the claims made in the statement of claim.
A Deed of Release signed on 15 February 2018, being the second of the two signed Deeds of Release, expressly precludes all but one of the claims in the statement of claim against the defendants. $120,000 was paid to Mr Mehajer as consideration for that Deed of Release.
The only claim not expressly included in the second Deed of Release is that the defendants caused Mr Mehajer to suffer "nervous shock". This claim for "nervous shock" did not occur in isolation. It is to be read as alleged to have arisen, directly or indirectly, from the conduct of the defendants which is the subject of a release in the Deeds of Release.
At some stage during the current proceedings, Mr Mehajer served on the defendants an unfiled originating application seeking to have the Deeds of Release set aside for reasons set out in an unsworn affidavit served simultaneously. This unsworn affidavit does not set out a ground upon which the Deeds of Release might be set aside but rather repeats the allegations against the defendants, states that Mr Mehajer was not receiving treatment for Bipolar Disorder, and sets out various threats that were made by unnamed persons against Mr Mehajer.
On 22 October 2020, I ordered that Mr Mehajer file and serve points of claim along with any evidence upon which he might rely, in support of the proposition that the Deeds of Release should be set aside. The points of claim filed by Mr Mehajer on 16 November 2020 made no mention of the Deeds of Release and were instead a repetition of the claims within the statement of claim initiating the current proceedings.
The second contention of the defendants, regardless of any finding about the Deeds of Release, is that any valid claim made by Mr Mehajer has vested in Mr Mehajer's Trustee by virtue of his bankruptcy.
Any claim that Mr Mehajer might have against the defendants, being a chose in action, is prima facie property of the bankrupt which has vested in his Trustee pursuant to section 58(1) of the Bankruptcy Act.
Section 58(1) provides that property vests in the Trustee if, and only if, divisible amongst Mr Mehajer's creditors. Section 116(1)(a) of the Bankruptcy Act provides that all property vested in Mr Mehajer at the commencement of his bankruptcy, or afterwards, is property divisible amongst his creditors.
Relevantly, section 116(2)(g) of the Bankruptcy Act provides the following exception: (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;
Any claim for sufferings as a result of "nervous shock" could be a "personal injury or wrong" done to Mr Mehajer enlivening section 116(2)(g).
However, any claim for a "wrong" cannot be read in isolation and must be read in the context in which it appears: Daemar v Industrial Commission of NSW (1988) 12 NSWLR 45 at 55.
In Cox v Journeaux (No 2) (1935) 52 CLR 713 Dixon J at 721 explained that: "The test appears to be whether the damages or part of them are to be estimated by immediate reference to pain felt by the bankrupt in respect of his mind, body or character and without reference to his rights of property"
In Bryant v Commonwealth Bank of Australia (1997) 75 FCR 545 at 564, O'Loughlin and Merkell JJ made the following observations: "Mr Bryant's causes of action, as pleaded in his statement of claim, are essentially claims which are referable to his financial and property rights. That is not to deny him his right to allege "personal injury or wrong done to" him or members of his family. But if the injury that was suffered or the wrong done arose as a direct result of the alleged infringements of his financial or property rights, as was the case in Faulkner v Bluett , then "the primary and substantial right of action is direct pecuniary loss to the property or estate of the bankrupt". (at 119) To apply the language of Handley JA in Manningel v Hewlett to Mr Bryant's circumstances his claims for stress and suffering were "consequential upon alleged breaches" of duty said to be owed to him by the Bank as a mortgagee or secured creditor and were not claims "without reference to [his] rights of property", within the principle stated by Dixon J in Cox v Journeaux."
Any claim for "nervous shock" in these proceedings, when read in the context in which it arose, derives from or is referable to economic claims which have vested in the Trustee.
The defendants' contentions in opposition to the statement of claim point to a finding that the current proceedings were initiated, and subsequently pursued, without any reasonable ground.
The current proceedings can also be declared vexatious as being an abuse of process pursuant to section 6(a) of the Vexatious Proceedings Act.
Attempts to re-litigate claims which have already been determined are an abuse of process: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [33] citing Reichel v Magrath (1889) 14 App Cas 665.
Two major elements of the current proceedings have been previously litigated and determined.
First, the proceedings at first instance to which the First EOT Application related sought declarations that certain property had vested in Mr Mehajer's Trustee. That property, in those proceedings, is largely coincident with the claims Mr Mehajer is pursuing in the current proceedings. On 25 January 2019, Lee J made orders that the property had vested in the Trustee.
The issue of ownership of the choses in action presently being pursued by Mr Mehajer has therefore been previously litigated and determined. The current proceedings are an attempt to re-litigate that which has previously been determined by the Federal Court of Australia, with an additional claim for "nervous shock" added.
Secondly, the claims proffered by Mr Mehajer in the current proceedings bear resemblance to the claims which were litigated before Lee J in the Second Annulment Proceedings for the purpose of a finding of insolvency, focusing upon whether Mr Mehajer had any litigation assets. Lee J detailed, at [43]-[47] of his reasons for judgment, reasons that the litigation assets were of "no value whatsoever".
In pursuing these claims through a different path and under a different label, Mr Mehajer is choosing to ignore, or to attempt to circumvent, the findings of Lee J in his Honour's determination of the Second Annulment Application. The current proceedings amount to an effort to re-litigate the value of any claim Mr Mehajer has against the defendants in a manner that amounts to an abuse of process.
I am satisfied that the current proceedings can be declared vexatious pursuant to section 6(a) of the Vexatious Proceedings Act.

[15]

FREQUENT

The making of an order under section 8 of the Vexatious Proceedings Act is predicated upon a court being satisfied that a person has "frequently" instituted or pursued vexatious proceedings.
The meaning of the word "frequently" as used in section 8(1)(a) of the Vexatious Proceedings Act was considered by Leeming JA (with whom Basten and Meagher JJA agreed) in Potier v Attorney General in and for the State of New South Wales (2015) 89 NSWLR 284 at [114]-[118]: "The power to make an order under the Vexatious Proceedings Act is conditioned upon a court being satisfied that the person has "frequently" instituted or conducted vexatious proceedings in Australia. The meaning of a word like "frequently" turns very much on its context; that is no different from many other protean words (such as "adversely affect" and "mistake": cf Independent Commission Against Corruption v Cunneen [2015] HCA 14 at [2] and [57] and CTM v The Queen [2008] HCA 25; 236 CLR 440 at [7]). It is not possible to articulate a precise test. However, the following two matters relevant to its construction for the purposes of this appeal may be noted. Each supports the conclusion that "frequently" is a relatively low threshold. First, the change in language from the predecessor provision (s 84 of the Supreme Court Act) of "habitually and persistently" was deliberate, and plainly lowered the threshold condition. Secondly, there are vexatious proceedings and vexatious proceedings. It is one thing to file urgent appeals or applications for judicial review which cause substantial disruption to courts and other litigants and participants in the legal system (for example, the adjournment of a trial), or to make serious allegations of fraud unfounded in the evidence. It is quite different to encounter some poorly known legal doctrine which denies reasonable grounds to the proceedings or renders them technically an abuse of process, or to file a series of applications for the annulment of decisions of magistrates (I have in mind the nine applications for annulment made by Mr Viavattene all listed and determined on the same day: see Viavattene v Attorney General (NSW) [2015] NSWCA 44 at [70]). That is to say, both the quality of the vexatiousness of a proceeding, and the nature of the proceeding itself, inform the assessment of frequency. I can readily envisage circumstances where a litigant commences only a handful of large proceedings, making serious allegations without any proper basis, but which occupy a significant amount of time and resources of parties and the courts, which could satisfy the statutory test of "frequently". This illustrates the fact that "[t]he issue posed by the statutory term "frequently" is not to be assessed merely by an arithmetic calculation": Viavattene at [49]. Each of those considerations favour "frequently" being a relatively low threshold."
The ten proceedings brought in the period between late 2017 and 2021 may be described as a "handful" (or more) of proceedings which have often contained "serious allegations without any proper basis".
In Attorney General in and for the State of NSW v Gargan [2010] NSWSC 1192, Davies J said at [7] that the term "frequently" is a "relative term and must be looked at in the context of the litigation being considered."
In my opinion the quantity and quality of the proceedings in question meet the threshold for what constitutes "frequently" for the purposes of the making of an order under the Vexatious Proceedings Act.

[16]

POWERS CONFERRED BY SECTION 8(7)

If, once the Court has identified specific proceedings it considers to be vexatious, and it is satisfied of the threshold condition of frequency, then it has a discretion to make a vexatious proceedings order: Quach v New South Wales Health Care Complaints Commission; Quach v New South Wales Civil and Administrative Tribunal [2017] NSWCA 267 at [114] (Gleeson JA, Simpson JA and Sackville AJA agreeing); Mahmoud v Attorney General of New South Wales [2017] NSWCA 12 at [47] (Payne JA, Beazley P and Macfarlan JA agreeing).
Mr Mehajer has frequently initiated and pursued vexatious proceedings across multiple courts with an ultimate purpose of pursuing repetitive allegations against the defendants and any other party who has become involved in any way with the commercial dealings that culminated in his bankruptcy. I am persuaded that Mr Mehajer will continue to initiate and pursue vexatious proceedings unless an order under the Vexatious Proceedings Act is made.
After judgment in these proceedings had been reserved, Mr Mehajer sent an email to my Associate on 17 January 2022 seeking leave to re-open his case, and an email to the Supreme Court Registry seeking to file two summonses (to set aside the Deeds of Release) and two affidavits in support of the summonses. That led to the proceedings being relisted before me on 22 February 2022. The materials upon which Mr Mehajer then sought to rely were received and marked for identification. Separate consideration of those materials does not advance these proceedings except insofar as it points to the likelihood that Mr Mehajer will continue to initiate and pursue proceedings in the absence of a vexatious proceedings order.
I am satisfied that a vexatious proceedings order should be made against Mr Mehajer but a question arises as to whether such an order should be general in its application or include a carve out of persons or subject matters about which Mr Mehajer be prohibited from initiating proceedings: Viavattene v Attorney General (NSW) [2015] NSWCA 44 at [79].
Mr Mehajer has displayed what appears from time to time to have been a calculated misunderstanding of his legal rights and remedies, and a marked inability, or refusal, to accept judicial decisions which might explain to him what his legal rights and remedies are. It is not practical in these circumstances to define a category of cases which Mr Mehajer ought be prohibited from initiating: Wang v Botany View Hotel (No 4) [2019] NSWSC 1323 at [18].
Notwithstanding this, as was noted during the course of the hearing of the defendants' motion, any order prohibiting Mr Mehajer from initiating proceedings ought not to preclude him from initiating or pursuing procedural applications in criminal proceedings.
The defendants' Notice of Motion seeks an order under section 8(7)(b) prohibiting Mr Mehajer from instituting any proceedings in any New South Wales court or tribunal, either in his own name or in the name any other person or company, other than with the prior leave of a Judge of this Court under the Act.
The Notice of Motion also seeks an order under section 8(7)(c) prohibiting Mr Mehajer from serving on any other person any document purporting to be an originating process unless it is accompanied by a copy of the signed order of a Judge of this Court granting leave for him to institute proceedings by that originating process.
I am satisfied that orders to that effect are suitable in the circumstances and that the discretion to make such orders under section 8(7) ought be exercised.
It is also appropriate to stay the current proceedings initiated by Mr Mehajer by statement of claim on 9 April 2020 as an abuse of process: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [33] citing Reichel v Magrath (1889) 14 App Cas 665.
Orders have previously been made in these proceedings striking out Mr Mehajer's statement of claim and reserving liberty to him to apply for leave to file an amended statement of claim. An order staying the proceedings should now be until further order so that any attempt by Mr Mehajer to seek leave to file an amended statement of claim can be supervised by the Court.

[18]

CONCLUSION

I am conscious that orders made on the defendants' motion might affect other parties to the principal proceedings and that, accordingly, they should be given notice of the orders proposed to be made in disposition of the motion.
Subject to allowing all affected parties to the principal proceedings an opportunity to be heard as to the form of orders to be made, and costs, I propose to make orders in the following terms: 1. ORDER that the proceedings initiated by the plaintiff's statement of claim filed on 9 April 2020 be stayed until further order. 2. ORDER, pursuant to section 8(7)(b) of the Vexatious Proceedings Act 2008 NSW, that the plaintiff, by himself his servants or agents, be prohibited from instituting any proceedings, other than procedural applications in criminal proceedings, in any New South Wales court or tribunal, either in his own name or in the name any other person or company, other than with the prior leave of a Judge of this Court under the Act. 3. ORDER, pursuant to section 8(7)(c) of the Vexatious Proceedings Act 2008 NSW, that the plaintiff, by himself his servants or agents, be prohibited from serving on any other person any document purporting to be an originating process unless it is accompanied by a copy of the signed order of a Judge of this Court granting leave for him to institute proceedings by that originating process. 4. NOTE that, for the purpose of these orders, the plaintiff is to be taken to do something in the name of another person or company if he signs any document in the name of, or purportedly on behalf of, any other person or company, or files, or causes it to be filed, with a court or tribunal, or makes any oral application to any court or tribunal in the name of, or purportedly on behalf of, any other person or company. 5. NOTE that these orders do not prevent the plaintiff's trustee in bankruptcy from commencing any proceedings in the plaintiff's name or on the plaintiff's behalf. 6. ORDER that the plaintiff pay the costs of the defendants in the proceedings, as agreed or assessed.