District Court New South Wales Medium Neutral Citation: Zenah Project Developments Pty Ltd v Kanj [2020] NSWDC 322 Hearing dates: 22 June 2020 Date of orders: 22 June 2020 Decision date: 22 June 2020 Jurisdiction: Civil Before: Abadee DCJ Decision: See paragraphs 18-20 Catchwords: PRACTICE AND PROCEDURE – civil claim for damages for alleged conversion – alleged stolen vehicle – plaintiff previously unrepresented – first defendant unrepresented – prior purported representation of first plaintiff by lay advocate (SM) – prior statement by SM that plaintiff has no claim to subject stolen vehicle – title to vehicle apparently in third party which is currently in liquidation – need for delay for liquidator to consider position and to take steps to assert claim to property of the company Legislation Cited: Corporations Act 2001 (Cth), 471B Category: Procedural and other rulings Parties: Zenah Project Developments Pty Ltd (Plaintiff) Mr H Kanj (First Defendant) Representation: Solicitors: Rockliff Snelgrove Lawyers for the Plaintiff The First Defendant appeared in person File Number(s): 2019/292025 Publication restriction: Nil Judgment BACKGROUND 1. In this matter this morning, I am about to make procedural directions. These require some explanation; partly because they are unusual; partly because the events that have occurred so far in this proceeding as is apparent to me are very unusual; partly because one of the parties presently before the Court is unrepresented; and partly because it appears to the Court that a third party's rights may be affected by what the Court does in this proceeding. 2. The proceeding commenced on 17 September 2019. It was commenced by Ms Zenah Osman. Ms Osman is, apparently, the sister to Mr Salim Mehajer. In May 2018, she had apparently been struck off as a solicitor. Curiously, one week after the commencement of the proceeding, Ms Osman messaged the Court to request that she be substituted as plaintiff by the entity (which bears her first name) Zenah Project Developments Pty Ltd. 3. By its statement of claim, the plaintiff brings a claim against the defendant in respect to what it alleges is a stolen motor vehicle, a 2013 Rolls Royce Wraith (registration number 10452). It alleges that the first defendant sold the vehicle to the persons who, until recently, were the second and third defendants. The first defendant denies the claim in its entirety. 4. Although not pleaded expressly as such, I understand that the claim advanced is the tort of conversion. That requires the plaintiff to establish a proprietary interest in a good; commonly, but not always, a right of possession. 5. On 12 June 2020, one business day before a mention scheduled to occur before me in the scheduled two week civil sittings in Parramatta, an email was sent to my Associate by Mr Salim Mehajer. The substantial part of the message was to provide the Court with indications that: * Mr Mehajer "acts" for the plaintiff; * Mr Mehajer sought to furnish the Court with two affidavits – one from himself (dated 10 June 2020), and one from Mr Kenny Ayach, director of the plaintiff, whose content I will return to; and * a request was made of the Court to supply the affidavits to the defendant. This was said to be explicable since Mr Mehajer was the subject of a subsisting restraint in communicating with the first defendant; and * a request was made by Mr Mehajer to appear by telephone link. 1. Without having, at that point, had access to the Court file for this proceeding, later on that Friday afternoon, being 12 June 2020, I arranged for my Associate to send an email message in response to Mr Mehajer, which was copied to the defendant (a self-represented litigant), indicating that an anterior point that needed to be decided was whether Mr Mehajer was to be permitted to act for the plaintiff; as well as indicating that, since the Court was not minded to act as a postal service, consideration needed to be given to what might be done to vary any existing restraint upon communications, so that the plaintiff could communicate directly to the defendant without the involvement of the Court. I also indicated that I expected the plaintiff to appear by virtual courtroom as per the existing protocol for appearances during the current pandemic. 2. When the matter was before me for mention on 15 June 2020, I explained to Mr Mehajer my doubts about whether he could represent the plaintiff, but granted him, in exceptional circumstances, the opportunity to notify the plaintiff's director that he needed to do certain things. One of those was remove the second and third defendants who, to that point, had not entered Defences. This was after Mr Mehajer indicated to me that the claim was not pursued against either of those defendants. Leave was granted to the plaintiff to file an amended pleading to remove the second and third defendants and this has now occurred. The matter was scheduled for mention before me today. 3. On 19 June 2020, the last business day before today's mention, the Court received further communications from Mr Mehajer. They comprised of, relevantly, a purported new statement of claim, which removed the second and third defendants in the proceeding; which had been foreshadowed. There was also an indication that, as per my direction on 15 June 2020, Mr Mehajer had tried to notify the liquidator of the entity Mehajer Bros Pty Ltd of this claim, by contacting a Mr Andrew Quinn of the firm, Mackay Goodwin. A new draft, but unsigned and unsworn, affidavit was also served on behalf of the plaintiff's director, Mr Ayach. A feature of that affidavit was the statement that a mistake had been made in Mr Mehajer's first affidavit. Mr Ayach's most recent draft affidavit also annexed an email from Mr Mehajer to Mr Quinn to the effect that the plaintiff "has no rights to the claim". According to Mr Ayach, nor did the entity Mehajer Auto Bros Pty Ltd, which was the entity which Mr Mehajer had earlier deposed to having purchased the vehicle. 4. Several issues have arisen in relation to what has now been two directions hearings in this proceeding, in the space of a week, which have not substantively developed the proceeding at all. 5. When the matter was called before me this morning, Mr Fuenzalida, a solicitor, appeared for the plaintiff. The first defendant appeared in person. I now address the reasons why I will make the directions that I do. 6. By way of further explanation for the directions to follow, I note that in Mr Mehajer's affidavit of 10 June 2020, he deposed to interests in the subject vehicle assigned to the plaintiff, even there is no document to substantiate that transaction, and no indication of what, if any, consideration was supplied by the plaintiff to (the entity he identified as) Mehajer Bros Auto Pty Ltd. But in the email attached to Mr Ayach's most recent affidavit, being the email that Mr Mehajer sent to Mr Quinn, of the firm acting as liquidator to that entity, Mr Mehajer indicated that the plaintiff has "no rights in the claim". 7. There are several procedural consequences from the more recent communications that I have referred to, received since last week's mention. 8. First, the falsification of Mr Mehajer's assertions in his affidavit of 10 June 2020 that (a) Mehajer Bros Auto Pty Ltd owned the vehicle; and (b) the 'cause of action' relating to the vehicle was 'sold' to the plaintiff in his affidavit, evident from the most recent communications that the Court has received, not only indicates a concern as to the reliability in what Mr Mehajer has to say, but also his strong self-interest in the subject matter of this proceeding. 9. Secondly, the evidence does not disclose that the liquidator of Mehajer Bros Pty Ltd has acknowledged this proceeding, or consents to its continuation, involving as it arguably does, property that belongs to that entity. 10. Thirdly, there is no evidence that the liquidator to that entity has taken the steps he apparently needs to take for a proceeding to commence, or continue, in relation to property of Mehajer Bros Pty Ltd (pursuant to s 471B(1)(a) of the Corporations Act 2001 (Cth)). 11. The matter will go over for a period of a further month, to give the liquidator to Mehajer Bros Pty Ltd opportunity to take such steps as are needed to bring the claim to the subject property. Secondly, given the state of the evidence before the Court, the plaintiff should, with the benefit of representation and these reasons, before the next occasion have opportunity to consider why the Court should not act of its own motion to have the proceeding commenced by this plaintiff dismissed and why it should not pay the first defendant's costs of that dismissal. Having regard to Mr Mehajer's assertion in his email to Mr Quinn that the plaintiff has no rights to the claim, and Mr Ayach's professed ignorance of the transaction and the existence of this proceeding, prima facie, it appears unreasonable for it to have been joined as plaintiff. It will be recalled that, originally, it was an individual who was identified as the plaintiff, Ms Osman, apparently Mr Mehajer's sister, but that position was reversed only a week later. That being so, on the next occasion, the Court would also be disposed to order that the first defendant's costs are to be paid on an indemnity basis. Further consideration might need to be given whether it should be the plaintiff or Mr Mehajer himself who are liable for such costs. I propose to give the entity, and Mr Mehajer the opportunity to be heard on that matter. It may be, Mr Fuenzalida, that Mr Mehajer will need to consider separate representation since it is appears that his interests may be in conflict to the plaintiff's. 12. The 'Amended Statement of Claim' that was supplied to the Court last Friday has removed the second and third defendants. It should have been titled 'Further Amended Statement of Claim'. Be that as it may, it is defective and I do not propose to recognise it given that it has no verifying affidavit attached to it. It is pointless making any further directions about the pleading until the situation as to who is the proper claimant is resolved. DIRECTIONS 1. I make the following directions: 1. This proceeding is adjourned to 21 July 2020 before me, with participants to physically appear in Court, absent prior permission granted by me to appear by some different form. 2. On the next occasion that the matter is before me: 1. the plaintiff should be prepared to argue why the Court should not exercise its power to summarily dismiss the proceeding and make an order for the first defendant's costs to be paid on an indemnity basis; and 2. Mr Ayach (or a solicitor for the plaintiff) and Mr Mehajer are entitled to appear on the next occasion to argue, on the premise that the proceeding is dismissed with costs, which of the plaintiff or Mr Mehajer, should be liable to pay those costs. 1. Liberty to apply is granted on 3 days' notice. 2. The Court will forward: 1. an electronic copy of these reasons to the liquidator to Mehajer Bros Pty Ltd, Mr Domenic Calabretta of the firm Mackay Goodwin to the email address supplied on the notice of the winding up order dated 19 November 2018; and 2. a hard copy of these reasons to the address of Mr Kenny Ayach, director of the plaintiff, as contained in the affidavit signed by Mr Ayach. ********** 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: 22 June 2020