Jafari v 23 Development Pty Ltd
[2020] FCCA 2379
•3 September 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| JAFARI v 23 DEVELOPMENT PTY LTD | [2020] FCCA 2379 |
| Catchwords: BANKRUPTCY – Application for review of registrar’s decision to refuse to set aside a bankruptcy notice – applicant’s assertions that creditor’s solicitor not authorised to act being misconceived – applicant having lost in protracted proceedings in the in the Supreme Court of Victoria, the Court of Appeal and the High Court – applicant seeking in effect to run the Supreme Court hearing all over again – application ignoring principle of finality – application an abuse of process – application dismissed. |
| Legislation: Federal Court Rules 2001 (Cth). |
| Cases cited: Totev v Sfar [2008] FCAFC at [9]-[15] Wren v Mahony (1992) 126 CLR 212 Ramsay Health Care Australia Proprietary Limited v Compton [2017] HCA 28 |
| Applicant: | KOUROSH JAFARI |
| Respondent: | 23 DEVELOPMENT PTY LTD |
| File Number: | MLG 4437 of 2019 |
| Judgment of: | Judge Burchardt |
| Hearing date: | 7 August 2020 |
| Date of Last Submission: | 7 August 2020 |
| Delivered at: | Dandenong |
| Delivered on: | 3 September 2020 |
REPRESENTATION
| Counsel for the Applicant: | Self-Represented |
| Solicitors for the Applicant: | Not Applicable |
| Counsel for the Respondent: | Mr Clarke Q.C |
| Solicitors for the Respondent: | Holman Webb Lawyers |
ORDERS
The application for review of the decision of Registrar Gitsham made on 21 May 2020 and the applicant’s application to set aside the creditor’s bankruptcy notice filed 16 December 2019 are both dismissed.
The Applicant pay the Respondent’s costs, to be taxed pursuant to the Federal Court Rules 2001 (Cth) in default of agreement.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 4437 of 2019
| KOUROSH JAFARI |
Applicant
And
| 23 DEVELOPMENT PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introductory
On 21 November 2019, the Official Receiver issued a bankruptcy notice against Mr Kourosh Jafari at the behest of the petitioning creditor, 23 Developments Pty Ltd. That notice was served upon the applicant on 26 November 2019 when a process server left the notice in his mailbox.
On 16 December 2019, the applicant filed an application in this court seeking to set aside the bankruptcy notice, which ultimately culminated in orders made by Registrar Gitsham on 21 May 2020. The Registrar dismissed the applicant’s application to set the bankruptcy notice aside.
What is now before the court is Mr Jafari’s application for review of that decision filed 28 May 2020. It is a hearing de novo (see Totev v Sfar [2008] FCAFC at [9]-[15]).
Mr Jafari has been self-represented and is passionate about the matters the subject of this proceeding. I have a note of one of his submissions in which I understood him to say that “this case is my life”. Having perused the materials in the matter as a whole, I have no doubt that that is indeed the case.
Mr Jafari has advanced a number of strong submissions as to why the bankruptcy notice should be set aside and I will come to those in due course. It should be noted that his approach both to his oral and written submissions was, understandably given his self-representation, somewhat scattered and, at times, disorganised and therefore difficult to follow. Nonetheless, having given careful consideration to each and every matter he has raised, I am of the clear view that the application should be dismissed.
A Very Brief Outline of the Litigation
Following protracted proceedings over several months in November and December in late 2017, Elliott J gave judgment in a proceeding Mr Jafari had brought against 23 Developments in the Supreme Court. Both parties were represented by senior counsel. The effective outcome was that Elliott J ordered judgment in favour of 23 Developments in the sum of $219,393.59.
That judgment was the subject of an appeal. On 19 September 2019, Whelan and Niall JJA and Sifris AJA gave judgment. The application for leave to appeal and the appeal were, effectively, held together and the appeal was dismissed.
Mr Jafari applied thereafter for special leave to the High Court out of time. It was heard 16 April 2020. By then, the matter had been before this court on four occasions.
On 16 April 2020, Keane and Edelman JJ relevantly observed:
This application for special leave to appeal from a decision of the Court of Appeal of the Supreme Court of Victoria requires an extension of time to proceed. The application has insufficient prospects of success to warrant the grant of special leave to appeal and raises no question of general principle. Accordingly, it would be futile to grant the extension of time. The application should be dismissed.
On 15 May 2020, Mr Jafari sought to file an application in the Registry of the Court of Appeal. That application was considered by Niall JA on the papers and on 23 July 2020, Niall JA published his decision. The decision of Niall JA noted at [1] that:
One of the issues both at trial and on the application for leave to appeal concerned whether the land which was to be developed was contaminated.
Niall JA noted that the applicant (Mr Jafari) had obtained a further report about the site on 7 October 2019 and noted at [10]:
The applicant asserts that the report comprises a detailed site investigation and finds no contamination that would prevent development of the site. In those circumstances, he contends that it would be a gross miscarriage of justice for the judgment below to stand. He seeks to rely on the further evidence and the court’s discretion and its inherent power to regulate its own proceedings in the interest of justice.
Having referred to relevant authority, Niall JA continued at [15]:
Applying those principles here, it is clear that the application was, in the technical sense, an abuse of process. The purpose of the new or fresh evidence would be to contradict the factual findings made at trial and considered by this court in the application for leave to appeal. To allow it would be to conduct a new trial, inconsistent with the principle of finality. Subject to some immaterial exceptions, there is no authority in the Court of Appeal to set aside its authenticated orders in order to receive fresh evidence and the application is, therefore, bound to fail. Subject to a grant of special leave, the decision of the Court of Appeal finally and conclusively settled the dispute between the parties.
Niall JA went on to affirm the decision of the Registrar not to accept Mr Jafari’s application.
Against this background, I propose to deal with the matters raised by Mr Jafari in as sequential order as I am able.
The Authority of the Solicitor for the Respondent to Act for The Respondent
Mr Jafari has taken great issue with the conduct of Ms Evert, who it appears has not only acted against him in this proceeding, but historically in a number of antecedent proceedings also. He goes so far as to accuse her in effect of collusion and fraud (see affidavit 31 July 2020, paragraph 8(a)). Ms Evert’s affidavits have commenced with what, to those who are familiar with legal practice, is a fairly conventional deposition that:
I am authorised to make this affidavit on behalf of the respondent.
Indeed, she has filed, in my view unnecessarily, affidavits directly proving that the relevant officer of the respondent has, indeed, authorised her to do various things.
Mr Jafari’s assertion that Ms Evert was not in fact, authorised to act on behalf of the respondent proceeds on a radical misunderstanding of the nature of the relationship between a solicitor and client. Solicitors routinely take instructions over the telephone and the notion that, (and this is one of Mr Jafari’s assertions), it is necessary to tender, for example, minutes of meetings of the directors to authorise various courses of conduct is completely wrong.
The only basis upon which this court, or I venture to say any court, would start to closely examine whether a solicitor was duly authorised to act on behalf of their purported client would be when there was direct and probative evidence to suggest that the lawyer concerned, who is of course an officer of the court, was not acting in conformity with proper instructions. There is absolutely nothing in Mr Jafari’s materials to suggest that that is the case here and his insistence on pressing the point, elaborated at considerable detail in his written submissions, only shows, unfortunately, his lack of understanding of legal practice.
Was the Bankruptcy Notice Properly Issued?
It should be noted, of course, that the bankruptcy notice was not issued by 23 Developments. It was issued by the Official Receiver upon application made to the Official Receiver by 23 Developments. Mr Jafari’s position is that because Ms Evert was not properly authorised to act upon behalf of 23 Developments, the bankruptcy notice was not validly issued. For the reasons already given, this is completely misconceived.
The Notice to Produce
Mr Jafari served a notice to produce upon the respondent. He required production of the tax returns and financial statements of 23 Developments for the years 2010 to 2013. Ms Evert has deposed, albeit on a hearsay basis, that the respondent simply has not kept these documents because they are beyond the statutory required period. It should be noted first of all that this is an interlocutory proceeding and, accordingly, hearsay evidence is admissible. There is nothing inherently improbable or unreasonable in the explanation given, notwithstanding Mr Jafari’s criticisms.
There is a further and more fundamental objection to the notice to produce. It was served in order, as Mr Jafari put it, to put in issue the amount of loss allegedly suffered by 23 Developments in the trial proceeding before Elliott J. The notion that it would be appropriate at this stage of the application to set aside a bankruptcy notice to compel the production of documents of this character is, in my view, once again misconceived. The notice to produce presumes or presupposes that the court is minded to go behind the judgment of Elliott J. It would be only after such a conclusion had been reached that it would be appropriate to put the respondent to expenditure of this kind, even if the documents had, indeed, been available.
The Court’s Power to Go Behind the Judgment of Elliott J
There is, of course, no doubt that in an appropriate case, the court has power to go behind a judgment to see if, in truth, there really is a debt owed. Authorities such as Wren v Mahony (1992) 126 CLR 212, or more recently Ramsay Health Care Australia Proprietary Limited v Compton [2017] HCA 28 are to this effect which of course, is at the heart of Mr Jafari’s position. However, that general proposition needs to be seen in a proper context. In this instance, there has been judgment in the Supreme Court following an extensive, one might say exhaustive, examination of the dispute between the parties. This was followed by an unsuccessful application for leave to appeal, which in truth had all the substantive character of an appeal itself.
The High Court dismissed the application for special leave to appeal noting that the prospects of success were insufficient. A further endeavour by Mr Jafari to agitate the matter before Niall JA has been dismissed as an abuse of process and contrary to the principal of finality. In these circumstances, in my view the application in effect, to run in its entirety a further iteration of the dispute determined by Elliott J is, indeed, an abuse of process. On that ground alone, Mr Jafari’s application should be dismissed.
Even were this not the case, however, I am not persuaded by the materials that Mr Jafari has filed that his application, as it were on the merits, should be entertained.
In substance, doing the best I can to distrain the arguments from the overabundance of detail, Mr Jafari says that 23 Developments and its managing director, Mr Pizarro, unlawfully obtained possession of his properties and then sold them at what, in effect, was an undervalue for $1,200,00 to a related party, which, contrary to assertions made to the Supreme Court, was not a bona fide arm’s length purchaser. It is then said the property was sold for $2.5 million within a relatively short number of years thereafter. Fraud and collusion is alleged against the alleged bona fide purchaser, Mr Pizarro and his wife and others.
The second substantive point raised by Mr Jafari is an assertion that, contrary to the evidence given before Elliott J (and there was no shortage of expert evidence in that case), the land which was said to have been contaminated, thus justifying the outcome in that case, was not, in fact, contaminated because he had finally been able to get a new and authoritative report.
In proceedings before me, senior counsel for the respondent suggested that that report was, in fact, available to Mr Jafari before the Court of Appeal hearing and could have been put in his appeal to the Court of Appeal. I may have misunderstood counsel because I understood him to suggest that this failure, as it were, counted against Mr Jafari. I note, however, that from Niall JA’s decision, it seems that they may have become available to Mr Jafari shortly after the appeal.
The real difficulty with all these matters is that referred to by Niall JA. This controversy has been going on between the parties since at least 2009. It was the subject of an exhaustive examination by Elliott J. His Honour’s reasons for judgment run to over 190 pages. It should be noted further that, at [587], Elliott J said:
Clearly, from what is set out above, the credit of both Jafari and Pizarro was central to substantial numbers of issues in this case.
With respect, having read the judgment, his Honour’s observations were self-evidently correct. His Honour went on to make what were damning credit assessments of Mr Jafari (see at [589] – [591]). His Honour was by no means uncritical of Mr Pizarro but found as a general observation that he was more reliable than Mr Jafari.
These findings cannot simply be lightly set aside. His Honour had the benefit of observation of both those two primary players over what appears to have been a protracted period of time.
I do not propose to go through either the judgment of Elliott J or the judgment of the Court of Appeal in any detailed fashion. It is sufficient to note that not only did Elliott J comprehensively deal with the matters before him, but the Court of Appeal likewise dealt in considerable detail with the disagreement between the parties. It is sufficient to say that Mr Jafari’s criticisms of the findings that were adverse to him, concentrating, as they appear to, on the isolated bits of evidence, not necessarily taken in full context, are simply not persuasive.
To set out in laborious detail exactly why I have come to these conclusions is, in my view, neither necessary or appropriate. It would be an exercise involving something of a rewrite of Elliott J’s decision and that is not, in my view, an appropriate exercise, particularly when, as already detailed, the application is, in substance, an abuse of process.
Stay Pending Appeal
Mr Jafari informed the court that he proposes to appeal the decision of Niall JA to the High Court. He seeks a stay, if I understood him correctly, on the footing that the bankruptcy notice should be stayed until that matter is determined. It is, of course, well-established that an application by way of appeal, or an application for special leave, does not operate of itself as a stay. In this case, while obviously the success of any further application to the High Court that Mr Jafari makes is a matter for the High Court, I have no hesitation in saying that a stay would be inappropriate.
A bankruptcy notice may give rise to an act of bankruptcy, but it is not a sequestration order. The dismissal of this application would do no more than permit the serving of a creditor’s petition if that is what the respondent, in fact, does (as appears inevitable in the circumstances). Even if any further applications for special leave had better prospects of success, they would not in this particular circumstance, in my view, justify a stay in any event.
Conclusion
There is no doubt that Mr Jafari is passionate about this matter. There is equally no doubt in my mind that his application in this instance is an abuse of process. In any event, the substantive matters he seeks to agitate, while wholly setting aside the principle of finality, would be insufficiently strong to justify the outcome for which he contends. His criticisms of what one might describe as formal matters are misconceived. The application must be dismissed, and costs should follow the event
The creditor has sought that service of any further proceedings be effected by e-mail given the COVID-19 restrictions. Given that the present restrictions may shortly be relaxed somewhat, I am not presently disposed to order substituted service.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Judge Burchardt
Associate:
Date: 3 September 2020
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