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Laws relating to vexatious proceedings and vexatious litigants in NSW – Court Procedure

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Sydney property developer and former deputy mayor of Auburn City
Council, Salim Mehajer, has been added the list of those who
commence
‘vexatious proceedings’
in New South Wales, and his
civil claim against 17 former associated has been stopped in its
tracks.

No stranger to
the law

Mr Mehajer is certainly no stranger to the justice system.

In 2014, he pleaded guilty to failing to declare political
donations and, in 2018, was
sentenced to 21 months in prison after being found guilty
of 77
counts of electoral fraud stemming from a 2012 NSW Government
election.

Mr Mehajer has also been convicted of assaulting a taxi driver
and a reporter, as well as
supplying a prohibited drug
, dishonestly destroying or damaging
property for financial gain and negligent driving in relation to a

staged car accident
that occurred when he was due to face court
over his assault charges.

He is currently behind bars in
Cooma Correctional Centre
on the South Coast of New South
Wales, where he is serving prison time for
perjury (lying under oath)
.

Fall from
grace

Before being declared bankrupt in 2018, Mr Mehajer was known for
splashing his money around on expensive properties, luxury sports
cars, designer clothes and exclusive jewellery.

In 2015, he famously landed at a location hear his own wedding
in one of four helicopters commissioned for the event, before him
and his entourage hopped into a fleet of luxury sports cars to
complete the journey.

Banned from
directing companies

In August 2016, the Australian Securities and Investments
Commission (ASIC) banned Mr Mehajer from managing any corporation
for three years “as a means of protecting others from his
incompetence”.

At the time, it was reported that his failed businesses owed
about $1 million to the Australian Tax Office.

Mr Mehajer contested the decision through an appeal to the
Administrative Appeals Tribunal, but was unsuccessful.

Vexatious
case

But his latest court battle has resulted in a declaration by the
Supreme Court of New South Wales that his $52 million claim against
his former business associates was ‘vexatious’

Mr Mehajer
commenced civil proceedings against 17 defendants
who he
asserted were associated with, or involved in, the fallout of a
development project in Lidcombe which resulted in his
bankruptcy.

When the matter came before the court earlier this week, Justice
Geoff Lindsay found the proceedings to be vexatious and imposed a

permanent stay of proceedings
on the basis that they were an
abuse of the court process, effectively stopping the case in its
tracks.

During his judgement, his Honour remarked that, in recent years,
Mr Mehajer had brought a series of cases which were vexatious or
had “harassed’ and annoyed his opponents.

The Learned Judge also found that Mr Mehajer was ignoring or
“trying to circumvent” a previous Federal Court judgement
in relation to his bankruptcy.

Mr Mehajer was ordered to pay the legal costs of the defendants,
which he is unlikely to be able to do due to his current
situation.

What are
‘vexatious proceedings’ in New South Wales?


Section 6 of the Vexatious Proceedings Act 2008 (NSW)
defines
‘vexatious proceedings’ as those which are:

  • an abuse of the process of a court or tribunal, and

  • instituted to harass or annoy, to cause delay or detriment, or
    for another wrongful purpose, and

  • instituted or pursued without reasonable ground, and

  • conducted in a way so as to harass or annoy, cause delay or
    detriment, or achieve another wrongful purpose.

What is a
‘vexatious proceedings order’ in New South Wales?


Section 8(1) of the Act
prescribes a mechanism whereby the
Supreme Court, Land and Environment Court or Industrial Court can
make what is known as a vexatious proceedings order against a
particular person, in which case the court may:

  • order that existing proceedings in NSW be ‘stayed’ (ie
    stopped),

  • prohibit the person from instituting proceedings in NSW,
    or

  • make any other order it considers appropriate in relation to
    the person.

The court can make such as an order if it is satisfied that the
person:

  • has frequently instituted or conducted vexatious proceedings in
    Australia, or

  • acted in concert with a person who is already subject to a
    vexatious proceedings order or who has instituted or conducted
    vexatious proceedings in Australia.

While the Supreme Court has the power to make such an order for
all three of the mentioned courts, the Land and Environment Court
and Industrial Court can only make orders that are effective in
their own jurisdictions.

What may a
court consider when determining whether a ‘vexatious
proceedings order’ should be made?

Section 8(2) of the Act provides that when determining whether a
vexatious proceedings order should be made, the court may have
regard to:

  • proceedings instituted or conducted at any time in any
    Australian court or tribunal,

  • orders made at any time by any Australian court or tribunal,
    and

  • evidence of the decision, or a finding of fact, of any
    Australian court or tribunal hearing such proceedings or making
    such orders at any time, even if that evidence would otherwise not
    be admissible under the Evidence Act.

What does the
case-law say?

The common law test for determining whether proceedings are
vexatious was set out by Supreme Court Justice Adrian Roden in the
case of
Attorney General v Wentworth (1988) 14 NSWLR 481
at paragraph
491, where his Honour states:

  1. Proceedings are vexatious if they are instituted with the
    intention of annoying or embarrassing the person against whom they
    are brought.

  2. They are vexatious if they are brought for collateral
    purposes, and not for the purpose of having the court adjudicate on
    the issues to which they
    give rise.

  3. They are also properly to be regarded as vexatious if,
    irrespective of the motive of the litigant, they are so obviously
    untenable or manifestly groundless as to be utterly hopeless.4. In
    order to fall within the terms of s 84 [now section 8 of the
    Vexatious Proceedings Act 2008]:

(a) proceedings in categories 1 and 2 must also be
instituted without reasonable ground (proceedings in category 3
necessarily satisfy that requirement);

(b) the proceedings must have been ‘habitually and
persistently’ instituted by the litigant.

Who can make a
‘vexatious proceedings order’?

Section 8(4) of the Act provides that a vexatious proceedings
order can be made by an authorised court of its own motion or on
the application of any of the following persons:

(a) the Attorney General,

(b) the Solicitor General,

(c) the appropriate registrar for the court,

(d) a person against or in relation to whom another person has
instituted or conducted vexatious proceedings, or

(e) a person who, in the opinion of the court, has a sufficient
interest in the matter.

What is the
meaning of ‘vexatious litigant’ in New South Wales?

A person who is, under section 8 of the Act (which superseded
section 84 of the Supreme Court Act of 1970), prohibited from
instituting proceedings in New South Wales is commonly known as a
‘vexatious litigant’.

Those who are declared vexatious litigants are prohibited from
commencing civil proceedings in New South Wales without the
‘leave’ (permission) of the court.

How can a
‘vexatious litigant’ commence a civil case?

In order to commence a civil case in a New South Wales court, a
person who is subject to a vexatious proceedings order must
file:

  1. A summons, and

  2. An affidavit in support of that summons which:

(a) lists all occasions the person has applied for leave,

(b) lists all other proceedings commenced in Australia, and

(c) discloses all known facts material to the application,
whether supporting or adverse to the application.

The application for leave should not be served on any other
person, unless the court orders this to be done.

The court can either grant the application or dismiss it.

The court must dismiss the application if the affidavit does not
substantially comply with the above requirements, if the
proceedings are vexatious, or if there are no undeniable grounds
for the proceedings.

Before leave is granted, the court will order the applicant to
serve all relevant persons and give such people an opportunity to
be heard.

There is no right to appeal against an application to refuse
leave.

Is there a list
of people who have brought ‘vexatious proceedings’ and
those declared ‘vexatious litigants’?

Yes, the Supreme Court of New South Wales
publishes a list
of those against whom these orders have been
made, as well as the specific orders made by the court.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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