Islam & Anor v Ul Karim

By way of notice of motion filed on 8 March 2023, the defendant Etimad Ul Karim seeks an order that the Summons filed by the plaintiffs on 19 December 2022 be dismissed or struck out on the grounds that the second plaintiff Australian Real Estate Relations Pty Ltd, is in liquidation and that the first plaintiff, Rajibul Islam, does not have a cause of action.

The applicant, Mr Ul Karim, relies upon an affidavit of Emma Brianne Watt affirmed on 8 March 2023 which was read in the proceedings. It contains six annexures, one of which was not admitted. Mr Islam relies on two affidavits. The first affidavit was sworn on 14 March 2023 and the second was sworn on 20 June 2023. There is also one exhibit in the proceedings. I observe that the first plaintiff represented himself at the hearing of the motion.

These facts are not in dispute. The second plaintiff traded as Raine & Horne Ingleburn. Mr Islam was a director and shareholder of second plaintiff and the defendant was employed by that company as its accountant. On 13 February 2023 in the Supreme Court of New South Wales, Black J ordered Australian Real Estate Relations Pty Ltd to be wound up and appointed David Levi as the liquidator. An application for stay of the winding up order was dismissed by the Court of Appeal in March of this year.

At a time when the company was not yet in liquidation, on 20 December 2022, Mr Islam commenced proceedings by way of Summons seeking the following relief:

The notice of motion seeks the following relief:

Whilst the applicant relied on rr 13.1 and 14.28 of the Uniform Civil Procedure Rules 2005 (the UCPR), his primary argument was in fact directed at r 13.4 of the UCPR. Rule 13.4 of the UCPR provides:

The power to summarily dismiss proceedings is to be exercised sparingly and with exceptional caution. The power should only be exercised in the clearest of cases where the court is satisfied that the plaintiff's claim is manifestly groundless and bound to fail: see General Steel Industries Inc v Commissioner for Railways NSW (1964) 112 CLR 125 at [129]-[130]. It may also be said that the claim must be untenable and doomed to fail, the pursuance of the claim would involve useless expense or that under no possibility may there be grounds for a cause of action.

Rule 14.28 of the UCPR provides:

As pointed out by Mr Raftery on behalf of the applicant, in State of New South Wales v Williams (2014) 242 A Crim R 22; [2014] NSWCA 177 at [71], Emmett JA, with whom Macfarlan JA and Simpson J agreed, held:

The affidavit of Ms Watt sets out some uncontroversial matters, including that the applicant's position with respect to his intended notice of motion seeking summary dismissal was sent to Mr Islam on 23 February 2023. He was also advised that the liquidator, Mr David Levi, did not consent to the proceedings being brought or maintained on the company's behalf by Mr Islam.

The affidavit of Mr Islam sets out in a general way his complaints against the defendant applicant in the proceedings. He says that the defendant was involved in aiding and abetting one of the company’s directors to misappropriate company funds, that the defendant transferred excessive amounts of company commissions to a director's wife, that the defendant was involved in covering up fraudulent transfers of the company's funds resulting in financial loss to the company and that the defendant has transferred money from the company accounts without concern or care for the company and is professionally negligent and in breach of his contractual agreement with the company.

Exhibit 1 is an email of today's date from Mr David Levi to Ms Watt which says as follows:

So far as order 1 sought in the Summons is concerned, that is, “criminal conviction record on defendant for undertaking fraudulent money transfers from the company bank account as appointed company accountant without company directors' knowledge”, I am unable to glean the basis on which Mr Islam seeks such an order. He seeks a conviction which can only occur, in the case of an indictable offence, after a trial by jury, or by judge alone in circumstances where a trial by judge alone has been ordered, or if an accused person has pleaded guilty to an offence known to the criminal law. In my opinion, this court has no power in a civil proceeding to record a criminal conviction. In my view, with respect to either of Mr Islam’s or Australian Real Estate Relations Pty Ltd (in liq)’s order 1 sought in the Summons, it discloses no reasonable cause of action and ought to be dismissed.

The same can be said with respect to order 3 of the Summons, that is, “informing Australian Immigration of the defendant's fraudulent activities, covering up a breach of director's duties and professional negligence”. In my opinion, the court has no power to make such an order and no reasonable cause of action is disclosed with respect to order 3 contained in the Summons. It ought to be dismissed.

With respect to order 2, that is, “the defendant to pay the plaintiff for financial losses and damages incurred by plaintiff because of defendant's actions”, Mr Islam seeks an order that Mr Karim pay him for “financial loss and damages” suffered by him because of Mr Karim’s actions. As I have said, Mr Islam bases this claim on his contention at paragraph 6 of his first affidavit that:

Mr Raftery submits, and I agree, that this paragraph makes it clear that Mr Islam's complaint relates to Australian Real Estate Relations Pty Ltd's funds. Mr Raftery relies upon comments made by Bathurst CJ, with whom Beazley P and Emmett J A agreed, in Ekes v CBA (2014) 313 ALR 665; [2014] NSWCA 336 at [150] where his Honour said:

In this case, the alleged loss claimed by Mr Islam is the company's. It employed the defendant accountant, who allegedly either misappropriated funds or otherwise acted in breach of duty. The claim identified in Mr Islam's affidavit is one that Australian Real Estate Relations Pty Ltd (in liq) may be entitled to maintain. As that company is in liquidation, Mr Levi as the liquidator has the control of all the property which is, or appears to be, the property of the company: see s 474 of the Corporations Act 2001 (Cth) (the Corporations Act), and only Mr Levi may bring or maintain legal proceedings in the name and on behalf of the company: see s 477 of the Corporations Act.

I note again that Exhibit 1 in these proceedings indicates that Mr Levi, at least at present, does not wish to maintain or continue the proceedings insofar as they relate to the company. In my opinion, Mr Islam is not entitled to maintain the proceedings against Mr Karim in accordance with order 2 of the Summons, and it is only Mr Levi who may make the decision to continue the proceedings. I am therefore satisfied that as to order 2, and with respect to both plaintiffs, no reasonable cause of action exists, and it too must be dismissed.

I observe that Mr Islam, who was unrepresented in these proceedings, did his best to articulate what he considers to be various injustices that have been perpetrated upon him by the defendant, Mr Levi and others. I cannot decide those issues. The only issue for me, as a matter of law, is whether the Summons discloses any reasonable cause of action. In my opinion, Mr Islam's claim as articulated is so clearly deficient that I must accede to the defendant's claim for relief. I note that Mr Islam did not wish to be heard on the question of costs.

I make the following orders: