Salim Mehajer loses court bid to oust administrators from companies

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This was published 6 years ago

Salim Mehajer loses court bid to oust administrators from companies

By Michaela Whitbourn
Updated

Salim Mehajer has lost his urgent court bid to remove administrators appointed to two of his companies, as creditors clamour for almost $100 million from the property developer and former deputy mayor.

In a decision delivered on Friday afternoon, Supreme Court Justice Stephen Robb declared administrators were validly appointed to Mr Mehajer's companies Sydney Project Group and S.E.T Services.

Justice Robb said he was "not sufficiently persuaded" by evidence given by Mr Mehajer in support of his case.

However, he said it was not necessary to make "any direct findings concerning the truthfulness" of the evidence.

Two of Salim Mehajer's businesses have been placed in voluntary administration.

Two of Salim Mehajer's businesses have been placed in voluntary administration.Credit: Daniel Munoz

The court has heard the companies owe almost $100 million to creditors and have just $32,000 in the bank.

Justice Robb said it was "highly likely" the companies were insolvent but noted there was "evidence that the companies have been engaged in a very substantial property development that may be relatively near completion".

On June 16, the companies' former director, Kenneth Lee, appointed administrators Michael Hogan and Christian Sprowles to the businesses after Hong Kong-based financier SC Lowy issued a statutory demand for $83 million.

Mr Mehajer, the former deputy mayor of the now-defunct Auburn Council, sought an urgent court declaration that the appointment of administrators was invalid because he had removed Mr Lee as a director at a meeting at 5.31am that day.

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But Justice Robb found their appointment by Mr Lee was valid.

Mr Mehajer's lawyers immediately sought a stay of the decision on Friday to prevent the order from taking effect, pending a likely appeal.

His barrister, Marcus Young, SC, said the companies had "more than $100 million of assets so this is a matter of some significance".

In response, Justice Robb extended an order preventing the administrators from taking any steps in relation to the company's assets until 5pm on Wednesday.

In a tense appearance in the witness box on Thursday, the administrators' barrister Ian Pike, SC, put it to Mr Mehajer repeatedly that he did not hold the meeting to oust Mr Lee at 5.31am on June 16 and install his sister Khadijeh "Kat" Mehajer in his place.

"That is absolutely, totally incorrect," Mr Mehajer replied.

Mr Mehajer said the meeting was attended by his sister, along with his personal assistant and his solicitor.

Only Mr Mehajer gave evidence in court about the meeting. The court heard Ms Mehajer, who was expected to give evidence on Thursday, was at Westmead Children's Hospital with her infant son.

Justice Robb said that "although Mr Mehajer's evidence was not supported by the evidence of witnesses that ought to have been readily available", such as his solicitor, his barrister "gave an explanation for that circumstance" and he accepted it.

Without making a finding about the truthfulness of Mr Mehajer's evidence, Justice Robb said: "I am simply not persuaded ... that the minutes were prepared at the time claimed by [Mr Mehajer and his sister]... in the absence of corroboration from the witnesses, when that evidence could so easily have been given".

He ordered the Mehajers to pay the administrators' legal costs.

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