In the matter of C.V. Joint (Aust) Pty Ltd (No 2)
[2022] NSWSC 1579
•17 November 2022
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: In the matter of C.V. Joint (Aust) Pty Ltd (No 2) [2022] NSWSC 1579 Hearing dates: On the papers; submissions received 27 October, 11 and 14 November 2022 Date of orders: 17 November 2022 Decision date: 17 November 2022 Jurisdiction: Equity - Corporations List Before: Stevenson J Decision: No order as to the costs of the application to appoint a provisional liquidator; the plaintiff is released from the undertakings given by him on the 22 July 2022; and the plaintiff is to pay the costs of the second defendant’s Interlocutory Process filed 13 July 2022
Catchwords: COSTS – application to appoint provisional liquidator – where application successful – where serious allegations in support of application not made out – where conduct of applicant for appointment relevant to such appointment
Cases Cited: In the matter of C.V. Joint (Aust) Pty Ltd [2022] NSWSC 981
Category: Costs Parties: Ji Chen Mi (Plaintiff)
Duza Aleksandroff (First Defendant)
Ury Aleksandroff (Second Defendant)
C.V. Joint (Aust) Pty Ltd (Third Defendant)Representation: Counsel:
Solicitors:
C Perry (Solicitor) (Plaintiff)
N Bailey (First Defendant)
B Smith (Second Defendant)
Pure Legal (Plaintiff)
Croker Edwards (First Defendant)
ESY Lawyers (Second Defendant)
File Number(s): 2022/167513
JUDGMENT
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On 22 July 2022 I ordered that a provisional liquidator be appointed to the third defendant, C.V. Joint (Aust) Pty Ltd (“the Company”), for the reasons I gave that day. [1]
1. In the matter of C.V. Joint (Aust) Pty Ltd [2022] NSWSC 981.
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As to costs, I directed the parties to confer on a timetable for written submissions.
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I have only recently received those submissions.
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In the meantime, on 9 November 2022, Black J ordered that the Company be wound up in insolvency.
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As I explained in my 22 July 2022 judgment, the plaintiff and the first defendant were formerly husband and wife. The second defendant is the brother of the first defendant.
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The plaintiff seeks his costs of the application to appoint a provisional liquidator and seeks such costs on an indemnity basis on and from 16 June 2022, being seven days after he made an offer for the making of consent orders appointing a provisional liquidator, and otherwise on a party/party basis.
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The plaintiff was successful in the interlocutory application, in the sense that, as he sought, I appointed a provisional liquidator and agreed with his nominee.
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However, as my judgment revealed, the dispute before me concerned, to a very large extent, serious factual allegations that the plaintiff had made concerning the defendants.
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The first was that the defendants had made unauthorised payments to themselves from the Company’s bank account “over and above wages”. [2]
2. At [27].
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I considered that contention over several pages of the judgment and concluded[3] that there did “not appear to be conduct of directors seeking to transfer to themselves money to which they were not entitled”.
3. At [45].
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The plaintiff also made the very serious allegation that the second defendant “had retained cash from cash sales” and that both defendants were “undertaking cash sales to customers without raising invoices”. [4]
4. At [51].
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I found that there was no evidence that the defendants had misapplied cash that they had received. [5]
5. At [57].
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On the other hand, I also found, on a prima facie basis, that the plaintiff had caused company income to be diverted into an account in his own name without the knowledge of the defendants[6] and noted that although there was no evidence that the plaintiff had not used these funds for the Company’s benefit,[7] the evidence showed that the plaintiff had placed the Company’s assets in an account controlled by him and thus beyond the Company’s control. [8] I also found that the plaintiff was using the Company’s funds to pay a company controlled by his (and the first defendant’s) son for stock and thus removing this matter from the oversight of the defendants. [9]
6. At [66].
7. At [67].
8. At [68].
9. At [73]-[74].
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Thus, I found that the plaintiff’s own dealings with the Company’s assets were a significant reason to appoint a provisional liquidator. [10]
10. At [69] and [75].
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Although, ultimately, I acceded to the plaintiff’s submission that a provisional liquidator be appointed, it was, in substance, not for the reasons he advanced concerning the defendants’ conduct but rather, to a large extent, because of his own conduct.
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It is true that prior to the hearing the plaintiff proposed that, by consent, a provisional liquidator be appointed and that the defendants did not accede to that proposal. However, the fact remains that the plaintiff’s “success” on the application was in the circumstances I have described.
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For those reasons my conclusion is that the appropriate order for costs in relation to the plaintiff’s application for the appointment of a provisional liquidator is to make no order as to costs, with the intention that each party pays his or her own costs.
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Two further matters require consideration.
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The first is the noted undertakings that the plaintiff proposed to give to the Court. [11] Those undertakings were given. Now that the Company has been wound up, I shall order that the plaintiff be formally released from those undertakings.
11. At [97].
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The second relates to the plaintiff’s Interlocutory Process of 13 July 2022 to set aside two Notices to Produce served by the second defendant. I refused to set aside the Notices to Produce. [12]
12. See [9].
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I understand it to be common ground that the plaintiff should pay the second defendant’s costs of that Interlocutory Process. I so order. I note, however, as was pointed out on behalf of the plaintiff, that that application was dealt with in short form in response to a submission by Mr Smith, for the second defendant, that he was not in a position to cross-examine the plaintiff without access to those documents. The application took no more than a few minutes.
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In those circumstances, I order that:
there be no order as to the costs of the plaintiff’s Interlocutory Process filed on 10 June 2022 seeking the appointment of a provisional liquidator to the third defendant, to the intent that each party pays his or her own costs of that application;
the plaintiff is released from the undertakings given by him to the Court on 22 July 2022; and
the plaintiff is to pay the second defendant’s costs of the plaintiff's Interlocutory Process filed on 13 July 2022.
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Endnotes
Amendments
18 November 2022 - Typographical error amended
Decision last updated: 18 November 2022
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