Kamb Investments Pty Ltd (in liq) v Kambouris - [2021] WADC 126

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION:   PERTH
CITATION:   KAMB INVESTMENTS PTY LTD (in liq) -v- KAMBOURIS [2021] WADC 126
CORAM:   DEPUTY REGISTRAR HEWITT
HEARD:   9 DECEMBER 2021
DELIVERED          :   21 DECEMBER 2021
FILE NO/S:   CIV 1985 of 2021
BETWEEN:   KAMB INVESTMENTS PTY LTD (in liq)
First Plaintiff
CAMERON SHAW
Second Plaintiff
RICHARD ALBARRAN
Third Plaintiff
AND
TYRON KAMBOURIS
First Defendant
EVAN KAMBOURIS
Second Defendant
ADEN KAMBOURIS
Third Defendant

Catchwords:

Practice and procedure - Defendants' application for summary judgment dismissing claim for monies said to constitute preferences recoverable on the liquidation of the company - Turns on its own facts

Legislation:

Corporations Act 2001 (Cth), s 129, s 129(4), s 129(7), s 588FF
Rules of the Supreme Court 1971 (WA), O 18 r 4(1), O 18 r 4(2), O 18 r 6(1)

Result:

Application dismissed

Representation:

Counsel:

First Plaintiff	:	Mr J E Scovell
Second Plaintiff	:	Mr J E Scovell
Third Plaintiff	:	Mr J E Scovell
First Defendant	:	Mr A P Rumsley
Second Defendant	:	Mr A P Rumsley
Third Defendant	:	Mr A P Rumsley

Solicitors:

First Plaintiff	:	Rostron Carlyle Rojas Lawyers
Second Plaintiff	:	Rostron Carlyle Rojas Lawyers
Third Plaintiff	:	Rostron Carlyle Rojas Lawyers
First Defendant	:	Alan Rumsley
Second Defendant	:	Alan Rumsley
Third Defendant	:	Alan Rumsley

Case(s) referred to in decision(s):

Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109

DEPUTY REGISTRAR HEWITT:

In this matter the first plaintiff Kamb Investments Pty Ltd is a company in liquidation and the second and third plaintiffs are the liquidators appointed to supervise that liquidation. The first, second and third defendants are individuals from whom the liquidators seek to make recovery under the provisions of s 588FF of the Corporations Act 2001 (Cth) on the basis that the disposition of certain vehicles by the company immediately prior to the liquidation of the company was either at undervalue or for no payment at all.
The defendants' position is, however, that the dispositions were for a proper value for which payment was made and they seek a summary judgment dismissing the plaintiffs' claim. The application is out of time and accordingly, leave to bring it is required. In dealing with the application for leave I consider it appropriate to consider the strength of the defence which is advanced by the applicant defendants since that will be an important factor in deciding whether or not leave should be granted, for there is little point in propelling a case to a trial which has no prospects of success.
I therefore commence by considering the arguments advanced by the defendants. The first argument is that the application is brought under s 588FF of the Corporations Act and it is a precondition of the jurisdiction of this court that the application be made by a company's liquidators. There are in fact three plaintiffs, the first being the company in liquidation and the second and third being the liquidators. In that regard I turn to O 18 r 4(2) of the Rules of the Supreme Court 1971 (WA) expressed as follows:
(2)Where the plaintiff in any action claims any relief to which any other person is entitled jointly with him, all persons so entitled must, subject to the provisions of any Act and unless the Court gives leave to the contrary, be parties to the action and any of them who does not consent to being joined as a plaintiff must, subject to any order made by the Court on an application for leave under this subrule, be made a defendant.
This subrule shall not apply to a probate action.
It is contended by the plaintiffs that the Corporations Act requires any payment which may be made as a result of the successful prosecution of an action of the kind before me to be paid to the company, that is, however, of little moment in the present circumstances because O 18 r 6(1) is in the following terms:
6.Misjoinder and nonjoinder of parties
(1)No cause or matter shall be defeated by reason of the misjoinder or nonjoinder of any party; and the Court may in any cause or matter determine the issues or questions in dispute so far as they affect the rights and interests of the persons who are parties to the cause or matter.
My analysis of this aspect of the argument advanced by the defendants is that it does not have any chance of success. A summary judgment is a final judgment and would dispose of any entitlement which any of the plaintiffs had to bring an action against any of the defendants based on the causes of action pleaded. The most one could say of the argument, taking it at its zenith, is that there could possibly be some prospect of a successful strike-out application. A strike-out application does not extinguish a cause of action and extinguishment is what is sought by this application. Accordingly, the argument advanced is not capable of supporting a summary judgment.
The next matter which is argued is that the statement of claim does not state that the second and third plaintiffs sue in their capacity as liquidators, contrary to O 6 r 5 of the Rules of the Supreme Court. The materials make it perfectly clear that they are liquidators of the company and although there may be a pleading point, that point is not capable of sustaining a judgment which would extinguish the causes of action pursued.
It is next argued, in effect, that the first, second and third defendants should have each been defendants in a separate writ issued against each. Again, the Rules of the Supreme Court are relevant and O 18 r 4(1) is provided as follows:
4.Joinder of parties
(1)Subject to rule 5(1), 2 or more persons may be joined together in one action as plaintiffs or as defendants with the leave of the Court or where -
(a)if separate actions were brought by or against each of them, as the case may be, some common question of law or fact would arise in all the actions; and
(b)all rights to relief claimed in the action (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions.
As will appear apparent when I discuss other aspects of this matter, there is clearly a common question of law or fact which arises in respect of the transactions which are challenged. Once again, I do not consider that there is a proper complaint to make, were it to be so it would amount to an irregularity and would not entitle the defendants to the judgment which they seek, which is effectively the extinguishment of any claim against them.
I now turn to an examination of what appears to be the mainstay of the application, namely that certain identified vehicles which were unencumbered property of the company in liquidation were disposed of to the defendants without consideration or at least an inadequate consideration. In that regard I start by mentioning the financial state of the company as disclosed by the affidavit of the second plaintiff sworn 11 October 2021 that discloses the following matters which do not appear to be challenged by the applicant defendants:
1.The second and third defendants were appointed joint and several administrators of the first plaintiff on 8 June 2018.
2.On 12 July 2018 they were appointed as joint and several liquidators of the first plaintiff.
3.That the first plaintiff had traded whilst insolvent from at least 1 March 2018.
4.That the first plaintiff purchased:
(a)a 2011 Toyota motor vehicle;
(b)a 2014 Jeep Patriot motor vehicle;
(c)two 2014 Range Rover motor vehicles; and
(d)also had in possession a Toyota van.
5.All of these vehicles were transferred to the respective defendants between 21 and 29 days prior to the first plaintiff being placed into administration.
6.As at the date at which the company went into liquidation the company had liabilities of approximately $26 million, cash reserves of $74,000 and collectible debtors of $167,000, and no other realizable assets.
The transactions by which the vehicles were transferred from the plaintiff company to the defendants are described in the affidavit of Mr Peter Kambouris as follows: each of the vehicles is alleged to have been sold by way of a cash sale to the defendant concerned. In each instance the cash was paid to Mr Peter Kambouris and it was never banked in a company bank account. The amounts concerned were $4,500 for the Toyota van, $11,000 for the Jeep Patriot, $50,000 for one Range Rover and $60,000 for another Range Rover. As I have indicated, all of this money went to Mr Peter Kambouris, none of it was banked in the company bank accounts and it was explained to me in the course of the hearing that Mr Kambouris used the money for personal living expenses and it had been dissipated.
A number of features of this transaction concern me. To start with, all the dealings were in cash. The amounts were large; the largest amount was $60,000 for one of the Range Rovers and $50,000 for the other, that is six-hundred $100 bill notes for the larger and five‑hundred $100 bill notes for the other. Frequently cash payments are used as a means of ensuring that a paper trail is not created but it is unusual for individuals to have access to such large amounts of cash without needing to withdraw it from some kind of lending institution or bank. No evidence of any such deduction has been presented.
Also, the fact that the money appears to have simply disappeared is a source of concern. Receipts were issued for the payments and are exhibited to Mr Peter Kambouris' affidavit. They were allegedly issued by an accountant employed by the first plaintiff and the signatures on them are purportedly his. There are amongst the documents contained in the affidavit of Cameron Hugh Shaw sworn 11 October 2021 and in particular a deed executed by JDE Equities Pty Ltd which has also been executed not only by Mr Peter Kambouris in his personal and directorship capacity, but also an attesting signature of a person who has identified himself as an accountant and whose name matches a notation on the receipts upon which Mr Peter Kambouris relies. Whilst it is not possible for me to make a definitive conclusion, it is clear to me that the receipts were not signed by anybody other than Mr Peter Kambouris himself and the signature does not bear any resemblance to the signature of the company accountant. The real issue which is raised is whether in truth there was ever a payment made by the individual defendants for the purchase of the motor vehicles the subject of this action.
My suspicions are also compounded by the fact that all of the first, second and third defendants appear to be family members related to Mr Peter Kambouris and none of these individuals have sworn an affidavit supporting the application brought in their name.
The defendants rely upon the provisions of s 129, s 129(4) and s 129(7) of the Corporations Act. Effectively it is argued that the plaintiffs are not able to contradict the assumption the defendants are entitled to rely upon the transactions they have allegedly entered. Section 129(4) is to the effect that parties dealing with officers and agents of the company are entitled to assume they will properly perform their duties to the company. There is no doubt that Peter Kambouris was an officer or agent of the company. Likewise, s 129(7) entitles a person dealing with an officer or agent of the company to assume that officer has authority to issue a document or certified copy of a document on its behalf and authority to warrant the document as a genuine or true copy. Section 128 is to the effect that a person is entitled to make the assumptions in s 129 in relation to dealings with a company and the company is not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect.
That line of argument misses the point completely. The point is whether or not the transactions were in fact genuine and whether in fact money did pass hands. If money did not pass hands then there is no proper basis upon which these sections have any application. These sections are intended to protect parties who are dealing bona fide with an agent of the company in the belief that the company has the authority to do that which it purports to do. They have no application in circumstances where, if as is alleged in the present case, one or more of the defendants took ownership of the vehicles on the basis of having paid substantial amounts of money for them, whereas in truth they had not paid any money at all. That is the real issue which is before the court in this case.
By way of a brief recap, I summarise the matters that have been argued before me as follows:
1.The application that the action should be dismissed because the company is a party to it, is in my view in law wrong, but in any event, it is not a point which could ever justify a dismissal of the action.
2.The argument that the defendants should not have been joined in the one action but should have been separately sued is in my view not legally correct, but in any event not capable of sustaining a judgment of dismissal.
3.The argument that the statement of claim does not identify the fact that the liquidators are suing as such ignores the fact that their capacity as administrators and their appointment to the first plaintiff are pleaded facts. If in fact there is a deficiency, it is not a deficiency which would justify a dismissal of the action.
4.The provisions of the Corporation Act prevent the plaintiffs from denying the existence of the transaction upon which they rely. That misses the point that the challenge raised by the liquidators is twofold: firstly, that there was no transaction and there was no payment by the defendants to the company, and secondly, if there was, the prices paid for the vehicles transferred to the defendants was under the true value of those vehicles at the time of sale, which deficiency the plaintiffs are entitled to pursue.
5.That leaves the question of whether the transactions which are said to have taken place between the defendants and the company were genuine transactions. On the evidence before me, it is impossible to say, but there are matters which raise my suspicions. Those being:
(i)that the parties were all members of the same family;
(ii)that none of the defendants swore an affidavit in support of the application;
(iii)that the manner in which the transactions were conducted is unusual and to my mind suspicious. In that regard I refer to the fact that the alleged payments were all in cash and for the most part for large amounts. There are much more convenient ways of paying than by great wads of bills. Whilst it is not always the case, it is certainly often the case that payments which have not taken place but are alleged to have taken place are said to have been by way of cash. The reason for that is obvious since it is difficult to disprove such an assertion; and
(iv)finally, the fact that the money which was said to have been paid was not recorded in the company accounts and has disappeared.
All of these matters raise considerable doubts in my mind and those are doubts which in my opinion are worthy of proper investigation. That such doubts exist can be a sufficient reason to refuse a summary judgment application. This was explained by Brinsden J in Moscow Narodny Bank Ltd v Mosbert Finance(Aust) Pty Ltd:[1]
The matter is rather differently expressed by Brett LJ in Ray v Barker (1879) 4 Ex D 279 at 283, where he said that leave should be given to defend if facts were shown leading to 'the inference that at the trial of the action he [ie the defendant] may be able to establish a defence', while in Harrison v Bottenheim (1878) 26 WR 362 it was said that such leave should be given if the defendant 'has shown enough to entitle him to interrogate'. From all this it appears that where there is a real case to be investigated either in fact or in law, leave to defend should be given.
Only to the above statement I think should be added reference to the words now appearing in O 14, r 3(1) 'or that there ought for some other reason to be a trial of that claim or part'. These words have been interpreted by Megarry J in Miles v Bull [1969] 1 QB 258 at 265-6; [1968] 3 All ER 632 at 637. Subsequently in Bankfur Gemeinwirtschaft v City of London Garages Ltd & Ors [1971] 1 All ER 541 at 548, Cairns LJ said about these words, the following: 'The only reported case in which that provision has applied is Miles v Bull. Megarry J there gave leave to defend because the documents on which the claim was based had some appearance of a sham. It is not difficult to think of other circumstances where it might be reasonable to give leave to defend although no defence was shown, eg if the defendant was unable to get in touch with some material witness who might be able to provide him with material for a defence; or if the claim were of a highly complicated or technical nature which could only properly be understood if oral evidence was given; or if the plaintiff's case tended to show that he had acted harshly and unconscionably and if it was thought desirable that if he was to get judgment at all it should be in the full light of publicity'.
[1] Moscow Narodny Bank Ltd v Mosbert Finance(Aust) Pty Ltd [1976] WAR 109, 111.
It is my view that the material filed by the defendants to support the application is strongly suggestive of a sham. Additionally, there is a strong possibility that if not a sham the vehicles were disposed of for less than their true value. For these reasons I refuse the application to bring the application out of time.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
AC
Court Officer
17 DECEMBER 2021