Kim v Cha

[2011] FCA 554

FEDERAL COURT OF AUSTRALIA

Kim v Cha [2011] FCA 554

Citation:	Kim v Cha [2011] FCA 554
Parties:	YOUNG CHUL KIM v JENNY CHA, YANG IL CHA, MOON HEE CHA, ARIAKE PTY LIMITED AND ARIAKE JAPANESE PTY LIMITED
File number:	NSD 1688 of 2010
Judge:	EMMETT J
Date of judgment:	20 May 2011
Legislation:	Corporations Act 2001 (Cth) s 459P
Date of hearing:	20 May 2011
Place:	Sydney
Division:	GENERAL DIVISION
Category:	No catchwords
Number of paragraphs:	6
Counsel for the plaintiff:	C. R. Ireland
Solicitor for the plaintiff:	Dahan Lawyers
Solicitor for the first to third defendants:	P. Biber
Counsel for the fourth and fifth defendants:	The fourth and fifth defendants did not appear

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1688 of 2010

BETWEEN:

YOUNG CHUL KIM
Plaintiff

AND:

JENNY CHA
First Defendant

YANG IL CHA
Second Defendant

MOON HEE CHA
Third defendant

ARIAKE PTY LIMITED
Fourth Defendant

ARIAKE JAPANESE PTY LIMITED
Fifth Defendant

JUDGE:	EMMETT J
DATE OF ORDER:	20 MAY 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The order made on 18 February 2011 that the parties attend mediation no later than 22 April 2011 be vacated.

2.The first defendant be granted leave to file an amended interlocutory process to be returnable for hearing on an urgent basis.

3.The first defendant be granted leave, without conditions, to apply to the Court under s 459P of the Corporations Act for orders that the fourth and fifth defendants be wound up in insolvency.

4.Pursuant to s 467(3) of the Corporations Act, all formal defects or irregularities with respect to this application be waived, in particular, but not limited to, the failure of the plaintiff to publish notices of the proposed application for the winding up of the fourth and fifth defendants required under section 465A of the Act and Regulation 5.6 (Form 9) of the Federal Court (Corporations) Rules 2000.

5.The fourth and fifth defendants be wound up.

6.Mr Stewart Free of Jirsch Sutherland be appointed liquidator to the fourth and fifth defendants.

7.The costs of the plaintiff and first defendant of this interlocutory application be paid out of the assets of the fourth and fifth defendants in equal shares.

8.The statement of claim filed on 20 January 2011 by the plaintiff be dismissed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1688 of 2010

BETWEEN:

YOUNG CHUL KIM
Plaintiff

AND:

JENNY CHA
First Defendant

YANG IL CHA
Second Defendant

MOON HEE CHA
Third defendant

ARIAKE PTY LIMITED
Fourth Defendant

ARIAKE JAPANESE PTY LIMITED
Fifth Defendant

JUDGE:	EMMETT J
DATE:	20 MAY 2011
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This proceeding arose out of disputes between the shareholders and directors of two companies (the Companies), Ariake Pty Limited (Ariake) and Ariake Japanese Pty Limited (Ariake Japanese).  Mr Young Chul Kim and Ms Jenny Moskvin (née Cha) are the two directors and shareholders of the Companies.  The proceeding was commenced by originating process, in which Mr Kim sought orders for the removal of Ms Moskvin and other relief. Subsequently, Ms Moskvin filed an interlocutory process seeking the winding up of the Companies on the basis that each of them is insolvent.  That relief is now not opposed by Mr Kim. 

2. The winding up application is made under s 459P of the Corporations Act 2001 (Cth) (the Corporations Act), pursuant to which any one or more of a number of parties may apply to the Court for an order that a company be wound up in insolvency. The persons who may apply include a director and a contributory of the company. However, under s 459P(2), an application by a contributory or a director may only be made with the leave of the Court.

3. The affairs of the Companies are not in good order.  A review of the financial position of the Companies was carried out by Mr Bradley Tonks, who produced a report dated 28 April 2011.  Mr Tonks reported that there are some serious indicators of insolvency of the Companies, and recommended further attention to a number of areas.  In particular, the absence of budgets or cash flow forecasts was a significant concern.  A matter of further concern was the estimated position with respect to outstanding or unreported statutory liabilities. 

4. There are no accounts of the Companies dated after 30 June 2009.  The accounts that exist show that both of the Companies incurred losses in the year ended 30 June 2009.  In the case of Ariake, the accounts as at 30 June 2009 show that its liabilities exceeded its assets by more than $6,000.  The accounts of Ariake Japanese show that its liabilities exceeded its assets by more than $1,100.  The substantial assets of both of the Companies consist of plant, equipment and fittings, which may have little value in the event of winding up. 

5. Mr Stewart Free of Jirsch Sutherland has consented to be appointed liquidator of the Companies.  In all of the circumstances, I am persuaded that both of the Companies are insolvent and in any event that it is just and equitable that they be wound up, particularly since the contributories and directors of both of the Companies support that course.  I am told that it is unlikely that unsecured creditors will receive any distribution in the winding up. 

6. It is proposed that the claim originally brought by Mr Kim will not be prosecuted.  The appropriate course is therefore that the proceeding be dismissed, save in relation to the amended interlocutory process, which was filed, with leave, in Court on 20 May 2011.

I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated: 25 May 2011