Kulakovski v Kurmond Homes Pty Ltd
[2023] FCA 992
•16 August 2023
FEDERAL COURT OF AUSTRALIA
Kulakovski v Kurmond Homes Pty Ltd [2023] FCA 992
File number: NSD 821 of 2023 Judgment of: LEE J Date of judgment: 16 August 2023 Date of publication of reasons: 22 August 2023 Catchwords: CORPORATIONS – urgent application for withdrawal of undertakings to transfer shares – whether material change in circumstances – leave granted to withdraw and vary undertakings Legislation: Corporations Act 2001 (Cth) ss 232, 233(1), 1071F(2)(a) Cases cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 17 Date of hearing: 16 August 2023 Counsel for the plaintiffs: Mr J Hynes Solicitors for the plaintiffs: MinterEllison Counsel for the defendants: Mr M Connor Solicitors for the defendants: Marsdens Law Group ORDERS
NSD 821 of 2023 BETWEEN: BLAGA KULAKOVSKI
First Plaintiff
MK BUSINESS HOLDINGS PTY LIMITED ACN 643 367 051
Second Plaintiff
M&B INVESTMENTS NSW PTY LIMITED ACN 147 895 494
Third Plaintiff
AND: KURMOND HOMES PTY LIMITED ACN 128 821 198
First Defendant
KURMOND PROPERTIES PTY LIMITED ACN 650 683 819
Second Defendant
MPK COMMERCIAL PTY LIMITED ACN 647 908 834 (and others named in the Schedule)
Third Defendant
ORDER MADE BY:
LEE J
DATE OF ORDER:
16 AUGUST 2023
THE COURT ORDERS THAT:
1.Order 6 of the Orders dated 10 August 2023 be varied as follows:
(a)the fifth defendant be given leave to withdraw the undertaking referred to in 6(a); and
(b)the time for taking all steps reasonably necessary to comply with the undertaking referred to in 6(b) be extended until 5pm on 23 August 2023.
2.The hearing before the Commercial and Corporations Duty Judge on 7 September 2023 be vacated.
THE COURT NOTES THAT:
3.The matter is to be referred to the National Operations Registrar for allocation to a docket judge and for the fixing of a case management hearing, at which time orders can be made to facilitate a hearing as to the entitlement of the plaintiffs to final relief at a time to be fixed by the docket judge.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Delivered ex tempore, revised from the transcript)LEE J:
This matter has come before me in my capacity as Commercial and Corporations Duty Judge, on an urgent basis. The fifth defendant, Mr Peter Kulakovski, seeks the withdrawal of the following undertakings given by him to the Court on 10 August 2023 (Undertakings):
6.The Fifth Defendant undertakes to the Court to take all steps reasonably necessary within seven (7) days to:
a.cause the registration of the transfer of shares in the First Defendant from Blaga Kulakovski as legal personal representative of the estate of Michael Kulakovski to Blaga Kulakovski;
b.cause the registration of the transfer of shares in the Second Defendant from Blaga Kulakovski as legal personal representative of the estate of Michael Kulakovski to Blaga Kulakovski …
The nub of the dispute is as follows.
Mr Kulakovski is a director of the defendant companies. His brother, Mr Michael Kulakovski (a former director of the defendant companies), passed away one year ago. By this proceeding, his widow and the first plaintiff in this proceeding, Mrs Blaga Kulakovski, seeks, inter alia, an order for the transfer of the deceased’s shares to her pursuant to s 1071F(2)(a) of the Corporations Act 2001 (Cth) (Corporations Act).
Notwithstanding the Undertakings were given by consent, I am told by the defendants there has since been a material change in position, warranting the withdrawal of the Undertakings. It is trite that ordinarily, the Court will not allow an undertaking given to the Court to be withdrawn, except where there is a material change of circumstances: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 (at 178 per Gibbs CJ, Aickin, Wilson and Brennan JJ). The rationale is the Court retains control of its interlocutory orders, and may make further orders where new facts come to light which may render the enforcement of an undertaking unjust: Adam P Brown Male Fashions (at 178).
On 15 August 2023, the defendants’ solicitors wrote to Mrs Kulakovski’s solicitors, enclosing a purported shareholders’ agreement (Shareholders’ Agreement) between Michael and Peter Kulakovski in relation to the first defendant, Kurmond Homes Pty Limited (Kurmond Homes). The Shareholders’ Agreement records, in recital B, a “desire to provide for the seamless transfer of their shares upon the death of either [Michael or Peter Kulakovski], ensuring the continued operation of the Company”.
Accordingly, if the Shareholders’ Agreement is valid, it provides a defence to the claim that the relevant shares should be transferred to Mrs Kulakovski.
Mr Kulakovski’s solicitors sought Mrs Kulakovski’s consent to the withdrawal of the undertaking in relation to Kurmond Homes (Undertaking 6(a)). This was refused, and an affidavit was filed by Mrs Kulakovski’s solicitors, raising real questions as to the veracity of the Shareholders’ Agreement.
It is unnecessary to go into detail other than to note the Shareholders’ Agreement refers to Kurmond Homes having won several awards at the “Excellence in Housing Awards” on 7 September 2013 and the “HIA CSR NSW Housing Awards” in October 2013, notwithstanding the Shareholders’ Agreement bears the earlier date of 11 July 2013.
In response, counsel for the defendants tendered a document detailing the digital properties of the electronic version of the Shareholders’ Agreement. This document suggests the electronic version of the Shareholders’ Agreement was created on 11 July 2013, modified on 31 January 2014 and accessed much later. In view of this document, I had thought the defendants would clarify this discrepancy by explaining the Shareholders’ Agreement was entered into in or around January 2014 but was, for one reason or another, backdated to 11 July 2013. This was, however, disclaimed by Mr Connor, who indicated the defendants’ present position is the agreement was actually executed on 11 July 2013.
I am satisfied a bona fide dispute exists as to whether or not the Shareholders’ Agreement is valid and enforceable. But, on any view, there has been a material change of circumstances in relation to Kurmond Homes and I am disposed to grant leave for Undertaking 6(a) to be withdrawn.
The position in relation to Kurmond Properties (and Undertaking 6(b)) is more complicated. I am told there is a rational basis for believing a shareholders’ agreement exists in relation to Kurmond Properties, but counsel does not have instructions as to how long it may take to ascertain the true position.
In order to do justice between the parties, the appropriate course is to vary Undertaking 6(b) so as to provide the defendants with adequate time for the necessary searches to be made. If a shareholders’ agreement is located, then, dependent on its terms, and subject to any further submissions to be made at that time, the parties may approach the Court to vary Undertaking 6(b) accordingly.
The matter is currently listed for an interlocutory hearing before the Commercial and Corporations Duty Judge on 7 September 2023. It seems to me, however, the appropriate course is for that listing to be vacated and for at least this narrow issue as to validity of the Shareholders’ Agreement and related issues to be determined on a final basis as soon as practicable.
I propose to require my Associate to contact the National Operations Registrar to have the matter allocated to a docket judge so it can proceed to a final hearing. The parties agree the issue as to the proper beneficial owner of the shares in Kurmond Homes should not take more than a day.
As I see it, the parties may be able to push ahead to an expedited final hearing of all issues in the proceeding. The remainder of the case alleges Mr Kulakovski engaged in oppressive conduct within the meaning of s 232 of the Corporations Act, and that Mrs Kulakovski should be granted final relief pursuant to s 233(1). It should be left to the docket judge to determine whether or not it is preferable to hear the share transfer issues separately and before any other issue, or whether the oppression issues are so narrow as to commend a full final hearing as soon as practicable. Of course, that will ultimately be a matter for the docket judge, who will, no doubt, arrange for a case management hearing to be held following allocation.
The only other matter raised today was whether Mrs Kulakovski should be restrained from dealing with the shares in Kurmond Homes pending the resolution of this case. Mr Hynes indicated there is no current intention to transfer the shares, and, if such an intention arises, prior notification will be given to the solicitors for the defendants in order to allow them to approach the Court to seek any relief.
I will make orders giving effect to these reasons.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee. Associate:
Dated: 22 August 2023
SCHEDULE OF PARTIES
NSD 821 of 2023 Respondents
Fourth Respondent:
KURMOND GROUP HOLDINGS PTY LIMITED ACN 644 214 979
Fifth Respondent:
PETER KULAKOVSKI
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