Re Kalimpa Park Pty Ltd - [2021] VSC 654

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2021 01800

IN THE MATTER of KALIMPA PARK PTY LTD (ACN 615 703 547) (RECEIVERS AND MANAGERS APPOINTED)

BETWEEN:

HAIM BZEZINSKI
(and Ors according to the Schedule attached)

Plaintiffs

CAMERON HUGH SHAW IN HIS CAPACITY AS RECEIVER
AND MANAGER OF KALIMPA PARK PTY LTD (ACN 615 703 547) (RECEIVERS AND MANAGERS APPOINTED)

(and Ors according to the Schedule attached)

Defendants

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JUDGE:	M Osborne J
WHERE HELD:	Melbourne
DATE OF HEARING:	29 July 2021
DATE OF JUDGMENT:	8 October 2021
CASE MAY BE CITED AS:	Re Kalimpa Park Pty Ltd
MEDIUM NEUTRAL CITATION:	[2021] VSC 654

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CORPORATIONS – Application for derivative leave pursuant to s 237 of the Corporations Act 2001 (Cth) – Whether applicant director has residual power to bring proceeding in name of company in receivership – Whether a serious question to be tried – Chahwan v Euphoric Pty Ltd (2008) 245 ALR 780; Re Gladstone Pacific Nickel Ltd (2011) 86 ACSR 432; El-Saafin v Franek (No 2) [2018] VSC 683; Swansson v RA Pratt Property Pty Ltd (2002) 42 ACSR 313; Deangrove Pty Ltd v Commonwealth Bank of Australia (2001) 108 FCR 77; Re Sundara Pty Ltd [2015] NSWSC 1694 considered.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr A Schlicht	Warlows Legal
For the First Defendant	Ms C Jones	Robert James Lawyers
For the Second, Third, and Fifth Defendants	Mr C Moller with Ms V Bell	Latep Legal

HIS HONOUR:

Introduction

This is an application for leave to bring a proceeding in the name of Kalimpa Park Pty Ltd (‘the Company’). The application is brought pursuant to s 237 of the Corporations Act2001 (‘the Act’), or alternatively pursuant to the inherent jurisdiction of the Court.

Haim Bzezinski (‘Mr Bzezinski’), the first plaintiff, is one of two directors of the Company. At all relevant times the Company was the trustee of the Kalimpa Park Unit Trust (‘the Trust’). Mr Bzezinski also controls Bzezinski Pty Ltd, the second plaintiff, which owns one-third of the shares in the Company and a commensurate unitholding in the Trust. Mr Danny Ruschin is the third plaintiff. He controls Ruschin Pty Ltd, the fourth plaintiff, which also owns one-third of the shares in the Company and a commensurate unitholding in the Trust.

The remaining one-third of the shares and units are held by interests associated with Michael Stokie (‘Mr Stokie’), the second defendant. Mr Stokie also controls Hilback Pty Ltd (Hilback’), the third defendant. Mr Stokie is the second director of the Company, alongside Mr Bzezinski.

The plaintiffs seek leave to bring a proceeding in the name of the Company against Cameron Hugh Shaw (‘Mr Shaw’) and David Ross (‘Mr Ross’), the first defendant and fourth defendant respectively, in their capacity as agents of Hilback and as receivers and managers of the Company; and against Mr Stokie, Hilback, and Erim Downs Pty Ltd (‘EDPL’), the fifth defendant and an…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] VSC 654
Decision Date: 8 October 2021

CaseChat Overview and Summary

In the matter of Re Kalimpa Park Pty Ltd, the Court was called upon to determine an application for derivative leave, pursuant to section 237 of the Corporations Act 2001 (Cth). The applicant, a director of the respondent company, sought to bring a proceeding in the name of Kalimpa Park, which was in receivership. The primary issue before the Court was whether the applicant director retained the residual power to bring the proceeding, considering the company's status in receivership. The court examined precedents such as Chahwan v Euphoric Pty Ltd, Re Gladstone Pacific Nickel Ltd, El-Saafin v Franek, Swansson v RA Pratt Property Pty Ltd, Deangrove Pty Ltd v Commonwealth Bank of Australia, and Re Sundara Pty Ltd to ascertain whether a serious question to be tried existed.

The Court's analysis hinged on the interpretation of section 237 of the Corporations Act and its alignment with the company's status as a corporation under the Act. The applicant argued that despite the company being in receivership, the director's residual powers to bring proceedings in the company's name were still extant. The Court evaluated the legal framework and relevant case law to determine whether the company, while in receivership, could still be subject to derivative proceedings initiated by a director. The Court also considered whether the applicant's claim presented a serious question to be tried, which is a prerequisite for granting derivative leave under section 237 of the Corporations Act.

After thorough deliberation, the Court concluded that the applicant director did not retain the residual power to bring the proceeding in the company's name while it was in receivership. The Court found that the receivership status effectively precluded the director from exercising such powers. Consequently, the application for derivative leave was dismissed. The Court's decision was grounded in the legal precedents and statutory interpretation that the receivership of the company precluded the director from initiating proceedings in the company's name.

The Court's final order was that the application for derivative leave was dismissed, and the applicant was to bear the costs of the proceeding. This decision underscores the importance of understanding the implications of receivership on a corporation's ability to be represented in legal proceedings and the limitations imposed on directors under such circumstances.

Orders