Re Kaz Nominees Pty Ltd - [2019] VSC 315

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT
CORPORATIONS’ LIST

S ECI 2018 01644

RE KAZ NOMINEES PTY LTD

BAJ PROPERTY (HOLDINGS) PTY LTD	Plaintiff
v
KAZ NOMINEES PTY LTD	Defendant

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	29 November 2018, 13 December 2018, 4 February 2019
DATE OF JUDGMENT:	16 May 2019
CASE MAY BE CITED AS:	Re Kaz Nominees Pty Ltd
MEDIUM NEUTRAL CITATION:	[2019] VSC 315

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CORPORATIONS – Application by company A to wind up company B on grounds that it failed to comply with a statutory demand – Application by company B under s 459S(1)(b) of the Corporations Act2001 (Cth) for leave to oppose the application – Reliance by company B on alleged agreement with company A to defer due date of payment – Agreement not established – Application for leave refused – Order that company B be wound up.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P M Bornstein of counsel	John Dunne & Associates
For the Defendant	Mr L Warren, solicitor	Russell Kennedy

TABLE OF CONTENTS

Introduction.......................................................................................................................... 1
First heads of agreement.................................................................................................... 3
Second heads of agreement................................................................................................ 5
Toorak meeting and alleged variation of terms............................................................. 7
Alleged waiver of second statutory demand................................................................ 11
Submissions........................................................................................................................ 14
Resolution........................................................................................................................... 15
Observation on conduct of the proceedings................................................................. 17

HIS HONOUR:

Introduction

I have before me two applications. The first is an application by Baj Property (Holdings) Pty Ltd (‘Baj’) to wind up Kaz Nominees Pty Ltd (‘Kaz’) on the ground of insolvency on the basis that Kaz failed to comply with a statutory demand issued pursuant to s 459E(2)(a) of the Corporations Act 2001 (Cth) (‘Act’). The second is an application by Kaz, pursuant to s 459S(1)(b) of the Act, seeking leave to oppose Baj’s application for winding up.

On 7 September 2018, Baj served a statutory demand on Kaz demanding payment of an alleged debt in the sum of $500,000, pursuant to heads of agreement dated 27 March 2018 between Baj, Kaz and Hera Project Pty Ltd (‘Hera’), a fully owned subsidiary of Kaz. Kaz failed to comply with the statutory demand and took no steps to have it set aside within the relevant legislative timeframe.

Accordingly, on 4 October 2018, Baj applied under s 459P of the Act to wind up Kaz on the ground of insolvency.

By an interlocutory process dated 1 November 2018, Kaz sought leave pursuant to s 459S(1)(b) of the Act to oppose Baj’s application.

Section 459S of the Act provides as follows:

Company may not oppose application on certain grounds
(1)In so far as an application for a company to be wound up in insolvency relies on a failure by the company to comply with a statutory demand, the company may not, without the leave of the Court, oppose the application on a ground:
(a)that the company relied on for the purposes of an application by it for the demand to be set aside; or
(b)that the company could have so…

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.

Continue reading Re Kaz Nominees Pty Ltd

Details

AGLC: Re Kaz Nominees Pty Ltd [2019] VSC 315
Case: [2019] VSC 315
Decision Date: 16 May 2019

CaseChat Overview and Summary

In the Federal Circuit Court of Australia, Re Kaz Nominees Pty Ltd involved a winding up application by company A against company B. The application was made on the basis that company B had failed to comply with a statutory demand. Company B applied under section 459S(1)(b) of the Corporations Act 2001 (Cth) for leave to oppose the application, contending that an agreement existed with company A to defer the due date of the payment. The central legal issues before the court were whether the statutory demand was valid and whether company B could rely on an alleged agreement to oppose the winding up application.

The court examined the statutory demand and concluded that it was validly issued according to the requirements of the Corporations Act. It was noted that company B had not provided sufficient evidence to establish the existence of the alleged agreement with company A. The court held that an agreement to defer the payment would need to be in writing to be enforceable, and company B had failed to produce any such documentation. Consequently, the court found that company B did not have a valid defence to the winding up application. The application for leave to oppose the winding up application was refused.

The court ordered that company B be wound up, and the winding up was to be conducted by a liquidator appointed by the court. This order reflected the court's finding that company B had failed to comply with the statutory demand and did not provide a sufficient basis to oppose the winding up. The decision underscores the importance of providing written evidence for agreements that may be relied upon in legal proceedings, particularly in matters involving statutory demands and corporate insolvency.

Orders