IN THE MATTER of KORNUCOPIA PTY LTD (ACN 615 630 316)
IN THE MATTER of EFEKTIV PTY LTD (ACN 625 719 566)
IN THE MATTER of AVANT-GARDE VENTURES PTY LTD (ACN 620 447 789)

BETWEEN:

JEFFREY CHEN	Plaintiff
v
KORNUCOPIA PTY LTD (ACN 615 630 316)	Defendant
AND BETWEEN:
MADGWICKS (A FIRM) (ABN 82 199 611 971)	Plaintiff
v
EFEKTIV PTY LTD (ACN 625 719 566)	Defendant
AND BETWEEN:
MADGWICKS (A FIRM) (ABN 82 199 611 971)	Plaintiff
v
AVANT-GARDE VENTURES PTY LTD (ACN 620 447 789)	Defendant

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JUDGE:	Sifris J
WHERE HELD:	Melbourne
DATE OF HEARING:	16, 17, 18, 19, 20 December 2019
DATE OF JUDGMENT:	24 January 2020
CASE MAY BE CITED AS:	In the Matter of Kornucopia Pty Ltd (No 4)
MEDIUM NEUTRAL CITATION:	[2020] VSC 7

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CORPORATIONS – Winding up – Failure to comply with statutory demands – Presumptions of insolvency enlivened – Abuse of process – Applications made under Corporations Act 2001 (Cth) s 459S – Genuine disputes and offsetting claims – Offsetting claim against landlord of property in relation to tenant being deprived of quiet enjoyment – Genuine dispute in relation to professional fees charged by law firm to client – Whether creditor has improper purpose in commencing winding up application – Whether VCAT, Magistrates’ Court or Costs Court preferable forums for determination of disputes – No prospects of success in defendant’s grounds – No evidence of solvency – Leave not granted – Grounds cannot be raised but fail in any event – Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (2011) 244 CLR 1, applied – Fortuna Holdings Pty Ltd v Deputy Federal Commissioner of Taxation [1978] VR 83, not followed – Perpetual Nominees Ltd v Masri Apartments Pty Ltd (2004) 49 ACSR 714, not followed.

PRACTICE AND PROCEDURE – Apprehended bias – Statements made by Judge in directions hearing precluding defendants from making further application to file evidence – Subsequent statement clarified that further application would need to rely on fresh evidence and new grounds – Subsequent statement qualified earlier statement and negated reasonable apprehension of bias which might have otherwise arisen – Johnson v Johnson (2000) 174 ALR 655, applied.

PRACTICE AND PROCEDURE – Application by defendants for leave to file evidence of solvency at trial after close of evidence and plaintiffs’ closing submissions – Application by defendants to adjourn trial to new year – Numerous breaches of court orders by defendants preceding the trial – Numerous indulgences and extensions given to the defendants – No sufficient explanation of delay – Extensive breaches of overarching obligations – Dishonest, underhanded, tactical and strategic conduct – Civil Procedure Act 2010 (Vic) ss 17, 18, 19, 20, 21, 22, 23, 24, 25, 28, 29 – Aon Risk Services Australia Ltd v Australian National University (2009) 258 ALR 14

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 Kornucopia Pty Ltd (No 4)

Details

AGLC: Re Kornucopia Pty Ltd (No 4) [2020] VSC 7
Case: [2020] VSC 7
Decision Date: 24 January 2020

CaseChat Overview and Summary

The case of Re Kornucopia Pty Ltd (No 4) was heard by the Supreme Court of Victoria, with the primary focus on the winding up of Kornucopia Pty Ltd due to its failure to comply with statutory demands. The legal issues that the court had to resolve included whether the winding up application was made for an improper purpose, and if so, whether the court should dismiss the application on that basis. The defendants also argued that there were genuine disputes and offsetting claims, particularly against the landlord of the property where Kornucopia was a tenant, regarding the deprivation of quiet enjoyment. Furthermore, there was a dispute over professional fees charged by a law firm to the client, which Kornucopia claimed could offset the statutory demands. The court had to determine if these disputes and claims were genuine and if the winding up application should proceed.

The court held that the presumptions of insolvency were indeed enlivened, and the defendants did not provide any evidence of solvency. The court considered the issue of abuse of process, examining whether the creditor had an improper purpose in initiating the winding up application. It was determined that there was no evidence to support such a claim, and the application proceeded. Regarding the preference of forums for resolving the disputes, the court found that the Federal Court or the Supreme Court were appropriate forums, and not the VCAT, Magistrates’ Court, or the Costs Court. The court also found that the defendants had no prospects of success in their grounds and that the grounds could not be raised but failed in any event. The case law of Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd and Perpetual Nominees Ltd v Masri Apartments Pty Ltd were applied, while Fortuna Holdings Pty Ltd v Deputy Federal Commissioner of Taxation was not followed.

The court further considered the defendants’ application to file evidence of solvency at trial after the close of evidence and the plaintiffs’ closing submissions. The court noted the numerous breaches of court orders and overarching obligations by the defendants, including dishonesty, tactical and strategic conduct, and numerous indulgences and extensions given to them. The court held that the defendants had not provided a sufficient explanation for their delay and that their conduct was extensive. Therefore, the application for leave to file evidence of solvency and the application for an adjournment were both dismissed. The court's reasoning was based on the cases of Aon Risk Services Australia Ltd v Australian National University and Sali v SPC Ltd. The final orders of the court were that the winding up application was to proceed, and the defendants' applications were dismissed.

Orders