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:	17 June 2019	
DATE OF RULING:	17 June 2019 Ex tempore 	
CASE MAY BE CITED AS:	Re Kaz Nominees Pty Ltd (No 2)	
MEDIUM NEUTRAL CITATION:	[2019] VSC 487	

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CORPORATIONS – Application for leave to oppose a winding up application – Application to adjourn hearing of application to re-open case – Application refused – Section 459S of the Corporations Act 2001 (Cth).

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APPEARANCES:
	Counsel	Solicitors	
For the Plaintiff	Mr P M Bornstein	John Dunne & Associates	
			
For the Defendant	Mr R E Cook	William Murray Solicitors	

HIS HONOUR:
Introductory Remarks
1	An originating process to wind up Kaz Nominees Pty Ltd (‘Kaz Nominees’) was issued on 4 October 2018 by Baj Property (Holdings) Pty Ltd (‘Baj’).  On 1 November 2018, an interlocutory application was issued by Kaz Nominees seeking leave to oppose the winding up application and other relief to prevent the winding up pursuant to s 459S of the Corporations Act 2001 (Cth) (‘Act’) (ground one) and pursuant to the inherent or equitable jurisdiction of the court (grounds two to six).
2	Both applications were referred to me by Judicial Registrar Hetyey.  A directions hearing was held on 7 November 2018 and orders were made by consent on 21 November 2018 about the filing of material.  No application was made to split the hearing.  The hearing took place over three days on 29 November 2018, 13 December 2018 and 4 February 2019.  
3	During final submissions at the hearing, Mr Warren, the solicitor who appeared on behalf of Kaz Nominees, made no reference to the inherent or equitable jurisdiction of the court.  His submissions were based solely on seeking a factual finding that Baj had agreed to waive the statutory demand the subject of the winding up application.  On 16 May 2019, I delivered judgment dismissing Kaz Nominees’ application of 1 November 2018 and making a winding up order based on the originating process of 4 October 2018.  I referred the further hearing of the winding up to the Judicial Registrar. 
4	Subsequently, on the same day, my chambers received an email from Mr Warren which said: 
Dear Associate
I would ask that the orders made in court orally this morning not be authenticated prior to the parties having an opportunity to address His Honour.  
In particular, I would like to point out that the application made by Kaz Nominees pursuant to paragraph 1 of its interlocutory process dated 1 November 2018 was not before His Honour, and has not been determined.  In that regard, please see the orders made by His Honour on 21 November 2018.  I have not fully fleshed out this email, due to the urgency of it. 
5	In response, on 3 June 2019, I had my associate send an email to the practitioners for both parties.  That email referred to earlier emails and said: 
His Honour notes that no order was made which split the hearing of the defendant’s interlocutory application dated 1 November 2018 in two parts (being ground 1 on one hand and grounds 2-6 on the other).  However, His Honour understands that a belief to this effect may form the basis of Mr Warren’s email below which requests that orders not be authenticated.  
Accordingly, His Honour will hear any further submissions that have not already been made which the parties wish to make to finally dispose of the application.  
Any application to reopen the case to tender further evidence should be supported by affidavit.  
The matter will be re-listed on 17 June 2019 at 10.30 am.  
His Honour will make an order extending the winding up proceeding for one month to allow this further hearing to occur.  Please send by return email orders by consent and the orders will be made on the papers.
6	Today I am giving the opportunity, subject to what Mr Bornstein says, to Mr Cook of counsel (who now appears for Kaz Nominees) to make any further submissions he wishes to make, that have not already been made, as to why his client’s application should not be dismissed and the winding up order not made.  No application has been made to reopen the case to tender further evidence. 
Ruling
7	In my introductory remarks in this matter, I indicated that, on the basis of an apparent misunderstanding by Mr Warren as to what parts of Kaz Nominees’ application had been heard, I was prepared to give Kaz Nominees the opportunity to make any submission it wished to make in support of paragraph one of its application and in opposition to the application to wind up the company pursued by Mr Bornstein.  
8	When the matter was called on today, I was informed by Mr Cook of counsel that the further ground which Kaz Nominees wished to articulate under paragraph one was that the agreement pursuant to which the statutory demand was issued was not a binding agreement; rather, it was the second of two agreements made between Kaz Nominees and Baj, and only the first agreement was binding.  The first agreement acknowledged a debt of $400,000 and the second agreement acknowledged a debt of $500,000. 
9	Mr Cook informed me, however, that no application was being made today to reopen the case on this ground; what was sought by Kaz was an adjournment of the proceedings so such an application could be made at a later date.
10	Mr Cook pointed out to me that Mr Warren had informed the court that he was making submissions under paragraphs two to six of his application and not making submissions under paragraph one.  I apparently did not pick up this statement of Mr Warren, but, on the other hand, no application was made to split the hearing.  If Mr Warren wanted to split the hearing, he should have applied at the beginning to do so and informed the court of the reason for his request.  To merely stand up and tell the court that he was only arguing part of his case was insufficient.  
11	If an application had been made to split the hearing on the basis that there was an argument that the second alleged agreement was not an agreement at all, obviously it could not have been separated out and heard subsequently to the submission that the demand under the second agreement was waived.
12	If this was the case Kaz Nominees wanted to put to the court, it should have been the first point raised, not a subsequent ground.  The case would have been that there was no agreement, and in the alternative, if there was an agreement, then the demand under that agreement was waived.
13	It is inconceivable that the court would have agreed to hear and determine whether a demand under an agreement was waived before the court heard any evidence and  argument about whether there was an agreement in the first place.  I do not need to point to any principle of law or rule to say that is illogical and would not be permitted.
14	One can understand, therefore, why, at the time, it did not cross my mind that there could be any other argument along the lines now pressed. 
15	I have heard three days of evidence and argument as to the alleged waiver.  The evidence of Mr Konstandellos about the waiver was that he and Mr Donnelly were discussing the $500,000 debt pursuant to the second agreement.  There was no suggestion of any conversations between Mr Konstandellos and Mr Donnelly to the effect that the notice was deficient because it stated $500,000, not $400,000, was owing.  That was never Kaz Nominees’ case.  
16	Kaz Nominees’ case was solely that there was an agreement between the parties that the money owing would not be called upon until 120 days after the council issued a planning permit relating to a relevant block of land and once Mr Konstandellos reminded Mr Donnelly of that agreement, Mr Donnelly accepted it and Mr Konstandellos took no further steps with respect to the statutory demand. 
17	That was the case I heard and I decided against Kaz Nominees.  I was not satisfied that the alleged waiver occurred.  There was nothing in the evidence given about conversations concerning the alleged debt to the effect that the debt was $400,000, not $500,000.  Mr Donnelly and Mr Konstandellos would have to be called again to establish such a case, and I think it is entirely relevant for me to take that into account in deciding how to deal with Mr Cook’s application, as it is most unlikely a witness would be permitted to give evidence twice in one case which deals with grounds relied on to oppose a winding up.  Further, any evidence to that effect would likely amount to a recanting of the evidence already given by Mr Konstandellos. 
18	Notwithstanding the difficulty identified above, let us assume that there was such a hearing and I decided that the binding agreement was the first one and not the second one.  Section 459S(2) of the Act provides that ‘The Court is not to grant leave under subsection (1) unless it is satisfied that the ground is material to proving the company is solvent’. 
19	The ground now advanced by Kaz Nominees is that the debt was $400,000, not $500,000.  That ground would not be material to proving the company is solvent.  To prove that the company owes $400,000 and not $500,000 is, without anything more such as accounts (which were not put in) not evidence material to proving the company is solvent. 
20	I have given Kaz Nominees the opportunity to seek to reopen the case today and to correct any misunderstanding by Mr Warren, which it has declined to do.  Even if the opportunity had been taken and even if I had been satisfied that there was an argument that it was the first and not the second agreement which was binding, the fact remains that this argument was not raised in answer to the statutory demand.  
21	Further, as mentioned, I am not satisfied that under s 459S(2) of the Act that if Kaz Nominees did make out this ground that I would be satisfied in finding, on the balance of probabilities, that that was material proving the company was solvent.  
22	Therefore, I refuse Mr Cook’s application to adjourn the further hearing of this matter and I will not vacate the orders I have already pronounced.