Yakiti Pty Ltd atf the Yakiti Family Trust v Kassem

[2020] NSWSC 1873

Supreme Court

New South Wales

Medium Neutral Citation:

Yakiti Pty Ltd atf the Yakiti Family Trust v Kassem [2020] NSWSC 1873

Hearing dates:

On the papers

Date of orders:

18 December 2020

Decision date:

18 December 2020

Jurisdiction:

Equity - Commercial List

Before:

Stevenson J

Decision:

Application to transfer proceedings to Corporations List refused

Catchwords:

CIVIL PROCEDURE – proceedings commenced in Commercial List – whether proceedings should be transferred to the Corporations List – where issues in proceedings relate to other proceedings in the Commercial List – where Commercial List judge has ordered proceedings be managed together

Legislation Cited:

Corporations Act 2001 (Cth)

Cases Cited:

Coastline Constructions (Aust) Pty Ltd v Kakavas [2008] NSWSC 388

Giorgi v European Asian Bank Aktiengesellschaft NSWSC (Unrep) 3 March 1986

Category:

Procedural and other rulings

Parties:

Yakiti Pty Ltd atf the Yakiti Family Trust (First Plaintiff)
Manito Holdings Pty Ltd atf the Manito Family Trust (Second Plaintiff)
Ozem Assam Kassem (First Defendant)
Jason Bing-Fai Tang (Second Defendant)
The Cosmetic Institute Pty Ltd (in liq) (Third Defendant)
TCI Bondi Junction Pty Ltd (in liq) (Fourth Defendant)
TCI Management Pty Ltd (in liq) (Fifth Defendant)
TCI Southport Pty Ltd (in liq) (Sixth Defendant)
Macquarie Cosmetic Institute Pty Ltd (Seventh Defendant)

Representation:

Counsel:
W Muddle SC with R Francois (Plaintiffs)
M Condon SC (First to Sixth Defendants)
R Gorczyca, Solicitor (Seventh Defendant)

Solicitors:
William Roberts Lawyers (Plaintiffs)
Sage Solicitors (First to Sixth Defendants)
Holman Webb Lawyers (Seventh Defendant)

File Number(s):

2020/188431

Judgment

1. In 2017, Macquarie Cosmetic Institute Pty Ltd (MCI) purchased the business and undertaking of:

1. The Cosmetic Institute Pty Ltd (in liquidation);

2. TCI Bondi Junction Pty Ltd (in liquidation);

3. TCI Management Pty Ltd (in liquidation); and

4. TCI Southport Pty Ltd (in liquidation).

(together, “the TCI Entities”).

2. Liquidators were appointed to the TCI Entities on 10 July 2018.

3. On 11 October 2019 MCI commenced proceedings 2019/318531 (“The MCI Proceedings”) against the plaintiffs in these proceedings, Yakiti Pty Ltd and Manito Holdings Pty Ltd, and also against the sole director of Yakiti, Mr Babak Moini, and the sole director of Manito, Mr Alistair Champion.

4. In the MCI Proceedings, MCI claims from each of the defendants equitable compensation, moneys had or received and/or restitution for unjust enrichment and makes claims for insolvent trading under s 588FA and s 588FE of the Corporations Act 2001 (Cth) (“the Act”) and claims of contraventions by Mr Moini and Mr Champion, as directors, of Yakiti and Monito, of ss 588G and 588GAB of the Act.

5. Yakiti and Manito commenced these proceedings on 25 June 2020 against the TCI Entities (the third to sixth defendants), the liquidators for the TCI Entities (the first and second defendants) (together, “the Liquidator Parties”) and MCI (the second defendant).

6. The proceedings are related in that:

1. in the MCI proceedings, MCI asserts and relies on an assignment of rights by the liquidators of the TCI Entities to MCI; whereas

2. in these proceedings, Yakiti and Manito seek to impugn those assignments and to allege related contraventions of cl 100-5(3) of Schedule 2 and of s 477(2A) of the Act amongst other things.

7. Because of the relationship between the proceedings, on 3 July 2020 Hammerschlag J made an order in the MCI Proceedings that they be managed together.

8. By notice of motion filed on 8 September 2020, the Liquidator Parties seek an order that these proceedings be transferred to the Corporations List.

9. Mr Condon SC, for the Liquidator Parties, submitted this should occur because these proceedings:

“…clearly raise issues concerning the appropriate manner in which a liquidation is dealt with. It is more efficient, less costly and in the interests of consistency and fairness that these issues are determined by a specialist Corporations Judge with a working knowledge of the issues involved and the applicable legislative requirements, and how they interrelate. Lastly, consistency in decision making is important; this is best served if cases which plainly enliven the Act’s jurisdiction are dealt with, so far as practicable, by the specialist division nominated by the practice note.”

10. The Liquidator Parties do not seek an order that the MCI Proceedings also be transferred to the Corporations List. Indeed, in his written submissions, Mr Condon did not refer to the MCI Proceedings.

11. In response to my enquiry concerning the apparent relationship between the proceedings, Mr Condon submitted that resolution of the issues in these proceedings will determine the assignment issue in the MCI Proceedings, that there was no risk of issue estoppel or inconsistent judgments provided these proceedings were heard in advance of the MCI Proceedings and that “no one suggests, or can reasonably suggest” that the proceedings be heard together.

12. I do not see that any of these matters, assuming they are correct, compel the conclusion that these proceedings alone should be transferred to the Corporations List. Indeed, Mr Condon’s submission that these proceedings should be heard before the MCI Proceedings suggests strongly that both proceedings should be case managed in the same list.

13. Further, as Mr Muddle SC and Ms Francois for Yakiti and Manito submitted:

“Given that this is appears to be the first challenge to the new statutory powers of liquidators to assign their statutory rights in clause 100-5 of Schedule 2 to the Corporations Act, it is not clear how the Corporations List Judges could have any greater relevant experience than Commercial List Judges in such matters - even if there was a strict dichotomy between the Judges who sit from time to time on the Commercial List or the Corporations List.

In any event, the bulk of the present case involves determining contested factual disputes about the conduct of the defendants in a commercial transaction, a task for which any Judge of the Supreme Court of New South Wales is eminently qualified, more particularly any Judge in either the Commercial List or the Corporations List.”

14. Mr Muddle and Ms Francois also drew attention to the observations of McLelland J in Giorgi v European Asian Bank Aktiengesellschaft [1] :

“The orderly conduct of the business of the Court requires that proceedings properly commenced in one Division remain in that Division unless a sufficient case for transfer to another Division is made out”.

1. NSWSC (Unrep) 3 March 1986 at [5]. See also Coastline Constructions (Aust) Pty Ltd v Kakavas [2008] NSWSC 388 at [15]-[18] (Hislop J).

15. I am not persuaded that a sufficient case has been made out for a transfer to the Corporations List.

16. Both proceedings were properly commenced in this List.

17. I do not see that the issues that may arise under the Act could not be dealt with by a judge of this List and, as Mr Muddle and Ms Francois have pointed out, there are other issues in the two proceedings which are of an nature customarily dealt with in this List.

18. The first to sixth defendants’ application is dismissed with costs.

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Endnote