CIC Projects Pty Ltd v Eyre Kingston Pty Ltd

1. The hearing of the plaintiff's originating process filed on 15 June 2023 seeking orders winding up the first defendant is listed and heard by the Honourable Justice Jackson at the present hearing.
2. The requirement to lodge notices under s 465A of the Corporations Act 2001 (Cth) is dispensed with.
3. Pursuant to s 461(1)(k) of the Corporations Act, the first defendant is wound up on the ground that it is just and equitable for it to be wound up.
4. Robert Michael Kirman and Shane Norman O'Keeffe are appointed as joint and several liquidators of the first defendant.
5. The plaintiff's costs are to be taxed and paid in accordance with s 466(2) and s 556(1)(b) of the Corporations Act from the property and assets of the first defendant.
6. The plaintiff's interlocutory process dated 10 July 2023 is otherwise dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

JACKSON J: 1 The first defendant, Eyre Kingston Pty Ltd, acted as the vehicle for aspects of a property development in the Australian Capital Territory known as the Atria Development. Eyre Kingston has two shareholders who each hold 50% of its shares, the plaintiff CIC Projects Pty Ltd and the second defendant Griffin Q Pty Ltd. 2 CIC Projects has applied for the winding up of Eyre Kingston. The application is brought under s 461(1)(k) of the Corporations Act 2001 (Cth), which provides that the Court may order the winding up of a company if the Court is of opinion that it is just and equitable that the company be wound up. CIC Projects and Griffin Q have provided a minute of consent orders by which they agree that Eyre Kingston will be wound up. Although it will be done by consent, I still need to be satisfied that it is within power and appropriate to make an order of that kind. I have come to the view that it is, but the fact that there may be creditors and other third parties affected means that it is also appropriate to give these brief reasons indicating why. 3 CIC Projects relies on four affidavits affirmed by one of its directors, Domenico Scafetta, dated 14 June 2023, 10 July 2023 (two affidavits) and 11 July 2023 respectively. CIC Projects also relies on the affidavit of Anna Maria Jones and the affidavit of Emilio David Shambrook, which concern formal and procedural requirements and do not need to be mentioned further. 4 Mr Scafetta's affidavits show that CIC Projects is a subsidiary of Peet Limited and that Griffin Q is part of a group of companies controlled by two brothers, Dimitrios (James) Aristidis Koundouris and Theodoros Aristidis Koundouris. It is convenient to refer to the two shareholders and their associated entities loosely as 'Peet' and 'Koundouris'. 5 Of Eyre Kingston's four directors, two are nominees of Peet and two are nominees of Koundouris. Mr Scafetta's affidavits annexe voluminous correspondence between the directors about a number of disputes which have emerged between Peet and Koundouris. It is not necessary to describe them or the correspondence in detail; two instances are enough to illustrate the disputes which appear to have led to the present application. One is that Peet maintains that a Koundouris company is liable under the project agreements to pay Eyre Kingston its share of project expenses, which Peet calculates at over $7 million. Resolutions of the directors of Eyre Kingston were proposed including for Eyre Kingston through its solicitors to make demand on the Koundouris company in relation to part of this alleged liability. The Peet directors and the Koundouris directors could not reach agreement about the resolutions. 6 Another instance is that a company associated with Koundouris has commenced proceedings in the Supreme Court of New South Wales against Eyre Kingston and a different Koundouris company seeking damages for alleged breaches of a lease agreement and associated misleading or deceptive conduct. Directors' resolutions have been proposed authorising Eyre Kingston, through solicitors, to enter an appearance and defend the proceeding. The directors cannot agree on those resolutions either. 7 Further instances of deadlock and corporate paralysis abound in the evidence. It is well established that the jurisdiction to wind up a company on the just and equitable ground may arise in (potentially overlapping) circumstances which include (among several others) a breakdown in the relationship between the shareholders, and a deadlock in the management of the company: see the summary of principles given by Solomon J in VCS Holdings (Aust) Pty Ltd (In Liq) v KVG Contracting Services Pty Ltd [2023] WASC 189 at [38]. There is evidence here that there has been a breakdown in the relationship between the shareholders of Eyre Kingston and that there is a deadlock in the management of its affairs. 8 It is also relevant to the discretion to order winding up that the Atria Development has been completed. Eyre Kingston's remaining assets are comprised of cash and the liabilities (alleged or agreed) of other companies. Its future activities, if it were not paralysed, would be limited to recovery of those liabilities and defence of the claims made against it. 9 In view of all the above matters, the court has power to order the winding up of Eyre Kingston, and on the basis of those matters and of the consent of both shareholders, it is appropriate to do so. Robert Kirman and Shane O'Keeffe have provided a written consent to act as joint and several liquidators of the company and they will be appointed to that office. The parties have consented to the costs of CIC Projects as plaintiff to be taxed and paid out of the winding up in accordance with s 466(2) (liquidator to reimburse taxed costs incurred by applicant for winding up order) and s 556(1)(b) (those costs to have priority in winding up), and an order to that effect will be made. 10 It is also appropriate to record that the Court has made no findings about the liability, breach of duty or other misconduct of any company or person in the course of coming to the above conclusions. The parties ask the Court to note that Griffin Q has made no admission and that no point may be taken against it by reason of its consent to these orders, or the lack of any objection to Mr Scafetta's affidavits to be read into evidence, and it will be appropriate to record that in the orders as well. It is also appropriate to confirm that while there is evidence in Mr Scafetta's affidavits suggesting that Eyre Kingston is insolvent, that allegation forms no part of the basis for the winding up order made today. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackson.