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In the matter of Katherine Sozou and Anthony Connelly in their capacity as... [2026] NSWSC 646 | Case summary | Zoe

NSWNSWSC

In the matter of Katherine Sozou and Anthony Connelly in their capacity as joint and several liquidators of Apollo Kitchens (NSW) Pty Ltd (In Liquidation)

[2026] NSWSC 646

Supreme Court of NSW|2026-06-05|Before: Brereton J

View on NSW Caselaw

At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2026-06-05

Before

Brereton J

Catchwords

CORPORATIONS – winding up – application for directions that liquidators are justified in treating a related entity as the “true” employer – where entity has no assets to meet liabilities to employees – undisclosed principal – where a related entity transferred funds to cover wages and employee-related costs – where it is more likely than not that the employer of record was operating as agent for an undisclosed principal – no declaration made

Source

Original judgment source is linked above.

Catchwords

CORPORATIONS – winding up – application for directions that liquidators are justified in treating a related entity as the “true” employer – where entity has no assets to meet liabilities to employees – undisclosed principal – where a related entity transferred funds to cover wages and employee-related costs – where it is more likely than not that the employer of record was operating as agent for an undisclosed principal – no declaration made

Judgment

Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.

Medium Neutral Citation: In the matter of Katherine Sozou and Anthony Connelly in their capacity as joint and several liquidators of Apollo Kitchens (NSW) Pty Ltd (In Liquidation) [2026] NSWSC 646

Hearing dates: 20 April 2026

Ms Katherine Sozou and Mr Anthony Connelly are joint and several liquidators of Apollo Kitchens (NSW) Pty Ltd (In Liquidation) (Apollo Kitchens). Apollo Kitchens was wound up by the Federal Court of Australia on the application of the Deputy Commissioner of Taxation on 7 March 2024. The company had been in the business of providing custom joinery, specialising in the design, manufacture and installation of kitchens for commercial and retail customers.
Apollo Kitchens’ business activities were undertaken with some other related entities. It relied on AKA Supplies Pty Ltd (In Liquidation) (AKA Supplies) to provide stone benchtops and on Apollo Holdings (Australia) Pty Ltd (A****pollo Holdings) to provide plant and equipment. A company once called Apollo Joinery Showrooms Pty Ltd (Apollo Joinery Showrooms) was responsible for making contracts with retail customers and engaged Apollo Kitchens to meet those orders. Brownlen Pty Ltd (In Liquidation) (Brownlen) was said to supply finance and IT to Apollo Kitchens and the other companies. The various companies did not form a consolidated group of companies. There is nothing in the evidence that shows that Apollo Kitchens and Brownlen have any common ownership. Apollo Kitchens and Brownlen were related because Mr Peter Bader served as the sole director of both of them.
Mr Edwin Narayan and Mr Domenico Calabretta were appointed joint and several liquidators of Brownlen by a resolution of members on 27 March 2024.
An issue has arisen in the winding up of Apollo Kitchens that is not uncommon. It concerns the identity of the employer of various employees. Section 556 of the Corporations Act 2001 (Cth) concerns priority payments in a winding up. It includes a priority in favour of “employees” of the company being wound up. At least notionally, Brownlen had 27 employees. Brownlen has no assets and there is nothing available to meet outstanding obligations to those 27 employees in terms of wages and superannuation.
The liquidators of Apollo Kitchens seek declaratory relief under s 90-15 of the Insolvency Practice Schedule (Corporations) to the effect that the 27 Brownlen employees are, for the purposes of s 556, employees of Apollo Kitchens. Alternatively, they seek a direction pursuant to s 90-15 that they are entitled to proceed on that basis. They contend that Apollo Kitchens is the “true” employer.
If the liquidators succeed, the 27 employees will have a priority claim to the assets of Apollo Kitchens in its winding up. Apollo Kitchens does have assets available for distribution on a winding up. It is not expected to have assets to satisfy all creditors. If the 27 employees are creditors of Apollo Kitchens, there will be less available for the other creditors. In this case, the creditors who will be likely to receive less if the 27 persons are employees of Apollo Kitchens appears to be the 88 persons who are undoubtedly employees of Apollo Kitchens. That is because a limited pool of funds will have to be divided between 115 employees rather than 88.
For the reasons that follow, I will make a direction pursuant to s 90-15 that the liquidators are justified in treating Apollo Kitchens as the employer of the 27 relevant employees.

The principles to be applied in determining whether a person is an employee of a company for the purposes of s 556 have been addressed in a number of cases. The principles were considered and applied recently by the Court of Appeal in Resilient Investment Group Pty Ltd v Barnet and Hodgkinson as liquidators of Spitfire Corporation Limited (in liq) (2023) 111 NSWLR 446; [2023] NSWCA 118 at [153]-[185] (Gleeson JA; White and Brereton JJA agreeing). A useful and even more recent collection of relevant observations from the authorities was provided by Black J in In the matter of Mosaic Brands Limited (admins apptd) (recs and mgrs apptd) [2025] NSWSC 959 at [24]-[32].
The resolution of the question of whether a person is an employee of a particular company for the purposes of s 556 requires the ordinary application of legal principle. There is no separate test arising under s 556. That is, a person cannot be an employee of an entity for the purpose of s 556 but not for other purposes. Section 556 speaks of “an employee of the company”. That calls for the application of the usual common law principles to determine whether a person is (a) an employee, and (b) an employee of a particular company – being the company that is being wound up. It is the latter question that arises in this case, there being no suggestion that any of the 27 persons was not an employee but was instead an independent contractor. The question falls to be determined by the usual principles of contract and agency law: see Resilient Investment at [166]. It is principally a question of identifying the parties to a contractual relationship.
It would be an error of principle to consider events post-dating the commencement of the employment relationship, and to the circumstances of the insolvency of companies within a group, in order to seek to identify as the employer the company within a group of companies that is likely to result in what is perceived to be the fairest outcome for employees. Section 556 gives “employees” of a company priority over some other creditors. Whether a person is an employee of a company is to be determined objectively by reference to established principles – not by reference to perceptions of fairness.
The application of established principles can be difficult when a business is conducted through a group of companies where precise corporate boundaries are blurred. It is not uncommon for a group of companies who have a connection, be it common ownership or joint enterprise, to arrange their affairs in a way that has all (or some) employees working for the benefit of all of the companies in the group and for those employees to enter into a written contract that identifies a single company (often called a services company) within the group as their employer. The service company can make the employees available to work for other companies in the group. This structure can have benefits in terms of matters such as simplifying payroll and taxation compliance. It may facilitate asset sales. There may be many other good commercial reasons.
Some of the relevant considerations that arise on this application were addressed in Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (2011) 198 FCR 174; [2011] FCA 1176. Buchanan J observed:

Payslips for 26 of the 27 employees refer to Brownlen as the employer. In the case of the 27th person, there is a signed contract showing Brownlen as the employer.
There is very little evidence about the actual reasons and circumstances that lie behind the creation and use of Brownlen. The company was incorporated on 22 June 2012. Ms Elissar Bader was the director until 30 June 2016. Mr Bader was appointed as director on 30 June 2016.
It appears that the 27 “Brownlen” employees were engaged to and did undertake finance and IT tasks for Apollo Kitchens and the other related entities, namely AKA Supplies, Apollo Holdings and Apollo Joinery Showrooms. The evidence does not indicate whether those other entities had any contracts with any employees (save for the unsigned agreement with AKA Supplies that I have mentioned). The evidence does not disclose the extent to which the 27 employees performed services for each of the relevant entities.
Mr Bader was asked by the liquidators of Apollo Kitchens about who supervised the Brownlen employees who were providing services to Apollo Kitchens. His response was that the employees provided services to Apollo Kitchens and the other entities in the group. He stated that the “GM” (presumably the General Manager) “looked after all entity employees and the employees in each entity has job tasks advising them their admin tasks needed for each entity eg an order come in from the showroom division – admin tasks were done by Brownlen for accounts, drafting etc on behalf of showrooms entity. Apollo Kitchens would manufacture the works and invoice showrooms for the manufacture”. This is consistent with other evidence that suggests that, so far as contracts were made with retail customers, the outward facing entity, who received income from customers, was Apollo Joinery Showrooms.
There is some evidence that there was not a clear division of corporate responsibility and activity. There are examples of email signature blocks, for at least some of the 27 employees, that refer to the “Apollo Joinery Group” and do not identify any specific corporation.
At least in recent years (and likely at all times), Brownlen did not have any external source of income to meet employee entitlements and had no assets of its own. Apollo Kitchens made payments to Brownlen on a weekly basis in an amount very close to the amount that was then paid by Brownlen to the (at least notionally) Brownlen employees (or for employee-related expenses). The bank records support the conclusion that, typically, Apollo Kitchens put Brownlen in funds to enable Brownlen to pay employees on the same or the following day.
There is no evidence of a written agreement between Brownlen and Apollo Kitchens. It is unclear whether that is because none ever existed.
It does not appear that, at least in recent years, any management fee was paid by Apollo Kitchens to Brownlen.
Brownlen had its own bank account. The only payments into the account appear to have been made by Apollo Kitchens.
Brownlen and Apollo Kitchens had separate workers compensation policies. Apollo Kitchens provided Brownlen with the funds necessary for it to pay the premiums.
Although not in evidence, it seems that there is a document called the “Apollo Joinery Group Guide to Employment and Policy Manual” which appears to have been provided to all employees as a matter of practice (including those who were at least notionally employed by Brownlen). Indirect evidence suggests that Apollo Kitchens and Brownlen shared general and human resources policies and procedures concerning matters such as recruitment and termination.
Apart from what I have already said, there is little evidence about the relationship between Brownlen and AKA Supplies, Apollo Holdings and Apollo Joinery Showrooms, or between Apollo Kitchens and those entities.
The liquidators of Brownlen have expressed the view that Apollo Kitchens “was the true employer of the relevant employees” because Brownlen “operated purely as a labour-hire entity, and all employee related costs were paid directly by Apollo Kitchens from its trading income”. The last observation is not correct. The employee-related costs were paid indirectly by Apollo Kitchens. As noted above, Apollo Kitchens put Brownlen in funds and Brownlen paid the employee-related costs. I would not conclude that Apollo Kitchens was the “true” employer merely because Brownlen operated purely as a labour-hire company. Operating as a labour-hire company can be intelligible from a legitimate business perspective.

The liquidators of Apollo Kitchens seek a declaration that, for the purpose of s 556, Apollo Kitchens is the employer of all of the employees in the group of companies comprising Apollo Kitchens and Brownlen. This would mirror relief granted by Stewart J in Shepard (Administrator), in the matter of Transtar Linehaul Pty Ltd (Administrators Appointed) [2025] FCA 1663. There are other cases where declaratory relief has been given in similar circumstances: see, for example, Mosaic Brands. In that case, Black J considered declaratory relief was appropriate to quell the controversy and provide certainty to the receivers (at [41]).
The liquidators of Apollo Kitchens also seek a direction pursuant to s 90-15 of the Insolvency Practice Schedule, being Schedule 2 of the Act, that they are justified in treating Apollo Kitchens as the employer of the employees in the group of companies comprising Apollo Kitchens and Brownlen. A direction of this kind was given in Spitfire and Branded Media.
The principles and considerations arising in the application of s 90-15 have been considered in various cases, including in In the matter of Hawden Property Group Pty Ltd (in liq) [2018] NSWSC 481; 125 ACSR 355 at [6]-[8] (Gleeson JA). His Honour noted that the section was wide enough to accommodate the determination of substantive rights, but recognised that the Court would not do so without affording potentially affected parties an opportunity to be heard. The statements of principle in Hawden Property Group were endorsed in One T Development Pty Ltd v Peter Krejci (in his capacity as liquidator of ENA Development Pty Ltd) [2023] NSWCA 120 at [34]-[35] (Ward P, Leeming and Mitchelmore JJA).
The Court has power to give directions under s 90-15 to facilitate the performance of a liquidator’s functions, and the power should be interpreted widely to give effect to that object. The Court may give a direction where it is advantageous to the liquidation to do so, although the Court will generally be reluctant to give a direction as to the making or implementing of a business or commercial decision: see In the matter of Octaviar Administration Pty Ltd (in liq) [2017] NSWSC 1556 at [7]-[9] (Black J), concerning precursor provisions.

The evidence before the Court does not expose, in clear and unambiguous terms, the true character of the formal legal relationship between the 27 employees and either Brownlen or Apollo Kitchens. Most obviously, for some of the 27 employees, there is no written contract of employment in evidence. Whether that is because there was never a written contract or the written contract cannot be located is unknown. With some exceptions, it seems likely that there was a contract made between Brownlen and the 27 employees. In most cases there is a signed agreement. In others, the unsigned contract is some evidence from which it might be inferred that there was a contract with Brownlen. In nearly all cases, the payslips support the proposition that there was a contract between Brownlen and the relevant employee.
The question that arises is whether, when contracts were made by Brownlen and the relevant employees, Brownlen was doing so as an agent of an undisclosed principal, being Apollo Kitchens. That question mainly depends on whether Brownlen had authority to make contracts on behalf of Apollo Kitchens and intended to act on Apollo Kitchens’ behalf when it entered into each of the relevant contracts of employment. The answer to this question is principally a matter of inference.
The evidence is sufficient to enable me to infer that it is more likely than not that Brownlen did have authority to make contracts on behalf of Apollo Kitchens and did intend to act on Apollo Kitchens’ behalf when it entered into each of the relevant contracts of employment. I rely in particular on the following matters.
The failure of the liquidators to locate any management agreement suggests that there is no written management agreement and that the arrangements between Apollo Kitchens and Brownlen were relatively informal.
There is no evidence that Brownlen was set up or ever operated as a standalone business, to make profits from supplying labour to other companies. Brownlen, at all relevant times on the evidence, depended on Apollo Kitchens for funding. Funding was provided in a barely sufficient amount to cover the employment-related costs on an as needed basis. This case is not as clear as some others, such as Resilient Investment, Branded Media or Mosaic Brands because here the wages were not paid directly by Apollo Kitchens. But the circumstances of this case are not far removed from those cases. There is not much difference between Apollo Kitchens paying the employees directly and Apollo Kitchens paying Brownlen an amount just sufficient to pay the employees and Brownlen then paying the employees on that or the following day.
Brownlen appears in substance to have operated at all times as a division of Apollo Kitchens. It is likely that this reflects the commercial circumstances operating as between Apollo Kitchens and Brownlen at the time of entry into each of the contracts with the 27 employees.
The written contracts that are available do not, either expressly or by implication, provide that Brownlen is the principal, or otherwise seek to exclude Apollo Kitchens as principal. The language points in the opposite direction, by including a definition of “Employer” that extends beyond Brownlen. This also serves to confirm that the personality of the employer was not material, which would have precluded the operation of the doctrine of undisclosed principal: see Siu Yin Kwan at 207; Winstonu Pty Ltd trading as Harvey Norman Electrics v Pitson [2001] FCA 541 at [30] (Stone J; Beaumont ACJ and Gyles J agreeing) and Resilient Investments at [170].
It appears likely that Brownlen was established to house the finance and IT staff who were to provide services exclusively for Apollo Kitchens and other related entities, at the direction of senior staff from Apollo Kitchens.
It is likely that when the contracts were made, both Brownlen and Apollo Kitchens (and the employee) contemplated that the employee would be providing services to Apollo Kitchens and other related entities at the direction of senior staff from Apollo Kitchens.
The use of Brownlen as the named party in the contracts of employment was a commercially convenient mechanism by which Apollo Kitchens secured employees for itself and other related entities. The doctrine of undisclosed principal is justified on the basis of commercial convenience: see Keighley, Maxsted & Co v Durant [1901] AC 240 at 261-262 (Lord Lindley). The evidence supports the conclusion that Apollo Kitchens was making use of that commercially convenient doctrine when the 27 employees were employed.
However, I am not prepared to make the declaration sought by the liquidators of Apollo Kitchens. That is because there is no known controversy to quell. I also take into account that none of the 27 employees are parties or, as far as I am aware, have been invited to indicate their position. The same is true of the 88 other Apollo Kitchens employees, who appear to be persons made worse off if the 27 relevant employees are employees of Apollo Kitchens.
I am, however, prepared to make a direction under s 90-15. The effect of the direction is to protect the liquidators of Apollo Kitchens from liability if they act in accordance with the direction. There is a public and private interest in the efficient winding up of Apollo Kitchens. It is probable on the evidence that the 27 relevant employees are all employees of Apollo Kitchens, through the operation of the doctrine of undisclosed principal (save in 2 cases where the evidence suggests that Apollo Kitchens might be the employer directly and not as Brownlen’s principal). The liquidators of Apollo Kitchens are justified to proceed on that basis, particularly having regard to the desire for the winding up to be conducted efficiently and without unnecessary expense.