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[2012] NSWSC 957
procedural. The hearing dates allocated for 2–3 and 7–8 August 2012 were vacated; the proceedings were listed before the Corporations Judge for directions on 3 September 2012; liberty to apply was granted on...
This was not a decision about who would ultimately succeed in the dispute. The company had entered administration, and some claims against it could not proceed without consent or leave. The Court considered it unfair and impractical to hold the scheduled trial while important parts of the case were stayed, the company’s assets and leases were in flux, and the status of its cross-claim was unclear. It therefore vacated the trial dates and left the parties’ substantive claims unresolved. It also found no basis to make the plaintiffs pay costs thrown away and reserved the costs of the argument.
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7 cited instruments linked from this judgment.
2,302 words · generated 02/10/2026
The judgment is an interlocutory decision about whether a six-day hearing should go ahead after significant developments affecting one of the defendants. The supplied heading identifies “Karabay v Carr”, but the judgment itself is headed In the matter of Oliver Brown Pty Ltd [2012] NSWSC 957, and its parties and reasons concern the Oliver Brown proceedings. Karabay v Carr is mentioned in the body as an authority on costs, not as the proceeding being decided. The analysis below follows the judgment text and citation.
The plaintiffs were three individuals, Min Kyu Kim, Min Jae Kim and Dong Woo Seo, and two companies, BMJ Chocolata Pty Ltd and MTK Chocolata Pty Ltd. The defendants were Byung Sun (Eric) Song, Jacob Jihoon Kim and Oliver Brown Pty Ltd (the Company) ([1]). The dispute concerned an alleged arrangement to operate chocolate cafes under the Oliver Brown name, including arrangements about subleases, shares and the conduct of the business ([6]).
The plaintiffs’ pleaded case included an oppression claim under s 233 of the Corporations Act 2001 (Cth), claims about alleged misleading or deceptive conduct, alleged franchising disclosure failures and unconscionability. The relief sought included repayment of capital contributions, transfers or sales of shares, damages and declarations about provisions of an alleged agreement ([4]–[6]). Song and the Company had also brought a cross-claim seeking specified amounts allegedly unpaid by the plaintiffs ([7]).
The trial dates were 2–3 and 7–8 August 2012, following argument on 31 July. The company had entered administration on 13 July. The Court was also told about a purported assignment of trademarks and equipment, steps concerning the Ryde cafe lease, and the administrator’s communications that the company’s leases for the Chatswood and Ryde cafes had been disclaimed ([8]–[9]). The evidence did not establish whether Jacob Jihoon Kim had filed for bankruptcy, despite his earlier statement that he intended to do so ([2], [9]).
Black J concluded that parts of the plaintiffs’ claims were stayed under s 440D, but did not decide whether the stay extended across the whole case ([10]–[11]). The Court vacated the hearing dates, listed the proceedings for directions on 3 September 2012, declined to direct Song to discontinue his cross-claim and reserved the costs of the argument ([22]–[28]). The judgment did not determine the merits of any substantive claim.
The first issue was the effect of the company’s administration on the claims. Section 440D was described as preventing a proceeding against the company, or in relation to its property, from being begun or proceeded with during administration without the administrator’s written consent or the Court’s leave ([10]). The Court deliberately confined its decision: it said it did not need to determine whether the stay operated as widely as the plaintiffs contended ([10]).
The Court nevertheless found that significant parts of the case were stayed. It treated the oppression claim and consequential relief concerning transfers of shares in the Company as stayed. Although the claim was primarily brought against Song and Jacob Kim, the Company was also a party and would be bound by any orders. In the Court’s view, continuing the claim could require the administrator to decide its position on the claim and distract the administrator from other responsibilities ([11]). It also held that the plaintiffs’ claims against the Company under the Franchising Code of Conduct and for unconscionability were proceedings against the Company and therefore stayed ([11]).
The Court then considered whether a hearing should proceed on the remaining matters. It applied s 58 of the Civil Procedure Act 2005 (NSW), including the overriding purpose in s 56 of facilitating the just, quick and cheap resolution of proceedings and the case-management objectives in s 57 ([15]). It acknowledged the prejudice to Song: he had incurred preparation costs and wanted the claims against him resolved without further delay. It also took account of the lost opportunity for other parties to use the six-day hearing allocation and the likely delay before a new hearing could be listed ([16]).
Those considerations were outweighed by the risk of substantial injustice to the plaintiffs if the hearing proceeded as scheduled. Important claims against the Company would not proceed, it was uncertain whether the Company would have assets available to meet a judgment, and the Company’s cross-claim would not be determined at the hearing ([17]). The Court also considered the practical effect of requiring the plaintiffs to give evidence about the same alleged conversations twice, once in relation to their claim against Song and again in relation to the Company’s cross-claim. It considered that this could create particular difficulties because English was not the plaintiffs’ first language and could also raise the risk of inconsistent factual findings ([14], [18]).
The costs decisions were distinct. The Court declined to order the plaintiffs to pay costs thrown away because it found no fault on their part warranting such an order. The relevant developments occurred shortly before the hearing, and the plaintiffs had communicated their view that the hearing could not proceed ([19]–[21]). As to the costs of the 31 July argument, the Court noted the general position that costs follow the event, but treated that as subject to discretion. Since neither side was shown to have caused the relevant events, and later amendments or the ultimate result might matter, it reserved those costs ([26]–[28]).
This judgment did not announce a new statutory rule or alter the text of s 440D. Its importance is in its application of that section and of the NSW case-management provisions to a proceeding affected by a company’s administration.
Before the Court’s decision, the parties faced the question whether they could proceed with the listed hearing when the Company was in administration. The Court determined that particular claims involving the Company could not then proceed without the consent or leave contemplated by s 440D ([10]–[12]). It did not resolve the broader question whether every claim or every part of the proceedings was stayed. That issue was expressly left undecided because it was unnecessary to determine the immediate listing question ([10]).
After the decision, the scheduled hearing dates were no longer operative and the proceedings were to return for directions. The parties’ substantive claims remained unresolved. The plaintiffs could seek consent or leave in relation to stayed claims, but the judgment records that they were not then ready to make such an application and considered the utility of pursuing claims against the Company in light of the recent events ([12]). The judgment does not say what happened after the relisting date, and it does not establish that the stayed claims were later allowed to proceed.
The decision also illustrates the interaction between statutory stays and case management. The stay did not, by itself, decide the fate of every claim against the other defendants. The Court separately considered whether the remaining parts of the litigation should proceed in circumstances where the claims were connected, evidence could be duplicated, and the company’s cross-claim was unresolved ([13]–[18]). The outcome was a procedural response to the situation then before the Court, not a final ruling on liability or entitlement.
At [10], Black J said: “I do not consider that I need to determine whether the stay under s 440D of the Corporations Act operates as widely as that, in order to determine the question that presently arises for determination.” In plain English, the Court did not decide the full reach of the statutory stay. It decided only what was needed to deal with whether the scheduled hearing should go ahead.
At [11], the Court said the continuation of the oppression claim fell within the language and policy of s 440D. The practical point was that the Company was a party and could be affected by the orders, while the administrator might need to assess the claim. The Court considered that involvement could distract the administrator from the administration.
At [14], the Court identified the risk that plaintiffs and Song might have to give evidence about the same conversations twice. It also referred to the possibility of inconsistent factual findings if further evidence emerged during a later cross-examination. This was a case-specific reason for avoiding a fragmented hearing, not a general rule that related claims must always be heard together.
At [17], the Court said proceeding would cause “substantial injustice to the Plaintiffs”. That conclusion was based on the combination of the stay, uncertainty about the Company’s assets, the unresolved cross-claim and the substantial cost of the hearing. The Court had also recognised prejudice to Song and to other court users at [16].
At [18], the Court concluded that there was “no alternative other than to vacate the hearing dates”. This was the case-management result after balancing the competing practical and fairness considerations. It was not a finding that the plaintiffs’ pleaded allegations were established.
At [27]–[28], the Court explained why costs were reserved. It considered that a later court might have more information about amendments and the ultimate outcome. The costs decision was therefore left open rather than resolved in favour of either side.
The decision is relevant where a company involved in ongoing litigation enters administration shortly before a hearing, and some claims or remedies concern the company directly or may affect its property. The clearest example in this judgment is an oppression claim in which the company is a party and would be bound by the orders sought ([11]). The Court also treated claims against the Company under the Franchising Code of Conduct and for unconscionability as stayed proceedings against it ([11]).
It is also relevant to proceedings in which the live claims are factually interdependent. Here, both the plaintiffs’ claims and the Company’s cross-claim relied on alleged oral agreements arising from conversations beginning in March 2010, although they were pleaded in different terms ([13]–[14]). Proceeding with one part while another was stayed risked duplicated witness evidence and inconsistent findings.
The judgment may also be relevant where administration creates material uncertainty about the company’s assets, business operations or ability to meet a judgment. In this case the company had purportedly assigned trademarks and equipment, and its leases had been disclaimed ([8]–[9], [17]). The Court considered these developments alongside the costs of proceeding and the limits on what the hearing could resolve.
The decision does not establish that administration automatically requires every hearing involving the company or its associates to be adjourned. The Court expressly left the full scope of s 440D undecided and reached a case-management conclusion on the specific circumstances before it ([10], [18]). The competing prejudice to other parties, including delay and wasted preparation, was expressly considered ([16]). A later court would need to assess the statutory position and procedural circumstances in the case before it.
The supplied judgment contains no account of later decisions applying, following, distinguishing or criticising In the matter of Oliver Brown Pty Ltd [2012] NSWSC 957. It therefore does not support a claim about how later courts have treated this decision.
The judgment itself refers to three earlier authorities. It applies Re Capital General Corporation Ltd; Rodgers v Radly [2000] VSC 570; (2000) 37 ACSR 158 on the reach and purpose of s 440D in relation to oppression proceedings involving a company under administration ([11]). It considers Mead Corporation v Carbonless Papers (Australia) Pty Ltd [2002] WASC 268 in discussing whether the Company’s cross-claim might also be stayed, but does not decide that issue ([13]). It refers to Karabay v Carr [2011] NSWSC 365 at [16] for an observation about costs thrown away where an adjournment is occasioned by a party’s own fault ([19]).
Those references are the authorities identified in the judgment, not evidence of later treatment of the 2012 decision. Any broader account of its subsequent citation history would require sources beyond the judgment supplied.
Several matters were left unresolved. First, the Court did not decide whether s 440D stayed the whole proceeding or only the claims and relief it identified. It expressly said that it was unnecessary to determine the broader question ([10]–[11]).
Second, the Court did not decide whether the Company’s cross-claim was stayed. It described that as at least arguable and referred to two possible bases discussed in Mead Corporation, including concern that a company in administration should not obtain a procedural advantage by pursuing a counterclaim while relying on a stay against the opposing claim ([13]). The administrators had not appeared, and the position concerning that cross-claim was unknown ([13]).
Third, the judgment did not decide whether the plaintiffs would obtain the administrator’s consent or the Court’s leave to pursue stayed claims. It recorded that the plaintiffs were not then in a position to make that application and were assessing whether claims against the Company would have practical utility after the asset and lease developments ([12]).
Fourth, the Court did not decide what amendments would be made to the plaintiffs’ case or Song’s cross-claim, or how those amendments would affect later proceedings and costs. It observed that amendments might be required if either side pursued its claims ([22]) and that the future development of the proceedings could be relevant to the reserved costs ([27]).
Finally, the judgment did not determine the merits of the alleged agreements, representations, oppression, franchising disclosure failures, unconscionability, or amounts claimed in the cross-claim. Those remained allegations and issues for any later proceedings. The decision’s binding practical result was the vacating of the specified hearing dates and relisting for directions, not a final resolution of the dispute.
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Judgment - EX TEMPORE 1The Plaintiffs in these proceedings are three individuals, Min Kyu Kim ("MKK"), Min Jae Kim ("MJK") and Dong Woo Seo ("DWS") and two companies, BMJ Chocolata Pty Ltd ("BMJ Co")and MTK Chocolata Pty Ltd ("MTK Co"). The Defendants in the proceedings are Byung Sun (Eric) Song ("ES"), Jacob Jihoon Kim ("JK") and Oliver Brown Pty Ltd ("Company"). 2This matter was listed for hearing before me for six days commencing 31 July 2012. A question has arisen whether, in substance, the hearing dates commencing 31 July should be vacated by reason of recent developments. In particular, JK has recently advised the parties that he was about to file for bankruptcy, although the evidence before me did not indicate whether he had yet done so; the Company has recently been placed in administration; and there have been other recent developments to which I will refer below. 3The Plaintiffs contend the proceedings are stayed by s 440B of the Corporations Act 2001 (Cth) or alternatively that the Plaintiffs' claims against the Company, and a Cross-Claim by the Company against the Plaintiffs are stayed and it is not in the interests of justice for the balance of the proceedings to go forward. ES contends that the claims against him should be determined. The nature of the proceedings 4I should first outline the nature of the claims in the proceedings. By their Amended Originating Process and Amended Statement of Claim, the Plaintiffs seek orders under s 233 of the Corporations Act in respect of oppression and also under the Competition and Consumer Act 2010 (Cth), the Australian Consumer Law and the Australian Securities and Investments Commissions Act 2001 (Cth) in respect of misleading and deceptive conduct, an alleged contravention of the Franchising Code of Conduct and unconscionability. 5The orders sought in the originating process are that:
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 September 2012
Karabay
Carr
The hearing dates allocated for 2–3 and 7–8 August 2012 were vacated; the proceedings were listed before the Corporations Judge for directions on 3 September 2012; liberty to apply was granted on two days’ notice; and the costs of the 31 July 2012 argument were reserved ([23], [28]).