Kalls Enterprises Pty Ltd (In Liq) v Baloglow [2006]

Kalls Enterprises Pty Ltd (In Liq) v Baloglow [2006] These proceedings are brought by two companies that are being wound up, Kalls Enterprises Pty Limited (In Liquidation) (“KE”) and AA Australian Commercial Laundries Pty Limited (In Liquidation) (“AA”) and their common liquidator Christopher Damien Darin (“the liquidator”). The companies at different times conducted a laundry business known as Total Quality Laundry Service (“TQLS”). As at November/December 1995 the respective interests in TQLS of KE and AA were on the evidence quite unclear. Con Kalls (“Kalls”) was a director and the effective controller of both companies. In November 1995 KE sold TQLS to a third party purchaser. Out of the proceeds of the sale KE paid to Kalls who paid to Theo Baloglow (“Baloglow”) $555,000 to settle a judgment debt which Kalls owed to Baloglow in proceedings no 50103 of 1995 in the Commercial Division of this Court (“the Proceedings”). Baloglow, who, as the subject proceedings were conducted before me, was the only defendant, had been, but as at November/December 1995 was no longer, a director of AA.2 The plaintiffs’ claims are that either: 1 The payment to Baloglow was part of an uncommercial transaction within the meaning of s 588FB of the Corporations Law (“the CL”), so that Baloglow ought be ordered to pay that sum to one or the other or both of KE and AA pursuant to s 588FF(1)(a) of the CL. 2 That Baloglow ought be ordered to pay that sum to the companies under the first limb of Barnes v Addy (1874) LR 9 Ch App 244, as being the recipient of moneys paid away in breach of trust or breach of fiduciary duty. The cross claim which was agitated at the trial was by Baloglow against Peter Kaliaropoulos (“Kaliaropoulos”). Kaliaropoulos is Kalls’ brother. He was liable to Baloglow under a judgment in the Proceedings and was also discharged from that liability by the payment of the $555,000. The cross claim was for a declaration that, if Baloglow were ordered to repay the $555,000, then he should again become entitled to enforce his judgment against Kaliaropoulos. THE CORPORATIONS LAW PROVISIONS Despite the enactment of the Corporations Act 2001 (Cth) (“the CA”), the parties are agreed and it is correct that the relevant corporations provisions are those of the CL, which continue to apply in respect of the winding up of these companies. However, from the point of view of reference to later authority, there is no difference of substance in the relevant provisions of the CA, including the Part and section numbers. Sections 588FB to 588FG are in Part 5.7B of the CL. The definition of “transaction” in s 9 and relevant portions of ss 588FB to 588FG are as follows: Read more about this case: Lawsuits where our case has been cited:
  1. Kalls Enterprises Pty Ltd (In Liquidation) & Ors v Baloglow & Anor [2007] NSWCA 191; (2007) 25 ACLC 1094
  2. Onefone Australia Pty Ltd v One.Tel Ltd [2007] NSWSC 69; (2007) 61 ACSR 246
  Kalls Enterprises Pty Ltd (In Liq) v Baloglow [2006] NSWSC 1021 These proceedings are brought by two companies that are being wound up, Kalls Enterprises Pty Limited (In Liquidation) (“KE”) and AA Australian Commercial Laundries Pty Limited (In Liquidation) (“AA”) and their common liquidator Christopher Damien Darin (“the liquidator”). The companies at different times conducted a laundry business known as Total Quality Laundry Service (“TQLS”). As at November/December 1995 the respective interests in TQLS of KE and AA were on the evidence quite unclear. Con Kalls (“Kalls”) was a director and the effective controller of both companies. In November 1995 KE sold TQLS to a third party purchaser. Out of the proceeds of the sale KE paid to Kalls who paid to Theo Baloglow (“Baloglow”) $555,000 to settle a judgment debt which Kalls owed to Baloglow in proceedings no 50103 of 1995 in the Commercial Division of this Court (“the Proceedings”). Baloglow, who, as the subject proceedings were conducted before me, was the only defendant, had been, but as at November/December 1995 was no longer, a director of AA. The plaintiffs’ claims are that either: 1 The payment to Baloglow was part of an uncommercial transaction within the meaning of s 588FB of the Corporations Law (“the CL”), so that Baloglow ought be ordered to pay that sum to one or the other or both of KE and AA pursuant to s 588FF(1)(a) of the CL. 2 That Baloglow ought be ordered to pay that sum to the companies under the first limb of Barnes v Addy (1874) LR 9 Ch App 244, as being the recipient of moneys paid away in breach of trust or breach of fiduciary duty. The cross claim which was agitated at the trial was by Baloglow against Peter Kaliaropoulos (“Kaliaropoulos”). Kaliaropoulos is Kalls’ brother. He was liable to Baloglow under a judgment in the Proceedings and was also discharged from that liability by the payment of the $555,000. The cross claim was for a declaration that, if Baloglow were ordered to repay the $555,000, then he should again become entitled to enforce his judgment against Kaliaropoulos. THE CORPORATIONS LAW PROVISIONS Despite the enactment of the Corporations Act 2001 (Cth) (“the CA”), the parties are agreed and it is correct that the relevant corporations provisions are those of the CL, which continue to apply in respect of the winding up of these companies. However, from the point of view of reference to later authority, there is no difference of substance in the relevant provisions of the CA, including the Part and section numbers. Sections 588FB to 588FG are in Part 5.7B of the CL. The definition of “transaction” in s 9 and relevant portions of ss 588FB to 588FG are as follows... Read more bout this case: Lawsuits where our case has been cited:
  1. Dyluc Pty Limited v Mally Group Pty Limited & Ors (No. 2) [2013] NSWDC 105
  2. Kalls Enterprises Pty Ltd (In Liquidation) & Ors v Baloglow & Anor [2007] NSWCA 191; (2007) 25 ACLC 1094


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