Richard Albarran in his capacity as liquidator of Krisnic Nominees Pty Ltd (in Liquidation) (ACN 634 372 437) v Kristofer Wczesniak

1. [1]

   The first and second plaintiffs are the joint and several liquidators (Liquidators) of the third plaintiff, Krisnic Nominees Pty Ltd (in Liquidation) (ACN 634 372 347) (the Company). They were appointed on 20 March 2024.

2. [2]

   The first defendant, Mr Kristofer Wczesniak (Mr Wczesniak), is the former sole director and secretary of the Company.

3. [3]

   On 20 March 2024, the Company was wound up by order of the Supreme Court of New South Wales. Since that time, the Liquidators have issued various correspondence to Mr Wczesniak with respect to the books and records of the Company. Orders have been made by the Court, and subpoenas have been issued, yet, to date, nothing has been produced.

4. [4]

   On 24 April 2024, in the Duty List, I made the following orders:

5. [5]

   These are my reasons for making those orders.

A brief overview and chronology

1. [6]

   It would appear that the Company traded as a business known as Gecco Gifts and/or Gecco Gifts International (ABN 97 594 558 388) (Gecco Gifts), through which it sold retail and wholesale gifts.

2. [7]

   It would also appear the Company maintained a bank account with the National Australia Bank with the account number ending in 5718, which recorded credits and debits with “Gecco” in the particulars.

3. [8]

   As set out above, the Company was wound up by order of the Supreme Court of New South Wales on 20 March 2024 and the Liquidators were appointed.

4. [9]

   By letter dated 21 March 2024, the Liquidators wrote to Mr Wczesniak advising of their appointment and, inter alia, attached a notice for the Production of Books and Records in accordance with the provisions of ss 530A and 530B of the Corporations Act 2001 (Cth) (Corporations Act). The letters stated “we require copies of any records in your possession”.

5. [10]

   The letter also requested that Mr Wczesniak provide, by no later than 12pm on Friday 22 March 2024:

6. [11]

   By letter dated 11 April 2024, the solicitors for the plaintiffs sent a letter to the second defendant, being the company (TREG Nominees), of which the third defendant (Ms Hilder) is the sole director and secretary, requesting that TREG Nominees deliver up to the Liquidators the books and records of the Company. I explain the inter-relationship between the Company, TREG Nominees and Ms Hilder below.

7. [12]

   On 30 March 2024, it appears that a circular was issued to customers of the Company in the following terms:

8. [13]

   On its face, the circular advises of a change in the Company’s bank account details, from a bank account formerly in the name of the Company trading as Gecco Gifts, to a bank account in the name of TREG Nominees Pty Ltd as trustee for GNN Wholesale Group Trust trading as Gecco Gifts. The “OLD bank account” referred to in the circular is the bank account which the Liquidators have identified as the Company’s bank account with National Australia Bank.

9. [14]

   Ms Hilder is an equal shareholder of the Company with Mr Wczesniak and resides at the same address.

10. [15]

    These proceedings were commenced by summons on 5 April 2024. The summons seeks certain interlocutory relief including an order restraining Mr Wczesniak, TREG Nominees, and Ms Hilder (the Defendants) from trading as Gecco Gifts and/or Gecco Gifts International, and from transferring, disposing or otherwise alienating any stock, equipment or plant held in the control of any of the Defendants for the purposes of carrying on business as Gecco Gifts and/or Gecco Gifts International. Interlocutory relief is also sought seeking to reverse the effect of the circular referred to above in [12]. The summons seeks final relief in relation to the property of the business trading as Gecco Gifts and/or Gecco Gifts International and, inter alia, a declaration that any monies received by TREG Nominees are held on trust for the Company.

11. [16]

    Short service was granted on the summons and it was made returnable on 9 April 2024. On that day, there was no appearance for the Defendants and the Court made the following orders:

12. [17]

    On or about 11 April 2024, the Liquidators attended the warehouse where it was understood that the business used to store its stock. It was observed that all the stock had been removed from the warehouse.

13. [18]

    The matter was next before the Court on 17 April 2024. There was no appearance by the Defendants. The Court made the following orders on 17 April 2024:

14. [19]

    By order 6 made on 17 April 2024, the Court also granted leave to the plaintiffs to issue subpoenas to Mr Wczesniak and Ms Hilder for the production of documents, such subpoenas to be returnable on 22 April 2024. The subpoenas sought, in substance, production of the books and records of the Company, together with any trust documents in relation to the Company and in relation to TREG Nominees.

15. [20]

    By email dated 22 March 2024, Mr Wczesniak indicated to the Liquidators that Mr Jason Hammond, who appears to be an accountant associated with Mr Wczesniak, was representing Mr Wczesniak and had full authority to act on his behalf. Pursuant to this email and acting on Mr Wczesniak’s behalf, on 17 April 2024, Mr Hammond sent an email to the plaintiffs’ solicitors stating:

16. [21]

    The matter was next before the Court on 22 April 2024. There was no appearance by the Defendants and there was no production in response to either subpoena.

17. [22]

    The subpoenas were stood over to 24 April 2024 before me as the Duty Judge and the matter was otherwise returnable before myself on that date. There was no appearance by the Defendants and no documents produced in response to the subpoenas.

18. [23]

    To complete the evidentiary picture, on 17 April 2024, Mr Hammond asserted that:

19. [24]

    According to a company search for Lisnic Pty Ltd, it does not appear to have any relationship with any of the Defendants.

20. [25]

    Further, on 11 April 2024, Westpac Banking Corporation produced documents in answer to a subpoena issued by the Court on the application of the plaintiffs.

21. [26]

    One of the copy documents produced under that subpoena was a “Deed of Establishment – Discretionary Trust” in relation to the GNN Wholesale Group Trust dated 13 January 2022. The Company was the trustee of the trust. Mr Wczesniak and Ms Hilder were the designated beneficiaries of the trust.

22. [27]

    A further document was produced by Westpac entitled “Deed of Amendment – GNN Wholesale Group Trust” dated 7 February 2024. By that document, Mr Wczesniak resigned as appointor under the trust, and appointed Anthony Francis Hackett under the trust. A further document produced by Westpac is a “Deed of Amendment – GNN Wholesale Group Trust” dated 8 February 2024 by which TREG Nominees appears to have been appointed a trustee of the trust.

Relevant Legal Principles

1. [28]

   The orders sought by the plaintiffs are based on ss 68 and 108 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act).

2. [29]

   In Hexiva Pty Ltd v Lederer [2006] NSWSC 561, Brereton J stated at [13]-[16]:

3. [30]

   Orders 1(c) and (d) concern compliance with earlier orders of the Court. Section 108 of the Civil Procedure Act relevantly provides:

4. [31]

   In Austress Freyssinet Pty Ltd v Kowalski [2007] NSWSC 1105, where orders were sought by a plaintiff for the oral examination of the defendant under s 108 of the Civil Procedure Act in relation to and connection with compliance with earlier orders made by the Court, Austin J stated at [31]:

Consideration

1. [32]

   Having regard to the facts set out above, I was satisfied that this was an appropriate case in which to exercise the Court’s discretion to require the Mr Wczesniak and Ms Hilder to attend Court to be examined in relation to their compliance with the subpoenas issued to each of them and the earlier orders of the Court.

2. [33]

   There is, in my view, an appropriate basis to test the sufficiency of the response to each subpoena – namely, according to Mr Hammond, there are no documents to produce. Given the lack of meaningful response from the Defendants there is little alternative than to order an examination.

3. [34]

   It is also appropriate, in my view, to order Mr Wczesniak and Ms Hilder to attend Court and be orally examined in relation to compliance with the orders made on 9 and 17 April 2024.

4. [35]

   The starting point is that the Company operated a business selling physical items, namely gifts. It had a bank account into which its customers paid money. The fact that the Company was a trustee does not relevantly alter the position in terms of the possession of documents. It may be that shortly prior to the liquidation of the Company, it ceased to be the trustee of the GNN Wholesale Group Trust and was replaced by TREG Nominees. The circular issued on 30 November 2024 would appear to suggest that as at the date of the winding up, the Company’s bank account continued to be used and by the circular it sought to change the bank account to one that is operated by TREG Nominees.

5. [36]

   Any transfer of the business and its assets is obviously a relevant matter in the present proceedings.

6. [37]

   It is difficult to understand there could be no books and records of the Company in the possession of the Defendants. The Company obviously has an obligation to keep financial records (see Corporations Act s 286). Even if the business was transferred so that it was no longer being carried on by the Company but rather was being carried on by TREG Nominees, documents should exist to evidence the transfer. If all of the documents have been transferred to TREG Nominees, then ordinarily they would be produced by Ms Hilder in answer to the subpoena addressed to her.

7. [38]

   The response given by Mr Hammond, on behalf of Mr Wczesniak that there are no documents to produce is, on its face, open to be questioned.

8. [39]

   Likewise in the circumstances set out above, it is appropriate in my view that Mr Wczesniak and Ms Hilder be examined in relation to the orders made on 9 and 17 April 2024 and why there appears to have been no compliance with them.

9. [40]

   There is nothing telling against the making of the orders. Whilst it would be open to the Liquidators to seek to exercise their compulsory examination powers under the Corporations Act in relation to Mr Wczesniak and Ms Hilder requiring them to be examined, and for TREG Nominees to produce documents, pursuing that course would be no less intrusive to the Defendants and would simply add to costs and delay. More importantly, the Liquidators and the Company have properly instituted these proceedings seeking the relief as outlined above. The subpoenas were issued, and the orders properly made in these proceedings. Further, the Liquidators have sought to exercise the powers open to them under the Corporations Act to call for the books and records to be delivered up to the Liquidators. This has not occurred.

10. [41]

    There will obviously be limits on the nature of the examination in accordance with well understood principles: see, for example, Quach v Vu [2009] NSWSC 131 at [9]ff and GEMI 169 Pty Ltd v Suria Global (L) Pty Ltd (No 2) [2023] NSWSC 427. If necessary, orders can be made formalising the process prior to the commencement of the examinations.