Franklin Yeezy Holdings atf Franklin Yeezy Holdings Trust v Paligaru

1. [1]

   On 2 March 2021, Mr Ralph Paligaru filed a Notice of Motion in these proceedings seeking to set aside a judgment entered against him on 11 September 2020. That judgment was purportedly entered against Mr Paligaru in a cross-claim brought in these proceedings by DCP Litigation Holdings Pty Limited, now in liquidation. For reasons to which I shall refer, the status of that cross-claim is not clear.

2. [2]

   What is clear is that the claim originally brought in these proceedings by the plaintiff, Franklin Yeezy Holdings Pty Limited, against, amongst other parties, Mr Paligaru and DCP Litigation Holdings, has been resolved.

3. [3]

   All that remains, if anything, in these proceedings is a cross-claim purportedly brought by DCP Litigation Holdings.

4. [4]

   On 11 September 2020, Darke J made the following orders:

5. [5]

   The terms of the judgment entered by Darke J reflected the terms of a document called "Consent Judgment" annexed to a document called "Deed of Settlement and Release" dated 11 March 2020 made between DCP Litigation Holdings, Mr Paligaru and a company called Reliance Leasing Pty Limited.

6. [6]

   The effect of that deed was that if Mr Paligaru failed to take certain steps DCP Litigation Holdings could enter judgment against him in terms of the Consent Judgment, which formed the basis of the judgment entered by Darke J on 11 September 2020. The Deed of Settlement and Release recited that Reliance Leasing had lent money to Mr Paligaru and had assigned that loan to DCP Litigation Holdings.

7. [7]

   There is a dispute as to whether, at a meeting which took place on 21 April 2020, the sole director of DCP Litigation Holdings, Mr Mark Smith, made representations to Mr Paligaru the effect of which, it is alleged, would estop or otherwise prevent DCP Litigation Holdings from acting on the Consent Judgment.

8. [8]

   DCP Litigation Holdings was placed into liquidation on 2 March 2021.

9. [9]

   In circumstances not necessary to recite for today's purposes, Mr Smith now claims to be the ultimate successor in title to DCP Litigation Holdings and thus to the debt said to provide the basis for the judgment entered on 11 September 2020.

10. [10]

    Mr Paligaru was directed by Darke J to file "Points of Claim" to, in effect, articulate the basis upon which he would seek to defend the proceedings the subject of the judgment, were the judgment to be set aside. Those "Points of Claim" outline matters associated with the 21 April 2020 meeting to which I have referred.

11. [11]

    However, a more fundamental reason has now emerged as to why the 11 September 2020 judgment must be set aside.

12. [12]

    In an affidavit filed by Mr Smith in his capacity as, in effect, a contradictor to Mr Paligaru's application, Mr Smith has deposed that Reliance Leasing "actually assigned" the loan not to DCP Litigation Holdings but rather to "another of my companies called DC Partners (Nominees) Pty Limited". Mr Smith annexed to that affidavit what purports to be a notice of assignment under s 12 of the Conveyancing Act 1919 (NSW) addressed to Mr Paligaru, dated 1 September 2017, in which Reliance Leasing gave Mr Paligaru notice that it had assigned its rights and other interests in the relevant debt to DC Partners (Nominees).

13. [13]

    It follows from that evidence, if it is to be accepted, that contrary to the recital in the 11 March 2020 document, Reliance Leasing did not assign the relevant debt to DCP Litigation Holdings, but rather to DC Partners (Nominees).

14. [14]

    There is thus no sound basis to conclude that DCP Litigation Holdings had standing to enter judgment against Mr Paligaru.

15. [15]

    The complication is that DCP Litigation Holdings is now in liquidation and that Mr Paligaru has not sought leave under s 500(2) of the Corporations Act 2001 (Cth) to proceed against the company.

16. [16]

    I am informed that the liquidator of DCP Litigation Holdings is aware of the application before me and has expressed little or no interest in being involved in it.

17. [17]

    Nonetheless, those representing Mr Paligaru should by 5pm today inform the liquidator of the substance of these reasons, and say that I am inclined to grant Mr Paligaru leave nunc pro tunc to bring and continue this application, and that I will grant such leave unless my Associate hears from the liquidator by 5pm tomorrow that he or she wishes to become involved in the application. Those representing Mr Paligaru should provide evidence to my Associate that these steps have been taken.

18. [18]

    Subject to hearing from the liquidator, what I propose to do is:

    1. (1)

       Order nunc pro tunc that Mr Paligaru has leave to bring this application.

    2. (2)

       Order that the judgment of 11 September 2020 be set aside.

19. [19]

    During argument there was discussion as to whether I should also permit Mr Paligaru to file a defence in relation to such claim as remains on foot in any cross-claim that may still exist in these proceedings. In view of the uncertainty that appears to surround all of those matters, I do not propose to make that direction.

20. [20]

    As to costs, Mr Maroya, who appears for Mr Paligaru, has foreshadowed that Mr Paligaru wishes to seek an order that Mr Smith pay the costs of this application.

21. [21]

    I direct that the parties confer and create a short timetable for written submissions on that question. I shall deal with that question on the papers, unless either party seeks an oral hearing.

POSTSCRIPT

1. [22]

   Since giving the above ex tempore reasons, my Associate has received the following communication from the liquidators of DCP Litigation Holdings:

2. [23]

   For the reasons set out in my ex tempore judgment, and despite the Liquidators’ submission, I do propose to grant Mr Paligaru leave nunc pro tunc under s 500(2) of the Corporations Act to bring his application to set aside the judgment.

3. [24]

   However, I accept the Liquidators’ submission that such leave should be for the purpose only of applying to set aside the judgment and should be subject to the condition that if Mr Paligaru wishes to make any further claim against DCP Litigation Holdings, he should do so by way of proof of debt in the winding up of that company.

4. [25]

   For those reasons, I order:

   1. (1)

      Nunc pro tunc that Mr Paligaru have leave pursuant to s 500(2) of the Corporations Act to bring and maintain his application of 2 March 2021 to set aside the judgment entered against him on 11 September 2020 in favour of DCP Litigation Holdings on condition that Mr Paligaru make any further claim against the company arising from the judgment of 11 September 2020 by way of proof of debt in the winding up of the company;

   2. (2)

      That the judgment entered in these proceedings against Mr Paligaru in favour of DCP Litigation Holdings of 11 September 2020 be set aside.

FURTHER POSTSCRIPT

1. [26]

   In my ex tempore reasons, I mentioned at [1] and [19] that the status of the cross-claim was not clear.

2. [27]

   My reason for making that comment was that, despite the wording of the orders made on 11 September 2020, which reflected the wording in the Deed referred to at [5], it does not appear from the Court’s records that any cross-claim was in fact filed by DCP Litigation Holdings. That company applied by Notice of Motion dated 7 November 2019 to file a cross-claim, but on 13 December 2019 that motion was dismissed.