Australia, Sept. 6 -- New South Wales Land and Environment Court issued text of the following judgement on Aug. 6:

1. By Originating Process filed on 13 March 2025, the Plaintiffs, C88 Project Pty Ltd (in liq) ("C88") and Mr Kugel, as liquidator appointed to C88, brought claims against Festival Corp Pty Ltd ("Festival"). The Plaintiffs sought judgment against C88 of $7,174,126 or such other amount as the Court determined and interest under s 100 of the Civil Procedure Act 2005 (NSW) or on such other basis as the Court determined. C88's substantive claim, as set out in a very brief Statement of Claim also dated 13 March 2025, was that the amount of $7,174,126 was money payable by Festival to C88 for money lent by C88 to Festival. By that Originating Process, the Plaintiffs also sought an order under s 588FF(3) of the Corporations Act 2001 (Cth) ("Act") extending the period in which Mr Kugel could bring a claim against Festival under s 588FF(1) of the Act to a date six months after the date of the order, or such alternative period as the Court determines. It is common ground that this application was made within the three year period specified in s 588FF of the Act.

2. Subsequently, by a Defence filed on 1 May 2025, Festival denied the allegation that it owed a debt to C88 and pleaded that:

"(b) [C88] made payments to [Festival] from time to time in the financial years ended 30 June 2020, 30 June 2021 and 30 June 2022;

"(c) The said payments were dividends and interim profit distributions to [Festival], a shareholder."

3. The Plaintiffs' application to extend the time for a claim under s 588FF of the Act was heard as a separate issue, prior to the determination of any other issue in the proceedings, by agreement of the parties. The Plaintiffs narrowed the order that they sought, in the course of the hearing of this application, and now seek:

"An order pursuant to s 588FF(3)(b) of the Act that the period within which [Mr Kugel as liquidator of C88] may bring any application for relief under s 588FF(1), against [Festival], concerning the payments of money the subject of these proceedings, be extended to 29 August 2025."

4. I made this order at the conclusion of the hearing of the separate issue. These are my reasons for doing so.

Affidavit evidence

5. The Plaintiffs read the affidavit dated 13 March 2025 of Mr Kugel, who is (as I noted above) the liquidator of C88, and tendered an extensive exhibit to that affidavit (Ex SBK-1, CB 22). Mr Kugel there referred to the appointment of voluntary administrators to C88 on 14 April 2022, to his appointment as replacement administrator at the first meeting of creditors of C88 held on 29 April 2022 and to his appointment as liquidator when C88 was wound up following the second meeting of its creditors held on 31 May 2022.

6. Mr Kugel there noted that C88 was a special purpose vehicle set up to purchase, develop and sell land in Carlingford, New South Wales, and that, at the time that C88 went into voluntary administration, it had completed the development and remained as registered proprietor of 43 units in the development, many of which were subject to encumbrances such as mortgages or caveats.

7. Importantly, Mr Kugel also there noted that:

"In or around March 2022, shortly before [C88] was placed into voluntary administration, a balance sheet was prepared on behalf of [C88], which identified that [Festival] was indebted to [C88] in the amount of $7,174,126 for loans provided to it by [C88]."

8. Mr Kugel exhibited a copy of that balance sheet to his affidavit (Ex SBK-1, CB 110), which recorded a debt owed by C88 to Festival of $7,174,126, the amount now claimed by C88 as a debt against Festival in the proceedings. He also recognised the possibility that C88 received those funds as trustee of the Joseph Khattar Family Trust No 2 ("Trust") and also referred to financial statements for the Trust which identified amounts received by the Trust from C88. I pause to note that the documents to which Mr Kugel referred were, on the face of them, kept by C88 under a requirement of the Act, namely the requirement to maintain true and fair records of C88's financial position and were prima facie evidence of the matters stated or recorded in them under s 1305 of the Act.

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/1987d97f8a2279e60e7af31a)

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