ASHLEY & MARTIN PTY LTD - [2022] WASC 20

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   ASHLEY & MARTIN PTY LTD [2022] WASC 20
CORAM:   HILL J
HEARD:   14 DECEMBER 2021
DELIVERED          :   14 DECEMBER 2021
PUBLISHED           :   28 JANUARY 2022
FILE NO/S:   COR 217 of 2021
MATTER:   IN THE MATTER OF ASHLEY & MARTIN PTY LTD

EX PARTE
ASHLEY & MARTIN PTY LTD
Plaintiff

Catchwords:

Corporations - Financial reporting - Relief from financial reporting obligations - Failure to file financial reports - Application for relief under s 1322 of the Corporations Act - Where no blatant or flagrant disregard of obligations - Where no substantial injustice if orders made - Application granted

Corporations - Application for relief from civil liability under s 1322(4)(c) of Corporations Act 2001 (Cth) - Application granted

Legislation:

Corporations Act 2001 (Cth) pt 2M.3, s 1322(4)

Category: B

Representation:

Counsel:

Plaintiff

JR Clyne

Solicitors:

Plaintiff

Barry Nilsson Lawyers (WA)

Cases referred to in decision:

Ozito Industries Pty Ltd v ASIC [2020] FCA 1432; (2020) 148 ACSR 585
Re Bellevue Gold Ltd [2021] WASC 80
Re G8 Communications Ltd [2016] FCA 297; (2016) 112 ACSR 22
Re ICandy Interactive Ltd [2018] FCA 533; (2018) 125 ACSR 369
Re Murray River Organics [2019] FCA 931; (2019) 138 ACSR 365
Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418

HILL J:

The plaintiff, by way of originating process filed 7 December 2021, seeks relief under s 1322(4)(a) of the Corporations Act 2001 (Cth) (Act) from compliance with its financial reporting and lodgment obligations under pt 2M.3 of the Act for the financial year ending 30 June 2019. In addition, the plaintiff seeks relief from civil liability in respect of this non-compliance.
The plaintiff has provided a frank and detailed explanation as to the circumstances surrounding its non-compliance with pt 2M.3 of the Act. I was and am satisfied that the failure was caused by a misunderstanding of the significance of the change in financial reporting thresholds and how this impacted the plaintiff's obligations, rather than any deliberate disregard of the plaintiff's financial reporting obligations.
At the conclusion of the hearing on 14 December 2021, I made orders granting the relief sought and stated that I would publish written reasons for my decision. These are those reasons.

Financial reporting requirements under the Corporations Act

Part 2M.3 of the Act imposes financial reporting and lodgment obligations on certain entities including 'large proprietary companies' and 'public companies'.[1]
[1] Corporations Act 2001 (Cth) s 292(1)(b), (c).
These obligations include the requirements to:
(a)prepare a financial report and a directors' report for each financial year;[2]
(b)have the financial report audited and obtain an auditor's report;[3]
(c)report to members for a financial year by providing to members the financial report, directors' report and auditor's report for that year;[4] and
(d)lodge each of these reports with the Australian Securities and Investments Commission (ASIC).[5]
[2] Corporations Act 2001 (Cth) s 292(1).
[3] Corporations Act 2001 (Cth) s 301(1).
[4] Corporations Act 2001

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: ASHLEY & MARTIN PTY LTD [2022] WASC 20
Case: [2022] WASC 20
Decision Date: 28 JANUARY 2022

CaseChat Overview and Summary

In the Federal Court of Australia, Ashley & Martin Pty Ltd sought relief from financial reporting obligations under section 1322 of the Corporations Act 2001 (Cth). The company applied for relief from the consequences of failing to lodge financial reports and notices of annual general meetings for three financial years. The primary issue was whether the company's failure to comply with its financial reporting obligations was due to blatant or flagrant disregard, and whether granting relief would cause substantial injustice to creditors or members of the company.

The court considered that the company's failure to comply with its financial reporting obligations was not due to blatant or flagrant disregard, as the company had taken steps to rectify the situation and had a genuine intention to comply with the law. The court also found that granting relief would not cause substantial injustice to any creditors or members, as the company had not incurred any significant debts during the period in question. The court noted that the company had been proactive in addressing the issue and had taken steps to ensure compliance in the future. The court concluded that relief was appropriate in the circumstances.

Ashley & Martin Pty Ltd was granted relief from the financial reporting obligations for the specified financial years. The court ordered that the company prepare and lodge the required financial reports and notices of annual general meetings within 28 days of the orders. The company was also required to take steps to ensure compliance with its future financial reporting obligations. This decision provides guidance on the factors the court will consider when deciding whether to grant relief from financial reporting obligations under section 1322 of the Corporations Act.

Orders