Binqld Finances Pty Ltd (in liq) v Binetter

Case [2024] FCA 361

FEDERAL COURT OF AUSTRALIA

Binqld Finances Pty Ltd (in liq) v Binetter [2024] FCA 361  

File number: NSD 377 of 2023
Judgment of: KENNETT J
Date of judgment: 12 April 2024
Catchwords:

PRACTICE AND PROCEDURE – application for summary dismissal and strike-out of cause of action – where application turns solely on a question of law – where question of law has previously been answered in a single-judge interlocutory decision of a superior court – where applicants contend that decision is plainly wrong – whether question of law should be decided at the final hearing

STATUTORY INTERPRETATION – whether limitation period in s 1317K of Corporations Act 2001 (Cth) (Act) may be extended by s 1322(4)(d) – whether limitation period has jurisdictional character with respect to the cause of action conferred by s 1317H

STATUTORY INTERPRETATION – relevance of extrinsic materials to discerning legislative intention of amending legislation  
Legislation:

Corporate Law Economic Reform Program Act 1999 (Cth)

Corporate Law Reform Act 1992 (Cth)

Corporations Act 2001 (Cth) ss 180, 181, 182, 588FF, 962P, 1317E, 1317F, 1317G, 1317H, 1317HA, 1317HB, 1317J, 1317K, 1655, 1657

Corporations Act 1989 (Cth) (repealed) ss 232, 459G, 1317DA, 1317EA, 1317EB, 1317EC, 1317GF, 1317HA, 1317HD, 1317HE, 1322

Federal Court of Australia Act 1976 (Cth) s 31A

Trade Practices Act 1974 (Cth) (repealed) s 82

Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 (Cth) sch 1

Federal Court Rules 2011 (Cth) rr 26.01, 30.01

Corporate Law Economic Reform Program Bill Explanatory Memorandum 1998 (Cth)

Corporate Law Reform Bill (No 2) Explanatory Memorandum 1992 (Cth)

Corporations Law (Vic) ss 459C, 459F, 459G, 1322  
Cases cited:

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27

Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1

Australian Securities and Investments Commission v BHF Solutions Pty Ltd [2021] FCA 684

Austructures Pty Ltd v Makin [2014] VSC 544; 290 FLR 153

Barnes v Addy (1874) LR 9 Ch App 244

BP Australia Ltd v Brown [2003] NSWCA 216; 58 NSWLR 322

Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541

British American Tobacco v Western Australia [2003] HCA 47; 217 CLR 30

Certain Lloyd’s Underwriters v Cross [2012] HCA 56; 248 CLR 378

Chung-Yi Pty Ltd v Chih-Yang Chang (No 2) [2018] NSWSC 1112; 128 ACSR 585

CSR Ltd v Eddy [2005] HCA 64; 226 CLR 1

David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265

Emanuele v Australian Securities Commission (1997) 188 CLR 114

General Steel IndustriesInc v Commissioner for Railways (NSW) (1964) 112 CLR 125

Gerace v Auzhair Supplies Pty Ltd (in liq) [2014] NSWCA 181; 87 NSWLR 435

Greylag Goose Leasing 1410 Designated Activity Company v PT Garuda Indonesia Ltd [2023] NSWCA 134; 111 NSWLR 550

Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd [2008] FCAFC 60; 167…

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Details
AGLC
Binqld Finances Pty Ltd (in liq) v Binetter [2024] FCA 361
Case
[2024] FCA 361
Decision Date

CaseChat Overview and Summary

Binqld Finances Pty Ltd (in liq) and others, as plaintiffs, have brought a claim against Binetter, as the defendant, for equitable compensation and, further or alternatively, statutory compensation under s 1317H of the Corporations Act 2001 (Cth). The claims arise from allegations that Binetter, while acting as a director, engaged in conduct that led the companies into tax evasion schemes involving his family members. The defendant argues that the claim for statutory compensation is barred by the limitation period in s 1317K of the Corporations Act and that this period cannot be extended under s 1322(4)(d). The plaintiffs counter that the limitation period should be extended. The Federal Court of Australia was tasked with determining whether the limitation period in s 1317K could be extended under s 1322(4)(d) and whether the claim for statutory compensation should be summarily dismissed or struck out.

The court considered the statutory interpretation of s 1317K and s 1322(4)(d) of the Corporations Act. It examined whether the limitation period in s 1317K had a jurisdictional character concerning the cause of action under s 1317H. The court also evaluated the relevance of extrinsic materials in discerning the legislative intent of the amending legislation. The court concluded that the decision in Austructures, which found that the limitation period could be extended, was not plainly wrong and thus should be followed. Consequently, the claim for statutory compensation could not succeed unless the decision in Austructures was clearly erroneous, which the court found it was not. The court also addressed the procedural aspect of the case, noting that the defendant's application for an order to determine the jurisdictional question separately was unnecessary as it did not alter the substantive outcome of the application for summary dismissal.

The court dismissed the defendant's application for summary dismissal and strike-out of the claim for statutory compensation. The court found that the claim for statutory compensation would fail based on the current state of the authorities and decided to narrow the issues for the final hearing. The plaintiffs' application for leave to amend their pleadings was also dismissed because the proposed amendments were not appropriate given the dismissal of part of their claims. The court reserved the costs of both the defendant's and the plaintiffs' interlocutory applications. The court's decision ensured that the issues would be appropriately narrowed for the final hearing, while also addressing procedural aspects of the case.

Orders

Orders of the court

1. Pursuant to r 26.01 of the Federal Court Rules 2011 (Cth), the originating application is dismissed in so far as it seeks compensation under s 1317H of the Corporations Act 2001 (Cth).

2. The applicants’ interlocutory application filed on 24 November 2023 for leave to amend their Statement of Claim and Reply is dismissed.

3. The costs of the respondent’s interlocutory application filed on 7 November 2023 and the applicants’ interlocutory application filed on 24 November 2023 are reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

On the present state of the authorities, the claim for statutory compensation cannot succeed at a final hearing unless I am persuaded that the decision in Austructures is plainly wrong (see eg Australian Securities and Investments Commission v BHF Solutions Pty Ltd [2021] FCA 684 at [106] (Halley J)). For the reasons set out above, I consider that the conclusion reached in Austructures as to the availability of the power in s 1322(4)(d) is the preferable view. It is clear that Austructures is at least not plainly wrong and would therefore be followed.CONCLUSION ON SUMMARY DISMISSAL The conclusion in the previous paragraph means, inevitably, that the claim for statutory compensation will fail on the present state of the authorities. It is preferable that that conclusion be stated now and the issues in the final hearing be correspondingly narrowed. The originating application will therefore be dismissed in so far as it seeks compensation under s 1317H of the Corporations Act. The applicants’ application for leave to amend their pleadings will be dismissed, on the basis that those pleadings require further amendment in the light of the dismissal of part of the applicants’ claims in order for their filing to be appropriate. I note the respondent’s indication, through his counsel, that he otherwise does not oppose the proposed amendments.

Ratio Decidendi

Legal Principle Established

Each of the six applicants in this proceeding seeks the same relief against the respondent, namely equitable compensation and, further or alternatively, an order for compensation under s 1317H of the Corporations Act 2001 (Cth) (the Corporations Act). The claims arise out of the respondent having been a director of each of the applicants and having, it is alleged, been involved in causing them to become involved in schemes for the evasion of tax by members of his family. All of the conduct alleged against the respondent took place more than six years before the proceeding was commenced on 3 May 2023. By his defence, filed on 28 July 2023, the respondent pleads that the claim under s 1317H is time barred by operation of s 1317K of the Corporations Act. By their reply, filed on 14 August 2023, the applicants say that time should be extended in relation to that claim pursuant to s 1322(4)(d) of the Corporations Act. The respondent filed an interlocutory application on 7 November 2023 seeking an order that the claim for statutory compensation under s 1317H be summarily dismissed or, alternatively, that the paragraphs of the Statement of Claim advancing that claim be struck out. These paragraphs of the Statement of Claim are not said to be deficient except to the extent that they advance a claim that cannot succeed. Attention can therefore focus on the prayer seeking summary dismissal of the claim for statutory compensation. This prayer invoked r 26.01 of the Federal Court Rules 2011 (Cth) (the Rules); however, reliance was also placed orally (with no objection by the applicants) on s 31A of the Federal Court of Australia Act 1976 (Cth). The substance of the respondent’s argument is that the limitation period in s 1317K is not capable of being extended under s 1322(4)(d) and the claim for statutory compensation must therefore fail. The respondent’s interlocutory application also seeks an order under r 30.01 of the Rules that the Court hear and determine, as a separate question, whether power exists under s 1322(4)(d) to extend the limitation period in s 1317K. However, this order is sought only “to the extent necessary to determine Orders 1 and 2”; that is, in aid of the application for summary dismissal and/or strike-out. It is apparently not sought to separate the question thus identified from the other issues in the trial and obtain a final judgment on that question. Framed in this way, the application appears to misunderstand the role and effect of the procedure provided by r 30.01. It is, in any event, unnecessary. No procedural prelude is required to a decision on the prayers for relief seeking summary judgment or strike-out. These reasons therefore focus, as indicated in the previous paragraph, on the application for summary judgment. Also in play is an interlocutory application, filed by the applicants on 24 November 2023, for leave to amend their Statement of Claim and Reply. The proposed amendments relate to issues other than those raised by the respondent’s interlocutory application. The respondent says that leave should not be granted to file an amended pleading containing the claim for statutory compensation because that claim is bad in law, for the reason advanced in his application for summary dismissal. He makes no further objection to the application to amend.THE POSITIONS OF THE PARTIES