In the Matter of Keyhole Enterprises Pty Ltd; Ex Parte - [2023] WASC 497

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   IN THE MATTER OF KEYHOLE ENTERPRISES PTY LTD; EX PARTE KEYHOLE ENTERPRISES PTY LTD [2023] WASC 497
CORAM:   HILL J
HEARD:   22 SEPTEMBER 2023, 30 OCTOBER 2023
DELIVERED          :   22 SEPTEMBER 2023, 30 OCTOBER 2023
PUBLISHED           :   19 APRIL 2024
FILE NO/S:   COR 143 of 2023
MATTER:   IN THE MATTER OF KEYHOLE ENTERPRISES PTY LTD

EX PARTE
KEYHOLE ENTERPRISES PTY LTD
First Plaintiff
STEVENSON LOGISTICS PTY LTD
Second Plaintiff
CONTAINER CARGO SPECIALIST PTY LTD
Third Plaintiff

Catchwords:

Corporations - Application for extension of time by first plaintiff to report to members and lodge financial reports for eleven-year period - Where no blatant or flagrant disregard of obligations - Where no discretionary reason to withhold relief - Turns on own facts

Corporations - Financial reporting - Group of companies - Relief from reporting obligations - Application for declaration that financial reports are not invalid - Application for extension of time to comply with ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 - Whether substantial injustice - Turns on own facts

Corporations - Financial reporting - Application for relief from civil liability - Whether substantial injustice - Turns on own facts

Corporations - Application for extension of time sought for preparation and lodgment of financial statements for year ending 30 June 2023 - Whether substantial injustice - Turns on own facts

Legislation:

ASIC Corporations (Wholly Owned Companies) Instrument 2016/785
Corporations Act 2001 (Cth), s 295, s 315(4), s 319(3)(b), s 1322(4)(d), s 1322(6)

Result:

Applications granted

Category: B

Representation:

Counsel:

First Plaintiff	:	A J Papamatheos & E L Taylor
Second Plaintiff	:	A J Papamatheos & E L Taylor
Third Plaintiff	:	A J Papamatheos & E L Taylor

Solicitors:

First Plaintiff	:	Tottle Partners
Second Plaintiff	:	Tottle Partners
Third Plaintiff	:	Tottle Partners

Cases referred to in decision:

Blaze Asset Pty Ltd v Target Energy Ltd [2009] FCA 698; (2009) 177 FCR 488
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265
Owners of Shin Kobe Maru v Empire Shipping Co Inc (1994) 181 CLR 404
Re Bellevue Gold Ltd [2021] WASC 80
Re G8 Communications Ltd [2016] FCA 297; (2016) 112 ACSR 22
Re Helios Energy Ltd [2021] WASC 183
Re iCandy Interactive Ltd [2018] FCA 533; (2018) 125 ACSR 369
Re Jaxsta Ltd [2018] WASC 390
Re Murray River Organics Ltd [2019] FCA 931; (2019) 138 ACSR 365
Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418
Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396

HILL J:

By originating process filed 8 September 2023, the plaintiffs sought relief under s 1322(4)(a), s 1322(c) and s 1322(d) of the Corporations Act 2001 (Cth) (Act) to address various instances of non-compliance with their financial reporting and lodgement obligations under pt 2M.3 of the Act over an 11-year period, commencing with the financial year ending 30 June 2013.
Specifically, the plaintiffs sought orders:
(a)extending the time for the first and second plaintiffs to report to members and lodge their financial reports with the Australian Securities and Investments Commission (ASIC);
(b)enabling the second plaintiff, who is a party to a deed of cross-guarantee dated 28 September 2016, to take advantage of the reporting relief which would have been available to it under the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (Instrument), had the plaintiffs taken certain steps for the six financial years commencing 30 June 2017;
(c)declaring that financial reports prepared by the first plaintiff which did not, in various respects, comply with s 295 of the Act, are not invalid by reason of that non-compliance;
(d)declaring that the financial report prepared by the first plaintiff for the financial year ended 30 June 2013 was not invalid by reason of the company's failure to have the report audited; and
(e)for relief from civil liability in relation to these failures as well as the first plaintiff's failure to obtain audit relief under ASIC Class Order (CO 98/1417) for the financial year ended 30 June 2013 and the second plaintiff's failure to prepare financial reports for the financial years ended 30 June 2013 and 30 June 2016.
The plaintiffs provided a frank and detailed explanation as to the circumstances surrounding each of the instances of non-compliance and the remedial measures that have been taken since they became aware of them. I was and am satisfied that these failures were caused by inadvertence rather than any deliberate disregard of the plaintiffs' financial reporting obligations.
For this reason, at the conclusion of the hearing on 22 September 2023, I made orders in terms of the orders sought by the plaintiffs.
Subsequently, on 27 October 2023, the plaintiffs filed an interlocutory process seeking an extension of time for the reporting to members and lodgement of the financial reports for the year ending 30 June 2023. At the conclusion of the hearing on 30 October 2023, I made orders in terms of the orders sought by the plaintiffs.
At the conclusion of both hearings, I stated that I would subsequently publish written reasons for my decision. These are those reasons.

Relevant legal principles

Reporting requirements under the Act

Part 2M.3 of the Act imposes financial reporting requirements on certain entities including 'large proprietary companies'.[1] On the evidence before me, I accept that the first plaintiff was obliged to comply with pt 2M.3 of the Act from the financial year ending 30 June 2013 and the second plaintiff from the financial year ending 30 June 2016.[2]
[1] Corporations Act 2001 (Cth) s 292(1)(c).
[2] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [55(b)(ii)], [72].
The Act imposes various requirements on large proprietary companies including the requirement to:
(a)prepare a financial report and a directors' report for each financial year;[3]
(b)have the financial report audited and obtain an auditor's report;[4]
(c)report to members for a financial year by providing to members the financial report, directors' report and auditor's report for that year;[5] and
(d)lodge each of the reports referred to in (c) with ASIC.[6]
[3] Corporations Act 2001 (Cth) s 292(1)(c).
[4] Corporations Act 2001 (Cth) s 301(1).
[5] Corporations Act 2001 (Cth) s 314(1).
[6] Corporations Act 2001 (Cth) s 319(1).
The deadline to report to members and lodge the requisite documents with ASIC is four months after the end of the financial year.[7]
[7] Corporations Act 2001 (Cth) s 315(4) and s 319(3).
Companies can obtain relief from compliance with these requirements in certain circumstances. Relevantly, for the purposes of this application, three orders or instruments have been made by ASIC, pursuant to s 341(1) of the Act, which provide a mechanism for relief from compliance with certain financial reporting requirements under the Act. These are:
(a)ASIC Class Order 98/1417 (Audit Relief Class Order), which has been repealed but continues to apply for the financial years prior to 1 January 2017;
(b)ASIC Class Order 98/1418 (Class Order), which has also been repealed but continues to apply for financial years prior to 1 January 2017; and
(c)the Instrument, which is in force and applies to the financial years commencing after 1 January 2017.
Each of these provide a mechanism for relief from compliance with certain financial reporting requirements under pt 2M.3 of the Act if the conditions set out (as applicable) are met for that financial year.
Relevantly, these conditions include, in respect of the Instrument:
(a)the applicable entity is a wholly-owned (or closely-held) subsidiary of a holding entity and has executed a deed of cross-guarantee with the holding entity as at the end of the relevant financial year;[8]
(b)for the first year in which it seeks to obtain relief, the applicable entity has lodged an 'opt-in' notice with ASIC using Form 389 which is entitled 'Opt-in/change of holding entity notice by wholly-owned company relieved from financial reporting obligations' (Form);[9] and
(c)the holding entity has prepared consolidated financial statements for the financial year, the notes to which include specific details about the parties to the deed of cross guarantee.[10]

Power under s 1322 of the Act

[8] ASIC Class Order 98/1418, First order, para (b); ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 s 4, s 5, s 6(1)(c).

[9] ASIC Class Order 98/1418, First order, para (k); ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 s 6(1)(f), s 6(2).

[10] ASIC Class Order 98/1418, First order par (i), subpars (i) - (iii); ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 s 6(1)(r), s 6(1)(v)(ii), s 6(1)(v)(iii), s 6(2).

Section 1322 of the Act relevantly provides:
(4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:
(a)an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;
…
(c)an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a);
(d)an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;
and may make such consequential or ancillary orders as the Court thinks fit.
...
(6) The Court must not make an order under this section unless it is satisfied:
(a)in the case of an order referred to in paragraph (4)(a):
(i) that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature;
(ii)that the person or persons concerned in or party to the contravention or failure acted honestly; or
(iii)that it is just and equitable that the order be made; and
(b)in the case of an order referred to in paragraph (4)(c) —that the person subject to the civil liability concerned acted honestly; and
(c) in every case—that no substantial injustice has been or is likely to be caused to any person.
On an application under s 1322 of the Act, it is necessary that the prescriptive requirements of the wording in s 1322(4) and the preconditions in s 1322(6) of the Act are satisfied.[11]
[11] Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396 [43] (French CJ), [53] (Hayne, Crennan and Kiefel JJ), [64] (Gageler J).
The powers conferred under s 1322 of the Act reflect the broad legislative policy that the law should not unnecessarily invalidate transactions or cause inconvenience because of non‑compliance with the requirements of the Act where such non‑compliance is the result of honest error or inadvertence, and where the court can avoid such effects without causing prejudice to third parties or the public interest in ensuring compliance with the law. This broad policy does not authorise the court to lightly set aside the requirements of the Act where such requirements have not been observed. It is necessary for the court to consider the circumstances of each individual case to ensure that it is appropriate to grant the indulgence sought and that, in making such orders, it does not undermine requirements of the Act.[12]
[12] Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418 [29].
In considering an application under s 1322(4) of the Act, the essential principles are:[13]
(a)the prescriptive requirements of s 1322(4) and the pre‑conditions in s 1322(6) need to be satisfied;[14]
(b)the court retains a discretion as to whether it makes the orders sought;
(c)limitations to the broad powers in s 1322 will not be readily implied.[15] Section 1322 is remedial in character and should be applied broadly;
(d)the court can make orders under s 1322(4)(a) on conditions and also make such consequential and ancillary orders as it thinks fit; and
(e)an order can be made under s 1322(4)(a) notwithstanding that the contravention or failure concerned resulted in the commission of an offence.[16]
[13] Re Helios Energy Ltd [2021] WASC 183 [20].
[14] Weinstock v Beck [43], [53], [64].
[15] Weinstock v Beck [43], [55] - [56], [64].
[16] Corporations Act 2001 (Cth) s 1322(5).
An application under s 1322(4)(d) of the Act involves what is, in essence, a two-stage process. As was stated by Barker J in Blaze Asset Pty Ltd v Target Energy Ltd:[17]
First, the Court needs to determine whether, having regard to the circumstances of the case and the general objects of the [Act] it is appropriate to make an order extending a relevant period, or abridging a relevant period. Secondly, if those circumstances are made out, then the Court must address the question whether any substantial prejudice has been or is likely to be caused to any person by the making of such an order.
[17] Blaze Asset Pty Ltd v Target Energy Ltd [2009] FCA 698; (2009) 177 FCR 488 [31]. See also Re Jaxsta Ltd [2018] WASC 390 [42].
Section 1322 confers broad authority on the court to extend time where the statutory pre-requisites are met.[18] The power must be exercised having regard to the interests of all parties affected and the public interest in ensuring compliance with the Act. It must also take account of the general objects and purposes of the relevant statutory provision of the Act imposing the time period; the court's order must not undermine the object of the relevant requirement.[19]
[18] David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265, 275 ‑ 276.
[19] Re Jaxsta Ltd [43].
It is clear from the authorities that the time period can be extended even if it has expired.

First court hearing

In their originating process, the plaintiffs sought the following relief:
(a)orders pursuant to s 1322(4)(d) of the Act that:
(i)the time in s 315(4) and s 319(3)(b) of the Act for the first plaintiff to, respectively, report to members and lodge financial reports with ASIC for the financial years ending 30 June 2013 until 30 June 2022 be extended to the various dates set out in the originating process;
(ii)the time in s 315(4) and s 319(3)(b) of the Act for the second plaintiff to, respectively, report to members and lodge financial reports with ASIC for the financial years ended 30 June 2014 and 30 June 2015, be extended to 21 August 2023;
(iii)the time specified in the Class Order (as applied by s 13 of the Instrument) for the second and third plaintiffs to lodge the notice required by condition 6(1)(f) of the Instrument and for the directors of the second and third plaintiffs to make the resolution and statements required by condition 6(1) of the Instrument, be extended until 14 days after the date of this order;
(iv)for the purposes of the Instrument, the time for the first plaintiff (as a 'holding entity' in respect of one or more 'wholly-owned entities' within the meaning of the Instrument) to have prepared and lodged with ASIC consolidated financial statements in relation to the financial years ending 30 June 2017, 30 June 2018, 30 June 2019, 30 June 2020, 30 June 2021 and 30 June 2022 (Relevant Years) be extended to the various dates specified in the originating process;
(b)declarations pursuant to s 1322(4)(a) of the Act that:
(i)the second plaintiff's act in purporting to take advantage of the relief available under the Instrument for each of the Relevant Years is not invalid by reason of the first plaintiff not securing its auditors' satisfaction as required in condition 6(1)(x) of the Instrument for each of the Relevant Years;
(ii)the first plaintiff's acts in failing to date the directors' declarations in its financial reports for 30 June 2019 and 30 June 2020, and in failing to make, date and sign the directors' declarations in its financial reports for 30 June 2013 are not invalid by reason of s 295(4) and s 295(5) of the Act;
(iii)the first plaintiff's act in not having its financial report for the financial year ended 30 June 2013 audited is not invalid by reason of its failure to comply with s 301(1) of the Act; and
(c)an order under s 1322(4)(c) of the Act relieving the plaintiffs and their directors from any civil liability in respect of any failure to comply with the applicable requirements of pt 2M.3 of the Act.
The plaintiffs relied on six affidavits for the purposes of the first court hearing, namely:
(a)an affidavit of James Robert Stevenson, a director and company secretary of each of the first to third plaintiffs and Chairman of the Group (as defined below at [22]), filed 8 September 2023;
(b)an affidavit of Kenneth George Stevenson, a director of the first and second plaintiffs, filed 8 September 2023;
(c)an affidavit of George Hendrik Constantius Maartens, the financial controller for the Group filed 8 September 2023;
(d)a confidential affidavit of Caroline Cecilie Spencer, a solicitor at Tottle Partners, the plaintiffs' legal representatives, filed 19 September 2023;
(e)a supplementary affidavit of James Robert Stevenson filed 21 September 2023; and
(f)an affidavit of Caroline Cecilie Spencer filed 21 September 2023.

Factual background

The plaintiffs, together with Rous Head Cargo Services Pty Ltd (Rous Head), comprise a privately held corporate group (Group) owned essentially by the Stevenson family. None of the companies within the Group are public companies.[20] The Group carries on business as a provider of transportation and logistics services, as well as warehousing, quarantine treatment and project management services.[21]
[20] Affidavit of James Robert Stevenson filed 8 September 2023 [6] - [7].
[21] Affidavit of James Robert Stevenson filed 8 September 2023 [8].
The directors of the first and second plaintiffs are James Stevenson and Kenneth Stevenson. James Stevenson is the sole director and company secretary of the third plaintiff. Both James and Kenneth Stevenson have worked in various roles in the family business comprising the Group for most of their working lives. From 2014 until mid-2019, James Stevenson spent only about 10-20% of his working time on the Group because of his other business interests. From mid-2019, for the reasons set out below, James Stevenson returned to an almost full time role within the Group.
Within the Group:
(a)the first plaintiff is the holding company and the second plaintiff is the trading company;[22]
(b)the second and third plaintiffs, together with Rous Head, are wholly owned subsidiaries of the first plaintiff;
(c)the third plaintiff was acquired in around October 2015 and has minimal assets;[23] and
(d)Rous Head holds the assets of a joint venture between the second and third plaintiffs.
[22] Affidavit of James Robert Stevenson filed 8 September 2023 [9].
[23] Affidavit of James Robert Stevenson filed 8 September 2023 [10].

In about 2013, the first plaintiff qualified as a 'large proprietary company'. As a result, from that time, it was required to have its accounts audited.[24] This did not occur for the financial year ending 30 June 2013. James Stevenson believed that the first plaintiff's accountants had applied for audit relief for the financial year ending 30 June 2013 and understood it had been obtained.[25] James and Kenneth Stevenson signed a number of forms and associated resolutions to obtain this relief which were lodged with ASIC in July and September 2013.[26]
[24] Affidavit of James Robert Stevenson filed 8 September 2023 [53].
[25] Affidavit of James Robert Stevenson filed 8 September 2023 [53].
[26] Affidavit of James Robert Stevenson filed 8 September 2023 'JRS-3', 'JRS-4'; Affidavit of Kenneth George Stevenson filed 8 September 2023 [21] - [22].

Despite signing these documents, it appears that relief was not obtained, although the first plaintiff is not aware as to why this is the case. Mr Maartens (the current financial controller of the Group) has undertaken a search of the hard copy and electronic records of the company and is unable to find any document which answers this question.[27]
[27] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [82].
Based on the information available to him, Mr Maartens considers that it was likely that the second plaintiff qualified as a 'large proprietary company' from the financial year ended 30 June 2016.[28]
[28] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [72].
On 28 September 2016, the plaintiffs and Rous Head Cargo Services Pty Ltd entered into a deed of cross-guarantee (Deed) in an attempt to take advantage of reporting relief under the Instrument.[29] However, no opt-in notice was ever lodged by the second plaintiff.[30]
[29] Affidavit of James Robert Stevenson filed 8 September 2023, 'JRS-5'; Affidavit of George Hendrik Constantius Maartens filed 8 September 2023, 'GHCM-2'.
[30] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 'GHCM-2'.
For each of the Relevant Years, the first plaintiff prepared financial reports on a consolidated basis and had them audited.[31] However, these financial reports were not lodged with ASIC.[32] The evidence of James Stevenson is that until May 2023, he was not aware this was required.[33]
[31] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [74] - [79].
[32] Affidavit of James Robert Stevenson filed 8 September 2023 [78].
[33] Affidavit of James Robert Stevenson filed 8 September 2023 [65] - [67], [79].
From about mid-2019, James Stevenson returned to an almost full-time role with the Group because of concerns he had about the then management and performance of the Group. His evidence is that at this stage, he had no reason to think that there was any issue with the plaintiffs' compliance with their financial reporting obligations under the Act.[34]
[34] Affidavit of James Robert Stevenson filed 8 September 2023 [30].
The Group's business was significantly impacted by the COVID-19 pandemic, due to the disruption to shipping and container transport businesses on which the Group was dependent. As a result, James Stevenson commenced a review of the Group, following which a decision was made to restructure the business with a major focus on returning the Group to profitability.[35] As part of this restructure, Mr Maartens commenced employment as financial controller.[36]
[35] Affidavit of James Robert Stevenson filed 8 September 2023 [31] - [33].
[36] Affidavit of James Robert Stevenson filed 8 September 2023 [35].
When Mr Maartens commenced employment with the Group in November 2021, the preparation of the financial reports for the year ending 30 June 2021 had not yet commenced. These reports were finalised, audited in December 2022, and lodged with ASIC on 9 January 2023.[37]
[37] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [23] - [29], [78], 'GHCM-15'.
Once the financial reports for the year ending 30 June 2021 had been completed, the financial reports for the year ending 30 June 2022 were finalised. These reports were audited between December 2022 and July 2023, signed on 21 July 2023 and lodged with ASIC on 22 July 2023.[38]
[38] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [30] - [34], [79], 'GHCM-16'.
During the process of the preparation and audit of financial reports for the years ending 30 June 2021 and 30 June 2022, James Stevenson decided the Group should be put on the market for sale.[39] Ultimately, this resulted in the Group entering into a confidential agreement with a large industrial company (Purchaser), pursuant to which all shares in the first plaintiff will be acquired by that company. A copy of the share purchase agreement was annexed to Ms Spencer's confidential affidavit.[40]
[39] Affidavit of James Robert Stevenson filed 8 September 2023 [41].
[40] Confidential affidavit of Caroline Cecilie Spencer filed 19 September 2023 [4] - [6], 'CS1'.
In around May 2023, as a result of the due diligence being undertaken by the Purchaser, James Stevenson became aware of the extent of the non-compliance by the first plaintiff with its financial reporting obligations.[41] At that time, he knew that the financial reports for the years ending 30 June 2021 and 30 June 2022 had not yet been audited but was unaware that the Group had failed to comply with its reporting obligations for previous years.[42]
[41] Affidavit of James Robert Stevenson filed 8 September 2023 [43].
[42] Affidavit of James Robert Stevenson filed 8 September 2023 [44], [47].
Mr Maartens' evidence is that in early 2022, he was informed by the Group's external tax advisers that the first plaintiff's financial report for the year ending 30 June 2020 had not yet been lodged with ASIC. However, he was not aware (and the auditors did not raise with him) that the financial reports for earlier years had not been lodged with ASIC. Mr Maartens considered that further work was required on the financial report for the year ending 20 June 2020 and, as a result, this report was not lodged until 3 May 2023.[43] He was first made aware on 24 April 2023, as a result of a request from the Purchaser during due diligence, that there may be broader issues of non-compliance. At that time, the Purchaser had only enquired about whether financial statements had been lodged for the financial years ending 30 June 2017 until 20 June 2022.[44]
[43] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [17], [21], [22].
[44] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [35] - [36].
On being made aware of the issues, Mr Stevenson instructed Mr Maartens to investigate the extent of the non-compliance and to rectify these issues. With the assistance of the Group's current (Deloitte) and past (Grant Thornton) accountants, detailed and historical reviews were conducted of the plaintiffs' financial records, statements and reporting for a 10-year period (from 2012/2013 to date). Over this period, the Group has had six heads of finance.[45] As part of this process, the plaintiffs' management team undertook searches of physical and electronic archives (including the email records of relevant staff) to locate relevant financial records and related correspondence.[46]
[45] Affidavit of James Robert Stevenson filed 8 September 2023 [26], [49]; Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [37] - [40].
[46] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [39].
The review identified the following additional issues of non-compliance:
(a)the only available copy of the financial report for the first plaintiff for the financial year ending 30 June 2013 did not include signed and dated directors' declarations;[47]
[47] Affidavit of James Robert Stevenson filed 8 September 2023 [58].
(b)the directors' declarations were signed after the period required by the Act for the financial reports of:[48]
[48] Affidavit of James Robert Stevenson filed 8 September 2023 [60].
(i)the first plaintiff for the years ending 30 June 2014 to 30 June 2018, 30 June 2021 and 30 June 2022;
(ii)the second plaintiff for the years ending 30 June 2014 and 30 June 2015;
(c)no financial report of the first plaintiff was prepared for the financial year ending 30 June 2016;[49]
(d)the financial statements for the first plaintiff for the financial years ending 30 June 2014 to 30 June 2016 were not lodged with ASIC;
(e)the financial statements for the Group for the financial year ending 30 June 2019 were lodged late, on 7 December 2020;[50]
(f)the financial statements for the second plaintiff for the financial years ending 30 June 2014 to 30 June 2015 were not lodged with ASIC;
(g)the opt-in notices required by the Instrument in respect of the Deed were not lodged, although an employee of the plaintiffs was advised this was required;[51] and
(h)the directors' resolutions in relation to the financial statements for the years ending 30 June 2019 and 30 June 2020 were not dated.[52]
[49] Affidavit of James Robert Stevenson filed 8 September 2023 [62].
[50] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [76], 'GHCM-13'.
[51] Affidavit of James Robert Stevenson filed 8 September 2023 [73].
[52] Affidavit of James Robert Stevenson filed 8 September 2023 [81].
On 3 May 2023, the financial reports for the group for the year ending 30 June 2020 were lodged with ASIC.[53] The first plaintiff's financial reports for the years ending 30 June 2017 and 30 June 2018 were lodged on 12 May 2023.[54]
[53] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [77], 'GHCM-14'.
[54] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [48], 'GHCM-11', 'GHCM-12', 'GHCM-14'.
On 18 August 2023, the first plaintiff's unaudited financial report for the year ending 30 June 2013,[55] and its audited financial reports for the year ending 30 June 2014,[56] 30 June 2015,[57] 30 June 2016,[58] were lodged with ASIC.
[55] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [58], 'GHCM-5'.
[56] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [62], 'GHCM-6'.
[57] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [66], 'GHCM-8'.
[58] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [70], 'GHCM-10'.
On 21 August 2023, the financial reports of the second plaintiff for the years ending 30 June 2014 and 30 June 2015 were lodged with ASIC.[59]
[59] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [64], [68], 'GHCM-7', 'GHCM-9'.
On 8 September 2023, the plaintiff filed the originating process, which was served on ASIC.
On 14 September, the first plaintiff provided its shareholders with copies of the financial reports for the financial years ending 30 June 2013 until 30 June 2022.[60]
[60] Affidavit of Caroline Cecilie Spencer filed 21 September 2023, 'CS9'.
The evidence of Mr Maartens is that since he commenced employment with the Group, he has been preparing a compliance program to assist the plaintiffs in meeting their financial compliance obligations. This was one of the key reasons he was hired. A copy of the compliance program was in evidence before me.[61]
[61] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [87], 'GHCM-18'.
On 18 September 2023, the plaintiffs lodged an application with ASIC for an extension of time until 30 November 2023 to lodge its financial statements for the year ending 30 June 2023. At the time of the court hearing, the plaintiffs had not received ASIC's response.[62]

Application by an 'interested party'

[62] Supplementary affidavit of James Robert Stevenson filed 21 September 2023 [17].

I am satisfied that, pursuant to s 1322(4) of the Act, each of the plaintiffs is an interested party who may seek their requested relief.

Position of ASIC, shareholders and Purchaser

ASIC has been given notice of the application, served with the papers and elected not to appear at the hearing. On 21 September 2023, ASIC informed the plaintiffs that they neither support nor oppose the plaintiffs' application.[63]
[63] Affidavit of Caroline Cecilie Spencer filed 21 September 2023, 'CS7'.
The first plaintiff's shareholders have been informed of the plaintiffs' intention to make this application. The shareholders have confirmed that they support the application and do not wish to be heard on the application.[64]
[64] Affidavit of Caroline Cecilie Spencer filed 21 September 2023, 'CS9'.
I am satisfied that the Purchaser's solicitors have been informed of the plaintiffs' intention to make this application and provided with a copy of the draft interlocutory process. The Purchaser provided a letter confirming their support for the application and that they did not wish to be heard on the application.[65]
[65] Confidential affidavit of Caroline Cecilie Spencer filed 19 September 2023, 'CS5'.
The plaintiffs have also informed their bank (the National Australia Bank (NAB)), the Group's major external creditor, of the plaintiffs' intention to make this application. The NAB has been provided with a copy of the originating process. The NAB did not seek to be heard on the application.[66]

Application for extensions of time (s 1322(4)(d) of the Act)

[66] Affidavit of Caroline Cecilie Spencer filed 21 September 2023, 'CS10', 'CS11'.

Three separate matters of non-compliance were the subject of an application for an extension of time. First, the first and second plaintiffs' application for an extension of time to report to its members and lodge its financial statements with ASIC. Second, an extension of time for the first and second plaintiffs to comply with the various requirements of the Instrument. Third, an extension of time for the first plaintiff to have prepared and lodged consolidated financial statements within the meaning of the Instrument.
I am satisfied that in respect of each of these matters, the Act or Instrument either expressly or impliedly imposes a time period which is capable of extension.

Extension of time to report to members and lodge financial statements

In each of the relevant financial years for which relief is sought, the time for the first and second plaintiffs to report to members and to lodge their financial statements with ASIC has expired.
In the circumstances of this case, notwithstanding the number of years over which the first plaintiff failed to comply with its obligations under the Act or the length of time for which some of the extensions are sought (in respect of both the first and second plaintiffs), for the following reasons, I consider it is appropriate to grant the extensions sought.
First, I am satisfied on the evidence before me that the failure to comply with the obligations of the Act was inadvertent. These plaintiffs employed appropriate personnel and retained external advisors, neither of which drew these issues to the attention of the directors. I am satisfied that once the issues were drawn to the attention of the directors of the first and second plaintiffs, steps were taken to rectify the omissions.
Second, while the financial reports were prepared late in many instances, the financial reports were prepared and audited for all years except the financial year ending 30 June 2013. No one has raised any concern as to the accuracy of these reports.
Third, all financial reports the subject of the application have now been provided to shareholders and lodged with ASIC.
Fourth, in the absence of an extension being granted, I accept there are adverse consequences for the first plaintiff and its shareholders as the share sale is conditional on relief being granted.
Fifth, the making of the orders sought is consistent with the conduct of commerce generally. The purpose of these sections is to ensure that financial reports are prepared, shareholders are kept informed about the financial performance of the company and that some financial information about the company is publicly available. In this case, as a closely held predominantly family company, with shareholders who were involved in the business, there is no suggestion they were not aware of the financial performance of these plaintiffs.
Sixth, ASIC did not oppose the application nor did any other party.
I am also satisfied that there is no basis for inferring that substantial injustice has been or is likely to be caused to any person by the making of the proposed orders. While there has undoubtedly been a significant delay in complying with the provisions of the Act, both plaintiffs have now complied with all obligations (apart from the audit of the 2013 financial statements). There is no indication that any shareholder, creditor or other person has suffered any prejudice as a result of the delay in complying with these obligations.
I also accept and find there is no evidence of any substantial misconduct, serious wrongdoing or flagrant disregard of the Act or the company's constitution to warrant refusal of the relief sought.[67]
[67] Re Wave Capital Ltd [29].
There is nothing in the evidence before me suggesting that any minority shareholder interest might be oppressed, or any other interest might be affected. I am satisfied that the shareholders, as well as ASIC, have been notified of the contraventions of the Act and been given notice of this hearing. No shareholder or ASIC sought to intervene in the hearing or gave notice they wanted to be heard on the application.
In exercising the discretion to grant relief under s 1322(4) of the Act, a relevant factor is the promptness with which the plaintiff has sought to remedy the irregularity once it has been identified.[68] In this case, I am satisfied that the first and second plaintiffs have brought the application relatively promptly after being informed of the necessity to seek relief.

Extension of time to comply with the Instrument

[68] Re G8 Communications Ltd [2016] FCA 297; (2016) 112 ACSR 22 [60].

In respect of the failure to comply with the conditions of the Instrument, I am satisfied that a time period is imposed which is capable of extension under the Act.[69] The Class Order required the second and third plaintiffs to lodge a Form with ASIC within four months from the end of the financial year for the first year in which it sought to obtain relief from the reporting requirements under the Act and for the directors of the second plaintiff to makes the resolutions required by the Instrument. It also required the first plaintiff to prepare and lodge with ASIC consolidated financial statements for the Relevant Years.
[69] See for example, Re Murray River Organics Ltd [2019] FCA 931; (2019) 138 ACSR 365 [28].
In the circumstances of this case, for the following reasons, I considered it was appropriate to extend the time limits for the lodging of the Form and the passing of the resolutions until a date that was fourteen days after the date of my order, and to extend the time for lodging the consolidated financial statements until the dates they were lodged.
First, granting the extension of time was consistent with the purpose of the Class Order, the Instrument and the Act. The purpose of the Class Order and the Instrument is to enable closely held or 'closed group' companies to prepare and lodge a consolidated set of financial statements where each company is a party to a deed of cross-guarantee. The relief sought by the plaintiffs is consistent with this purpose. It also furthers the objects of the Class Order, Instrument and the Act by correcting the omission to lodge the requisite Forms and information in the notes to the consolidated financial statements. Granting the relief will more accurately reflect the intention of the plaintiffs that they be a 'closed group' as well as the contents of the consolidated financial statements that were lodged at the appropriate times in accordance with the Act.
Second, I am satisfied that the non‑compliance by the plaintiffs was unintentional, honest and inadvertent. I accept that had James Stevenson and Kenneth Stevenson known the requisite documents had not been filed with ASIC, they would have lodged the Forms and lodged the consolidated financial statements.
Third, in the absence of an extension of time, there will be significant costs incurred by the plaintiffs.
Fourth, there is no suggestion that any third party has acted or could have acted to its detriment as a result of the non-compliance or that any substantial injustice has been or is likely to be caused to any third party.
Fifth, ASIC did not oppose the application.

Pre-conditions in s 1322(6)(a) of the Act

In determining whether a person has acted honestly, the court looks to an absence of evidence of dishonesty and whether the party has taken prompt action to remedy the error.[70]
[70] Re iCandy Interactive Ltd [2018] FCA 533; (2018) 125 ACSR 369 [54].
The concept of acting honestly can embrace:[71]
(a)inadvertence or a failure to turn their mind to the relevant issue;
(b)an active, but incorrect, consideration of a legal issue as well as failure to consider the issue at all; and
(c)the failure to understand or appreciate the significance of non‑compliance.
[71] Re iCandy Interactive Ltd [55].
I am satisfied on the evidence before me that all persons concerned in or party to the contraventions have acted honestly. Specifically, I accept James Stevenson's evidence that, although aware of some previous instances of non-compliance, he was not aware of the extent of the issues prior to the Purchaser drawing these to his attention.
It is clear from the evidence that James Stevenson and Kenneth Stevenson were operational and non-executive directors with no accounting or other qualifications.[72] I accept that these directors relied on the Group's head of finance, who was employed to be in charge of, amongst other things, final reporting compliance.[73] Over the Relevant Years, there have been six different employees in this position.[74] There is no evidence before the court that the conclusion of employment for these individuals was based on cause or related to their financial reporting obligations. Rather, in some cases, it was the result of 'personality clashes'.[75]
[72] Affidavit of James Robert Stevenson filed 8 September 2023 [11], [15]; Affidavit of Kenneth George Stevenson filed 8 September 2023 [9], [11].
[73] Affidavit of James Robert Stevenson filed 8 September 2023 [25] - [28]; Affidavit of Kenneth George Stevenson filed 8 September 2023 [12].
[74] Affidavit of James Robert Stevenson filed 8 September 2023 [26].
[75] Second affidavit of James Robert Stevenson filed 21 September 2023 [18].
Mr James Stevenson and Mr Maartens have expressed genuine regret and remorse for the non-compliance. They recognise the importance of the obligations under the Act and the potential impact that the consequences of non-compliance could have on the business. Mr Stevenson has also indicated his intention to undertake courses on directors' responsibilities in the aim of improving his knowledge of his corporate obligations as a director.[76]
[76] Affidavit of James Robert Stevenson filed 8 September 2023 [50].
I am satisfied on the evidence before me that the failure to lodge the notice was not dishonest. The evidence before me supports a conclusion that the failure by the plaintiffs to comply with the Class Order, the Instrument and the Act was a result of inadvertence and reliance on internal finance personnel and reputable external advisors, rather than a deliberate disregard of the plaintiffs' obligations. I also accept that the relief sought is appropriately confined to the specific omissions that caused the contraventions.
Section 1322(6)(a)(iii) of the Act gives the court a wide discretion in exercising its powers under s 1322 of the Act.[77] Factors relevant in this matter include the honest view of management in relying upon internal and external accounting personnel, the circumstances of the discovery of that non-compliance and the steps promptly take to address the non-compliance and to ensure it does not occur again. As a result, I am also satisfied that it would be just and equitable to make the orders sought.
[77] Re Bellevue Gold Ltd [2021] WASC 80[64] - [65] and the authorities cited therein.
In my view, the making of the orders sought by the plaintiff would be consistent with the public policy of pt 2M.3 of the Act, which is to ensure that financial documents are lodged within the timeframes specified by the Act.
On this basis, I am satisfied that the pre-conditions in s 1322(6)(a)(ii) of the Act and s 1322(6)(a)(iii) of the Act are satisfied.

No substantial injustice (s 1322(6)(c) of the Act)

Mr James Stevenson and Mr Maartens depose that each is not aware of anyone who would suffer prejudice if the relief sought in the application was granted, or anyone who has been directly prejudiced by the instances of non-compliance.[78] On the contrary, the directors depose that the Purchaser has made the granting of the relief sought in this application a condition precedent to the sale completing. Therefore, there may be prejudice suffered if the relief is not granted, in that the Purchaser may not proceed with the transaction.[79]
[78] Affidavit of James Robert Stevenson filed 8 September 2023 [82], [84] - [85]; Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [88].
[79] Affidavit of James Robert Stevenson filed 8 September 2023 [83]; Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [91].
Mr Maarten further deposes that if relief was not granted, there would be prejudice to the current shareholders as it would create uncertainty regarding the sale. This would waste the preparation that has been made for the sale to occur on 1 November 2023 and require additional work later to re-prepare for settlement.[80]
[80] Affidavit of George Hendrik Constantius Maartens filed 27 October 2023 [33].
The Group's shareholding is closely held, with members predominantly of the same family. None of the companies which comprise the Group are publicly listed. Further, the current shareholders of the Group are unlikely to be shareholders post-completion. On this basis, it is contended (which I accept) that there is no prejudice to the shareholders in the late reporting.[81]
[81] Affidavit of George Hendrik Constantius Maartens filed 27 October 2023 [34].
For these reasons, I am satisfied that there is no basis for inferring that substantial injustice has been or is likely to be caused to any person by the making of the proposed orders.

No other discretionary reason to withhold relief

I accept and find that there is no evidence of any substantial misconduct, serious wrongdoing or flagrant disregard of the Act so as to warrant refusal of the relief sought.
In exercising the discretion to grant relief under s 1322(4)(a) of the Act, a relevant factor is the promptness with which the plaintiffs sought to remedy the irregularity once it was identified. In this case, upon realising the extent of the non-compliance I accept that Mr James Stevenson and Mr Maartens took appropriate remedial measures and liaised with the Group's legal representatives, who brought this application.[82] Whilst the first realisation of non-compliance by Mr Maartens was on 24 April 2023, I accept his evidence that the delay in bringing the application was due to the complexity of completing investigations into the non-compliance, a task made more challenging given he was not employed by the Group until 2021 and some contraventions date back to 2013.[83] I accept that extensive physical and digital searches were conducted, as well as consultations with external accountants and advisers, to ascertain all instances of non-compliance. I accept the process was also delayed because Mr Maartens was spending considerable time finalising the Group's financial statements for the 2022 financial year and was heavily involved in providing information to the Buyer as part of its due diligence process.[84]
[82] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [41] - [87].
[83] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [38].
[84] Affidavit of George Hendrik Constantius Maartens filed 8 September 2023 [38].
I accept and find that the plaintiffs acted diligently in seeking to remedy the matters that are the subject of this application.

Application for declaratory relief (s 1322(4)(a) of the Act)

The plaintiffs sought a number of declarations under s 1322(4)(a) of the Act that a number of its financial reports were not invalid by reason of the failure to comply with the Instrument or with s 295(4), s 295(5)(b), and s 301(1) of the Act. The specific failures for which relief was sought are set out in [20(b)] above.
In each case, I accept that the prescriptive requirements of s 1322(4)(a) of the Act are satisfied in that:
(a)the proposed validation orders are framed in a declaratory form;
(b)the act, matter or thing has been identified; and
(c)the contravention in each case has been identified as a contravention of a specific section of the Act or the Instrument.
In each case, I am satisfied on the evidence before me that all persons concerned in or party to the contraventions have acted honestly and that it would also be just and equitable to make the orders sought.
In respect of the failure to comply with the conditions of the Instrument, the evidence of both James Stevenson and Kenneth Stevenson is that they were not aware further administrative steps were required other than signing the Deed. While I accept that their employees were advised that further administrative steps were required, there is no evidence as to why these requirements were not met. I accept the submissions of the plaintiffs that there is no evidence these employees were acting dishonestly or that there is any basis on which such an inference should be drawn.
The evidence of both James Stevenson and Kenneth Stevenson is that they were also unaware of the specific requirements that led to the second and third contraventions, and that James Stevenson believed that audit relief had been applied for and obtained. I accept this evidence, which is supported by the steps that have been taken since the issues of non-compliance was drawn to their attention and the considerable work that has been undertaken to address these other issues.
Counsel for the plaintiffs drew the court's attention to the fact that the first plaintiff had not and did not intend to audit its financial reports for the year ended 30 June 2013. Several reasons were advanced for this including the cost and difficulty of doing so, and the length of time that had passed since these accounts were prepared. Unaudited financial reports have been lodged with ASIC. In the circumstances of this case, I accept, given these matters, that it is appropriate to make the orders sought. There is no evidence that any party has been or will suffer any prejudice or substantial injustice from any continued failure to have these accounts audited.

Ancillary orders

The plaintiffs also sought ancillary orders to deem the financial statements and the Form to have been prepared and lodged as at the date of the original lodgement, as well as the second plaintiff's entitlement to the relief under the Instrument. These orders were, in effect, a corollary of the other orders. For the reasons set out above, I considered it was appropriate to make such orders.

Relief from civil liability (s 1322(4)(c) of the Act)

The plaintiffs also sought orders relieving the companies and their directors from any civil liability arising out of the contraventions of the Act.
Section 1322(4)(c) of the Act permits the court to make an order relieving a person from civil liability for a broad range of contraventions or failures, subject to the conditions in s 1322(6) of the Act that the person concerned acted honestly and that no substantial injustice has been or is likely to be caused to any person.[85]
[85] Re Murray River Organics [28].
A pre-condition to making an order under s 1322(4)(c) of the Act is that the person to be relieved from civil liability acted honestly.[86]
[86] Corporations Act 2001 (Cth) s 1322(6)(b).
For the reasons referred to at [63] - [87] above, it is appropriate that the plaintiffs and their officers be relieved of any civil liability arising out of their contraventions of the Act.

Conclusion

For these reasons, at the conclusion of the hearing on 22 September 2023, I made orders in terms of 'Annexure A' to these reasons.

Second court hearing - 30 October 2023

On 27 October 2023, the plaintiffs filed an interlocutory process seeking an extension of time for reporting and lodgement of their financial reports for the financial year ending 30 June 2023.
Specifically, the plaintiffs sought orders:
(a)pursuant to s 1322(4)(d) of the Act, extending the time to report to members and lodge their financial report for the financial year ended 30 June 2023;
(b)pursuant to s 1322(4)(d) of the Act, extending the time to prepare and lodge ASIC consolidated financial statements within the meaning of the Instrument for the financial year ended 30 June 2023; and
(c)for consequential or ancillary relief that the plaintiffs be deemed to have prepared and lodged the ASIC consolidated financial statements within the time period required by the Instrument, subject to the first plaintiff reporting to members and lodging its financial report ended 30 June 2023 by the extended date.
Given the urgency of the matter, the interlocutory process was listed for hearing on 30 October 2023. At the hearing, the plaintiffs relied on an additional three affidavits being:
(a)an affidavit of Caroline Cecilie Spencer filed 27 October 2023;
(b)an affidavit of George Hendrik Constantius Maartens filed 27 October 2023; and
(c)a supplementary affidavit of Caroline Cecilie Spencer filed 30 October 2023.
The factual background to this hearing arose from the application by the plaintiffs for an extension of time to report and lodge their financial reports for the financial year ending 30 June 2023. At the first court hearing, counsel for the plaintiffs foreshadowed that an application in terms of the interlocutory process may be required.[87]
[87] ts 7 - 8.
From late July 2023, the Group was preparing its financial reports for the year ended 30 June 2023. Completion of the financial reports was delayed for several reasons. First, there was substantial work involved in the finalisation of calculations, working papers and the 2022 financial report. Until these reports were finalised, the 2023 financial report could not be completed. Second, there was a significantly increased workload for the members of the financial team arising from the sale of the Group, including the preparation of forecasting models required for the sale. Third, the Group's current auditor, RSM Australia Partners, had limited availability. As a result of these matters, the financial reports for the 2023 financial year could not be completed before the deadline of 31 October 2023.[88]
[88] Supplementary affidavit of George Hendrik Constantius Maartens filed 27 October 2023 [13], [17], [21] ‑ [22], [25] - [26], [28] - [29].
On 18 September 2023, the plaintiffs sought an extension of time from ASIC for the preparation and lodgement of the financial accounts ended 30 June 2023. As at the date of the first court hearing, ASIC had not determined whether or not to grant the extension sought. Nor was the amount of time required by the Purchaser's nominee directors to review and sign-off on the audited financials known to the plaintiffs.[89]
[89] Third affidavit of Caroline Cecilie Spencer filed 27 October 2023 [7] - [9].
On 25 October 2023, ASIC notified the plaintiffs that a decision had been made in principle to refuse the application.[90]
[90] Third affidavit of Caroline Cecilie Spencer filed 27 October 2023, 'CS15'; Supplementary affidavit of George Hendrik Constantius Maartens filed 27 October 2023, 'GCHM-23'.
The proposed completion date for the share sale agreement is 1 November 2023. If this occurs, new directors will be appointed who may want additional time to satisfy themselves the accounts are accurate. It is anticipated that this will occur a number of weeks after the audit has been completed.[91]

Application for extension of time (s 1322(4)(d) of the Act)

[91] Supplementary affidavit of George Hendrik Constantius Maartens filed 27 October 2023 [31] - [32].

I was and am satisfied that the Act imposes a time period for the preparation and lodgement of financial statements which is capable of extension and that the Instrument requires consolidated financial statements to be lodged with ASIC.
The plaintiffs drew to my attention the fact that ASIC had determined in principle to refuse the application and then refused the application. The plaintiffs also drew to my attention the limitations and thresholds which apply to ASIC's consideration of the application pursuant to ASIC Regulatory Guide 43 and s 342 of the Act. These are different to the exercise of the court's discretion under s 1322(4) of the Act, which is informed by all the circumstances and broader policies and objects. Despite the broad nature of s 1322, the power is not read with implied limitations that are not found in the word of the statute.[92] On this basis, while ASIC's decision in principle is a relevant factor it is not, in any way, determinative of this application.
[92] Owners of Shin Kobe Maru v Empire Shipping Co Inc (1994) 181 CLR 404, 421; Weinstock v Beck 419 - 420, [55] - [56].
In this case, for the following reasons, I was and satisfied that it is appropriate to make the orders sought by the plaintiffs.
First, I am satisfied on the evidence before me that the failure to comply with the obligations of the Act was inadvertent. I accept that the plaintiffs and its employees and external advisors have attempted to comply with the time periods imposed by the Act but have been unable to for two primary reasons. First, the work involved in addressing the issues of non-compliance which were the subject of the first court hearing. Second, the additional work arising from the share sale agreement.
Second, in the absence of an extension being granted, I accept there may be adverse consequences for the first plaintiff and its shareholders as this may constitute a 'material adverse change' under the terms of that agreement.
Third, the making of the orders sought is consistent with the conduct of commerce generally. The purpose of these sections is to ensure that financial reports are prepared, to facilitate group reporting, shareholders are kept informed about the financial performance of the company and that some financial information about the company is publicly available. In this case, there is no suggestion these parties are not aware of the financial performance of these plaintiffs.
Fourth, ASIC did not oppose the application[93] nor did any other party.
[93] Supplementary affidavit of Caroline Cecilie Spencer filed 30 October 2023, 'CS16'.
I am also satisfied that there is no basis for inferring that substantial injustice has been or is likely to be caused to any person by the making of the proposed orders. There is no indication that any shareholder, creditor or other person will suffer any prejudice as a result of the delay in complying with the reporting obligations.
I also accept and find there is no evidence of any substantial misconduct, serious wrongdoing or flagrant disregard of the Act or the company's constitution to warrant refusal of the relief sought.[94]
[94] Re Wave Capital Ltd [29].
There is nothing in the evidence before me suggesting that any minority shareholder interest might be oppressed, or any other interest might be affected. I am satisfied that the shareholders, as well as ASIC, have been notified of the contraventions of the Act and been given notice of this hearing. No shareholder or ASIC sought to intervene in the hearing or gave notice they wanted to be heard on the application.
In exercising the discretion to grant relief under s 1322(4) of the Act, a relevant factor is the promptness with which the application has been brought.[95] In this case, I am satisfied that the first plaintiff filed the application promptly after being informed of the necessity to seek relief.

Ancillary orders

[95] Re G8 Communications Ltd [60].

The plaintiffs also sought ancillary orders to deem the financial statements and the second plaintiff's entitlement to relief under the Instrument Form to have been lodged within time.
These orders were, in effect, a corollary of the other orders. For the reasons set out above, I considered it was appropriate to make such orders.

Conclusion

For these reasons, at the conclusion of the hearing of the interlocutory process on 30 October 2023, I made orders in terms of 'Annexure B' to these reasons.

'Annexure A'

'Annexure B'

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JN
Associate to the Honourable Justice Hill
19 APRIL 2024