JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE BARRICK MIDDLE EAST PTY LIMITED [2023] WASC 122
CORAM: LUNDBERG J
HEARD: 12 APRIL 2023
DELIVERED : 12 APRIL 2023
PUBLISHED : 19 APRIL 2023
FILE NO/S: COR 50 of 2023
MATTER: IN THE MATTER OF BARRICK MIDDLE EAST PTY LIMITED
EX PARTE
BARRICK MIDDLE EAST PTY LIMITED
Plaintiff
Catchwords:
Corporations Law - Failure to comply with financial reporting obligations in Part 2M.3 of the Corporations Act 2001 (Cth) - Small proprietary company became a large proprietary company in financial year following receipt of dividend payment - Application for relief pursuant to s 1322(4)(d) of the Corporations Act 2001 (Cth) for extensions of time to comply with ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 - Application pursuant to s 1322(4)(c) of the Corporations Act 2001 (Cth) for relief from civil liability
Legislation:
ASIC Corporations (Wholly-owned Companies) Instrument 2016/785
Corporations Act 2001 (Cth), ss 181(1)(h), 292(1), 292(2), 301(1), 319(1), 344(1), 1274(11), 1322(4) and 1322(6)
Result:
Application for extensions of time and for relief from civil liability granted
Category: B
Representation:
Counsel:
| Plaintiff | : | A J Papamatheos and A Pieniazek |
Solicitors:
| Plaintiff | : | Warman & Goldblatt |
Case(s) referred to in decision(s):
Barrick (Australia Pacific Exploration) Pty Limited v Barrick (PD) Australia Pty Limited, in the matter of Barrick (Australia Pacific Exploration) Pty Limited (No 2) [2017] FCA 1076
Canon Australia Pty Ltd, in the matter of Cannon Australia Pty Ltd [2023] FCA 281
DAC Finance (NSW/Qld) Pty Ltd and other companies [2020] NSWSC 182
Dana Australia (Holdings) Ltd [2006] FCA 355; (2006) 57 ACSR 99
Diona Pty Ltd, in the matter of Diona Pty Ltd [2022] FCA 1215
Entertainment Publications of Australia Pty Ltd v ASIC [2022] FCA 960
Owen, in the matter of RiverCity Motorway Pty Limited [2014] FCA 1008
Re Affinity Health Ltd [2006] NSWSC 579; (2006) 58 ACSR 461
Re Bellavista Resources Limited [2023] WASC 40
Re Car Buyers Australia Pty Ltd [2020] FCA 599
Re Clinical Cell Culture Ltd [2004] FCA 1798; (2004) ACSR 362
Re Flight Centre Technology Pty Ltd [2022] NSWSC 367; (2022) 160 ACSR 651
Re Murray River Organics Ltd [2019] FCA 1432; (2019) 138 ACSR 365
Re Novonix Ltd [2019] FCA 2198; (2019) 141 ACSR 636
Re Ozito Industries Pty Ltd [2020] FCA 1432; (2020) 148 ACSR 585
Re Phosphate Resources Ltd [2005] FCA 1705; (2005) 56 ACSR 169
Re SMS Operations Pty Ltd; Ex parte SMS Operations Pty Ltd [2021] WASC 191
Re Sprintex Ltd [2022] WASC 188
Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418
Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd (No 2) [2018] WASC 357
Re Yandal Resources Ltd [2022] WASC 338
Table of Contents
A. Introduction and Summary
B. Legislative Framework
C. Relevant Principles
D. Factual Background
Affidavit evidence
Corporate structure and details
Deed of Cross Guarantee
Events from October 2022
Historical non-compliance
The position of…
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- Case
- [2023] WASC 122
- Decision Date
CaseChat Overview and Summary
The primary legal issue before the Court was whether Barrick was entitled to an extension of time to comply with the financial reporting obligations, and whether it should be relieved from civil liability for its failure to comply. The Court noted that the purpose of the Instrument was to enable closed groups of companies to prepare and lodge financial statements prepared on a consolidated basis. The Court also noted that section 6 of the Instrument set out mandatory conditions that had to be satisfied before the relief in section 5 was available. In particular, the Court noted that one of the conditions was that the company must not have been a small proprietary company for the relevant financial year. The Court considered whether Barrick satisfied this condition, and whether it was entitled to the relief under the Instrument.
The Court found that Barrick had satisfied the condition in section 6(a)(iii) of the Instrument, as it was a small proprietary company to which paragraph 292(2)(b) of the Corporations Act 2001 (Cth) applied in relation to the relevant financial year. The Court also found that Barrick was entitled to the relief under section 5 of the Instrument, as all of the other conditions in section 6 of the Instrument were satisfied. The Court noted that Barrick had not been a disclosing entity, a borrower in relation to debentures, a guarantor of such a borrower, or a financial services licensee during the relevant financial year. The Court also noted that there was a holding entity in relation to Barrick at the end of the relevant financial year, and that the holding entity was not a small proprietary company for the relevant holding entity financial year. The Court concluded that Barrick was entitled to an extension of time to comply with the financial reporting obligations, and that it should be relieved from civil liability for its failure to comply.
The Court ordered that Barrick be granted an extension of time to comply with the financial reporting obligations, and that it be relieved from civil liability for its failure to comply. The Court also ordered that Barrick lodge a notice with ASIC using ASIC Form 389, containing a statement that it had taken advantage of relief under the Instrument together with the identity of the holding entity.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
The purpose of Instrument 2016/785 is to enable a closed group of companies to prepare and lodge financial statements prepared on a consolidated basis where each such company is a party to a deed of cross guarantee: Re SMS Operations Pty Ltd; Ex parte SMS Operations Pty Ltd [2021] WASC 191 [43] (Hill J). Section 5 of ASIC Instrument 2016/785 states as follows: Section 6 of Instrument 2016/785 sets out numerous (and mandatory) conditions which must be satisfied before the relief in section 5 is available. Section 6 relevantly states as follows:6Where financial reporting relief applies(1)The relief in section 5 is available to a company and its directors in relation to a relevant financial year where all of the following are satisfied: Nature of company(a)the company was: (i)a public company for the relevant financial year; or(ii)a large proprietary company for the relevant financial year; or (iii)a small proprietary company to which paragraph 292(2)(b) of the Act applies in relation to the relevant financial year at the relevant time; (b)the company was not, at any time during the relevant financial year, any of the following: (i)a disclosing entity; (ii)a borrower in relation to debentures; (iii)the guarantor of such a borrower;(iv)a financial services licensee; Holding entity(c)there was a holding entity in relation to the company at the end of the relevant financial year;Note:This requires that the holding entity was party to the deed of cross guarantee at the end of the relevant financial year: see definition of holding entity in section 4.(d)the relevant financial year and the financial year (relevant holding entity financial year) of the holding entity ended on the same date;(e)the holding entity was not a small proprietary company for the relevant holding entity financial year;Opt-in notice(f)if: (i)the company did not rely on the relief available under this instrument or ASIC Class Order [CO 98/1418] in respect of the financial year before the relevant financial year; or(ii) the holding entity of the company was not the same for the relevant financial year and the financial year before; the company has lodged by the relevant time a notice signed by a director or secretary with ASIC using ASIC Form 389 as at the date of this instrument, containing a statement that the company has taken advantage of relief under this instrument together with the identity of the holding entity; Initial procedures in applying for relief(g) before the end of the first financial year (first reliance year) in respect of which the company took advantage of relief under this instrument or a previous order (being a financial year at the end of which the company was one of the wholly-owned entities of the holding entity):(i) the directors of the company resolved that the company should obtain the benefit of this instrument or a previous order and the directors have not revoked that resolution or resolved to the contrary; and(ii) in respect of every other entity (the other entity) which has become a party to the deed of cross guarantee after 13 August 1998 and before the end of the first reliance year (irrespective of whether the other entity has taken advantage of relief under this instrument or ASIC Class Order [CO 98/1418]) the directors of that other entity have made a statement: Note: ASIC Class Order [CO 98/1418] was made on 13 August 1998.(A)signed by at least one director, and made before the end of the financial year in which it became a party to the deed of cross guarantee; and(B) stating that in the directors' opinion immediately before the execution of the deed of cross guarantee or assumption deed by the other entity there were reasonable grounds to believe that the other entity would be able to pay its debts as and when they become due and payable;…(2)In this section, relevant time means, in relation to a relevant financial year, 4 months after the end of the year.