FEDERAL COURT OF AUSTRALIA
Murray River Organics Limited, in the matter of Murray River Organics Limited [2019] FCA 931
File number(s): VID 418 of 2019 Judge(s): ANDERSON J Date of judgment: 13 June 2019 Date of publication of reasons: 17 June 2019 Catchwords: CORPORATIONS – application under s 1322(4)(c) of Corporations Act 2001 (Cth) (Act) for relief of company and its current and former directors and officers from civil liability in respect of failure of company to lodge certain forms and comply with financial reporting obligations – where failure to lodge opt-in notice for relief under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 – whether persons concerned acted honestly – application under s 1322(4)(d) of Act for extension of time for company to lodge opt-in notice – whether substantial injustice has been or is likely to be caused to any person by statutory non-compliance or proposed orders
Held: Application granted – failure to lodge opt-in notice resulted from inadvertence – company and its current former directors and officers are relevantly relieved from any civil liability – extension of time granted for company to lodge opt-in notice
Legislation: Corporations Act 2001 (Cth) Pts 2M.3, 9.5 ss 292, 292(1)(b), 301(1), 314, 314(1), 315, 316(1), 316(2), 319(1), 341(1), 1274(11), 1322, 1322(4), 1322(4)(c), 1322(4)(d), 1322(5), 1322(6), 1322(6)(b), 1322(6)(c)
ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (Cth) ss 5, 6(1)(f)
Cases cited: Australian Securities and Investments Commission v Lewski (2018) 362 ALR 286; 132 ACSR 403
Blaze Asset Pty Ltd v Target Energy Ltd (2009) 177 FCR 488
Caeneus Minerals Ltd, in the matter of Caeneus Minerals Ltd [2018] FCA 560
Clancy Exploration Limited, in the matter of Clancy Exploration Limited [2018] FCA 569
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265
Elderslie Finance Corp Ltd v Australian Securities Commission (1993) 11 ACSR 157
Gangemi v Osborne [2009] VSCA 297
In the matter of Order of AHEPA NSW Incorporated [2018] NSWSC 458
Kimberley College Ltd v Davis, in the matter of Kimberley College Ltd [2018] FCA 1102
Lock, in the matter of Cedenco JV Australia Pty Ltd (in liq) (No 2) [2019] FCA 93
Re Compaction Systems Pty Ltd & The Companies Act [1976] 2 NSWLR 477
Re Golden Gate Petroleum Ltd (ABN 090 074 785) (2010) 77 ACSR 17
Re G8 Communications Ltd (ACN 009 076 233) (2016) 112 ACSR 22
Re iCandy Interactive Ltd (2018) 125 ACSR 369
Re Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390
Re Phylogica Ltd (2004) 52 ACSR 159
Re Solco Ltd (ACN 084 656 691) (2015) 106 ACSR 591
Re Wave Capital Ltd (ACN 006 031 161) (2003) 47 ACSR 418
Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd (No 2) [2018] WASC 357
Sprint Energy Ltd, in the matter of Sprint Energy Ltd [2012] FCA 1354
Weinstock v Beck (2013) 251 CLR 396
5G Networks Limited, in the matter of 5G Networks Limited [2019] FCA 698
Date of hearing: 13 June 2019 Registry: Victoria Division: General Division National Practice…
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- AGLC
- Re Murray River Organics Ltd [2019] FCA 931
- Case
- [2019] FCA 931
- Decision Date
CaseChat Overview and Summary
The primary legal issues before the Court were whether the company and its directors and officers acted honestly and whether any substantial injustice would be caused to any person by the statutory non-compliance or by the making of the proposed orders. The Court also needed to decide whether it was just and equitable to grant an extension of time for the company to lodge the opt-in notice.
The Court found that the failure to lodge the opt-in notice was due to inadvertence rather than any deliberate disregard of the company's obligations. The Court was satisfied that all persons concerned acted honestly and that no substantial injustice had been or was likely to be caused to any person by the contravention or by the making of the proposed orders. The Court also found that it was just and equitable to grant an extension of time for the company to lodge the opt-in notice. The Court exercised its residual discretion under section 1322(6) of the Act and granted the relief sought by MRO.
The Court ordered that the time specified by ASIC Corporations Instrument 2016/785 for MRO to lodge a Form 389 – Opt in/change of holding entity notice by wholly-owned company relieved from financial reporting obligations be extended to a date five days from the date of the order. The Court also ordered that MRO and its current and former directors and officers be relieved from any civil liability in respect of any failure to lodge the opt-in notice and comply with financial reporting obligations. Finally, the Court ordered that a confidential exhibit be suppressed from public examination.
Orders
Orders of the court
1. Pursuant to s 1322(4)(d) of the Corporations Act 2001 (Cth) the time specified by ASIC Corporations Instrument 2016/785 (ASIC Instrument) for the Plaintiff to lodge a Form 389 – Opt in/change of holding entity notice by wholly-owned company relieved from financial reporting obligations be extended to a date five days from the date of this order.
2. Under s 1322(4)(c) of the Corporations Act 2001 (Cth) the Plaintiff and its current and former directors and officers are relieved from any civil liability in respect of any failure to:
(a) lodge a Form 389 – Opt in/change of holding entity notice by wholly-owned company relieved from financial reporting obligations within four months of the end of the financial year of the Plaintiff for 2017;
(b) have the Plaintiff's financial statements for the financial year ending 2017 and 2018 each later financial year audited before the deadline for that year;
(c) comply with s 319(1) of the Corporations Act 2001 (Cth);
(d) comply with s 314(1) of the Corporations Act 2001 (Cth);
(e) lodge Form 388 Copy of financial statements and reports for 2017 and 2018 with the Australian Securities and Investments Commission; and / or
(f) comply with the notice issued by the Australian Securities and Investments Commission under s 1274(11) of the Corporations Act 2001 (Cth) dated 10 April 2019.
3. The exhibit marked "Confidential Exhibit MJO2" annexed to the affidavit of Matthew John O'Brien dated 23 April 2019 filed in these proceedings ("First O'Brien Affidavit"), being a paginated bundle of correspondence referred to in paragraph 13 of the First O'Brien Affidavit and located at pages 80 to 287 of the First O'Brien Affidavit, be suppressed from public examination.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Even if the criteria in 1322(6) are satisfied, the Court retains a residual discretion to decide whether or not to make the orders sought under s 1322(4): Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd (No 2) [2018] WASC 357 at [35]. The public interest is a relevant consideration in the exercise of this discretion: Lock at [98]-[99].ConsiderationNo substantial injustice There is no evidence that suggests any third party could have acted to its detriment as a result of MRO’s non-compliance. I am satisfied that no substantial injustice has been or is likely to be caused to any person. I am also satisfied that public policy will not be undermined by the making of the orders. As I have already observed, MRO’s conduct was the result of inadvertence and did not involve any blatant disregard of the provisions of the Act.Relief from civil liability MRO seeks an order under s 1322(4)(c) relieving it and its former and current directors and officers from any civil liability in respect of any failure to do, or comply with, the matters set out above at [23(2)]. I am satisfied on the evidence that the relief under s 1322(4)(c) should be granted because all persons concerned acted honestly and no substantial injustice has been or is likely to be caused to any person by reason of the contravention, or by the making of the proposed form of order. I am satisfied on the evidence that the failure to lodge the notice was not dishonest. The evidence supports a conclusion that the failure was the result of inadvertence, rather than any deliberate disregard of MRO’s obligations. I am satisfied on the evidence that all of the persons who subsequently engaged in any contravention or failure under the Act or the constitution did so in the bona fide belief that the company had been relieved from the requirement to report to members and to lodge financial statements with ASIC: see Sprint Energy at [51].Extension of time to lodge Form 389 MRO further seeks an order pursuant to s 1322(4)(d) extending the time specified by the Instrument for lodging the opt-in notice—in the form of the Form 389, being a pre-condition to obtaining relief under the Instrument. I am satisfied on the evidence that it is just and equitable that this order be made. Had the directors of MRO known that a notice had not been lodged with ASIC, I am satisfied that they would have attended to lodgement. The evidence is that the directors believed that the notice had been lodged and they carried out their functions and acted as if the notice had in fact been lodged on time.Residual discretion There is, in my opinion, no reason why the Court should exercise its residual discretion so as not to grant the relief sought by MRO.Conclusion For these reasons, I made the orders sought by MRO in its originating process.