X Corp v eSafety Commissioner

Case [2025] FCAFC 99

FEDERAL COURT OF AUSTRALIA

X Corp v eSafety Commissioner [2025] FCAFC 99  

Appeal from: X Corp v eSafety Commissioner [2024] FCA 1159
File number: VID 1186 of 2024
Judgment of: MURPHY, CHARLESWORTH AND HORAN JJ
Date of judgment: 31 July 2025
Catchwords:

APPEAL AND NEW TRIAL – appeal from judgment dismissing an application for judicial review – where primary judge made findings as to the meaning and application of foreign law after hearing competing expert evidence – whether primary judge erred in preferring the opinion of an expert – role of appellate court in determining ground of appeal alleging error in findings concerning foreign law – whether error in construction of law of Nevada relating to the merger of entities.

STATUTORY INTERPRETATION – whether non-compliance with statutory requirements for the content of an infringement notice issued under the Regulatory Powers (Standard Provisions) Act 2014 (Cth) had the consequence that the infringement notice was valid

Legislation:

Foreign Corporations (Application of Laws) Act 1989 (Cth) s 7

Judiciary Act 1903 (Cth) s 39B

Migration Act 1958 (Cth)

Online Safety Act 2021 (Cth) ss 5, 45, 56, 57, 163, 238

Regulatory Powers (Standard Provisions) Act 2014 (Cth) ss 103, 104, 107

Regulatory Powers (Standard Provisions) Bill 2014 (Cth)  
Cases cited:

Chanos v Nevada Tax Commission 124 Nev 232 (2008)

Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Monash Freeway Widening Case) [2022] FCAFC 59

Goodman v Stafford (1992) 15 MVR 145

Henriques v Dutch West India Co (1728) 2 Ld Raym 1532; 92 ER 494

James Hardie & Co Pty Ltd v Hall (1994) 43 NSWLR 554

Lamb v Leroy Corp 85 Nev 276 (1969)

Lazard Brothers & Co v Midland Bank Ltd [1933] AC 289

Lee v Lee (2019) 266 CLR 129

Miller v Minister for Immigration, Citizenship and Multicultural Affairs (2024) 78 CLR 628

Minister for Immigration and Citizenship v SZIZO (2009) 238 CLR 627

Parkasho v Singh [1968] P 233

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355

Quixtar, Inc v Signature Management Team, LLC (7 April 2009)

Savage v Pierson 123 Nev 86 (2007)

X Corp v eSafety Commissioner [2024] FCA 1159

Division: General Division
Registry: Victoria
National Practice Area: Administrative and Constitutional Law and Human Rights
Number of paragraphs: 148
Date of hearing: 26 March 2025
Counsel for the Appellant: Mr B Walker SC with Mr S Hartford-Davis and Mr H Rogers
Solicitor for the Appellant: Thomson Geer
Counsel for the Respondent: Mr S Lloyd SC with Mr CJ Tran
Solicitor for the Respondent: Australian Government Solicitor

ORDERS

VID 1186 of 2024
BETWEEN:

X CORP

Appellant
AND:

ESAFETY COMMISSIONER

Respondent

ORDER MADE BY:

MURPHY, CHARLESWORTH AND HORAN JJ

DATE OF ORDER:

31 JULY 2025

THE COURT ORDERS THAT:

1.The appeal is dismissed.

2.The appellant is to pay the respondent’s costs of and incidental to the appeal.

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


REASONS FOR JUDGMENT

THE…

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X Corp v eSafety Commissioner [2025] FCAFC 99
Case
[2025] FCAFC 99
Decision Date

CaseChat Overview and Summary

X Corp lodged an appeal against the eSafety Commissioner in the Federal Court of Australia, challenging the validity of an infringement notice issued under the Regulatory Powers (Standard Provisions) Act 2014 (Cth). The dispute primarily hinged on the interpretation of the word “liabilities” in § 92A.250(d) and whether the infringement notice was valid despite non-compliance with statutory requirements. The core legal issues before the court were whether the primary judge erred in preferring the opinion of an expert on foreign law and whether there was an error in the construction of the law of Nevada relating to the merger of entities.

The court examined the primary judge’s reliance on expert evidence and found that the primary judge was correct in preferring the opinion of the expert provided by the respondent over that of the appellant’s expert. The court highlighted that the appellant's expert, Mr Bogatz, failed to adequately consider the legislative history of the relevant statute and provided an unpersuasive interpretation of the word “liability”. The court also noted that Mr Bogatz's reasoning on the significance of Nevada gaming law lacked support in authority and was not sufficiently grounded in well-established principles of statutory interpretation in Nevada.

The court concluded that there was no appealable error in the primary judge’s findings concerning the meaning and application of foreign law. The word “liabilities” in § 92A.250(d) was found to be broad enough to encompass an obligation to comply with a regulatory obligation. Consequently, the court dismissed the appeal and ordered that the appellant pay the respondent’s costs of and incidental to the appeal.

Orders

Orders of the court

1. The appeal is dismissed.

2. The appellant is to pay the respondent’s costs of and incidental to the appeal.

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

In addition, Mr Bogatz had prepared his reports without reference at all to legislative history. That history is to the effect that § 92A.250(1)(d) was based on model laws and was not intended to alter the effect of provisions in force prior to its enactment (including the 1969 iteration referred to in Lamb). The primary judge described it as surprising that Mr Bogatz should be ignorant of that legislative history despite having practised as an attorney in Nevada for some years. We share that view.Unpersuasive evidence as to dictionary meaning The evidence at first instance included two definitions from Black’s Law Dictionary (12th ed, Thomson Reuters, 2024) for the word “liability”, one that was capable of supporting Mr Bogatz’s opinion and one that was not. The contrary definition was:The quality, state, or condition of being legally obligated or accountable; legal responsibility to another or to society, enforceable by civil remedy or criminal punishment. This aspect of the evidence is considered by the primary judge at J, [148] as follows:… Mr Bogatz did not accept that the first definition is broader than the second, in that it is not limited to pecuniary obligations. Instead, he insisted that whether the first definition was broader in this way would ‘depend on the context’. This is to be contrasted with the fact that Mr Bogatz was able to state what ‘plain meaning’ the word ‘liability’ bears in isolation, with that plain meaning denoting in Mr Bogatz’s view ‘some type of monetary obligation’. I consider that Mr Bogatz’s opinion in this regard was strained. We arrive at the same conclusion. The breadth of the ordinary or legal meaning of the word “liabilities” assumed considerable importance in the evaluation of the competing expert evidence. That is because Mr Bogatz’s opinion depended on a premise that the word could not include anything other than a monetary obligation unless accompanied by additional words expanding that otherwise limited meaning. His credibility and reliability as an independent expert was undermined by his failure to sensibly grapple with a broader dictionary definition so plainly undermining a critical plank of his opinion. Acceptance of the breadth of the word would have meant that if the legislature intended “liabilities” to be limited to monetary payments, additional words of limitation would need to be employed. The primary judge was correct to describe this as an incident in which Mr Bogatz had moulded his evidence in cross-examination so as to adhere to the opinions he had set out in his report.Unpersuasive reasoning on the significance of Nevada gaming law Mr Bogatz’s evidence on this topic is summarised by the primary judge at J, [66] and [141] (extracted above). His opinion that Nevada’s gaming laws would influence the proper construction of § 92A.250 had no direct support in authority. Rather, it was an opinion about the policy considerations a Nevada court would take into account when resolving an ambiguity in the meaning of a word, which informed his opinion as to the “likely approach” of a Nevada court to the question of whether a liability to comply with a regulatory notice was transferred upon a merger.

Decision

Reasons for decision

On appeal, X Corp submitted that policy considerations based on “a threat of abusive phoenixing exercises” was “unreal” because regulatory entitlements or privileges generally did not transfer on merger, which meant that phoenixing exercises were more difficult in regulated industries. That argument does not address the fundamental problems affecting Mr Bogatz’s opinion that the word “liabilities” was limited to monetary liabilities for all purposes. He did not qualify that opinion by suggesting that the word could bear a wider meaning in non-regulatory contexts. The primary judge was entitled (as is this Court on appeal) to consider the policy considerations advanced by Mr Pyle as relevant to the interpretation of § 92A.250(1)(d). In short, if Mr Bogatz’s unqualified opinion were to be accepted, the surviving entity in a merger would enjoy non-monetary benefits of the constituent entities, and yet escape all non-monetary obligations. In the absence of decided authority, it was for Mr Bogatz to persuade the primary judge that such an outcome accorded with legal principle. The primary judge observed that his opinion was not sufficiently grounded in well established principles of statutory interpretation in Nevada. We are of the same view.Conclusions We have concluded that there is no appealable error affecting the factual findings of the primary judge. Alternatively, to the extent that it formed a part of this Full Court’s task to decide the question for itself, the relevant factual finding is that the word “liabilities” in § 92A.250(d) is sufficiently broad to encompass an obligation to comply with a regulatory obligation owed by a surviving corporation’s constituent entities prior to the merger. It follows that the third ground of appeal is not established. Some concluding observations may be made about Grounds 1 to 3. The issues in the proceeding arose from a “quirk of timing” (to use a phrase employed by senior counsel for X Corp in the course of argument) in that, before the time at which compliance with the Reporting Notice was required, the merger occurred upon which Twitter ceased to exist. This does not appear to have been regarded at the time as having any material effect on the relevant regulatory obligations. Prior to issuing the Reporting Notice, the Commissioner had confirmed that Twitter was the appropriate legal entity for service of the notice, which was to be sent to a named lawyer at Thomson Geer, the solicitors who were then acting for Twitter and who subsequently continued to act for X Corp (including in these proceedings). On 29 March 2023, the date for compliance with the Reporting Notice, the solicitors provided “Twitter Inc’s response” to the notice: J, [30]. This was after the date on which the merger took place (15 March 2023). On 20 April 2023, in the context of subsequent correspondence about compliance with the notice, the solicitors advised the Commissioner about the merger of Twitter into X Corp, relevantly stating that X Corp was “the successor in interest to Twitter, Inc”, that “[a]ll of Twitter, Inc.’s assets, liabilities, rights, etc. passed to X Corp on 15 March 2023 by operation of law”, and that X Corp had become “the provider of the Twitter service in Australia”. At that time, the solicitors advised the Commissioner that “[t]he Company would prefer that X Corp continues to be referred to as ‘Twitter’ where references are made to the provider of the Twitter service”.

Ratio Decidendi

Legal Principle Established

The primary judge said that certain consequences followed from the conclusion that s 57 of the Online Safety Act directed attention to foreign law for the purposes of deciding whether a foreign corporation was a “person”, including that s 57 should not be understood as operating in isolation from s 7 of the Foreign Corporations (Application of Laws) Act 1989 (Cth). It relevantly provides:7 Law applied in place of incorporation applicable law in determining questions relating to status of foreign corporation etc.(1)The section applies in relation to the determination of a question arising under Australian law (including a question arising in a proceeding in an Australian court) where it is necessary to determine the question by reference to a system of law other than Australian law.(2)Any question relating to whether a body or person has been validly incorporated in a place outside Australia is to be determined by reference to the law applied by the people in that place.(3) Any question relating to:(a)the status of a foreign corporation (including its identity as a legal entity and its legal capacity and powers); or…(h)the validity of a foreign corporation’s dealings otherwise than with outsiders;is to be determined by reference to the law applied by the people in the place in which the foreign corporation was incorporated.(4)A matter mentioned in subsection (2) or (3) is not to be taken, by implication, to limit any other matter mentioned in those subsections. Accordingly, his Honour said, identifying whether a foreign corporation was a “person” subject to obligations imposed by s 57 of the Online Safety Act depended on the status of the corporation by reference to the law of the place of its incorporation: J, [112]. The primary judge held that the relevant question arising under s 57 of the Online Safety Act was the status of X Corp, not the status of Twitter: J, [115]. That was because the true issue was whether a given company was subject to a particular obligation by reason of its status, which was to be determined by the law of the place of its incorporation. Accordingly, choice of law rules selected the laws of the place where X Corp was incorporated, namely the law of Nevada: J, [116]. The primary judge went on to say:119For these purposes, the status of a foreign corporation extended beyond its mere existence, and included all the attributes with which the corporation was invested under the laws of its domicile, including the identification of liabilities that attached to it, at least at the point of its creation: National Bank of Greece and Athens SA v Metliss [1958] AC 509 (Metliss) at 525 (Viscount Simonds) and 529 (Lord Tucker).120Once engaged, s 7 of the Act supplies the content of the choice-of-law rule to the questions set out in the section. But the reference to the status of a foreign corporation in s 7(3)(a) should be understood in the same way as the common law choice-of-law rule was formulated. As Davies J observed in La Mancha Group International BV v Federal Commissioner of Taxation [2020] FCA 1799; 112 ATR 660 (La Mancha) at [21], the relevant common law principle finds expression in s 7(3)(a) of the Act.