Car Buyers Australia Pty Limited v Australian Securities and Investments Commission, in the matter of Car Buyers Australia Pty Limited

• Jurisdiction: Australia Federal only
• Judge: GLEESON J
• Judgment Date: 14 May 2020
• Neutral Citation: [2020] FCA 599
• Date: 14 May 2020
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Car Buyers Australia Pty Limited v Australian Securities and Investments Commission, in the matter of Car Buyers Australia Pty Limited [2020] FCA 599

File number:	NSD 253 of 2020
Judge:	GLEESON J
Date of judgment:	14 May 2020
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
Legislation:	ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 cll 3, 5, 6 Corporations Act 2001 (Cth) Pt 2M.3, ss 314, 315, 341, 1274, 1322(4)
Cases cited:	An v Joo[2019] NSWSC 39 Elderslie Finance Corp Ltd v Australian Securities Commission [1993] WASC 465, (1993) 11 ACSR 157 Gangemi v Osborne[2009] VSCA 297 Lock, Re Cedenco JV Australia Pty Ltd (in liq) (No 2) [2019] FCA 93 Re Murray River Organics Ltd[2019] FCA 931; (2019) 138 ACSR 365 Re Solco Ltd [2015] FCA 635; (2015) 106 ACSR 591 Re Wave Capital Ltd[2003] FCA 969; (2003) 47 ACSR 418 Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd (No 2) [2018] WASC 357
Date of hearing:	28 April 2020
Date of last submissions:	5 May 2020
Registry:	New South Wales
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Category:	Catchwords
Number of paragraphs:	41
Counsel for the Plaintiff:	R Yezerski
Solicitor for the Plaintiff:	Herbert Smith Freehills

ORDERS

		NSD 253 of 2020
IN THE MATTER OF CAR BUYERS AUSTRALIA PTY LIMITED (ACN 159 545 758)
BETWEEN:	CAR BUYERS AUSTRALIA PTY LIMITED (ACN 159 545 758) Plaintiff
AND:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Defendant

JUDGE:	GLEESON J
DATE OF ORDER:	14 May 2020

THE COURT ORDERS THAT:

1. Pursuant to s 1322(4)(d) of the Corporations Act 2001 (Cth) (Act), the time specified by:

   1. cl 6(1)(f) of the ASIC Corporations (Wholly-owned Companies) 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 (Form 389) for the financial year ended 30 September 2018; and

   2. cll 6(1)(g), (h) and (i) of the ASIC Instrument for the directors of the plaintiff to make certain statements and pass certain resolutions required to obtain the benefit of the ASIC Instrument,

be extended to 21 May 2020.

2. Pursuant to s 1322(4)(c) of the Act, the plaintiff and its current and former directors, secretaries and officers are relieved from any civil liability in respect of any failure to:

   1. lodge a Form 389 with the Australian Securities and Investments Commission (ASIC) within four months of the end of the plaintiff’s financial year ended 30 September 2018;

   2. pass resolutions of the directors of the plaintiff consistent with the requirements under cll 6(1)(g), (h) and (i) of the ASIC Instrument before 30 September 2018;

   3. lodge a Form 388 Copy of financial statements and reports for the financial year ended 30 September 2018 with ASIC; and

   4. comply with the notice issued by ASIC under s 1274(11) of the Act dated 4 December 2019.

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

REASONS FOR JUDGMENT

GLEESON J:

1. The plaintiff (Car Buyers) made an ex parte application for relief under ss 1322(4)(c) and (d) of the Corporations Act 2001 (Cth) (Act) arising out of failures to satisfy the requirements of the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (ASICInstrument).

2. Sections 1322(4)(c) and (d) 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:

…

(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.

3. Car Buyers served the originating process and supporting affidavits on the Australian Securities and Investments Commission (ASIC). On the basis of that information, ASIC neither supported nor opposed the application. Subsequently, Car Buyers served on ASIC additional affidavit evidence in support of its application. ASIC’s position did not change.

4. Car Buyers’ evidence comprised the following affidavits:

1. two affidavits of Matthew Sinnamon, Group General Counsel and Company Secretary of Eclipx and a director and company secretary of Car Buyers between 19 December 2017 and 31 July 2019;

2. affidavit of Daniel Werzberger, a director of Car Buyers between 18 July 2012 and 31 July 2019;

3. two affidavits of Joshua Temkin, Group Legal Counsel of Eclipx and the in-house lawyer responsible for instructing the external lawyers for Eclipx and Car Buyers, Herbert Smith Freehills (HSF), in relation to Car Buyers’ attempts to bring itself within the ASIC Instrument in 2018;

4. affidavit of William Hanna, solicitor, affirmed 23 April 2020, annexing the financial report for the year ended 30 September 2018 filed by Eclipse with ASIC on 14 November 2018; and

5. affidavit of Phillip McMahon, partner of HSF, affirmed 5 May 2020.

Background to application for relief

5. Car Buyers is a large proprietary company limited by shares. From December 2017 to July 2019, Car Buyers was wholly-owned by Leasing Finance (Australia) Pty Limited (Leasing Finance), which itself was a wholly-owned subsidiary of Eclipx Group Limited (Eclipx).

6. In about September 2009, Eclipx had entered into a deed of cross-guarantee with a number of subsidiaries in its corporate group (deed of cross-guarantee).

7. In the lead-up to the end of their financial year on 30 September 2018 (FY2018), Eclipx and Car Buyers undertook various steps designed to permit Car Buyers to take the benefit of the ASIC Instrument.

8. In late July 2018, Eclipx engaged HSF to prepare the necessary documentation to facilitate the assumption of Car Buyers (and other entities) to the deed of cross-guarantee. HSF duly prepared an “assumption deed,” whereby Car Buyers...