Entertainment Publications of Australia Pty Ltd v Australian Securities and Investments Commission

• Jurisdiction: Australia Federal only
• Judgment Date: 19 August 2022
• Neutral Citation: [2022] FCA 960
• Date: 19 August 2022
• Court: Federal Court

Federal Court of Australia

Entertainment Publications of Australia Pty Ltd v Australian Securities and Investments Commission [2022] FCA 960

File number(s):	NSD 986 of 2021
Judgment of:	GOODMAN J
Date of judgment:	19 August 2022
Catchwords:	CORPORATIONS – Financial reporting and lodging requirements under Part 2M.3 of the Corporations Act 2001 (Cth) – relief from compliance under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 – inadvertent failure to comply with conditions of exemption – application for relief under s 1322 of the Corporations Act 2001 (Cth) granted
Legislation:	Corporations Act 2001 (Cth) Corporations Amendment (Proprietary Company Thresholds) Regulation 2019 (Cth) Corporations Regulations 2001 (Cth)
Cases cited:	Car Buyers Australia Pty Limited v Australian Securities and Investments Commission [2020] FCA 599 In the matter of Flight Centre Technology Pty Ltd [2022] NSWSC 367 In the matter of Bremick Pty Ltd [2021] NSWSC 533 In the matter of DAC Finance (NSW/Qld) Pty Ltd [2020] NSWSC 182 MB Vic Pty Ltd, in the matter of MB Vic Pty ltd [2022] FCA 874 Ozito Industries Pty Ltd v Australian Securities and Investments Commission [2020] FCA 1432; (2020) 148 ASCR 585 Re ComfortDelGro Corporation Australia Pty Ltd [2020] FCA 378 Re ex parte; Navitas Bundoora Pty Ltd [2020] WASC 87 Re Jaxsta Ltd [2018] WASC 390 Re Murray River Organics Ltd [2019] FCA 931; (2019) 138 ACSR 365 Re SMS Operations Pty Ltd; ex parte SMS Operations Pty Ltd [2021] WASC 191 Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396
Division:	General Division
Registry:	New South Wales
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	107
Date of hearing:	Determined on the papers
Counsel for the Plaintiff:	Mr B Le Plastrier
Solicitor for the Plaintiff:	Sundaraj & Ker
Counsel for the Defendant:	The defendant did not appear

ORDERS

		NSD 986 of 2021
BETWEEN:	ENTERTAINMENT PUBLICATIONS OF AUSTRALIA PTY LTD (ACN 065 011 903) Plaintiff
AND:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Defendant

order made by:	GOODMAN J
DATE OF ORDER:	19 August 2022

THE COURT ORDERS THAT:

1. Pursuant to s 1322(4)(d) of the Corporations Act 2011 (Cth), the time specified by clause 6(1)(f) and (2) 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 Opt-in Notice) be extended from 31 October 2018 to 9 December 2020.

2. Pursuant to s 1322(4)(d) of the Corporations Act, the time specified by clause 7(2) of the ASIC Instrument for the plaintiff to lodge a Form 399 – Opt-out notice by wholly‑owned company relieved from financial reporting obligations (Form 399 Opt‑out Notice) be extended from 31 October 2020 to a date seven days from the date of this order.

3. Under s 1322(4)(c) of the Corporations Act, the plaintiff and its current and former directors and officers are relieved from any civil liability in respect of the failures to comply with:

   1. the requirement in clause 6(1)(f) and (2) of the ASIC Instrument to lodge a Form 389 Opt-in Notice by 31 October 2018;

   2. the requirement in clauses 6(y)(i) and 7(2) of the ASIC Instrument to lodge a Form 399 Opt‑out Notice by 31 October 2020;

   3. the requirement in clause 6(1)(v) of the ASIC Instrument to include the notations in consolidated statements for the 2017-2018 financial year referred to in clause 6(1)(v) of the ASIC Instrument;

   4. the requirement in clause 6(1)(i) of the ASIC Instrument for the directors of the plaintiff at or about the end of the 2018-2019 financial year to have:

      1. considered the advantages and disadvantages associated with the company remaining a party to the deed of cross guarantee dated 25 June 2018 and taking advantage of the relief afforded by the ASIC Instrument; and

      2. resolved either:

         1. that the company should continue to remain a party to the deed of cross guarantee; or

         2. that the company should seek to revoke the deed of cross guarantee in respect of the company;

   5. ss 292(1), 301(1), 314(1) and 319(1) of the Corporations Act in respect of the 2017-2018 financial year and the 2018-2019 financial year to the extent that compliance was required as a result of the failures referred to in sub-paragraphs (a) to (d) above; and

   6. the notice issued by the defendant to the plaintiff under s 1274(11) of the Corporations Act dated 30 March 2021.

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

REASONS FOR JUDGMENT

GOODMAN J

Introduction

1. The plaintiff, Entertainment Publications of Australia Pty Ltd (EPA), seeks relief under s 1322(4)(c) and (d) of the Corporations Act 2001 (Cth) in connection with its non-compliance with financial reporting obligations imposed by Pt 2M.3 of the Act. EPA has provided a detailed explanation of the circumstances attending the proven instances of non-compliance. I am satisfied that each such instance was the product of inadvertence and not of dishonesty. I am also satisfied that no such instance has caused substantial injustice to any person or that a grant of relief would cause substantial injustice. There are no discretionary factors which suggest that the Court should refuse relief.

2. The defendant, the Australian Securities and Investments Commission (ASIC), informed the Court that it neither consents to, nor opposes, the relief sought by EPA and did not otherwise participate in the proceeding.

3. For the reasons set out below, relief should be granted largely, but not completely, in the form sought by EPA.

Legal framework

4. Before considering the circumstances giving rise to the application, it is convenient to set out the legal framework in which the application arises.

Part 2M.3 of the Act and the definition of “large proprietary company”

5. Part 2M.3 of the Act imposes a series of reporting obligations upon various entities including “large proprietary companies”. “Large proprietary company” is defined in s 45A(3) of the Act as follows:

45A Proprietary companies

…

Large proprietary company

(3) A proprietary company is a large proprietary company for a financial year if it satisfies at least 2 of the following paragraphs:

(a) the consolidated revenue for the financial year of the company and the entities it controls (if any) is $25 million, or any other amount prescribed by the regulations for the purposes of paragraph (2)(a), or more;

(b) the value of the consolidated gross assets at the end of the financial year of the company and the entities it controls (if any) is $12.5 million, or any other amount prescribed by the...