Adtrans Group Pty Ltd, in the matter of Adtrans Group Pty Ltd [2025] FCA 1606 (22 December 2025)

In the matter of ComfortDelGro Corporation Australia Pty Ltd [2020] FCA 378

In the matter of MB Vic Pty Ltd [2022] FCA 874

In the matter of Order of AHEPA NSW Incorporated [2018] NSWSC 458

Ozito Industries Pty Ltd v Australian Securities and Investments Commission [2020] FCA 1432; (2020) 148 ACSR 585

Re Clarity Pharmaceuticals Ltd [2021] FCA 804

Re Compaction Systems Pty Ltd and the Companies Act [1976] 2 NSWLR 477

Re EHR Resources Ltd [2018] FCA 997

Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd (No 2) [2018] WASC 357

Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396

IN THE MATTER OF ADTRANS GROUP PTY LTD (ACN 008 129 477)

AUTOMOTIVE HOLDINGS GROUP PTY LIMITED (ACN 111 470 038)

1. Pursuant to s 1322(4)(b) of the Corporations Act 2001 (Cth), the register of companies be rectified by removing:

(a) the opt-out notice lodged by Adtrans Group Pty Ltd with the Australian Securities and Investments Commission (ASIC) and signed on 1 August 2022, being ASIC document number 031691377;

(b) the opt-out notice lodged by A.P. Group Pty Ltd (APG) with ASIC and signed on 22 April 2022, being ASIC document number 03159405; and

(c) the opt-out notice lodged by Automotive Holdings Group Pty Limited (AHG) with ASIC and signed on 22 April 2022, being ASIC document number 03159407.

1. Pursuant to s 1322(4)(c) of the Act, the Applicants and their current and former directors are relieved from civil liability in respect of any failure to comply with the applicable requirements of Part 2M.3 of the Act, by reason of:

(a) the failure to prepare and lodge audited financial statements for Adtrans for the financial years ending 2016 to 2023 (inclusive);

(b) the failure to prepare and lodge audited financial statements for APG for the financial years ending 2021 and 2022;

(c) the failure to prepare and lodge audited financial statements for AHG for the financial years ending 2021, 2022 and 2023; and

(d) the lodging of opt-out notices for Adtrans, APG and AHG in error.

1. The Applicants are granted leave to make further submissions with respect to relief sought by paragraph 1 of the originating application dated 9 July 2025, pursuant to s 1322(4)(a) of the Act.

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

1. The Applicants (Adtrans, APG and AHG) apply for relief under s 1322(4) of the Corporations Act 2001 (Cth) for themselves, and on behalf of their ultimate holding company, Eagers Automotive Limited, from non-compliance with prescribed financial reporting requirements in Chapter 2M of the Act.
2. Part 2M.3 in Chapter 2M of the Act relevantly requires that a "large proprietary company" (s 45A(3)):

(a) prepare a financial report and a directors' report for each financial year (s 292(1)(c));

(b) have the financial report for a financial year audited in accordance with Division 3 and obtain an auditor's report (s 301(1));

(c) report to members for a financial year by providing the financial report, the directors' report and the auditor's report on the financial report for the financial year (s 314(1)); and

(d) upon request, send members a full financial report and the directors' report and auditor's report (s 316(1)).

1. A large proprietary company and its directors may obtain relief from these financial reporting requirements where, as here, both the company and its holding entity are parties to a deed of cross-guarantee and certain other conditions are met. That financial reporting relief is available under the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 and its predecessor, ASIC Class Order [CO98/1418]. Both the Instrument and the Class Order are exemption orders made by the Australian Securities and Investments Commission (ASIC) under s 341 of the Act.
2. Adtrans, APG and AHG (the Companies) apply for relief because, for the reasons outlined below, for certain financial years the Companies mistakenly understood they were not large proprietary companies to whom the financial reporting requirements applied. For those years, the Companies did not comply with Pt 2M.3 of the Act. The Companies also lodged "opt-out notices" informing ASIC that they had ceased to rely on the financial reporting relief available under the Instrument.
3. The Companies seek orders relieving themselves (and their directors) from any civil liability arising from non-compliance with Pt 2M.3 and rectifying the register of companies by removing the opt-out notices: Act, s 1322(4)(b) and s 1322(4)(c). They also seek declarations on behalf of Eagers Automotive, the effect of which appears to be to ensure that it is not adversely affected (including in terms of its reliance on the Instrument) by their acts and omissions: Act, s 1322(4)(a).
4. For the following reasons, I will make the orders sought by the Companies. I am not presently prepared to grant the Companies the declaratory relief they seek on behalf of Eagers Automotive because what is sought to be retrospectively excused by the declarations is unclear. I will, however, allow the Companies an opportunity to put on further submissions with respect to that relief.

1. As outlined above, the types of companies (and directors) that may obtain financial reporting relief under the Instrument relevantly include a "large proprietary company" that is a party to a deed of cross-guarantee at the end of a financial year (relevant financial year): Instrument, s 5(1) and s 6(1)(ii).

1. A proprietary company is a "large proprietary company" for a financial year if it has satisfied at least two of the following criteria:

(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 for the purposes of s 45A(2)(a) of the Act, or more: Act, s 45A(3)(a);

(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 for the purposes of s 45A(2)(b), or more: Act, s 45A(3)(b);

(c) The company and the entities it controls (if any) have 50, or any other number prescribed for the purposes of s 45A(2)(c), or more employees at the end of the financial year: Act, s 45A(3)(c).

1. A "small proprietary company" is the converse of a large proprietary company. A proprietary company is a "small proprietary company" for a financial year if it satisfies at least two of the following criteria:

(a) The consolidated revenue for the financial year of the company and the entities it controls (if any) is less than $25 million, or any other amount prescribed by the regulations for the purposes of the section: Act, s 45A(2)(a);

(b) The value of the consolidated gross assets at the end of the financial year for the company and the entities it controls (if any) is less than $12.5 million, or any other amount prescribed by the regulations for the purposes of the section: Act, s 45A(2)(b);

(c) The company and the entities it controls (if any) have fewer than 50 employees at the end of the financial year, or any other number prescribed by the regulations for the purposes of the section: Act, s 45A(2)(c).

1. A small proprietary company is not subject to the same financial reporting requirements as a large proprietary company: Act, s 292(1). Of present relevance, a small proprietary company only has to prepare a financial report and directors' report if it is directed to do so by shareholders, pursuant to s 293 of the Act or by ASIC, pursuant to s 294 of the Act: Act, s 292(2)(a).

Conditions under the Instrument for obtaining financial reporting relief conditions

1. To obtain financial reporting relief a "large proprietary company" must also satisfy the conditions stated in the Instrument: Instrument, s 6(1). Those conditions relevantly include the following:

(a) Holding entity conditions: The financial year for the holding entity must be the same as the relevant financial year: s 6(1)(d). Further, the holding entity must not be a small proprietary company for the relevant financial year, and it must have prepared by the relevant time consolidated financial statements, together with notes for the relevant financial year: s 6(1)(e) and s 6(1)(r). The company must also have remained as a wholly-owned entity of the holding entity at all times in the period from the end of the relevant financial year until the date on which the consolidated financial statements are lodged with ASIC: s 6(1)(j);

(b) Opt-in conditions: If the large proprietary company did not rely on the financial reporting relief for the preceding financial year, the company must have lodged with ASIC an "opt-in notice" by the prescribed time: s 6(1)(f). The opt-in notice contains a statement that the company has taken advantage of the financial reporting relief and identifies its holding entity: s 6(1)(f); Class Order, s (k)(ii). Before the end of the first financial year in respect of which the company takes advantage of the financial reporting relief, both the company and the other entities that are parties to the deed of cross-guarantee must also comply with certain requirements: s 6(1)(g). These include at least one director of each other entity signing a statement that, in their opinion, immediately before the execution of the deed of cross-guarantee 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: s 6(1)(g); and

(c) Opt-out condition: If the large proprietary company does not rely upon the financial reporting relief for a financial year (first non-reliance year) and does not lodge an annual financial report prepared under Chapter 2M of the Act for that first non-reliance year, then the company must lodge with ASIC an "opt-out notice" by the prescribed time: s 7. The opt-out notice contains a statement that the company has ceased to rely on the financial reporting relief: s 7(1).

1. The expression "consolidated financial statements" as referred to at [11(a)] above means the financial statements of a parent company and its subsidiaries in which the assets, liabilities, equities, income, expenses and cash flows of the parent company and its subsidiaries are presented as those of a single economic entity: Instrument, s 4 and Accounting Standard AASB 10 Consolidated Financial Statements, Appendix A. Thus, even when a large proprietary company avails itself of financial reporting relief, their financial information is included in the statements lodged by the holding entity.

1. The facts material to the application are contained in the affidavits of Olivia Harvey dated 8 July 2025, Amanda Ellison dated 8 July 2025, and Emily Tranter dated 29 July 2025 and 14 August 2025. Ms Harvey and Ms Ellison are, respectively, the General Manager Corporate Finance and the General Counsel for Eagers Automotive. Ms Tranter is the solicitor on the record for the Companies. Set out below is an overview of the evidence emerging from those affidavits.

1. Eagers Automotive (which is listed on ASX Limited) is the ultimate holding company of a group of companies, including Adtrans, APG and AHG (Eagers Group). The core business activity of Eagers Group is the ownership and operation of motor vehicle dealerships in Australia and New Zealand. Neither Adtrans, APG nor AHG operate a dealership or other business. The Companies are holding companies for subsidiaries within the Eagers Group. Except for a bank account maintained by APG, the Companies do not deal directly with third parties.

1. Eagers Automotive and the Companies (together with others in the Eagers Group) are parties to a deed of cross-guarantee (Eagers DOCG). The Eagers DOCG was first signed on 21 April 2008. Eagers Automotive (then A.P. Eagers Limited) was then, and remained, the holding entity under the deed. The Eagers DOCG has been amended and restated, and its parties have varied over time. Materially, APG has been a party since 2008, Adtrans has been a party since 2010 and AHG has been a party since 2019.
2. By the Eagers DOCG, each group entity (which includes the Companies) covenants with the trustee (presently Eagers Nominee Pty Ltd) that any one of the group entities under the deed guarantees to each creditor payment in full of any debt in accordance with the Eagers DOCG. It further provides that each group entity agrees with the trustee that the Eagers DOCG becomes enforceable in respect of a debt of a group entity upon its winding up under the Act or, in any other case, six months after a resolution or order for the winding up of the group entity if the debt of a creditor has not been paid in full.

Eagers Automotive consolidated financial statements

1. The financial year for all the companies in the Eagers Group (including the Companies and Eagers Automotive) ends on 31 December. Their financial statements are required to be lodged by 28 February the following year. Adtrans and APG are included in the consolidated financial statements that have been lodged by Eagers Automotive (as holding entity) for the financial years ending 2016 to 2023. AHG has been included in the consolidated financial statements lodged by Eagers Automotive (as holding entity) for the financial years ending 2019 to 2023. I will refer to the consolidated financial statements lodged by Eagers Automotive between 2016 and 2023 as the Eagers Financial Reports.

1. Although their financial information was included in the Eagers Financial Reports, the Companies did not comply with the financial reporting requirements in Pt 2M.3 of the Act for the following financial years: Adtrans (2016 to 2023); APG (2022) and AHG (2021 to 2023).
2. This was because, for those financial years, the Companies were mistakenly assessed as being small proprietary companies within the meaning of s 45A(2) of the Act. Ms Harvey gives evidence that the circumstances giving rise to this mischaracterisation of the Companies were as follows:

(a) In around 2019, Eagers Group introduced a model (using Microsoft Excel) which identified the required financial information, by legal entity, to test whether that entity satisfied the large proprietary company test in s 45A of the Act (LPC Workbook). The LPC Workbook was used by Eagers Group for that purpose for each financial year ending 2018 to 2024;

(b) The LPC Workbook drew data from a "data warehouse" first established by Eagers Group in 2018. The data warehouse stores all financial data for the Eagers Group at the level of the individual company. The data warehouse is used by Eagers Group to prepare its financial statements and by auditors when auditing those statements. Until the 2021 financial year, the information contained in the data warehouse was "non‑live", meaning that the specific financial reports were downloaded from the data warehouse via a reporting layer and saved to the LPC Workbook. In or about 2021, LPC Workbooks were created retrospectively for the 2016 and 2017 financial years. From the 2021 financial year, the data was drawn directly from the data warehouse into the yearly LPC Workbooks and updated in real time from the various systems that are operated by Eagers Group; and

(c) Across the financial years ending 2016 to 2023, the formula used in the LPC Workbooks recorded the revenue and assets of an entity on an individual rather than a consolidated entity basis (incorrect formula). Where (as is the case with the Companies) the entity was itself a parent company, this meant that the assessment of revenue, assets and employees in the LPC Workbook did not include the revenue, assets and employees of its subsidiary companies: cf, Act, s 45A. That is, those criteria were assessed on an individual rather than a consolidated (parent and subsidiary) entity basis, as s 45A requires.

1. The incorrect formula was not identified until after February 2025. Some months beforehand, the Eagers Group employed a new Group Financial Reporting Manager who was tasked with "rolling" out the LPC Workbook to prepare the financial reports for the Eagers Group companies. In or around February 2025, the Manager advised Ms Harvey that he was working on changing the LPC Workbook to factor in data for each company in the Eagers Group on a consolidated basis.
2. Ms Harvey was on leave between 28 March and 1 May 2025. In the intervening period, around 9 April 2025, Ms Ellison was provided with draft opt-in notices for each of Adtrans and AHG. This sent Ms Ellison on a train of inquiry because she did not consider that the status of those entities had changes from the previous financial year. On or about 11 April 2025, Ms Ellison became aware of the incorrect formula (and its correction) and commenced taking steps to address its consequences. This included a review of the LPC Workbook to identify the companies affected by the incorrect formula and contacting external lawyers to obtain advice. There followed, in July 2025, the commencement of these proceedings.

1. For Adtrans, the effect of the incorrect formula was that for each of the 2016 to 2023 financial years, it was assessed by the LPC Workbook as meeting the criteria of a small proprietary company (by reason of two or more of its revenue, assets or employees falling within the criteria in s 45A(2)). Assessed on a consolidated basis, Adtrans met the criteria of a large proprietary company in s 45A(3) of the Act.
2. An added complication for Adtrans was that in 2022 Eagers Group sought, and obtained, orders from the Federal Court extending the time for Adtrans to lodge an opt-out notice for the 2016 financial year: In the matter of MB Vic Pty Ltd [2022] FCA 874. Adtrans filed the opt-out notice in accordance with those orders in August 2022. By the opt-out notice, Adtrans informed ASIC that the company had ceased to rely on the financial reporting relief: Instrument, s 7.
3. On 24 April 2025, Adtrans lodged an opt-in notice in respect of the 2024 financial year.

1. For APG, the effect of the incorrect formula was that for each of the 2021 and 2022 financial years, it was assessed by the LPC Workbook as meeting the criteria of a small proprietary company (by reason of two or more of its revenue, assets or employees falling within the criteria in s 45A(2)). Assessed on a consolidated basis, APG met the criteria of a large proprietary company in s 45A(3) of the Act. APG also lodged an opt-out notice with ASIC in 2022 in respect of the 2021 financial year.

1. For AHG, the effect of the incorrect formula was that for each of the 2021 to 2023 financial years, it was assessed by the LPC Workbook as meeting the criteria of a small proprietary company (by reason of two or more of its revenue, assets or employees falling within the criteria in s 45A(2)). Assessed on a consolidated basis, AHG met the criteria of a large proprietary company in s 45A(3) of the Act.
2. AHG also obtained leave pursuant to orders made in MB Vic, but that leave was to lodge an opt-in notice with respect to the 2020 financial year. AHG lodged the opt-in notice on or about 1 August 2022. That same year, AHG lodged an opt-out notice in respect of the 2021 financial year.
3. On 24 April 2025, AHG lodged an opt-in notice with ASIC with respect to the 2024 financial year.

1. Ms Harvey has reviewed the Eagers Financial Reports for the financial years ending 2016 to 2023. She gives evidence that the Companies' financial information is included within the Eagers Financial Reports and is correct. Ms Harvey deposes that the notes concerning the closed group and extended group in the Eagers Financial Reports are unaffected by the erroneous lodging of opt-out notices by the Companies. Her evidence is that anyone reading the Eagers Financial Reports and the notes to them would not be any more informed of the financial metrics of the Companies (or the other companies forming part of the Eagers Group).

1. Ms Harvey gives evidence that the cost of the Companies complying with Pt 2M.3 of the Act for the relevant years would be between $371,800 and $1,931,000. The variation in that cost is attributable to the cost of conducting audits of the Companies' financial statements (between $240,000 and $1,800,000). Ms Harvey deposes that the range of the estimated audit cost is because of a number of factors, including the accessibility of supporting documentation and the availability of knowledgeable staff.

1. Ms Harvey gives evidence that save with respect to the errors outlined above, the Eagers Group has complied with the requirements of the Instrument in respect of each of Adtrans, APG and AHG.

1. On 29 July 2025, ASIC was served with the originating application, affidavits (except that of Ms Tranter dated 14 August 2025), written submissions and draft orders. On 14 August 2025, ASIC indicated that, based on the information provided to it, ASIC neither consented to nor opposed the relief sought by the originating application and did not propose to appear at the hearing. The affidavit of Ms Tranter dated 14 August 2025 annexed the correspondence with ASIC.

1. As outlined above, the Companies apply for relief under s 1322(4) of the Act. That section empowers the Court to validate irregularities in corporate governance and relevantly provides as follows:
   1. Irregularities

...

(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:

(a) an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;

(b) an order directing the rectification of any register kept by ASIC under this Act;

(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.

1. The section "reflects a long-standing legislative recognition that mistakes will happen" and "that it is not in the public interest that the validity of decisions made in relation to corporations be unduly vulnerable to innocent errors which may be corrected without substantial injustice to third parties": Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396 at [39] (French CJ). Section 1322 of the Act is to be "construed broadly and applied pragmatically" principally by reference to considerations of substance rather than form: Weinstock at [39].
2. An order may be made under s 1322(4)(a) or (c) notwithstanding that the contravention or failure referred to in the section concerned resulted in the commission of an offence: Act, s 1322(5).
3. Section 1322(6) of the Act does, however, impose the following conditions upon the grant of relief:

(6) The Court must not make an order under this section unless it is satisfied:

(a) in the case of an order referred to in paragraph (4)(a):

(i) that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature;

(ii) that the person or persons concerned in or party to the contravention or failure acted honestly; or

(iii) that it is just and equitable that the order be made; and

(b) in the case of an order referred to in paragraph (4)(c) - that the person subject to the civil liability concerned acted honestly; and

(c) in every case - that no substantial injustice has been or is likely to be caused to any person.

1. Only one of the preconditions in s 1322(6)(a)(i) to (iii) needs to be satisfied to meet the requirements of s 1322(6)(a) of the Act: Re Clarity Pharmaceuticals Ltd [2021] FCA 804 at [24] (Markovic J); see also, In the matter of Order of AHEPA NSW Incorporated [2018] NSWSC 458 at [25] (Black J).

Rectifying the register of companies pursuant to s 1322(4)(b) of the Act

1. The first category of relief sought by the Companies is an order pursuant to s 1322(4)(b) of the Act, that the register of companies be rectified by removing references to the opt-out notices lodged by Adtrans (dated 1 August 2022), by APG (dated 22 April 2022) and by AHG (dated 22 April 2022 (opt-out notice errors).
2. The only precondition for making an order under s 1322(4)(b) is that the Court be satisfied that no substantial injustice has been, or is likely to be, caused to any person: Act, s 1322(6)(c). This requires consideration of whether there will be any real, and not merely insubstantial or theoretical, prejudice which will be suffered by the making of an order and balancing that against the prejudice to the company, other members and creditors, if an order is not made: Re Compaction Systems Pty Ltd and the Companies Act [1976] 2 NSWLR 477 at 493 (Bowen CJ).
3. The test is "transactional and imposes a qualitative and evaluative assessment of the competing consequences for the parties affected": MB Vic at [16]. The Court may be satisfied that no substantial injustice has been, or is likely to be, caused to any person by reason of the making of the proposed order, where there is an absence of evidence that any third party could have acted to its detriment as a result of the non-compliance: In the matter of ComfortDelGro Corporation Australia Pty Ltd [2020] FCA 378 at [50] (Beach J); In the matter of Bremick Pty Ltd [2021] NSWSC 533 at [21] (Black J).
4. There exists a residual discretion whether to make or refuse to make the order: MB Vic at [17], citing Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd (No 2) [2018] WASC 357 at [35] (Vaughan J). The considerations relevant to the exercise of the discretion include: the circumstances of the non-compliance; whether public policy would be undermined by the making of such orders; whether the applicant acted reasonably promptly in commencing an appropriate inquiry once it became aware of the error; and whether ASIC opposed the relief that it sought: Bremick at [16].
5. I am satisfied that no substantial injustice has been, or is likely to be, caused to any person by making the order sought pursuant to s 1322(4)(b) of the Act. There is no evidence that a third party could have acted to its detriment because of the opt-out notice errors. As Ms Harvey deposes, the Companies' financial information was included in the Eagers Financial Reports, and the opt-out notice errors do not materially affect their contents. Further, there is no suggestion that the opt-out notice errors adversely impacted the capacity of third parties to rely on the Eagers DOCG.
6. I also consider it appropriate to exercise the discretion to grant the relief sought pursuant to s 1322(4)(b) of the Act. I am satisfied that the opt-out notice errors were inadvertent and not deliberate. I accept, in that regard, Ms Harvey's evidence that the opt-out notice errors resulted from the incorrect formula whereby the revenue, assets and employees of the Companies were assessed on an individual entity basis rather than a consolidated entity basis, as s 45A of the Act requires. This meant that the Companies were assessed as small proprietary companies to whom the financial reporting obligations did not apply. A direct consequence of that mischaracterisation was that the Companies lodged opt-out notices because they did not consider that they needed to avail themselves of financial reporting relief under the Instrument.
7. The identification of the incorrect formula which caused the opt-out notice errors was not timely. Nonetheless, once it became apparent (in April 2025), Eagers Group took prompt action to remedy the error, including by identifying the companies affected, notifying ASIC (in June 2025) and commencing these proceedings. The fact that ASIC has been made aware of the opt-out notice errors and does not oppose the relief sought is further matter that weighs in favour of the grant of relief.

Relieving the Companies and their directors of civil liability pursuant to s 1322(4)(c) of the Act

1. The second category of relief sought by the Companies is an order pursuant to s 1322(4)(c) of the Act, that they (and their current and former directors) are relieved from civil liability in respect of any failure to comply with the financial reporting obligations in Pt 2M.3 of the Act. That relief is sought for Adtrans for the financial years ending 2016 to 2023, for APG for the financial years ending 2021 and 2022 and for AHG for the financial years ending 2021 to 2023 (non-compliance period).
2. Relief is available under s 1322(4)(c) notwithstanding that the contravention resulted in the commission of an offence: Act, s 1322(5). The Court must, however, be satisfied that the person subject to the civil liability concerned acted honestly and that no substantial injustice has been, or is likely to be, caused to any person by the making of the order: Act, s 1322(6)(b) and s 1322(6)(c).

The persons involved in the contraventions of Pt 2M.3 of the Act acted honestly

1. In ICandy Interactive Limited, in the matter of ICandy Interactive Limited [2018] FCA 533; (2018) 125 ACSR 369, Banks-Smith J said of the requirement of honesty for the purposes of s 1322 of the Act (at [54] to [55]):

1. When determining whether someone has acted honestly for the purposes of s 1322 of Act the court looks to an absence of evidence of dishonesty: G8 Communications Ltd, in the matter of G8 Communications Ltd [2016] FCA 297 [35]. It also takes into account whether the applicant has taken prompt action to remedy the error: Sprint Energy [44]; Golden Gate [48]. 2. The concept of acting honestly can embrace the following:

(a) inadvertence or a failure to turn their mind to the relevant issue: Re QBiotics Limited [2016] FCA 873 [38]; > > (b) an active, but incorrect, consideration of a legal issue as well as failure to consider the issue at all: Primelife Corporation Ltd v Aevum Ltd [2005] NSWSC 269; (2005) 53 ACSR 283 [8]; Golden Gate [47]; Sprint Energy [43]; > > (c) failure to understand or appreciate the significance of non-compliance: Sprint Energy [44].

2. I am satisfied that those involved in any contravention of the financial reporting obligations in Pt 2M.3 of the Act acted honestly. That conclusion reflects the findings that I have made at [43] and [44] above. In short, the financial reporting obligations of the Companies were actively considered by those within the Eagers Group, but the incorrect formula meant that Adtrans, APG and AHG were mischaracterised as small proprietary companies during the non‑compliance period. A direct consequence of that mischaracterisation was that the Companies did not comply with the financial reporting obligations in Pt 2M.3 of the Act because they did not consider that those obligations applied to them. In my assessment, there is an absence of evidence that those involved in any resulting contravention of the civil liability provisions in the Act acted dishonestly. I am confirmed in that view by the reasonably prompt action taken by those within the Eagers Group to remedy the consequences of the incorrect formula once it was identified.

1. In determining whether to grant relief from civil liability under the Act, it is also necessary to pay close attention to the admitted acts or omissions that caused the contraventions. Relief under s 1322(4)(c) of the Act should not extend to contraventions arising from unidentified acts or omissions, the effect of which would be to write a "blank cheque" as it were: Ozito Industries Pty Ltd v Australian Securities and Investments Commission [2020] FCA 1432; (2020) 148 ACSR 585 at [30] (O'Bryan J). As such, "care must be taken to confine relief in a manner consistent with the justification for the application": Re EHR Resources Ltd [2018] FCA 997 at [7] (Colvin J).
2. The relief sought by the Companies is confined to the consequences of the failure to comply with Pt 2M.3 of the Act for the non-compliance period. Given that, and having regard to the evidence upon which the Companies rely, I consider that it is appropriate to make an order pursuant to s 1322(4)(c) that the Companies (and their current and former directors) are relieved from any civil liability in respect of any failure to comply with the relevant requirements of Pt 2M.3 for the non-compliance period.
3. That is essentially for the same reasons identified above. That is, I accept that the failure to comply with those requirements was inadvertent, not deliberate, and that there was no element of dishonesty on the part of those concerned with the non-compliance. I also accept the evidence that the failure to comply with the requirements of Pt 2M.3 has not caused prejudice to any third party, given that the Companies' financial information is included in the Eagers Financial Reports and the non-compliance does not adversely affect a third-party creditor's reliance on the Eagers DOCG. Given those matters, and the position taken by ASIC, I consider it appropriate to exercise the discretion to grant the Companies (and their directors) relief under s 1322(4)(c) of the Act.

Declaratory relief under s 1322(4)(a) of the Act

1. The final category of relief sought arises from the opt-out notice errors. The Companies seek declarations on behalf of Eagers Automotive, pursuant to s 1322(4)(a) of the Act that the Eagers Financial Reports for the relevant financial years are not invalid by reason of the opt-out notice errors (and the Companies' inclusion in the Eagers Financial Reports), and that Eagers Automotive's reliance on the financial reporting relief under the Instrument is similarly not invalid.

1. An act or omission in relation to an opt-out notice is essentially procedural in nature: MB Vic at [50] (Derrington J). That said, unlike MB Vic, the "act, matter or thing" for which relief is sought under s 1322(4)(a) of the Act is not the lodging of the opt-out notices themselves. Rather, it is the lodging of the Eagers Financial Reports and reliance on the Instrument for the 2016 to 2023 financial years: cf, Act, s 1322(6)(a)(i). Those acts concern Pt 2M.3 of the Act.
2. The preliminary view has been expressed that a failure to comply with the obligations in Ch 2M of the Act does not fall within s 1322(6)(a)(i) of the Act: Ex parte Bellevue Gold Ltd [2021] WASC 80 at [60] (Hill J). That was in the context of non-compliance with provisions governing the appointment of an auditor, which "have been designated by Parliament as sufficiently serious as to constitute a criminal offence": Bellevue at [60]. Similar considerations arise here, given that an offence based on non-compliance with the annual financial reporting requirements in Pt 2M.3 is an offence of strict liability: Act, ss 314(1), 314(1A), 1311(1A)(c) and Sch 3.
3. A failure to comply with Pt 2M.3 of the Act may, however, fall within s 1322(6)(a)(ii) of the Act. Satisfaction of that criterion would be sufficient to meet the requirements of s 1322(6)(a) of the Act: Re Clarity at [24] and AHEPA at [25].
4. It is neither necessary nor appropriate at this juncture to decide whether the acts for which relief is sought under s 1322(4)(a) of the Act engage s 1322(6)(a)(i) or (ii) of the Act. On the material presently before the Court it is not clear why the Eagers Financial Reports are, or may be, invalid by reason of the opt-out notice errors and the inclusion of the Companies therein. Similarly, it is unclear why the opt-out notice errors invalidated Eagers Automotive's reliance on the financial reporting relief in the Instrument for the relevant financial years. Beyond identifying the existence of a concern that this may be the case, it was not said why that is thought to be so.
5. It is important that any orders remediating the consequences of non-compliance clearly identify that which is being retrospectively excused: MB Vic at [10]. In the present case, that requires the Companies to identify the nature of the invalidity both with respect to the Eagers Financial Reports and the availability of financial reporting relief under the Instrument for which validation is sought. In the absence of that clarity, I am not presently prepared to grant declaratory relief. I will, however, permit the Companies to make further submissions on this aspect of the relief sought.

1. I will make orders consistent with the form indicated in these reasons.

I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Longbottom.