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[2025] NSWSC 784
General information, not legal advice.
Supreme Court of NSW
2025-07-18
Brereton J
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: In the matter of Maroubra Seals Sports & Community Club Limited [2025] NSWSC 784
Hearing dates: 7, 8 July 2025
Date of orders: 18 July 2025
Decision date: 18 July 2025
Jurisdiction: Equity - Corporations List
Before: Brereton J
Decision: Declarations made pursuant to s 1322(4)(a) of the Corporations Act 2001 (Cth)
Catchwords: CORPORATIONS – application for relief under s 1322(4)(a) of the Corporations Act 2001 (Cth) regarding plaintiff’s failure to properly appoint an auditor for a period spanning approximately 9 years – where failure to appoint auditor was due to honest inadvertence – where plaintiff acted promptly to address the error once identified – where no substantial injustice resulted from non-compliance or is likely to be caused through granting relief – declaration that appointment of auditor not invalid by reason of contraventions of the Corporations Act
Legislation Cited: Corporations Act 2001 (Cth)
Cases Cited: Clarity Pharmaceuticals Ltd, in the matter of Clarity Pharmaceuticals Ltd [2021] FCA 804
Ex Parte Bellevue Gold Ltd [2021] WASC 80
Re ICandy Interactive Ltd (2018) 125 ACSR 369; [2018] FCA 533
Re Matador Mining Ltd; Ex Parte Matador Mining Ltd [2021] WASC 132
Weinstock v Beck (2013) 251 CLR 396; [2013] HCA 14
Texts Cited: N.A.
Category: Principal judgment
Parties: Maroubra Seals Sports & Community Club Limited (plaintiff)
Representation: Counsel:
N Mirzai
Solicitors:
Pigott Stinson Lawyers
File Number(s): 2025/243061
Publication restriction: N.A.
The plaintiff is a sports and community club that has around 13,000 members and employs around 90 staff. Its annual revenue for the year that ended on 30 June 2024 was around $12.5m. It is an Australian public company and, as such, is subject to various requirements in the Corporations Act 2001 (Cth) concerning the appointment of an auditor and the auditing of the company’s financial reports.
For the financial year commencing in 2016 and through to March 2025, the plaintiff had a qualified auditor who conducted audits of its annual financial reports. However, it came to the attention of the plaintiff (in the sense that it became actually known) in late March or early April 2025 that the auditor who undertook the audit function from August 2016 to March 2025 was not validly appointed in accordance with the requirements of the Corporations Act.
By an originating process filed on 25 June 2025, the plaintiff seeks relief under s 1322(4)(a) of the Corporations Act. That section gives the Court power to declare that things purporting to have been done by a corporation are not invalid by reason of a contravention of the Corporations Act.
The matter was heard on 7 July 2025 and was relisted to deal with various matters on 8 July 2025. Mr Mirzai of counsel, who appeared for the plaintiff, provided some further submissions (and supporting documents) on 14 July 2025.
(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;…
(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);…
and may make such consequential or ancillary orders as the Court thinks fit.
(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…
(c) in every case - that no substantial injustice has been or is likely to be caused to any person.
The plaintiff seeks an order declaring that the appointment of Bell Partners Accountants Advisors Auditors Pty Ltd (Bell Partners) as auditor of the plaintiff in the period from 22 August 2016 to 31 March 2025 is not invalid by reason of failures to comply with various provisions of the Corporations Act.
The plaintiff seeks relief in respect of contraventions of the following provisions of the Corporations Act:
(a) s 327C(1) – which requires the directors of a public company to appoint an auditor within 1 month following a vacancy in the office of auditor occurring unless the company has appointed an auditor at a general meeting to fill said vacancy; (b) s 327B(1)(b) – which requires a public company to appoint an auditor where there is a vacancy in the office of auditor at each annual general meeting subsequent to the first annual general meeting; (c) s 328A(1)(a) – which requires the company or its directors to ensure that the auditor has consented by written notice to act as auditor before the appointment – and not withdrawn such consent before the appointment has been made; (d) s 328B(1) – which provides that a company may appoint an auditor at its annual general meeting only if a member of the company gives the company written notice of the nomination before the meeting was convened or not less than 21 days before the meeting; (e) s 301(1) – which requires a company to have a financial report audited by a properly appointed auditor; and (f) s 314(1) – which requires a company to provide to members a financial report audited by a properly appointed auditor.
The available historical record means that it is not possible to piece together a complete history of the identity of the person, firm or company that has been the plaintiff’s auditor since 1970.
It is clear that in about 1970, Mr Donald Bell was appointed the auditor of the plaintiff. Mr D Bell’s registered trading name was Donald F Bell & Co. It appears Mr D Bell was the auditor for many years after that appointment. The May 2000 auditor’s report, for example, was signed off as follows:
DONALD F. BELL & CO
Chartered Accountants
D.F.Bell, Principal
Registered Company Auditor
BELL PARTNERS
Chartered Accountants
DONALD F. BELL, Partner
Registered Company Auditor
Name of Firm: Bell Partners Accountants Advisors Auditors
Name of Partner: Donald F. Bell
Mr D Bell died on 22 August 2016.
The auditor’s report dated 12 October 2016, for the year ended 30 June 2016, was signed off as follows:
Name of Firm: Bell Partners Accountants Advisors Auditors
Name of Partner: Anthony F Bell
The General Manager’s Report in the 2016 Annual Report reported that Mr D Bell had died and that his son, Mr Anthony Bell, has taken over the auditing company and will continue in the role fulfilled by his father.
The minutes of the annual general meeting held on 29 November 2017 record that the Chairman advised that the name of the plaintiff’s auditors had changed from Donald F Bell & Co to Bell Partners. It appears that advice was given in the presence of Mr A Bell.
On 11 December 2017, the plaintiff wrote to the Australian Securities and Investments Commission advising of a “change of Auditor’s name only”, from Donald F Bell & Co to Bell Partners. The letter was signed by Mr Peter Redding, the company secretary. Mr Redding made an affidavit in these proceedings. He cannot recall who advised him to send the letter but assumed it was an appropriate course.
ASIC responded, requiring information from the auditor to confirm that the change was of name only. It appears that demand was sent to Bell Partners, who then advised ASIC, by letter of 14 December 2018, that Donald F Bell & Co was a predecessor auditor of the plaintiff, and that “Bell Partners Accountants Advisors Auditors” were appointed as auditors on 22 August 2016. Mr Redding cannot recall seeing this letter before the time of these proceedings. There is no other evidence of an appointment on 22 August 2016. This letter indicates that the change was not merely a change of name, but a change of the person or entity who was the auditor.
From 2017 until 2019, the auditor’s report was signed off in the same fashion as the 12 October 2016 report. Although the auditor’s reports refer to “Bell Partners Accountants Advisors Auditors” as the name of the “firm”, Bell Partners has been operating as a company since about January 2007.
From 2020 to 2024, the sign off has been some variation close to:
BELL PARTNERS
Anthony F. Bell
Registered Company Auditor
The reports are contained in a letter that includes a letterhead that refers to Bell Partners Accountants Advisors Auditors Pty Ltd.
In early 2025, the plaintiff contemplated a competitive tender for the role of auditor. There was some friction between some officers of the plaintiff and Bell Partners which led to a letter dated 25 March 2025, by which Bell Partners resigned as auditor. The plaintiff’s board accepted the resignation on 26 March 2025. BDO Audit Pty Ltd was appointed as the plaintiff’s auditor on 31 March 2025.
It was in the context of the resignation of Bell Partners that the plaintiff came to appreciate that Bell Partners apparently had not been properly appointed as auditor. The plaintiff was unable to locate any documents that evidenced an appointment that complied with the requirements of the Corporations Act.
While the plaintiff was not able to locate any documents by which Bell Partners was formally appointed as auditor, there can be no doubt that the company was appointed, in the sense of having been retained, to audit the accounts and fulfil the role of auditor. That is because Bell Partners in fact fulfilled that role and was qualified to do so. There is no reason to doubt that Bell Partners charged and was paid to undertake the audit work. Bell Partners, and the plaintiff, clearly laboured under the belief that Bell Partners was the properly appointed auditor of the plaintiff. That is, Bell Partners was the retained auditor and fulfilled that role, but appears never to have been appointed in conformity with the Corporations Act.
The dispensing power conferred on the Court by s 1322(4)(a) is not in the nature of a general absolution for all past errors. It does not authorise the making of an order declaring that an impugned act, matter or thing is valid. It allows a determination by the Court that the act, matter or thing done “is not invalid” by reason of a provision of the Corporations Act or a provision of the constitution of a corporation. The remedy may be sought by a party fearing or suspecting invalidity on such a ground or, as in the present case, to meet a contention of invalidity advanced by another party in adversarial proceedings. The effect of a declaration under the provision is limited to overcoming invalidity flowing from a particular contravention or contraventions. It could not be otherwise. It is only with respect to particular contraventions that the Court can reach the state of satisfaction required by s 1322(6).
The plurality in that case spoke of the broad operation of s 1322(4) – see [53]-[56].
(a) Bell Partners was not appointed by any resolution of the directors within 1 month following a vacancy in the office of auditor – giving rise to a potential contravention of s 327C(1); (b) Bell Partners was never appointed at an annual general meeting – giving rise to a potential contraventions of s 327B(1)(b); (c) while Bell Partners plainly consented to act as auditor (because it was operating on the basis that it was the auditor), there is no evidence of consent prior to a formal appointment, because there is no evidence of a formal appointment – giving rise to a potential contravention of s 328A(1)(a); and (d) there was no notice of any nomination of Bell Partners before an annual general meeting – giving rise to a potential contravention of s 328B(1).
I can understand why the plaintiff would fear and suspect that the appointment of Bell Partners was invalid by reason of these potential contraventions.
(a) the plaintiff did not have a financial report audited by a properly appointed auditor for the years ending 30 June 2016 to 30 June 2024 giving rise to potential contraventions of s 301(1); and (b) the plaintiff did not provide to members a financial report audited by a properly appointed auditor for the years ending 30 June 2016 to 30 June 2024 – giving rise to potential contraventions of s 314(1).
I cannot understand why the plaintiff would fear and suspect that the appointment of Bell Partners was invalid by reason of these potential contraventions. They are contraventions that may flow from a failure to properly appoint an auditor, but they do not bear upon the question of the validity of the appointment of Bell Partners.
Section 1322(6)(a) requires the Court to be satisfied of one of the three things specified in (i)-(iii). Mr Mirzai submitted that he relied on each of (i)-(iii), but primarily (ii). I can confine myself to that requirement – which is that the Court is satisfied that the person or persons concerned in or party to the contravention or failure acted honestly. This provision was considered in Re ICandy Interactive Limited (2018) 125 ACSR 369; [2018] FCA 533 at [54]-[108].
The relevant contraventions are those identified at [25] above. They concern failures associated with the appointment of Bell Partners. On the evidence before me, the directors should have appointed an auditor within 1 month after Mr D Bell’s death on 22 August 2016 (see s 327C(1)) and the plaintiff should have filled the vacancy that existed at each annual general meeting that occurred from 2016 to 2024 (s 327B). In so far as Bell Partners was appointed otherwise than in conformity with s 327C and 327B, there is an apparent contravention of the requirements of consent (s 328A) and nomination (s 328B). It may be that some, or even all, of these provisions were not contravened, and some may only have been contravened in 2016. Nevertheless, there is a risk that the plaintiff legitimately fears that one or more of these potential contraventions would invalidate the appointment of Bell Partners relevantly for the period from 22 August 2016 to 31 March 2025.
Given that the potential contraventions concern an extended period (nearly 9 years) and involve matters required to have been performed by the plaintiff’s directors and by the company in its annual general meeting, there are likely many persons concerned in or party to the contraventions or failures, including directors and senior management. They have not all been identified. That, however, does not mean that I cannot be satisfied as to the matters in s 1322(6)(a)(ii).
There is evidence from the plaintiff’s current chief executive officer, Mr Harper, that the error in failing to appoint Bell Partners either at an annual general meeting or a board meeting was not intentional and there was no failure of the plaintiff’s board or management to act honestly. Mr Harper has been working for the plaintiff since before 22 August 2016, but has only been the chief executive officer (including in an acting capacity) since 2021. He cannot speak firsthand as to the whole period, or for all the persons involved. However, he has interrogated the plaintiff’s records and enquiries have been made of current and former directors and managers. The documentary record, including the documents summarised above, speaks of an unintentional failure on the part of the plaintiff (through its directors and officers) to adhere to the requirements of the Corporations Act concerning the manner of the appointment of an auditor.
The plaintiff, through its officers, understood that Bell Partners had been properly appointed as the company’s auditor. It is inconceivable that any person within the plaintiff had any appreciation that Bell Partners had not been properly appointed. The contemporaneous evidence speaks of inadvertence in 2016, when Mr D Bell died. The plaintiff (through its directors and officers) seemed to think that after Mr D Bell died and his son, Mr A Bell, took over, there was a change in name only to the company that was the appointed auditor. That apparently was a mistake. The plaintiff’s directors and officers laboured under the mistaken belief that Bell Partners had been properly appointed as auditor through until March or April 2025, when the issue with the appointment came to light in connection with the resignation by Bell Partners. None of the communications from this time suggest that anyone at the plaintiff had any previous inkling that there was a problem with the appointment of Bell Partners.
I cannot make an order under s 1322(4)(a) unless I am satisfied that no substantial injustice has been done or is likely to be caused to any person.
Persons who would potentially suffer injustice include the plaintiff, its shareholders (from 2016) and its former auditor: see Bellevue Gold at [69]. I am satisfied that no injustice has been done or is likely to be caused to any of them.
The plaintiff itself does not suggest that it would or may suffer injustice by the order – on the contrary. Nor has any possible injustice to Bell Partners been identified, and there has been no suggestion in any correspondence from Bell Partners that it may suffer injustice. On the face of it, the orders would be to the benefit of Bell Partners, because as things stand it seems that it fulfilled the role of auditor for some 9 years even though they were not properly appointed to do so.
Most important are the shareholders. For many years, the financial reports coming to them were not audited by a properly appointed auditor. However, the accounts were audited by a company that had the qualifications to conduct those audits. There has been no question about the quality of those audits. On 11 June 2025, Bell Partners wrote to the solicitors acting for the plaintiff as follows:
…for years ending 30 June 2017 to 2024 inclusive (Audits):
The Audits conducted by Bell Partners were completed in accordance with Australian Accounting Standards.
the Seals Club may continue to rely on the Audits.
the audit opinions expressed have not been revised, nor do we have any intention for revision of same (sic). As such the Seals Club can continue to rely on each of the reports for the purpose issued…
I am satisfied that the shareholders (past and present) are in no worse position by reason of the identified contraventions and would suffer no injustice if I make orders under s 1322(4)(a).
The Court retains a discretion as to whether to make an order under s 1322(4).
A matter that may weigh against the making of an order is delay in making the application: Bellevue Gold at [78]. The plaintiff became conscious of the problem associated with the appointment of Bell Partners shortly after the resignation by Bell Partners on 26 March 2025. Steps were taken immediately to seek to ascertain the true position, which involved interrogating the plaintiff’s records over an extended period and obtaining legal advice. These proceedings were commenced, with detailed supporting affidavits, on 25 June 2025. I accept that the company has acted diligently in attending to the matters that might flow from a failure to appoint an auditor in the manner required by the Corporations Act.
The provisions of the Corporations Act concerning the appointment of an auditor serve an important role. They are not merely formal or technical requirements. Auditors of public companies perform a critical role in securing the confidence that shareholders and the community must be able to place in the financial reporting by public companies. Without reliable financial reporting, there can be no public confidence in investment activities. It is vital that companies appoint properly qualified and appropriate auditors and that is the obvious purpose of the provisions in Part 2M.4 of the Corporations Act that arise on the current application. It should not be thought that the failure by the plaintiff, a public company, to adhere to the requirements of the Corporations Act concerning the appointment of an auditor is a matter of little moment, or that a declaration under s 1322(4)(a) merely addresses an administrative oversight.
Nevertheless, in this case, having regard to the circumstances concerning the failures associated with the appointment of Bell Partners, I am satisfied that the public interest is served by making declarations that the appointment of Bell Partners is not invalid by reason of the specified contraventions of the C**orporations Act and that the relief would not undermine the public policy that lies behind the relevant sections of the Corporations Act. I am satisfied that there is no discretionary reason to withhold that relief.
Subject to four things, I propose to grant the relief that is claimed in the originating process.
First, the plaintiff initially sought an order under s 1322(4)(c) of the Corporations Act that relieved the plaintiff, as well as current and former directors, from any civil liability arising out of any contravention of sections 301(1), 314(1), 327B(1)(a), 327B(1)(b), 327C(1), 328A(4)(b), 328B(2)(b) and 344(1) of the Corporations Act . That relief was not pressed.
Secondly, I do not propose to declare that the appointment of Bell Partners in not invalid by reason of any failure to comply with s 301(1) or s 314(1) of the Corporations Act. As I have already observed, I cannot see how any failure to comply with those sections could render invalid the appointment of Bell Partners.
Thirdly, I have made some adjustments to the framing of the potential contraventions to more faithfully reflect the language and requirements of the Corporations Act.
Fourthly, the plaintiff seeks a declaration that ends with the words “…and the plaintiff and its directors are deemed to have complied with those requirements”. The same words were included in the orders made in Clarity Pharmaceuticals. There were similar words in the orders made by Hill J in Bellevue Gold and Matador Mining, but in those cases the orders did not extend to the directors. The plaintiff correctly submits that including these words is consistent with the orders in those cases.
I am not going to make orders that include a declaration or some order that the plaintiff and its directors are deemed to have complied with the requirements of the Corporations Act in circumstances where it appears that they have not done so. The power to make orders to that effect is not found in s 1322(4)(a). If there is power, it can only be found in the power to make such consequential or ancillary orders as the Court thinks fit. However, it is not obvious to me that, in this case, an order that deems that there has been compliance is either consequential or ancillary to an order declaring that the appointment of Bell Partners is not invalid by reason of any contraventions of the Corporations Act.
The position may be different if the plaintiff was seeking orders under s 1322(4)(c) that relieved the plaintiff and directors from civil liability. Relief of that kind was sought and granted in Clarity Pharmaceuticals, Bellevue Gold and Matador Mining. However, as I have indicated, that form of relief is not pressed by the plaintiff. In circumstances where the plaintiff does not seek an order relieving it and its directors from any civil liability in respect of contraventions, I do not think the Court should contemplate making an order that deems that they have complied with the statutory requirements. That may give relief that is substantively the same as, or even more extensive than, s 1322(4)(c) relief via the back door, but without separate consideration of whether such relief is appropriate. Moreover, I do not consider that an order deeming compliance with statutory requirements should be made without considering if there are implications concerning the offence provisions in the .
(a) any contravention of s 327C(1) of the Corporations Act occasioned by a failure of the directors to appoint an auditor of the company within one month following the vacancy in the office of auditor of the plaintiff from 22 August 2016; (b) any contravention of s 327B(1)(b) of the Corporations Act occasioned by a failure of the plaintiff to appoint an auditor of the company to fill any vacancy in the office of auditor at each of the annual general meetings of the company held in the years from 2016 to 2024; (c) any contravention of s 328A(1) of the Corporations Act occasioned by a failure of the plaintiff or its directors after 22 August 2016 to obtain the consent of Bell Partners before the appointment to act as auditor; or (d) any contravention of s 328B(1) of the Corporations Act occasioned by a failure of the plaintiff to obtain a nomination of Bell Partners as auditor from a member of the company before any annual general meeting of the company held in the years from 2016 to 2024.
**********
(2013) 251 CLR 396
I am satisfied that the persons concerned in or party to the identified contraventions or failures acted honestly.
For these reasons, I make the following orders:
Pursuant to s 1322(4)(a) of the Corporations Act, declare that the appointment of Bell Partners Accountants Advisors Auditors Pty Ltd as auditor of the plaintiff in the period from 22 August 2016 to 31 March 2025 is not invalid by reason of: