Pilbara Minerals Limited, in the matter of Pilbara Minerals Limited [2025] FCA 890 | Case summary

[2022] FCA 960Pilbara Minerals Limited, in the matter of Pilbara Minerals Limited [2025] FCA 890 | Case summary | Zoe

[28]

Pursuant to reg 1.0.02B of the Corporations Regulations 2001 (Cth), for the 2019-2020 financial year and for later financial years, each of the thresholds in subss (3)(a), (b) and (c) of s 45A of the Act were doubled.
In accordance with s 344(1) of the Act, a director of a large proprietary company is obliged to take all reasonable steps to comply, or to secure compliance with, Pt 2M.3.
Notwithstanding the reporting obligations that are imposed on large proprietary companies under Pt 2M.3, pursuant to s 341 of the Act, the Australian Securities and Investments Commission (ASIC) may make an order in writing in respect of a specified class of companies, relieving the directors and the companies of all or specified requirements of Pt 2M.3. Relevantly, ASIC made the Instrument pursuant to s 341(1). The Instrument has been in effect since 29 September 2016.
The Instrument recognises that there are significant costs associated with preparing financial reports and having those reports audited. Where the Instrument applies, it enables a 'closed group' of companies (a 'closed group' is defined in s 4 of the Instrument to be 'the holding entity and the wholly-owned entities') to prepare and lodge financial statements prepared on a consolidated basis, which is considered to sufficiently meet the information needs of creditors and other stakeholders: Entertainment Publications of Australia Pty Ltd v Australian Securities and Investments Commission [2022] FCA 960 (Entertainment Publications v ASIC) at [10], citing Re SMS Operations Pty Ltd; ex parte SMS Operations Pty Ltd [2021] WASC 191 at [43] and Car Buyers Australia Pty Limited v Australian Securities and Investments Commission, in the matter of Car Buyers Australia Pty Limited [2020] FCA 599 (Car Buyers v ASIC) at [22]‑[23]. Amongst other requirements, the Instrument provides that each member of a closed group of companies must be a party to a deed of cross-guarantee that guarantees payment of any debt to creditors of each party to the deed by each other entity.
Section 5 of the Instrument is in the following terms:

[58]

The plaintiffs' application is supported by three affidavits. The primary affidavit was affirmed by the company secretary of each of the plaintiffs, Danielle Lee Webber, on 9 July 2025. Ms Webber's affidavit sets out in detail the circumstances that led to the making of the application.
Ms Webber affirmed that she made her affidavit from her own knowledge, except where otherwise stated. She also affirmed that where she has made statements that are not from her own knowledge, those statements are made to the best of her knowledge and belief after due enquiry, and that she has set out the source of her knowledge. Ms Webber's affidavit then contains several statements of her belief, as well as hearsay statements made to Ms Webber by several current and former directors, officers and employees of the plaintiffs during inquiries carried out to ascertain why there had been non-compliance with the Instrument.
It is obvious that the plaintiffs have approached the application for orders under s 1322(4) of the Act on the assumption that it is an interlocutory proceeding. In that regard, s 75 of the Evidence Act 1995 (Cth) provides that in an interlocutory proceeding, the hearsay rule (expressed in s 59 of the Evidence Act) does not apply to evidence if the party who adduces it also adduces evidence of its source.
The plaintiffs' assumption may well be correct in the context of an application for orders extending or abridging time under s 1322(4)(d) of the Act, given that such orders will not in general finally dispose of rights: Sanofi v Parke Davis Pty Ltd (No 1) (1982) 149 CLR 147 at 152. However, that assumption may not hold in respect of applications for orders under s 1322(4)(c), as it is arguable that relieving a person of civil liability in respect of relevant contraventions or failures will finally dispose of rights.
It is unnecessary to resolve this issue in the circumstances of this case. This is because the plaintiffs have indicated that they do not rely on Ms Webber's evidence of previous representations that were made to her by other persons in order to prove the existence of a fact that it can reasonably be supposed those persons intended to assert by their representations. The plaintiffs instead rely on the fact that the representations were made to Ms Webber to prove that she undertook detailed inquiries, including inquiries of several current and former directors, officers and employees of the plaintiffs, to establish why there had been historical non-compliance with the Instrument. In my view, the fact Ms Webber undertook such a detailed investigation is at least relevant to the question of whether she acted honestly, which is an issue that must be determined under s 1322(6)(b) of the Act. That detailed nature of the investigation is also relevant to the question of whether the Court should exercise its discretion to grant any of the relief sought, having regard to whether the plaintiffs acted reasonably promptly in commencing an appropriate inquiry.
Given that Ms Webber's evidence of representations made by other persons is relevant for a non-hearsay purpose, as I have just explained, the hearsay rule then does not apply to those representations by operation of s 60 of the Evidence Act: Lee v The Queen [1998] HCA 60; (1998) 195 CLR 594. Accordingly, to the extent it may be necessary for the purposes of considering whether to make orders under s 1322(4)(c) of the Act, Ms Webber's evidence of out of court representations made by other persons is admitted as evidence of the truth of those representations.
To the extent that the plaintiffs rely on evidence of Ms Webber's beliefs and opinions, I have not taken that evidence into account in determining whether to make an order under ss 1322(4)(c) or 1322(4)(d) of the Act. Such evidence is, in my view, inadmissible because of the operation of the provisions in Pt 3.3 of the Evidence Act. I note that a similar approach to evidence of opinions relied on in the context of applications for orders under s 1322(4) was recently taken by Lundberg J in Sprintex Limited [No 2] [2025] WASC 15 at [20]- [21], albeit in the context of the rules of evidence that apply in Western Australia.
A second affidavit was affirmed by a solicitor employed by the plaintiffs' solicitors. To the extent that this affidavit contains representations made by ASIC that it does not consent to or oppose the application and does not intend appearing at the hearing of the application, it too seeks to adduce hearsay evidence. However, I will proceed on the basis that such evidence is admissible to prove the fact those representations were made. Again, to the extent that it may be necessary for the purposes of s 1322(4)(c) of the Act, the hearsay rule will therefore not apply to those representations by operation of s 60 of the Evidence Act.
A third affidavit, affirmed on 30 July 2025 by the interim chief financial officer of the plaintiffs, Flavio Lino Garofalo, is concerned with establishing that POPL was a 'large proprietary company' for the purposes of s 45A of the Act.
Having dealt with issues relating to the admissibility of the evidence relied on by the plaintiffs, it is then necessary to make relevant findings based on that evidence. I will begin with a summary of the relevant factual background to this application, which is based on Ms Webber's evidence.
On 6 August 2018, POPL became a 'large proprietary company' for the purposes of s 45A(3) of the Act, during the financial year ended 30 June 2019. This occurred after an internal restructure of the company group the plaintiffs are a part of; the Pilbara Minerals Limited group (PLS group). PHPL, as the sole shareholder of POPL, therefore also became a large proprietary company during the financial year ended 30 June 2019. Based on Ms Garofalo's evidence, POPL and PHPL have both continued to be large proprietary companies for each relevant financial year.
Pilbara Minerals Limited (PLS), which is the parent company of the PLS group, engaged and received legal advice from a large law firm (not the plaintiffs' current solicitors) about obtaining consolidated group relief under the Instrument. This was done to relieve PHPL and POPL from relevant financial reporting requirements in Pt 2M.3 of the Act.
On 17 September 2018, PLS, PHPL and POPL executed a deed of cross-guarantee in the required form and in accordance with s 5(1) of the Instrument. That deed was lodged with ASIC on or about 21 September 2018, under cover of the required ASIC form. The deed was also lodged with what purported to be a lawyer's certificate in accordance with s 6(1)(m) of the Instrument.
An 'opt-in/change of holding entity notice by wholly-owned company relieved from financial reporting obligations' (Opt-in Notice) was lodged with ASIC by POPL on or around 27 November 2018, in accordance with s 6(1)(f) of the Instrument. However, no Opt-in Notice was lodged on behalf of PHPL.
Since the execution of the deed in September 2018, the plaintiffs, their boards of directors and the PLS executive leadership team have been operating as if PHPL and POPL were not required to comply with the financial reporting requirements in Pt 2M.3 of the Act. Accordingly, neither PHPL and POPL (or their officers) have complied with the financial reporting obligations in Pt 2M.3 of the Act since the deed of cross-guarantee was executed. It is clear that this has occurred because of a mistaken assumption that PHPL and POPL had obtained consolidated group relief pursuant to the Instrument.
PLS acquired Latin Resources Pty Ltd (LRPL) in February 2025. At that time, steps were taken to find out whether LRPL was required to be a party to the deed of cross-guarantee. It was in this context that, in May and June 2025, PLS identified that PHPL and POPL had not complied with certain requirements of the Instrument. Specifically, it was identified that:

[66]

As explained above, while POPL lodged an Opt-in Notice as required by s 6(1)(f) of the Instrument, PHPL has never done so.
The evidence of Ms Webber (including the correspondence and documents attached to her affidavit) makes it clear that before 2021, the relevant officers and employees of PLS did not appreciate that PHPL was a 'large proprietary company', as defined in s 45A(3) of the Act.
During 2021, PLS acquired Ngungaju Lithium Operations Pty Ltd (NLO). PLS obtained advice from a large firm of lawyers in connection with that acquisition. Correspondence identified by Ms Webber between PLS representatives and those lawyers reveals that advice was sought about whether NLO was required to become a party to the deed of cross-guarantee, together with PHPL and POPL. PLS also sought advice at that time about whether PHPL should lodge an Opt-in Notice.
The correspondence also demonstrates that PLS obtained advice that PHPL was a 'large proprietary company' and that an Opt-in Notice should be prepared and lodged. However, that advice was not acted upon. It appears that the advice was overlooked, probably because a person from PLS, who was a party to the correspondence, left PLS soon after the advice was received. It may also have been overlooked as PLS was focusing on issues relating to the acquisition of NLO at the relevant time.
I note that no legal advice was given to any of the plaintiffs that PHPL should have lodged an Opt-in Notice within four months after the end of the financial year ended 30 June 2019, or that PHPL had been in breach of its financial reporting obligations under the Act for each of the subsequent years because it had failed to lodge an Opt-in Notice. Further, no advice was provided that PHPL should file an application pursuant to s 1322 of the Act.
The various inquiries undertaken by Ms Webber have failed to uncover any direct evidence to establish why PHPL has never lodged an Opt-in Notice. However, based on Ms Webber's evidence, I infer that the representatives of PLS and PHPL were initially operating on the mistaken belief that PHPL was not required to lodge an Opt-in Notice. As I have already explained, later, and despite receiving advice that PHPL was required to lodge an Opt-in Notice, that requirement was overlooked.

[68]

While undertaking the audit to which I have earlier referred at [41] of these reasons, representatives of PLS identified that the directors of PHPL and the directors of POPL had not passed a resolution before the end of the financial year ended 30 June 2019 resolving that the relevant company should obtain the benefit of the Instrument, as required by s 6(1)(g)(i) of the Instrument. However, despite the searches and inquiries referred to at [44] of these reasons, there is no direct evidence that establishes why the necessary initial resolutions were never passed.
What is clear is that in June 2018, PLS obtained legal advice that the PLS group was required to procure each entity of the closed group (which included PHPL and POPL) to sign resolutions, solvency statements and a deed of cross-guarantee. However, that advice did not deal with the content of the resolutions and it did not expressly refer to s 6(1)(g)(i) of the Instrument.
Towards the end of June 2018, a board paper was provided to the board of directors of the PLS group. One of the purposes of that board paper was to obtain approval for PLS to enter into a deed of cross‑guarantee with PHPL and POPL so as to obtain consolidated group relief, which would then relieve PHPL and POPL from the requirement to prepare and lodge audited financial statements under the Act. Although the board paper identified certain requirements for obtaining consolidated group relief, it did not refer to the requirement to pass initial resolutions of the kind required by s 6(1)(g)(i) of the Instrument.
In all the circumstances, I infer that initial resolutions were not passed by the boards of each of PHPL and POPL in accordance with s 6(1)(g)(i) of the Instrument because the respective boards of were unaware of that requirement. Based on the evidence before me, it is clear that it only became apparent that there had been a failure to comply with s 6(1)(g)(i) when consideration was being given to the question of whether LRPL was required to become a party to the deed of cross-guarantee: see [40] of these reasons.

[78]

be extended to a date 28 days from the date of these orders.

Pursuant to section 1322(4)(c) of the Act, the Second and Third Plaintiffs and each of their current and former directors and officers are relieved from any civil liability, including under ss 188 and 344 of the Act, in respect of their failure to comply with ss 292(1), 298(1), 301(1), 314(1), 315(4) and 319(1) of the Act in respect of each [of the] financial years ended 30 June 2019, 30 June 2020, 30 June 2021, 30 June 2022, 30 June 2023 and 30 June 2024 (each a 'relevant financial year' doe the purposes of the Instrument (Relevant Financial Years)), to the extent that compliance was required as a result of the following failures to comply with the Instrument:

(a) the Second Plaintiff's failure to comply with the requirement in s 6(1)(f) of the Instrument to lodge an Opt-in Notice with ASIC within four months of the end of the Second Plaintiff's financial year ended 30 June 2019;

(b) each of the Second and Third Plaintiffs' failure to comply with the requirement in s 6(1)(g)(i) of the Instrument to pass resolutions of the directors of the relevant Plaintiff before 30 June 2019;

(c) each of the Second and Third plaintiffs' failure to comply with the requirement in s 6(1)(i) of the Instrument to pass resolutions of the directors of the relevant Plaintiff for each of the Relevant Financial Years;

(d) the Plaintiffs' failure to comply with the requirement in s 6(1)(m)(ii) of the Instrument to lodge a certificate conforming with the definition of 'certificate' as it appears in the Instrument; and

(e) the First Plaintiff's failure to comply with one or more of the requirements in s 6(1)(v) of the Instrument to include certain matters in the notes to the consolidated financial statements prepared and lodged by the First Plaintiff with ASIC in respect of the Relevant Financial Years.

A sealed copy of these orders is to be served on ASIC as soon as reasonably practicable and upon service of these orders, ASIC is to include these orders on its database.

For a period of 28 days from the date of these orders, any person who claims to have suffered substantial injustice or is likely to suffer substantial injustice by the making of any or all of these orders has liberty to apply to vary or discharge them within that period.

[79]

The plaintiffs submit that orders 1(a), 1(b) and 1(c) should be made under s 1322(4)(d) of the Act. In each case, the relevant 'act, matter or thing', for which extensions of time are sought, for the purposes of s 1322(4)(d), concern obligations imposed by the Instrument to lodge documents with ASIC (orders 1(a) and 1(c)) and to pass resolutions (order 1 (b)). As I have noted earlier in these reasons at [23], s 1322(4)(d) is capable of being applied to extend time periods specified in the Instrument for the lodgement of documents as a condition of relief from compliance with financial reporting requirements in Pt 2M.3 of the Act.
Having regard to the evidence of Ms Webber, I am satisfied that the various failures to comply with s 6(1)(f), s 6(1)(g)(i) and s 6(1)(m)(ii) of the Instrument were due to inadvertence. There is certainly nothing to suggest that any of those failures were the result of any deliberate disregard for the law. As I have explained earlier, the initial failure to lodge an Opt-in Notice in relation to PHPL was plainly due to a misunderstanding as to whether PHPL was a 'large proprietary company'. When later advice was received in 2021 that suggested that PHPL was required to lodge an Opt-in Notice, that advice appears to have been overlooked in circumstances in which the person who received the advice ceased employment with PLS shortly thereafter, and where people are likely to have been distracted by issues relating to the acquisition of NLO.
The failures by PHPL and POPL to pass initial resolutions as required by s 6(1)(g)(i) of the Instrument also appear to have been the result of inadvertence, in circumstances in which external legal advisers had not drawn attention to all of the relevant obligations under the Instrument.
The failure to lodge a certificate that complied with the definition of 'certificate' in s 4 of the Instrument can properly be described as a technical failure, and one that was, in any event, substantially contributed to by the external lawyer who signed the certificate and upon whose expertise the plaintiffs were entitled to rely.
I am satisfied that no substantial injustice has been or is likely to be caused to any person by reason of the plaintiffs' failures to comply with s 6(1)(f), s 6(1)(g)(i) and s 6(1)(m)(ii) of the Instrument. In that regard, there is no evidence before me that any person has suffered any prejudice because of those failures, or because the plaintiffs were not thereby relieved from their obligations under Pt 2M.3 of the Act. Ms Webber's evidence, which I accept, is to the effect that she is not aware of any shareholder or creditor being misled by any of the compliance issues, nor is she aware of any complaints being made by any shareholder or creditor with respect to any of those matters.
The evidence also satisfies me that no relevant prejudice is likely to be caused to any person. In that regard I accept the plaintiffs' submissions that:

[82]

Order 2 is sought under s 1322(4)(c) of the Act. Specifically, an order is sought relieving PHPL and POPL, and each of their current and former directors and officers, from any civil liability, including under ss 188 and 344 of the Act, in respect of each of PHPL and POPL's failures to comply with ss 292(1), 298(1), 301(1), 314(1), 315(4) and 319(1) of the Act for each of the relevant financial years, to the extent that such compliance was required because of failures to comply with s 6 of the Instrument.
Section 292(1) of the Act relevantly provides that large proprietary companies are to prepare a financial report and a directors' report for each financial year. Section 298(1) relevantly requires that all companies prepare a directors' report for each financial year, and in that sense, at least for large proprietary companies, appears to duplicate the obligation under s 292(1).
Section 301(1) of the Act relevantly provides that a company must have its financial report for a financial year audited in accordance with Div 3 of Pt 2M.3, and that it must obtain an auditor's report. Section 314 requires that company must report to its members within the time required by s 315. Finally, s 319(1) relevantly provides that companies that are required to prepare or obtain a report for a financial year (which includes reports under s 292(1), s 298(1), and s 301(1)), must also lodge those reports with ASIC.
Because there were various failures to satisfy the requirements of s 6 of the Instrument, PHPL and POPL were not relieved of their obligations to comply with the relevant requirements of ss 292(1), 298(1), 301(1), 314(1), 315(4) and 319(1) in Pt 2M.3 of the Act for the relevant financial years. This gives rise to the potential for civil liability. Further, by at least the operation of s 188 and s 344 of the Act, respectively, those failures may also give rise to an exposure to civil liability for any persons who have acted as a secretary or director of PHPL and POPL at relevant times.
As I have observed earlier in these reasons, before an order can be made under s 1322(4)(c) of the Act, I must first be satisfied that each person who is subject to the civil liability concerned has acted honestly: s 1322(6)(b). I must also be satisfied that no substantial injustice has been or is likely to be caused to any person: s 1322(6)(c).
For the following reasons, I am satisfied that PHPL and POPL, and each of their respective directors and secretaries who occupied those positions at all relevant times for each of the relevant financial years, acted honestly. Based on Ms Webber's evidence, I am satisfied that apart from the plaintiffs themselves, the only relevant persons who had an active involvement in connection with ensuring compliance with the Instrument were Ms Webber herself (as a company secretary), Alexander Eastwood (as company secretary of all of the plaintiffs from 2016 to November 2023) and Kenneth Brinsden (as a director of all of the plaintiffs from 2016 to July 2022).
There is no evidence before me that any of those persons, or indeed any other person, acted dishonestly in connection with any of the relevant failures to comply with obligations under Pt 2.3M of the Act due to a failure to satisfy s 6 of the Instrument. On the contrary, although the evidence suggests that Mr Eastwood and Mr Brinsden cannot not now recall why s 6 of the Instrument was not fully complied with, the only reasonable inference is that such non‑compliance was due to inadvertence and because on several occasions officers of the plaintiffs relied on what has turned out to have been incomplete external professional advice.
I am fortified in reaching the conclusion that the persons subject to potential civil liability acted honestly because:

Pilbara Minerals Limited, in the matter of Pilbara Minerals Limited [2025] FCA 890 (1 August 2025)

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