For the reasons set out above, I will make the orders sought in the plaintiff's minute of proposed orders dated 4 April 2023, as amended during the hearing. The final orders made are set out in Attachment A to these reasons.
[2]
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
[3]
[1] Diona Pty Ltd, in the matter of Diona Pty Ltd [2022] FCA 1215 [20] (Cheeseman J).
[4]
[2] Which are express preconditions within ASIC Instrument 2016/785 - see condition 6(1)(f) and condition 6(1)(g)(i).
Cases Cited (10)
The terms of ASIC Instrument 2016/785 are relevant to this Application. That instrument is made pursuant to s 341(1) CA, which empowers ASIC to make orders in respect of a specified class of companies, registered schemes or disclosing entities, relieving them (and others) from all or specified requirements of Parts 2M.2, 2M.3 and 2M.4 (other than Division 4) of the Act.
The purpose of Instrument 2016/785 is to enable a closed group of companies to prepare and lodge financial statements prepared on a consolidated basis where each such company is a party to a deed of cross guarantee: Re SMS Operations Pty Ltd; Ex parte SMS Operations Pty Ltd [2021] WASC 191 [43] (Hill J).
Section 5 of ASIC Instrument 2016/785 states as follows:
Financial reporting relief for wholly-owned entities
The principles applicable to s 1322(4) CA are well known and need not be thoroughly restated for the purposes of this Application. I refer to and endorse the summary of those principles recently drawn together by Hill J in Re Sprintex Ltd [2022] WASC 188 [22], by Strk J in Re Yandal Resources Ltd [2022] WASC 338 [74] ‑ [75], in my recent decision in Re Bellavista Resources Limited [2023] WASC 40 [36] ‑ [47], and the very recent decision of Stewart J in Canon Australia Pty Ltd, in the matter of Cannon Australia Pty Ltd [2023] FCA 281 [3] (Stewart J). Those principles emerge from the leading authorities in this area including the decision of French J (as he then was) in Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418 [29] ‑ [31] and the High Court's decision in Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396 [43], [53] and [64].
Those principles, insofar as they relate to s 1322(4)(d) CA, may be summarised as follows:
Prior to making an order under s 1322(4)(c) or (d) CA, the Court must be satisfied that no substantial injustice has been or is likely to be caused to any person: s 1322(6)(c) CA. I refer to the following exposition of this concept, by Anderson J in Re Murray River Organics Ltd [2019] FCA 1432; (2019) 138 ACSR 365 [35] ‑ [38]:
[35] The court must not make any order under s 1322 unless it is satisfied that no substantial injustice has been or is likely to be caused to any person: s 1322(6)(c) of the Act; Kimberley College Ltd v Davis, in the matter of Kimberley College Ltd [2018] FCA 1102 at [28]. There are two aspects to this requirement:
(a) the expression 'has been' invites an inquiry as to the effect of the irregularity sought to be cured; and
(b) the expression 'likely to be' draws attention to the effect of the proposed order: An v Joo [2019] NSWSC 39 at [34].
[36] A degree of prejudice to a person or persons may be outweighed if the overwhelming weight of justice is in favour of making the order: Elderslie Finance Corp Ltd v Australian Securities Commission [1993] WASC 465; (1993) 11 ACSR 157 (Elderslie Finance) at 160; An v Joo [2019] NSWSC 39 at [35].
[37] The reference to 'substantial injustice' in s 1322(6)(c) is to a real and not insubstantial or theoretical prejudice: Elderslie Finance at 160. Whether there is real injustice requires a weighing of any prejudice if the order is made against the prejudice which would be suffered by the corporation and its directors and officers if an order was not made: Gangemi v Osborne [2009] VSCA 297 at [62], citing Re Compaction Systems Pty Ltd & The Companies Act [1976] 2 NSWLR 477 at 493; see also AHEPA NSW at [25].
In essence, the question whether the making of the orders sought will cause any person substantial injustice directs attention to the interests of (at least) the creditors and shareholders of the company: DAC Finance (NSW/Qld) Pty Ltd and other companies [2020] NSWSC 182 [46] (Gleeson J).
The court of course retains a residual discretion even if the preconditions to s 1322(4) CA are satisfied: Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd (No 2) [2018] WASC 357 [35] (Vaughan J); and Re Murray River Organics Ltd [39]. Satisfaction of the conditions in s 1322(6)(b) CA and s 1322(6)(c) CA are therefore necessary but not sufficient to ensure a favourable exercise of the discretion in s 1322(4)(c) and (d) CA. As summarised in Entertainment Publications of Australia Pty Ltd v ASIC [2022] FCA 960, factors which have previously been considered as relevant to the exercise of the discretion in the context of applications involving a failure to comply with the conditions in ASIC Instrument 2016/785 (being the instrument which is central to the present application) include:
Historically, orders have been made under s 1322(4) CA to extend time for the lodgment of financial reports with ASIC and to relieve the company and its directors and officers from any civil liability in respect of those contraventions of the Act. I refer, by way of example, to Re Clinical Cell Culture Ltd [2004] FCA 1798; (2004) ACSR 362 (Lee J); Re Phosphate Resources Ltd [2005] FCA 1705; (2005) 56 ACSR 169 (French J); Re Affinity Health Ltd [2006] NSWSC 579; (2006) 58 ACSR 461 (Barrett J); and Owen, in the matter of RiverCity Motorway Pty Limited [2014] FCA 1008 (Greenwood J).
It has been accepted for some years that s 1322(4)(d) CA applies to time periods specified in ASIC Class Orders. I refer to Dana Australia (Holdings) Ltd [2006] FCA 355; (2006) 57 ACSR 99 (Finkelstein J) at [8] ‑ [11]. Further, there is a body of authority which has held that s 1322(4) CA may apply to time periods specified in ASIC Instruments (such as ASIC Instrument 2016/785) where lodgment of a particular document is required to be lodged with ASIC as a condition of relief from compliance with financial reporting requirements. See, for example, Re Murray River Organics Ltd (Anderson J); Re Novonix Ltd [2019] FCA 2198; (2019) 141 ACSR 636 [26] (Jackson J); Re Car Buyers Australia Pty Ltd [2020] FCA 599 [30] (Gleeson J); and Re Flight Centre Technology Pty Ltd [2022] NSWSC 367; [29] (Black J).
The plaintiff has adduced evidence as to certain matters of historical non-compliance by companies in the Group. These matters were also disclosed to the Federal Court of Australia in the course of scheme of arrangements proceedings before that court in 2017: Barrick (Australia Pacific Exploration) Pty Limited v Barrick (PD) Australia Pty Limited, in the matter of Barrick (Australia Pacific Exploration) Pty Limited (No 2) [2017] FCA 1076. I will describe these historical matters briefly.
The affidavit evidence before me discloses that on 14 December 2006, Barrick (Australia Pacific Exploration) Pty Limited (BAPE), Barrick (GSM) Pty Limited (GSM), Delta Gold Pty Limited (Delta Gold), Barrick (Kalgoorlie) Pty Limited (BKal), AurionGold Pty Limited (AurionGold), Barrick (Granny Smith) Pty Limited (Granny Smith), Barrick (PD) Australia Pty Limited (BPDAL), and other wholly-owned subsidiaries of BPDAL entered into a Deed of Cross Guarantee (2006 Cross Guarantee) in the form required by the Class Order in order to seek relief under the Class Order in respect of requirements to prepare and lodge financial accounts. BPDAL was the 'Holding Entity' in respect of the 2006 Cross Guarantee.
The relevant failure was that BPDAL failed to prepare and lodge Consolidated Financial Statements in accordance with the conditions of the Class Order in respect of the financial years ended 31 December 2006, 31 December 2007, 31 December 2008, 31 December 2009, 31 December 2010 and 31 December 2011. Further, none of the entities seeking to rely on the relief provided by the Class Order (including BAPE, GSM, Delta Gold, BKal, AurionGold and Granny Smith) lodged the required annual notices or opt-in notices. Barrick Gold Group applied to ASIC for 'no-action' letters to be issued in respect of these contraventions, but that request was refused.
The affidavit evidence discloses that proceedings were commenced by ASIC in relation to certain of these contraventions, which resulted in a fine being imposed on at least one of the entities concerned. So, although the contraventions in question were not cured as such, they were dealt with in part, for the period of contravention from 2006 to 2009, by way of regulatory action.
Mrs Trezise has deposed that she is not aware of any failure to comply with Part 2M.3 of the Act by any of the entities in the Barrick Gold Group since 2012 (other than the matters the subject of this Application).
I turn first to deal with the orders sought to extend time for compliance with ASIC Instrument 2016/785. These orders are sought under s 1322(4)(d) CA, to extend the time for compliance with conditions 6(1)(f) and 6(1)(g)(i) of that instrument. In my view, the following matters weigh in favour of the extension which is sought.
First, there is a cogent reason for the delay in not having complied with the requirements of ASIC Instrument 2016 /785 and a good reason for the extension. The court has been provided with comprehensive affidavit evidence to detail the belief of the relevant officers within BME and the Group that BME did not require the relief by virtue of the lodgment of consolidated accounts and its status as a 'small proprietary company'. Mrs Trezise and Mr Fleming have deposed to the relevant circumstances which historically applied within the Group and the explicable reasons which meant the failure was not identified or detected at the time. I accept their belief was genuine.
It is entirely understandable in my view that the officers within a large international mining house, which is otherwise accustomed to group reporting, would overlook the consequences of a specific dividend payment in terms of the financial reporting obligations.
The error made in the present circumstances is not dissimilar to the error made by the plaintiff company in Entertainment Publications of Australia Pty Ltd v ASIC [2022] FCA 960 (Goodman J), an authority to which the plaintiff has drawn my attention. In that case, a change in the legislative definition of 'large proprietary company' in s 45A(3) CA went undetected by the company. The relevant entity ceased being a 'large proprietary company' during the relevant years, which impacted its financial reporting obligations. On the evidence before the court in that matter, extensions of time were granted and relief from civil liability orders were made.
Second, once BME became aware of the failure, it acted promptly to obtain further advice about the failures and how to comply with the relevant statutory requirements and conditions, including to bring this application. The affidavit evidence discloses a series of responsible steps and actions taken by the company from mid-October 2022 which demonstrate the company's concern as to the failure and the importance to the company of corrective action.
The promptness of the plaintiff's conduct was directly addressed by counsel for the plaintiff, Ms Pieniazek. Counsel drew a distinction in her submissions between failures on the part of public listed entities and failures on the part of privately held entities. In the former circumstances, counsel submitted there may well be trading or market‑related concerns and a need for urgent corrective action to be taken. In the latter cases, although delay is not encouraged, there are typically no trading or market-related concerns and so there tend not to be the broader implications for third party interests beyond those of the creditors and shareholders to the instant group. I accept this is a valid distinction and in any event, as counsel observed, third party stakeholders of the plaintiff had the protection of the Deed of Cross Guarantee which remained in place.
As to the pre-condition and requirement in s 1322(6)(c) CA that no substantial injustice has been or is likely to be caused to any person, that matter is satisfied in the present circumstances. I reach that conclusion primarily because the Deed of Cross Guarantee has been and is in place, and because the plaintiff is solvent and operates within a large corporate group for which group accounts have been prepared. It is therefore most unlikely that any creditor or potential creditor has been prejudiced by the contraventions. In addition, I refer to the letter of support which exists within the Group itself.
Counsel for the plaintiff, Mr Papamatheos, has also directed my attention to paragraph 4 of the minute of proposed orders, which provides another measure of comfort as to satisfaction of the precondition in 1322(6)(c) CA.[4] That paragraph allows parties to make an application within 28 days should they wish to address the court on the question of substantial injustice.
As to whether there are discretionary reasons to withhold relief, I am satisfied there is no evidence of any substantial misconduct, serious wrongdoing or flagrant disregard of the corporate law or constitution so as to warrant refusal of the relief sought. Additionally, the Application has been brought promptly.
This is one final matter to address. The form of the relief sought was initially directed to 'any failure' to comply with the relevant statutory and other requirements. There is authority to the effect that the grant of the court's relief should be based on, and limited to, the 'confessed acts of contravention', rather than be drafted in an overly broad manner. See, for example, Re Ozito Industries Pty Ltd [2020] FCA 1432; (2020) 148 ACSR 585 [30] (O'Bryan J) but there are other authorities. The fundamental proposition that is made in those authorities is that the form of the order for relief should not operate as a blank cheque to the plaintiff and the other parties involved. This is a matter I raised with counsel during the course of the hearing. I am satisfied that, with a minor change to the chapeau to paragraph 2 of the minute to refer to 'the failures', the order is sufficiently directed to the confessed acts of contravention. With this amendment, the form of paragraphs 2(a), 2(b) and 2(c) will all be directed to particular acts or omissions which have been identified in the affidavit evidence before the court as being the relevant acts of contravention in this particular case.
(2013) 251 CLR 396
[38] One mechanism by which the court may ensure that an order under s 1322(4) does not cause substantial injustice is to make an ancillary order permitting any interested person who may suffer substantial injustice to apply within a set period of time to vary or dissolve the s 1322(4) order: see Sprint Energy at [51]; Clancy Exploration Limited, in the matter of Clancy Exploration Limited [2018] FCA 569 at [36].
Third, it is consistent with the policy and purpose of the Act that extensions such as the present be granted. Extensions such as this are facilitative of commerce generally, as a beneficial end in itself.
Fourth, the conduct of BME and its officers, viewed in totality, is not otherwise disentitling of relief. I find that the failures were a result of inadvertence and oversight on the part of Mrs Trezise, the plaintiff's company secretary. I find that the non-compliance was unintentional and not dishonest. Further, while I note the existence of historical instances of non-compliance by other entities within the Barrick Gold Group, which remain uncured, they are not such as to disentitle the plaintiff from the relief which is presently sought. As I have indicated, these historical non-compliances concern companies other than the present plaintiff, did not concern the present management team, and were dealt with by way of regulatory proceedings at least in so far as a substantial proportion of the contraventions are concerned.
Fifth, if no extension is granted there are adverse consequences for the plaintiff. Most significantly, these are the costs and time associated with the preparation and lodgment of financial reports for the plaintiff. While the costs are not material from the perspective of this Group, the need for the plaintiff to incur these costs, and the additional time of personnel to attend to the tasks required, is not consistent with the rationale of ASIC Instrument 2016/785 (particularly where I am told the Deed of Cross Guarantee remains in place and the holding company has already lodged consolidated financial statements).
Sixth, and allied to the preceding reason, the substantive protection and information needs of creditors of the Group (as well as other stakeholders) are already sufficiently met given the Deed of Cross Guarantee remains in place and the holding company has already lodged consolidated financial statements for the relevant year).
Seventh, an officer of the plaintiff has deposed that steps will be taken to prevent this oversight occurring in the future.
Eighth, ASIC has indicated it does not oppose the Application.
In the circumstances, I am persuaded that the failure was unintentional and inadvertent, and was not the result of any deliberate disregard of the Act. I find that no substantial injustice has been or is likely to be caused to any person by reason of the failure or by making of the order which is sought. As submitted by the plaintiff, the orders do not alter any rights but rather seek to formalise what should have occurred and what was assumed to have occurred.
As I have observed, the consolidated financial statements of the Group were lodged in respect of the financial year in question and, at all relevant times, the Group enjoyed the support of its parent entity, which is Barrick Gold Corporation, the ultimate parent company within the Group. There is evidence before me that the directors have obtained a letter of support from that parent company, which indicates that its present intention is to provide financial support to the plaintiff in order to enable the plaintiff to meet its liabilities as they fall due and to carry on its own business, for at least the 12 months after the audit report signing date. The audit report signing date is 31 May 2022, which indicates a continuing period of support beyond today for some months.
Specifically, there is evidence before me, contained within the Second Trezise Affidavit, of a solvency declaration which was made by the directors of the plaintiff on 4 April 2023. The directors noted that the plaintiff, which is ultimately controlled by Barrick Gold Corporation, has provided a letter of support to BRAPL. According to the declaration, that letter of support undertakes to ensure that BRAPL and its subsidiaries have access to adequate financial resources to enable them to fulfill all of its financial obligations.