Revesby Workers’ Club Limited, in the matter of Revesby Workers’ Club Limited [2008] FCA 1999

FEDERAL COURT OF AUSTRALIA

Revesby Workers' Club Limited, in the matter of Revesby Workers' Club Limited [2008] FCA 1999

REVESBY WORKERS' CLUB LIMITED, IN THE MATTER OF REVESBY WORKERS' CLUB LIMITED

NSD 1717 of 2008

EMMETT J

31 OCTOBER 2008

SYDNEY IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 1717 of 2008

IN THE MATTER OF REVESBY WORKERS' CLUB LIMITED, REVESBY WORKERS' CLUB LIMITED

ACN 000 348 121

Plaintiff

JUDGE: EMMETT J

DATE OF ORDER: 31 OCTOBER 2008

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. Pursuant to s 1322(4)(d) of the Corporations Act 2001 (Cth), the period within which the plaintiff, Revesby Workers' Club Limited, must comply with ss 315(1), 319(1) and 319(3) be extended to the period that terminates on 7 November 2008 or such later date as the Court may determine. 2. The proceeding be adjourned for further hearing at not before 11.30 am on 7 November 2008. 3. The Plaintiff notify the Australian Securities and Investments Commission (ASIC) of the terms of these orders. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 1717 of 2008

IN THE MATTER OF REVESBY WORKERS' CLUB LIMITED, REVESBY WORKERS' CLUB LIMITED

ACN 000 348 121

Plaintiff

JUDGE: EMMETT J

DATE: 31 OCTOBER 2008

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 The plaintiff, Revesby Workers Club Limited (the Company), has applied under s 1322 of the Corporations Act 2001 (Cth) (the Act) for an order extending the periods within it must do certain acts, matters or things. Two extensions are involved. They are interconnected. 2 Section 314(1) provides that a company must report to members for a financial year. Under s 315(1), a public company must report to members under s 314 by the earlier of 21 days before the next annual general meeting after the end of the financial year or four months after the end of the financial year. Section 319(1) provides that a company that has to prepare or obtain a report for a financial year under Division 1 of Part 2M.3 must lodge the report with the Australian Securities Investments Commission (the Commission). Under s 319(3) the time for lodgement is, relevantly, within four months after the end of the financial year. 3 The time for complying with those provisions expires today, since the Company's financial year ended on 30 June 2008. However, at present, the Company is not in a position to comply with those provisions. It is necessary to explain briefly why. 4 The Company's present auditors are KPMG. KPMG have been the Company's auditors since the early 1990s. In the course of preparatory work for the completion of the audit for the period ended 30 June 2008, it emerged that there have been misappropriations during the period August 2003 to May 2008 in amounts in excess of $1.5 million. The misappropriations appear to have been the work of employees of the Company. The Company is concerned that it may have cause for complaint against KPMG and, for that reason, its directors considered that it was undesirable for KPMG to continue as the Company's auditors. There are, however, restrictions on the removal of an auditor and the resignation of an auditor. 5 Section 329(1) of the Act provides that an auditor may be removed from office by a resolution of the Company at a general meeting of which notice under s 329(1A) has been given, but not otherwise. However, s 329(5) provides that an auditor of a Company may, by notice in writing given to the Company, resign as auditor but only if the auditor has, by notice in writing, applied to Australian Securities and Investment Commission (the Commission) for consent to the resignation and the consent of the Commission has been given. Section 329(6) provides that the Commission must, as soon as practicable after receiving a notice from an auditor under s 392(5), notify the auditor and the Company whether it consents to the resignation of the auditor. 6 After some discussions between the directors of the Company and KPMG, KPMG intimated that it would be prepared to give notice to the Commission applying for the Commission's consent to their resignation. On 23 September 2008, KPMG, by notice in writing to the Commission, applied for consent to their resignation as auditors. For reasons that are not presently apparent, there was no response by the Commission, notwithstanding the terms of s 329(6), until 21 October 2008, when the Commission intimated that it was unlikely to give its consent. In the meantime, arrangements had been made for Ernst & Young to be appointed as auditors in the places of KPMG. However, that step could not be taken. Accordingly, the work necessary to enable the Company to comply with ss 315 and 319 is nowhere near complete. 7 A further complication arises from the language of s 329. Section 329(1A) provides that notice of intention to move a resolution for the removal from office of an auditor must be given to the company at least two months before the meeting is to be held. However, s 329(1A) further provides that, if the company calls a meeting after the notice of intention is given under s 329(1A), the meeting may pass the resolution even though the meeting is held less than two months after the notice of intention is given. A question arises as to the precise effect of those provisions of s 329. 8 It is contemplated that the annual general meeting of the Company will be held in accordance with the provisions of the Act, which means that it must be held by 24 November 2008. On one view, it is no longer possible to comply with the requirement of s 329 for notice of a resolution for the removal of KPMG to be given at least two months before that meeting. It may of course be possible to have another meeting after the annual general meeting but that may well be an unnecessary expense and it would be convenient, if it is possible, that the question of the removal be put to the annual general meeting. 9 Of course, at present, the financial accounts will not be available for the annual general meeting. The Company's solicitors have received an intimation from the Commission that, while the Commission has no desire to take a stance in relation to any abridgement of time in relation to a resolution under s 329, the Commission wishes to be heard in relation to the question of whether there should be an extension of the time for complying with ss 315 and 319. 10 However, today is the last day for compliance with ss 319 and 315. The Company has therefore applied for orders under s 1322 of the Act. Section 1322(4)(d) relevantly provides that the Court, on application by any interested person, may make an order extending the period for doing any act, matter or thing under the 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 a period for doing such act, matter or thing. However, under s 1322(6) the Court must not make an order under s 1322 unless, relevantly, it is satisfied that no substantial injustice has been or is likely to be caused to any person. 11 The Company is concerned that its failure to comply with ss 315 and 319 constitutes an offence and, hence, it is anxious to ensure that at least some order is made pending the full consideration of the matter by the Court, with the assistance of the Commission, if necessary. The Commission has indicated that it would not oppose a short extension to some time next week to enable it to be ready to make submissions to the Court. I am satisfied that no substantial injustice would be caused by a short extension of the time for compliance with ss 315 and 319. Whether there should be a substantial extension would be a matter for argument, after the Commission has been given the opportunity to be heard, if it so wishes. 12 Accordingly, I propose to stand the matter over for hearing next Friday, to direct that the Commission be notified of the proceeding and of the hearing and, in the interim, to order, pursuant to s 1322(4)(d), that the period within which the Company must comply with ss 315(1), 319(1) and 319(3) be extended to the period that terminates on 7 November 2008 or such later date as the Court may, on that day, determine or on any later time it might determine. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.