Federal Court of Australia

W Cosmetics IP Pty Limited, in the matter of W Cosmetics IP Pty Limited [2026] FCA 1342

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 1322(4)(d) of the Corporations Act 2001 (Cth), the time specified by s 6(1)(m) of the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 for the first plaintiff to lodge a Deed of Cross-Guarantee and prescribed associated documentation with the Australian Securities and Investments Commission for the financial year ended 30 June 2026 be extended to 30 September 2026.

2.    Any person who can demonstrate sufficient interest has liberty to apply within 14 days to vary or set aside order 1.

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

REASONS FOR JUDGMENT

GOODMAN J:

1    On 10 September 2026, I made orders in this proceeding, including an order pursuant to s 1322(4)(d) of the Corporations Act 2001 (Cth) extending the time by which the first plaintiff (WCIP) is to lodge a deed of cross-guarantee and associated documents with the Australian Securities and Investments Commission (ASIC) so as to enable the plaintiffs to comply with s 6(1)(m) of the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.

2    These are my reasons for making those orders.

3    WCIP is the ultimate holding company of the W Group of companies. The second and third plaintiffs are wholly owned subsidiaries of WCIP. The W Group sells beauty products, through physical retail stores in Australia and New Zealand and on an online platform.

4    Each of the plaintiffs is a large proprietary company for the purposes of s 45A(3) of the Act. As such, each plaintiff is subject to a series of reporting obligations imposed by Part 2M.3 of the Act.

5    In particular, s 292(1)(c) of the Act obliges all large proprietary companies to prepare a financial report and a directors’ report for each financial year; and the directors of such entities are obliged to take reasonable steps to comply, or secure compliance with, Pt 2M.3: s 344(1) of the Act.

6    Section 341 of the Act empowers ASIC to make a written order providing, inter alia, relief from some or all of the requirements of Pt 2M.3 of the Act. The Instrument is such an order.

7    Clause 5 of the Instrument is in the following form:

5    Financial reporting relief for wholly-owned entities

(1)    A company that was party to a deed of cross guarantee at the end of a financial year (relevant financial year) does not have to comply with any of the following requirements of Part 2M.3 of the Act in relation to the financial year:

(a)    the requirement to prepare a financial report and a directors’ report under paragraphs 292(1)(b) and (c) and paragraph 292(2)(b);

(b)    the requirement to have the financial report audited and to obtain an auditor’s report under subclause 301(1);

(c)    the requirement to report to its members under section 314 within the time required by section 315;

(d)    the requirement to send reports to a member in accordance with a request under subsection 316(1) within the time required by subsection 316(2).

(2)    The directors of a company referred to in subsection (1) do not have to comply with the requirement under section 317 to lay reports before the AGM of the company following the relevant financial year.

(bold and italic emphasis in original)

8    Clause 6 of the Instrument sets out a series of conditions all of which must be satisfied before the relief in cl 5 is available. Relevantly, s 6(1)(m) of the Instrument contains a condition that:

(m)    before the end of the relevant financial year:

(i)    an original of:

(A)    the deed of cross guarantee; and

(B)    if the company became party to the deed of cross guarantee by an assumption deed—that assumption deed;

has been lodged with ASIC; and

(ii)    where the lodgement of a deed referred to in subparagraph (i) occurred on or after 1 July 2004—an original of a certificate relating to that deed has also been lodged with ASIC by the relevant time, where that certificate conforms with the definition of certificate as it appears in this instrument or the definition of Certificate as it appeared in a previous order at the time that the deed was lodged…

9    Ahead of a 30 June 2026 deadline for the lodgement with ASIC of the documents necessary to qualify for relief under the Instrument for the financial year ending 30 June 2026, WCIP retained Allen Legal Pty Ltd to prepare and lodge a deed of cross-guarantee and associated documents.

10    In preparing the deed, Mr Mark Allen, the principal of Allen Legal, included as parties to the deed the plaintiffs together with two additional companies, namely W Pacific Holding Pty Ltd (a company registered in Australia) and W Retail Group (NZ) Limited (a company registered in New Zealand) (WRGNZ).

11    On or about 24 June 2026, the plaintiffs and the additional companies executed the deed.

12    On 26 June 2026, and thus before the 30 June 2026 deadline, Mr Allen lodged with ASIC what he believed at that time to be a complete copy of the deed, and other requisite documents.

13    On 3 July 2026, ASIC notified Mr Allen that it had not accepted the deed for lodgement because: (1) the deed did not appear to have been signed on behalf of each company by the requisite number of directors and officers; and (2) WRGNZ was not registered as a foreign company in Australia.

14    As to (1), Mr Allen then reviewed the copy of the deed as lodged and discovered that that copy contained only every second page of the deed because the deed, which was executed using pages printed on both sides, had been scanned as if it were a single-sided document and then sent to ASIC. Thus, ASIC had received only the odd-numbered pages of the deed.

15    As to (2), Mr Allen had not appreciated that ASIC required foreign companies to be registered in Australia (which WRGNZ is not).

16    Mr Allen’s evidence is that the errors were made by him and were unintentional and inadvertent.

17    As these errors were not identified until 3 July 2026, the time for lodgement of a correctly scanned deed, with WRGNZ removed as a party, had passed.

18    The evidence of Mr Jason Munstermann, the plaintiffs’ solicitor in this proceeding, established that in the absence of the relief sought in this proceeding being granted:

(1)    WCIP will need to prepare and lodge financial statements prepared on a consolidated basis and the second and third plaintiffs will need to prepare and lodge stand-alone financial accounts (each by 31 October 2026). Although WCIP will be in a position to comply with that deadline, the stand-alone accounts for the second and third plaintiffs are highly unlikely to be able to be lodged on time as, inter alia, the preparation of such accounts will require substantial additional audit evidence and disclosure information to be gathered;

(2)    the provision of the audit evidence and disclosure information will require W Group to undertake additional work in relation to stock accuracy, potentially including a full stocktake of the Group’s warehouses and retail stores. The cost of that exercise could exceed $200,000;

(3)    as W Group’s accounting and finance resources are already at capacity on several critical projects, further resources would need to be procured at a cost of at least $20,000 to $30,000;

(4)    the fees to be charged by the W Group’s auditor for the provision of the required audit services would likely be approximately $70,000 to $90,000 (plus GST);

(5)    the fees to be charged by the W Group’s accountants for the preparation of the stand-alone accounts following completion of the audit exercise would likely be approximately $40,000 to $55,000 (plus GST);

(6)    a failure to lodge all required financial accounts for the financial year ending 30 June 2026 by the required date may give rise to enforcement action by ASIC, with an attendant risk of the imposition of substantial penalties. This is because:

(a)    for the financial year ending 30 June 2025, the plaintiffs failed to lodge audited financial reports on time pursuant to their obligations under the Act;

(b)    in February 2026, ASIC commenced an investigation into that non-compliance;

(c)    by 29 May 2026, the non-compliance was rectified; and

(d)    on 7 July 2026, ASIC communicated its decision to take no further action in relation to that non-compliance. ASIC also indicated that it would actively monitor the compliance of the W Group with its reporting obligations for, at least, the financial year ending 30 June 2026, and would consider enforcement action if there was any failure to lodge W Group’s financial reports for the financial year ending 30 June 2026 by the due date.

19    As noted above, the plaintiffs sought relief under s 1322(4)(d) of the Act. Section 1322 provides in so far as is presently relevant:

1322    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:

…

(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) …;

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:

…

(c)    … that no substantial injustice has been or is likely to be caused to any person.

(bold emphasis in original)

20    Each of the plaintiffs has a real financial interest in the result of this application, and as such is an “interested person” within the meaning of that term in s 1322(4): see Entertainment Publications of Australia Pty Ltd v Australian Securities and Investments Commission [2022] FCA 960 at [54] and the authorities there cited.

21    Section 1322(4) confers a broad discretion upon the Court. In Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396 at 414 [39], French CJ explained:

Corporations, in contemporary Australian society, serve the purposes of enterprises, large and small, owned and operated by men and women, some of whom are sophisticated, knowledgeable and well-advised on matters of corporate governance and some, perhaps many, of whom are not. Section 1322(4) and related provisions reflect a long-standing legislative recognition that mistakes will happen in corporate governance 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. In accordance with its evident purpose, s 1322(4)(a) is to be construed broadly and applied pragmatically, principally by reference to considerations of substance rather than those of form.

22    Similarly, in Car Buyers Australia Pty Limited v Australian Securities and Investments Commission, in the matter of Car Buyers Australia Pty Limited [2020] FCA 599, Gleeson J stated at [26]:

Section 1322(4) of the Act provides a wide power to validate non-compliance by companies in certain circumstances. It reflects a “broad legislative policy that the law should not inflict unnecessary liability or inconvenience or invalidate transactions because of non-compliance with its requirements where such non-compliance is the product of honest error or inadvertence and where the court can avoid its effects without prejudice to third parties or to the public interest in compliance with the law”: Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418 at [29] (French J); Re Solco Ltd [2015] FCA 635; (2015) 106 ACSR 591 at [23] (McKerracher J); Re Murray River Organics Ltd [2019] FCA 931; (2019) 138 ACSR 365 … at [26] (Anderson J).

23    The following matters weighed in favour of the grant of the relief sought.

24    First, the extension of time would enable the plaintiffs to obtain an exemption which would have significant benefits to them, consistent with the purpose of the Instrument. In this regard, in Car Buyers Australia Gleeson J explained at [22] to [23]:

22.    The rationale for the Instrument is explained in ASIC’s Explanatory Statement for the Instrument (Explanatory Statement):

Part 2M.3 of the Corporations Act requires companies (except most small proprietary companies), disclosing entities and registered managed investment schemes (registered schemes) to prepare and lodge a financial report, directors’ report and auditor’s report for a financial year.

The costs of preparing a financial report and having it audited are significant. Where entities are wholly owned within a group of companies, and there are deeds of cross-guarantee within the group, the information needs of creditors and other stakeholders may be sufficiently met by the consolidated financial statements for the group, rather than individual financial statements for each of the wholly owned entities.

23.    The Explanatory Statement summarises the operation of the Instrument, relevantly, as follows:

A wholly-owned company is relieved of its obligations under Part 2M.3 of the Corporations Act provided it enters into a deed of cross-guarantee with its holding entity and other wholly owned entities of the group, and meets certain other conditions. Entities that are not wholly owned may be a party to the deed but are not relieved from the requirements in Part 2M.3.

The deed of cross-guarantee is an instrument under which each entity enters into a covenant with the trustee to guarantee payment in full of any debt to creditors of each party to the deed by each other entity.

The deed of cross-guarantee is required as a protection for creditors of the company that will not have access to the company’s financial report in order to assess its financial position. …

(bold emphasis in original)

25    Secondly, the deed was lodged before the 30 June 2026 deadline, but that deadline was not met because of errors made by the plaintiffs’ then solicitor which were unintentional and inadvertent.

26    Thirdly, once the errors were discovered, the plaintiffs acted sufficiently promptly in seeking a remedy.

27    Fourthly, the prejudice that the plaintiffs would suffer if relief were not to be granted is substantial (see [18] above) and disproportionate to the omissions made.

28    Finally ASIC, by its delegate, indicated that: (a) it had received the originating process and the affidavits upon which the plaintiffs relied; and (b) neither consented to nor opposed the application.

29    I also took into account that s 1322(6)(c) requires the Court, before making an order under s 1322(4)(d), to be satisfied that no substantial injustice has been or is likely to be caused to any person. In Re Murray River Organics Ltd (ACN 159 039 175) [2019] FCA 931; (2019) 138 ACSR 365 at 371 to 372 ([35] to [38]), Justice Anderson explained:

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 [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 (An v Joo) 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 Corporation Ltd v Australian Securities Commission (1993) 11 ACSR 157 at 160 (Elderslie Finance); An v Joo 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 [1976] 2 NSWLR 477 at 493; (1976) 2 ACLR 135 at 150; see also Re AHEPA NSW at [25].

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 Re Sprint Energy at [51]; Re Clancy Exploration Ltd [2018] FCA 569 at [36].

(italic emphasis in original)

30    There was no evidence that any third party may have been prejudiced by the failure to lodge the deed in a form satisfactory to ASIC, or might be prejudiced by the grant of relief. In this regard, the orders proposed by the plaintiffs included an order permitting any person with a sufficient interest to apply to vary or set aside the s 1322(4) order, consistent with the views expressed by Justice Anderson in Murray River Organics at [38].

31    Finally, there was no apparent reason why the relief sought should not be granted.

Associate:

Dated:    11 September 2026