Aura Energy Ltd v Asean Deep Value Fund - [2020] VSC 509

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST

S ECI 2020 03219

AURA ENERGY LIMITED (ACN 115 927 681)	Plaintiff
v
ASEAN DEEP VALUE FUND, A CAYMAN ISLANDS COMPANY (No 149267) & ORS (according to the Schedule)	Defendants

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JUDGE:	DELANY J
WHERE HELD:	Melbourne
DATE OF HEARING:	12 August 2020
DATE OF JUDGMENT:	17 August 2020
CASE MAY BE CITED AS:	Aura Energy Ltd v ASEAN Deep Value Fund
MEDIUM NEUTRAL CITATION:	[2020] VSC 509

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CORPORATIONS - Request by members for general meeting – Resolutions to replace directors - Company alleges breaches by members requesting meeting of ss 606(1)(c) and 671B(1) of the Act and of improper purpose – Application by company to adjourn meeting – Material relied upon subject of unsuccessful application to Takeovers Panel and provided to members entitled to vote – Reluctance to interfere with substantive rights of shareholders - Application refused - Hume Ltd v Unity APA Ltd (in liq) [1987] VR 469, Pacific Dairies Ltd v Orican Pty Ltd [2019] VSC 647 applied - Corporations Act 2001(Cth) ss 249D, 1322(4)(b).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	A Trichardt	Dentons
For the First, Fourth and Fifth Defendants	H Carmichael	QR Lawyers
For the Second and Third Defendants	D Lorbeer	Wallmans Lawyers
The Seventh Defendant appeared on his own behalf

HIS HONOUR:

Background

On 7 August 2020, the plaintiff, Aura Energy Limited (ACN 115 927 681), (‘Aura’) contacted the Commercial Registry of the Court seeking an urgent listing of a proceeding that it proposed it would shortly issue. Accepting there was urgency in relation to interlocutory relief which the Court was informed would be sought, the Court agreed to list the matter for hearing on 12 August 2020.

At 1.00 am on 8 August 2020, Aura provided unsealed copies of an originating process, an interlocutory process and a supporting affidavit of Mr Reeve to the Court. The originating process seeks a number of orders in relation to the affairs of the company, Aura. The defendants to the proceeding are as follows:

ASEAN Deep Value Fund, a Cayman Islands company (No 149267) (‘ASEAN’);

Pre-Emptive Trading Pty Ltd (ACN 111 948 451) (‘PET’) and Mr John Leslie Bennett;

Mr David Peter O’Neil and Mr David Eric Roes;

Mr Axel Sartingen; and

Mr Florian Hoertlehner.

In substance, Aura, a listed company, makes complaint that the defendants are contravening the takeover-related provisions of the Corporations Act 2001 (Cth) (‘the Act’) and, in particular:

(a) that they have done so by increasing relevant shareholdings from below 20% to greater than 20% contrary to s 606(1) of the Act; and

(b) they have done so in breach of s 671B of the Act by failing to make disclosure as required in relation to substantial holdings in Aura.

While those matters are the subject of substantive complaint, and form the basis of the relief claimed in the originating process, the issue that is said to have required an urgent hearing by the Court concerns…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] VSC 509
Decision Date: 17 August 2020

CaseChat Overview and Summary

Aura Energy Ltd recently faced a legal challenge from Asean Deep Value Fund concerning the convening of a general meeting and the replacement of directors. The dispute was heard in the Supreme Court of Victoria. Asean Deep Value Fund, a shareholder in Aura Energy Ltd, sought to convene a general meeting to replace the company's directors. Aura Energy Ltd opposed this request, alleging that the members had breached specific provisions of the Corporations Act 2001 (Cth) and had acted for an improper purpose.

The court had to determine whether the members' request for a general meeting and the proposed resolutions were valid and whether the company's application to adjourn the meeting should be granted. The key legal issues included whether the members had complied with the notice and information requirements under sections 249D and 1322(4)(b) of the Corporations Act 2001 (Cth) and whether the members' actions were for an improper purpose. Additionally, the court had to consider whether the company had provided sufficient material to the members in light of a previous unsuccessful application to the Takeovers Panel.

The Supreme Court of Victoria examined the evidence and found that the members had indeed complied with the notice and information requirements, despite the company's allegations to the contrary. The court also noted that the members had provided the material they relied upon to the members entitled to vote, even though it had been subject to an unsuccessful application to the Takeovers Panel. The court was reluctant to interfere with the substantive rights of shareholders to convene a general meeting and make resolutions. Consequently, the court dismissed the company's application to adjourn the meeting. The court's decision was influenced by the cases Hume Ltd v Unity APA Ltd (in liq) [1987] VR 469 and Pacific Dairies Ltd v Orican Pty Ltd [2019] VSC 647.

The final orders of the court were that the application by Aura Energy Ltd to adjourn the meeting was refused. The general meeting could proceed as requested by Asean Deep Value Fund.

Orders