Ex Parte - [2021] WASC 55

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   EX PARTE ARCHTIS LTD [2021] WASC 55
CORAM:   HILL J
HEARD:   19 FEBRUARY 2021
DELIVERED          :   19 FEBRUARY 2021
PUBLISHED           :   3 MARCH 2021
FILE NO/S:   COR 18 of 2021

EX PARTE
ARCHTIS LTD
Plaintiff

Catchwords:

Corporations law - Securities - Application for declaratory relief to validate trading in shares issued without a valid cleansing notice or prospectus - 28 instances of securities being issued without a valid cleansing notice - Where no blatant or flagrant disregard of obligations - Where no substantial injustice if orders made - Application granted

Legislation:

Corporations Act 2001 (Cth), s 707, s 708A, s 1322

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff

Mr M F Holler

Solicitors:

Plaintiff

Steinepreis Paganin

Case(s) referred to in decision(s):

Re Caeneus Minerals Ltd [2018] FCA 560
Re Classic Minerals Ltd [2018] FCA 2039
Re G8 Communications Ltd [2016] FCA 297; (2016) 112 ACSR 22
Re Golden Gate Petroleum Ltd [2010] FCA 40; (2010) 77 ACSR 17
Re Helios Energy Ltd [2017] FCA 840; (2017) 122 ACSR 174
Re ICandy Interactive Ltd [2018] FCA 533; (2018) 125 ACSR 369
Re Poseidon Nickel Ltd [2018] FCA 1063; (2018) 129 ACSR 57
Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418
Weinstock v Beck (2013) 251 CLR 396

HILL J:

On 12 February 2021, the plaintiff, archTIS Ltd (archTIS), filed an originating process seeking orders under s 1322(4)(a) of the Corporations Act 2001 (Cth) (Act) relating to contraventions of s 707(3) and s 727(1) of the Act. The contraventions occurred as a result of share sales following 28 separate instances of shares being issued between 31 August 2020 and 12 February 2021 without a valid cleansing notice or cleansing prospectus.
Despite the number of instances where shares were issued without a valid cleansing notice or cleansing prospectus, archTIS has provided a frank and detailed explanation as to the circumstances surrounding each of the share issues. On the basis of the evidence before me, I was and am satisfied that the failure was caused by inadvertence rather than any deliberate disregard of the plaintiff's obligations.
In light of the urgency with which the application was brought, I made orders at the conclusion of the hearing on 19 February 2021 granting the relief sought and said that I would subsequently publish reasons for my decision. These are the reasons for my decision.

Part 6D.2, Corporations Act

Part 6D.2 of the Act imposes disclosure obligations in relation to the issue and sale of shares. In certain circumstances, these obligations can be satisfied by lodging what is commonly referred to as a cleansing notice or a prospectus.[1] If disclosure has not been made by the issuer and the shares are on-sold within 12 months, the party to whom the shares are issued may be obliged to make disclosure.[2]
[1] Corporations Act, s 708A(5).
[2] Corporations Act, s 707(3). See also Re

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.

Continue reading Ex Parte

Details

AGLC: Ex Parte [2021] WASC 55
Case: [2021] WASC 55
Decision Date

CaseChat Overview and Summary

archTIS Ltd applied to the Supreme Court of Western Australia for relief under s 1322(4)(a) of the Corporations Act 2001 (Cth) to validate the sale of shares issued without a valid cleansing notice or prospectus. The sales occurred between 31 August 2020 and 12 February 2021. The court had to decide whether the failure to issue the notices was honest and inadvertent or a blatant disregard of obligations. The court also had to consider if granting relief would cause substantial injustice. After reviewing the evidence, the court found that the failure was due to inadvertence and no substantial injustice would result from granting relief. The court granted the application and validated the share sales.

Orders