Global Lithium Resources Limited v Sincerity Development Pty Ltd [No 2] - [2024] WASC 443

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   GLOBAL LITHIUM RESOURCES LIMITED -v- SINCERITY DEVELOPMENT PTY LTD [No 2] [2024] WASC 443
CORAM:   HILL J
HEARD:   18 NOVEMBER 2024
DELIVERED          :   19 NOVEMBER 2024
PUBLISHED           :   26 NOVEMBER 2024
FILE NO/S:   COR 139 of 2024
BETWEEN:   GLOBAL LITHIUM RESOURCES LIMITED
Plaintiff
AND
SINCERITY DEVELOPMENT PTY LTD
Defendant

Catchwords:

Corporations - Meetings - Application for extension of time to hold extraordinary general meeting and annual general meeting - Where majority of plaintiff's directors hold concerns about potential breaches of Foreign Acquisitions and Takeovers Act 1975 (Cth) (FIRB Act) by a group of shareholders - Where plaintiff made complaint to Department of Treasury about possible breach of FIRB Act - Where ongoing communication between plaintiff and Department of Treasury - Relevant factors in considering application for extension of time - Whether substantial injustice caused by extension of time

Legislation:

Corporations Act 2001 (Cth) s 249D, s 249J, s 250N, s 250P, s 250R, s 317, s 459G, s 1322
Foreign Acquisitions and Takeovers Act 1975 (Cth)

Result:

Extension of time granted

Category: B

Representation:

Counsel:

Plaintiff	:	A J Papamatheos SC & C E McKay
Defendant	:	S Penglis SC & T Houweling

Solicitors:

Plaintiff	:	Thomson Geer
Defendant	:	Cornerstone Legal

Cases referred to in decision:

An v Joo [2019] NSWSC 39
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265
Elderslie Finance Corp Ltd v Australian Securities Commission (1993) 11 ACLC 787
National Roads & Motorists' Association Ltd v Parkin [2004] NSWSC 296
PCM Nominees (WA) Pty Ltd v ACN 063 291 430 Pty Ltd [2017] FCA 848
Re Compaction Systems Pty Ltd [1976] NSWLR 477, 493; (1976) 2 ACLR 135
Re Gem Exploration and Minerals NL [1975] 2 NSWLR 584
Re Helios Energy Ltd [2017] FCA 840; (2017) 122 ACSR 174
Re Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390
Re Northern Minerals Ltd [2023] NSWSC 1568
Super John Pty Ltd v Futuris Rural Pty Ltd [1999] NSWSC 627 [14]; (1999) 32 ACSR 398
Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396

HILL J:

(This judgment was delivered extemporaneously and has been edited from the transcript to include references, headings, and to correct matters of grammar and expression.)

By an interlocutory process filed 8 November 2024, the plaintiff (the Company) seeks orders pursuant to s 1322(4)(d) of the Corporations Act 2001 (Cth) (Act) to extend the time fixed under the Act for calling and holding an extraordinary general meeting (EGM) as well as its annual general meeting (AGM). The extension of time is sought until 20 March 2025. At present, these meetings are scheduled to take place tomorrow, Wednesday, 20 November 2024, at 4.00 pm.
In support of the application, the plaintiff relied on nine affidavits being:
(a)three open affidavits of Ronald Mitchell, a director of the plaintiff, which were filed on 11 and 18 September 2024, and 8 November 2024;
(b)a confidential affidavit of Mr…

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: [2024] WASC 443
Decision Date: 26 NOVEMBER 2024

CaseChat Overview and Summary

Global Lithium Resources Limited applied to the Supreme Court of New South Wales for an extension of time to hold an extraordinary general meeting (EGM) and an annual general meeting (AGM). The application arose from concerns about potential breaches of the Foreign Acquisitions and Takeovers Act 1975 (Cth) by a group of shareholders. The plaintiff had already made a complaint to the Department of Treasury about the possible breach. The court was required to decide whether an extension of time should be granted and if so, whether such an extension would cause substantial injustice.

The court considered the plaintiff's complaint to Treasury, the impact of the AGM on the commercial direction of the company, and the public interest in investigating the potential breach before the AGM. The court also noted the similarities and distinctions between this case and the case of Re Northern Minerals Ltd, where an extension had been granted. The plaintiff's major shareholders supported the application. The court found that while the complaint to Treasury was not sufficient on its own to warrant an extension, the other factors, including the critical minerals policy and the potential impact of a board change, warranted consideration. The court ultimately decided that the application should be granted.

The court ordered that the time for holding the EGM and AGM be extended to allow for the investigation of the potential breach of the Foreign Acquisitions and Takeovers Act 1975 (Cth). The court also ordered that the EGM and AGM be held at the same time, to avoid confusion and to ensure that the company's shareholders have an opportunity to vote on the potential breach and its implications. The court further ordered that the plaintiff provide regular updates to the Department of Treasury and that the plaintiff's major shareholders be notified of the extension and its implications.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

ASIC is guided by previous decisions of the court, including Bowen CJ's comments in Re Gem Exploration and Minerals NL that AGMs are 'an important safeguard for shareholders, investors and creditors of companies' which should only be relaxed where good cause is shown.[19] [19] Re Gem Exploration and Minerals NL [1975] 2 NSWLR 584. In this case, the plaintiff relied primarily on three matters which, in its submission, made it appropriate for the time period to be extended. First, it relied on its complaint to Treasury, on the basis that this may have an impact on who should be entitled to vote at the AGM and EGM. Second, it contended that the question as to who had control of the board after the AGM was likely to have a significant impact on the commercial direction of the Company, including whether the Company stayed effectively mothballed or started to ramp-up, including by proceeding with various studies. The identity of the board may also impact various commercial decisions, including entry into or extensions of various commercial agreements. Third, the plaintiff submitted that it is in the interests of all directors and shareholders of the Company, as well as in the public interest, to have the potential breach of the FIRB Act investigated and addressed before the AGM is held. Senior counsel for the plaintiff accepted that the making of the complaint to Treasury was not of itself a sufficient basis on which the court should exercise its discretion to grant the extension sought. In this case, the additional matters that were relied on were: the specific issues that arose from the critical minerals policy of the Australian Government, which covers lithium; the plaintiff's status as a lithium exploration company, which is on the verge of obtaining its mining licence; the details of the allegations raised; the likelihood that if the AGM proceeds, there is likely to be a change in the board and with that change, a change in the focus of the Company, and the resulting impact on various commercial agreements. The plaintiff also referred to and relied upon the support from two of its major shareholders for the application. In support of its application, the plaintiff placed significant reliance on the decision of Black J in Re Northern Minerals Ltd.[20] While I accept that there are some similarities to the facts of that case, there are two important distinctions between that case and the application before me. First, the application before his Honour was not an application for an extension of time to hold the company's AGM. That extension of time had already been granted by ASIC. After this extension was granted, a s 249D notice was issued by a shareholder. It was this meeting that was the subject of his Honour's orders, on the basis that the meeting should be held at the same time as the AGM. In this regard, I consider that his Honour's decision is consistent with the orders I made on the hearing of the originating process. Second, well prior to the originating process being filed in Re Northern Minerals Ltd, the Treasurer had issued an order under s 67 of the FIRB Act to a shareholder of Northern Minerals prohibiting the acquisition of any additional interest in the company or the interest of its proportion of its shareholding in the company beyond 9.98%. There was, however, in that case, an ongoing issue as to whether there had been compliance with the order.[20] Re Northern Minerals Ltd [2023] NSWSC 1568.