JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: METALICITY LTD -v- ALLEN [No 2] [2022] WASC 420
CORAM: HILL J
HEARD: 14, 15 & 17 NOVEMBER 2022
WRITTEN SUBMISSIONS 21, 25 & 27 NOVEMBER 2022
DELIVERED : 9 DECEMBER 2022
FILE NO/S: COR 140 of 2022
BETWEEN: METALICITY LTD
Plaintiff
AND
KENNETH MALCOLME ALLEN
First Defendant
KENNETH MALCOLME ALLEN as trustee for THE ALLEN SUPER FUND A/C
LEE KIANG ALLEN as trustee for THE ALLEN SUPER FUND A/C
Second Defendants
THOMAS FRANCIS PERCY
Third Defendant
HOCK HOO CHUA
Fourth Defendant
B3 PROSPECTING PTY LTD
Fifth Defendant
LEE KIANG ALLEN
Sixth Defendant
LEE KIANG ALLEN as trustee for ANDREA K ALLEN
Seventh Defendant
LEE KIANG ALLEN as trustee for ROYCE K ALLEN
Eighth Defendant
LEE KIANG ALLEN as trustee for AMELIA V ALLEN
Ninth Defendant
ANDREA KATHLEEN HUANG LING ALLEN
Tenth Defendant
BRETT ROYLE
Eleventh Defendant
PECK CHONG YEO
Twelfth Defendant
HOCK PENG CHUA
Thirteenth Defendant
AGENOR PTY LTD as trustee for THE GLAMUZINA SUPER FUND
Fourteenth Defendant
MATE AUTO ELECTRICAL PTY LTD
Fifteenth Defendant
MATTHEW GUY MAYNE as trustee for THE MAYNE SUPER FUND
LISA MAYNE as trustee for THE MAYNE SUPER FUND
Sixteenth Defendants
TOPRANGE PTY LTD as trustee for THE KEVDEN SUPER FUND
Seventeenth Defendant
JETT HOLDINGS PTY LTD
Eighteenth Defendant
SIANG JOON GOH
Nineteenth Defendant
BARRY LUCAS
Twentieth Defendant
DION GERALD MEREDITH
Twenty First Defendant
PETER VANDA RESOURCES PTY LTD
Twenty Second Defendant
HIGHAM HILL PTY LTD
Twenty Third Defendant
ALIC TRPCEV
Twenty Fourth Defendant
EFFIS PTY LTD
Twenty Fifth Defendant
ROBERT RITCHER as trustee for THE ROBERT RICHTER SUPER FUND NO 2
ANNE LYELL RITCHER as trustee for THE ROBERT RICHTER SUPER FUND NO 2
Twenty Sixth Defendants
NEX METALS EXPLORATIONS LTD
Twenty Seventh Defendant
Catchwords:
Corporations – Meetings – Proxies – Requirements for lodgment of valid and effective proxy – Electronic lodgment of proxy – Whether documents evidencing authority required to be lodged with company at least 48 hours prior to meeting if electronic proxy not lodged by shareholder – Proper construction of s 250(1)(b), Corporations Act 2001 (Cth)
Corporations – Allegation of undeclared association – Whether undeclared association – Whether defendants or any of them had arrangement or understanding or were acting in concert in relation to the control of the board of Nex – Whether the first defendant has a relevant interest in the shares of the defendants or any of them – 'Hub' and 'spokes' – Turns on own facts
Corporations – Delay in seeking relief in relation to resolutions at annual general meeting – Effect of similar resolutions being passed at subsequent extraordinary general meeting – Discretion to order relief
Legislation:
Corporations Act 2001 (Cth) s 9, s 64(a), s 250A, s 250B, s 606, s 608, s 609(5), s 610, s 1325A
Corporations Regulations 2001 (Cth), reg 2G.2.01
Result:
Originating process dismissed
Category: A
Representation:
Counsel:
| Plaintiff | : | G D Cobby SC |
| First Defendant | : | G Donaldson SC & J Sippe |
| Second Defendants | : | G Donaldson SC &… |
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- Case
- [2022] WASC 420
- Decision Date
CaseChat Overview and Summary
The court was tasked with determining several legal issues. Firstly, whether documents evidencing authority were required to be lodged with the company at least 48 hours prior to the AGM if an electronic proxy was not lodged by the shareholder, as per s 250(1)(b) of the Corporations Act 2001 (Cth). Secondly, whether there was an undeclared association among the defendants, which would breach ch 6 of the Corporations Act 2001 (Cth). Thirdly, whether any non-compliance with the Act caused substantial injustice, particularly in light of Metalicity's delay in seeking relief. Lastly, the court had to consider the effect of similar resolutions being passed at a subsequent EGM on the discretion to order relief.
The court held that while some proxies were indeed invalid due to the failure to lodge necessary documents prior to the AGM, it did not deem it appropriate to grant relief. The court found that Mr Allen had a relevant interest in the shares of some defendants based on an arrangement or understanding, but this did not amount to a breach of s 606 of the Act as it did not exceed the 20% threshold. The court considered the substantial similarity of resolutions passed at the EGM, which effectively mirrored those at the AGM, and concluded that the shareholders' views had been adequately represented. Therefore, the court declined to exercise its discretion to grant relief, considering the delay in seeking relief and the outcome of the EGM.
The court's final orders did not include any vesting of shares in ASIC or the discounting of votes at the EGM. The court ruled that the delay in seeking relief and the subsequent EGM's alignment with the AGM's resolutions meant that no substantial injustice had occurred. The court also affirmed that the failure to lodge proxy authorities prior to the AGM, while significant, did not warrant relief given the circumstances.
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
These proceedings concern the validity of resolutions of shareholders at two separate meetings of Nex: the 2021 annual general meeting held on 31 March 2022 (AGM) and an extraordinary general meeting held on 25 July 2022 (EGM). The EGM was held following my judgment in earlier proceedings between Nex and Metalicity.[1] At both meetings, the nominees of Metalicity were not elected as directors of Nex and the incumbent directors of Nex were not removed.[1] Metalicity Ltd v Nex Metals Explorations Ltd [2022] WASC 234. Metalicity contends the proxies lodged by the first to twenty-sixth defendants at the AGM were not effective and that, as a consequence, Mr Percy KC was not re‑elected and its nominees were. Metalicity also alleges there is an undeclared association between the first to twenty‑sixth defendants in breach of ch 6 of the Corporations Act 2001 (Cth) (Act). Metalicity contends two matters should flow from this. First, the votes cast at the EGM by these parties should be discounted in their entirety and second, orders should be made vesting the shares owned by these defendants in the Australian Securities and Investments Commission (ASIC) for sale. The defendants who participated in these proceedings strenuously deny the allegations made against them. The defendants accept the issues raised by Metalicity in respect of the proxies are relevant to three matters: first, the effectiveness of the proxies lodged for the AGM; second whether there has been a contravention of s 606 of the Act; and third, whether any non-compliance with the Act has caused any substantial injustice. In response, the defendants say that, on a proper construction of the Act, there was no requirement for any documents to be lodged by them, or on their behalf, with Nex prior to the AGM. They contend that the fact that each of the defendants (apart from the twenty‑seventh defendant) voted in a similar fashion at the two meetings does not give rise to an inference there is an undeclared association or any other conduct in breach of the Act. Finally, if there has been any irregularity or non-compliance with the Act, which is denied, the defendants say no relief should be granted due to Metalicity's delay in seeking relief in respect of the AGM, and because the votes that were cast at both meetings represent the views of shareholders. On this basis, they say no substantial injustice has occurred. For the reasons that are set out below, it is my view that:(a)where a proxy is signed or lodged online by a person other than the shareholder, s 250B(1)(b) of the Act requires the authority under which the appointment was signed or authenticated to be received by the company not less than 48 hours prior to the meeting;(b)where shareholders gave Mr Allen the right to lodge a proxy without directing the manner in which those votes were to be cast, this gave Mr Allen a relevant interest in these shares;(c)there was an arrangement or understanding between Mr Allen and Mr Papamihail whereby Mr Papamihail would seek to obtain votes for both the AGM and EGM to retain the incumbent directors and not to appoint the nominees of Metalicity. This gave Mr Allen a relevant interest in the shares of the twenty-fifth defendant;(d)neither of the matters referred to in (b) or (c) gave Mr Allen a relevant interest in more than 20% of the issued share capital of Nex and there has been no breach of s 606 of the Act;(e)while the failure to lodge the necessary authorities prior to the AGM meant that a number of the proxies submitted for the AGM were ineffective, in circumstances where almost identical resolutions have been considered and voted on at a subsequent meeting, namely the EGM, I do not consider I should exercise my discretion to grant any relief.