Metalicity Ltd v Allen [No 2]

Metalicity Ltd, a company engaged in a corporate dispute, brought proceedings against Allen and others in the Supreme Court of Western Australia, focusing on the validity of resolutions passed at two meetings of Nex, an Australian company. The dispute centred around the effectiveness of proxies lodged for the AGM and EGM, with Metalicity asserting that the proxies were invalid, leading to improper outcomes in the election of directors. Metalicity further alleged an undeclared association among the defendants, suggesting a breach of the Corporations Act 2001 (Cth), which was denied by the defendants. Metalicity sought relief, including the discounting of votes at the EGM and the vesting of shares in ASIC for sale.

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.