Mighty River International Ltd v Hughes (as deed administrators of Mesa Minerals Ltd)

In this case, Mighty River International Ltd sought relief from the Supreme Court of New South Wales against Mesa Minerals Ltd and its deed administrators, Hughes, regarding financial assistance provided to acquire shares. The dispute centred on whether the funding of legal proceedings by Mesa Minerals Ltd, aimed at compelling one shareholder to offer shares to other shareholders, constituted financial assistance under the Corporations Act 2001 (Cth). The court was required to determine the interpretation of 'financial assistance' and the applicable onus of proof in this context. Additionally, the case examined the appropriateness of an injunction to prevent further financial assistance and the procedural aspects of an application for leave to appeal a determination not embodied in an order.

The court first addressed the meaning of 'financial assistance' in the context of the legal proceedings funded by Mesa Minerals Ltd. It found that such funding was indeed financial assistance, as it directly supported the litigation necessary for the compulsory acquisition of shares. The court relied on precedents such as Charterhouse Investment Trust Ltd v Tempest Diesels Ltd and Australian Securities and Investments Commission v Adler to support its interpretation. Regarding the onus of proof, the court held that the onus was on Mesa Minerals Ltd to prove that the funding did not constitute financial assistance, aligning with the reasoning in Kinarra Pty Ltd v On Q Group Ltd. Furthermore, the court considered the procedural matter of the application for leave to appeal, applying principles from Yates Property Corporation Pty Ltd v Boland and Athens v Randwick City Council to ensure the order and reasons were read together.

Consequently, the court granted Mighty River International Ltd the relief sought, including an injunction to prevent further financial assistance for the acquisition of shares. The court ruled that the funding provided by Mesa Minerals Ltd for the legal proceedings constituted financial assistance, contrary to the Corporations Act. The injunction effectively halted the acquisition process, preventing Mesa Minerals Ltd from using financial assistance to compel a shareholder to offer shares to others. This decision underscored the importance of adhering to the prohibitions against financial assistance to acquire shares as set out in the Corporations Act.