QGold Pty Ltd v Woods

Case [2025] FCA 1201

FEDERAL COURT OF AUSTRALIA

QGold Pty Ltd v Woods [2025] FCA 1201

File number: QUD 260 of 2024
Judgment of: DERRINGTON J
Date of judgment: 2 October 2025
Catchwords: CORPORATIONS – application for compulsory acquisition of residual ordinary shares of Carawine Resources Limited – where the applicant is the “90% holder” of the relevant class of securities – where the applicant’s compliance with Division 1 of Part 6A.2 of the Corporations Act 2001 (Cth) (the Act) is irregular in part – whether appropriate to remediate such irregularities pursuant to s 1322 of the Act – where the applicant lodged a compulsory acquisition notice with the Australian Securities & Investments Commission on 21 March 2024 – where the notice relies upon the opinion expressed in an expert’s report dated 26 February 2024 – whether expert’s report inconsistent with the Act or otherwise deficient – whether applicant has established that the terms set out in the compulsory acquisition notice give a “fair value” for the relevant securities – application granted – costs reserved
Legislation: Corporations Act 2001 (Cth)
Cases cited:

Batoka Pty Ltd v Conocophillips WA-248 Pty Ltd (2006) 198 FLR 93

BG & E Management Pty Ltd v de Abolitz [2016] FCA 1368

Blaze Asset Pty Ltd v Target Energy Ltd (2009) 177 FCR 488

Bromley Investments Pty Ltd v Elkington (2003) 47 ACSR 273

Browne v Dunn (1893) 6 R 67

Capricorn Diamonds Investments Pty Ltd v Catto (2002) 5 VR 61

ConocoPhillips WA-248 Pty Ltd v Batoka Pty Ltd (2005) 193 FLR 424

Dolby Australia Pty Ltd v Catto (2004) 52 ACSR 204

Espasia Pty Ltd v Barbarry Pty Ltd (2009) 262 ALR 639

Holt v Cox (1997) 23 ACSR 590

In the matter of Navalo Financial Services Group Limited [2025] NSWSC 317

Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705

Re Australian Water Holdings Pty Limited (2016) 306 FLR 40

Re Goodyear Australia Ltd (2002) 167 FLR 1

Re Helios Energy Ltd (2017) 122 ACSR 174

Re Wave Capital Ltd (2003) 47 ACSR 418

Teh v Ramsay Centauri Pty Ltd (2002) 42 ACSR 354

Weinstock v Beck (2013) 251 CLR 396

Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd (2000) 176 ALR 86
Division: General Division
Registry: Queensland
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 194
Date of hearing: 6, 8 May 2025
Counsel for the Plaintiff: Mr D Ananian-Cooper
Solicitor for the Plaintiff: Arnold Bloch Leibler
Counsel for the Thirty-Sixth Defendant: Mr M Bennett
Solicitor for the Thirty-Sixth Defendant: Bennett Law

ORDERS

QUD 260 of 2024
BETWEEN:

QGOLD PTY LTD ACN 149 659 950

Plaintiff
AND:

KERRIN JOHN WOODS

First Defendant

FAYE LEONIE WOODS

Second Defendant

MELINDA JANE KIRKWOOD (and others named in the Schedule)

Third Defendant

ORDER MADE BY:

DERRINGTON J

DATE OF ORDER:

2 OCTOBER 2025

THE COURT ORDERS THAT:

1.The plaintiff’s acquisition of all of the ordinary shares in Carawine Resources Limited (Carawine) not already held by the plaintiff is approved on the terms set out…

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AGLC
QGold Pty Ltd v Woods [2025] FCA 1201
Case
[2025] FCA 1201
Decision Date

CaseChat Overview and Summary

QGold Pty Ltd sought approval from the Court for the compulsory acquisition of the residual ordinary shares in Carawine Resources Limited, following its acquisition of 90% of the company's shares. The Court was tasked with determining whether the compulsory acquisition notice, which proposed a valuation of $0.11 per ordinary share, offered a fair value for the shares and whether the procedural errors in the notice could be remediated under the Corporations Act 2001 (Cth). The case also involved an examination of the reports that formed the basis of the valuation and whether they were compliant with the Act.

The Court found that the valuation proposed in the notice was reasonable, as it fell within the range of estimated values for an ordinary Carawine share and was slightly higher than the preferred market value. The Court determined that the valuation methodology used was appropriate and the calculations conducted were neither inherently flawed nor incorrect. Consequently, the Court held that the notice provided a fair value for the shares, and QGold had satisfied its obligations under the Corporations Act. The Court also concluded that the procedural errors made in the notice, such as the overstatement of shares acquired and the delay in distributing the compulsory acquisition documents, were minor and did not cause substantial prejudice or injustice to any party.

The Court granted the application for compulsory acquisition, stating that the procedural irregularities could be remedied under section 1322(4) of the Corporations Act, as the errors were likely the result of honest mistakes or inadvertence. The Court further noted that the defendants had not argued that the irregularities caused substantial injustice or that the parties acted improperly or unreasonably. The Court also extended the time for QGold to comply with certain sections of the Act and directed that the parties be heard on the question of costs.

The Court's decision was that the compulsory acquisition of the residual ordinary shares in Carawine Resources Limited would be approved on the terms set out in the notice dated 21 March 2024. The Court extended the time for QGold to comply with certain sections of the Act and directed that the parties be heard on the question of costs. The Court clarified that the procedural errors in the notice, the list of objectors, and the reports did not invalidate the notice, the list, or the reports under section 1322(4) of the Act.

Orders

Orders of the court

1. The plaintiff’s acquisition of all of the ordinary shares in Carawine Resources Limited (Carawine) not already held by the plaintiff is approved on the terms set out in the notice of compulsory acquisition dated 21 March 2024 (the Compulsory Acquisition Notice).

2. The time for the plaintiff to comply with ss 664C(2)(b) and (3) of the Corporations Act 2001 (Cth) (the Act) is extended to:

(a) 25 March 2024, in respect of all shareholders of Carawine except those referred to in sub-paragraphs (b) and (c) below;

(b) 11 April 2024, in respect of the 71 shareholders referred to at paragraph [42] of the affidavit of Ann Hunyh (filed 20 May 2024) (the Huynh Affidavit); and

(c) 16 May 2024, in respect of the 3 shareholders identified at paragraph [62] of the Huynh Affidavit.

3. Notwithstanding that the Compulsory Acquisition Notice contravenes s 664C(1)(d) of the Act, neither the notice nor this proceeding are invalidated per s 1322(4) of the Act.

4. Notwithstanding that the list of objectors that was lodged with the Australian Securities and Investments Commission on 30 April 2024 contravenes s 664E(3)(a) of the Act, neither the list nor this proceeding are invalidated per s 1322(4) of the Act.

5. To the extent that the reports prepared by Sherif Andrawes of BDO Corporate Finance (WA) Pty Ltd (dated 26 February 2024) and Lynda Burnett of Valuation and Resource Management Pty Ltd (dated 26 February 2024) (together, the Reports) contravene the Act, neither the Reports, the Compulsory Acquisition Notice nor this proceeding are invalidated per s 1322(4) of the Act.

6. The parties are to be heard on the question of costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

That logic – to the extent it suggests that a valuation of $0.11 per ordinary Carawine share may, perhaps, be in excess of market value – is persuasive and buttresses the conclusion that a price of $0.11 cash per share represents at least “fair value” for an ordinary Carawine share. Conclusion as to “fair value” The Compulsory Acquisition Notice proposed to offer $0.11 cash per ordinary Carawine share. Section 664F(3) directs attention to whether that offer gives “fair value” for the relevant shares. The SoP methodology is a cogent mechanism by which to assess the value of a security. Here, that method was used to calculate the value of an ordinary Carawine share; the manner in which it was relied upon in the Andrawes Report, and the calculations undertaken by the VRM Report to ascertain the value of Carawine’s mineral assets, have not been shown to be either inherently flawed or incorrect. Ultimately, the SoP method identified the value of a Carawine share to be between $0.064 and $0.141, with a preferred value of $0.104. In light of the fact that the offer price proposed in the Compulsory Acquisition Notice falls within the range of estimated values of a Carawine share, and is $0.006 or 5.45% greater than the “preferred” (or most likely) market value, it can be accepted that the terms set out in that notice give a fair value for the securities in question. To that end, QGold has discharged its onus under s 664F(3) and, as such, the Court is obliged to approve the acquisition of the ordinary shares in Carawine on the terms proposed. Costs Section 664F(4) provides that the 90% holder “must” bear the costs of the other parties in the litigation unless the Court is satisfied the parties “acted improperly, vexatiously or otherwise unreasonably”. It is not self-evident that the conduct of the defendants in this case could not be so characterised, such that it is appropriate that the parties be heard on the question of costs.

Ratio Decidendi

Legal Principle Established

For instance, it is settled that the power enumerated within s 1322(4) reflects a legislative policy that the Act should not inflict unnecessary liability or inconvenience or invalidate transactions as a consequence of non-compliance with its requirements where such non-compliance is the product of honest error or inadvertence and if the Court can avoid its effects without prejudice to third parties or to the public interest in compliance with the law: Re Wave Capital Ltd (2003) 47 ACSR 418, 426 [29]; see also Blaze Asset Pty Ltd v Target Energy Ltd (2009) 177 FCR 488, 492 – 493 [30] – [35]; Weinstock v Beck (2013) 251 CLR 396, 419 – 420 [53] – [56].Consideration The written outline of submissions for the representative defendant records the following:The plaintiff, by one of its originating affidavits, namely the affidavit of Ann Huynh affirmed 20 May 2024 admits procedural errors contrary to the requirements of the Corporations Act 2001. As such, the plaintiff seeks to rely on an amended originating process seeking orders pursuant to section 1322(4) of the Corporations Act 2001.The representative defendant makes no submissions in respect of the plaintiffs application for relief for its procedural errors That silence, it may be observed, gives colour to the prejudice, if any, that the aforementioned irregularities (at supra [26]) may have occasioned. Indeed, there is no hint of a suggestion that they were other than of a procedural nature, that they were not honest or that their remediation would not be just and equitable. Nor is there any suggestion that substantial injustice has been, or is likely to be, caused to any person by the irregularities or by an order validating them. First, the overstatement in Annexure A to the Compulsory Acquisition Notice as to the number of shares acquired by QGold on 20 November 2023 is of little moment. The magnitude of the overstatement concerns approximately 27,000 shares out of a total of 39,000,000 (i.e., an error of 0.07%) and it is not easily understandable how such error could be of material consequence. Indeed, there is no suggestion that it occurred other than by inadvertence or that any injustice, substantial or otherwise, could have been caused to any party by reason of it. Second, and similarly, the delay in the provision of the Compulsory Acquisition Documents to shareholders is also of little moment. There is no suggestion that it occasioned any prejudice. It appears that, in early March 2024, a printing firm (MBE Brisbane CBD (MBE)) was engaged, by QGold, to print and issue copies of the documents to Carawine’s shareholders based upon the company’s share register as at 29 February 2024 (which identified 1,154 shareholders). On 6 March 2024, MBE was (a) provided with copies of the Andrawes Report and a shareholders’ objection form; and (b) instructed to commence production (which was estimated to take 8 to 10 business days). On 21 March 2024, the Compulsory Acquisition Notice was given to MBE; that day, the notice was also lodged with ASIC such that, pursuant s 664C(3), the Compulsory Acquisition Documents were to have been sent to all relevant shareholders of Carawine on that date or the next business day (being Friday, 22 March 2024). That did not occur.