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Re Animoca Brands Corporation Ltd

Re Animoca Brands Corporation Ltd

Case [2019] WASC 225 27 June 2019

Corporations Act 2001 (Cth)

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JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
CITATION:   RE ANIMOCA BRANDS CORPORATION LTD; EX PARTE ANIMOCA BRANDS CORPORATION LTD [2019] WASC 225
CORAM:   HILL J
HEARD:   13-14 JUNE 2019
DELIVERED          :   14 JUNE 2019
PUBLISHED           :   27 JUNE 2019
FILE NO/S:   COR 126 of 2019
BETWEEN:   ANIMOCA BRANDS CORPORATION LTD
Plaintiff

Catchwords:

Corporations – Application for orders under s 1322 of the Corporations Act 2001 (Cth) - Shares issued on four occasions without valid cleansing notice – Shares issued on one occasion without cleansing notice or prospectus – Where shares issued for partial consideration for a previous acquisition – Where vendor queried whether a cleansing notice had been issued - Where trading of shares prior to issue of cleansing prospectus - Where no blatant or flagrant disregard of obligations – Whether orders should be made relieving shareholders of civil liability – Whether relief from civil liability should extend to the vendor - Consideration of appropriate form of orders

Legislation:

Corporations Act 2001 (Cth), s 707, s 708A, s 727, s 1322

Result:

Application allowed

Category: B

Representation:

Counsel:

Plaintiff

Mr A J Papamatheos

Solicitors:

Plaintiff

AGH Law

Case(s) referred to in decision(s):

Associated Beauty Aids Pty Ltd v Federal Commissioner of Taxation (1965) 113 CLR 662
Re Caeneus Minerals Ltd [2018] FCA 560
Re Classic Minerals Ltd [2018] FCA 2039
Re G8 Communications Ltd [2016] FCA 297; (2016) 112 ACSR 22
Re Golden Gate Petroleum Ltd [2010] FCA 40; (2010) 77 ACSR 17
Re Helios Energy Ltd [2017] FCA 840; (2017) 122 ACSR 174
Re ICandy Interactive Ltd [2018] FCA 533; (2018) 125 ACSR 369
Re Poseidon Nickel Ltd [2018] FCA 1063; (2018) 129 ACSR 57
Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418
State of South Australia v Slipper MP [2003] FCA 1414; (2003) 203 ALR 473
Weinstock v Beck (2013) 251 CLR 396

HILL J:

The plaintiff (company), by originating motion filed 6 June 2019, seeks relief under the Corporations Act 2001 (Cth) ('Act'), s 1322(4) for alleged contraventions of pt 6D.2 to relieve shareholders from liability in circumstances where they may have unknowingly contravened the secondary sale provisions of the Corporations Act. It does not seek relief as to the potential civil liability of the company or its officers.
The contraventions concern five separate instances of shares being issued. In respect of four of the instances, a cleansing notice was issued at the time of the share issues. It was later discovered by the company that these notices may not be valid as the Australian Securities Exchange Limited (ASX) considered that the company had been suspended from trading for more than five days in the preceding 12 month period. In respect of the last share issue, no cleansing notice or contemporaneous prospectus was lodged.
The company has provided a frank and detailed explanation as to the circumstances surrounding each of these instances. I am satisfied that each of the failures was caused by…

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.

Continue reading Re Animoca Brands Corporation Ltd

Details

AGLC: Re Animoca Brands Corporation Ltd [2019] WASC 225
Case: [2019] WASC 225
Decision Date: 27 JUNE 2019

CaseChat Overview and Summary

The case involved an application by Animoca Brands Corporation Ltd for orders under section 1322 of the Corporations Act 2001. The company sought relief from civil liability for the issuance of shares in four different transactions, all of which were conducted without a valid cleansing notice. Additionally, one transaction involved the issuance of shares without either a cleansing notice or a prospectus. The shares were issued as partial consideration for a prior acquisition, and the vendor had questioned whether a cleansing notice had been issued. The shares were traded prior to the issuance of a cleansing prospectus. The company argued that there was no blatant or flagrant disregard of its obligations, and therefore, the shareholders should be relieved from any civil liability. The vendor also sought relief from civil liability.

The legal issues that the court had to address were whether the company's actions constituted a blatant or flagrant disregard of its obligations under the Corporations Act, and whether relief should be granted to the shareholders and the vendor from civil liability. The court needed to consider the circumstances surrounding the issuance of the shares and whether the company had acted in good faith.

The court found that the company had not acted with blatant or flagrant disregard of its obligations, and therefore, the shareholders should be relieved from civil liability. However, the court did not extend the relief to the vendor, as it found that the vendor had not acted in good faith. The court considered the appropriate form of orders that should be made, taking into account the circumstances of each transaction. The court made orders relieving the shareholders from civil liability for the issuance of shares in the four transactions. The court did not make any orders relieving the vendor from civil liability.

The court's final orders were that the shareholders were relieved from civil liability for the issuance of shares in the four transactions, while the vendor was not relieved from civil liability. The court did not make any orders in relation to the issuance of shares without a prospectus, as it found that the company had taken steps to remedy the situation by issuing a cleansing prospectus. The court's decision provides guidance on the appropriate relief that can be granted under section 1322 of the Corporations Act, and the factors that the court will consider when deciding whether to grant relief.

Orders