Re Argent Minerals Ltd
[2023] WASC 34
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE ARGENT MINERALS LTD; EX PARTE ARGENT MINERALS LTD [2023] WASC 34
CORAM: HILL J
HEARD: 13 JANUARY 2023
DELIVERED : 13 JANUARY 2023
PUBLISHED : 14 FEBRUARY 2023
FILE NO/S: COR 6 of 2023
MATTER: IN THE MATTER OF ARGENT MINERALS LTD
EX PARTE
ARGENT MINERALS LTD
Plaintiff
Catchwords:
Corporations law - Securities - Application for orders extending the period for lodging a cleansing notice under s 708A of the Corporations Act 2001 (Cth) - Application for declaratory relief to validate trading in securities issued without a valid cleansing notice - Eleven instances of securities being issued without a valid cleansing notice or prospectus - Where no blatant or flagrant disregard of obligations - Where no substantial injustice if orders made - Application granted
Legislation:
Corporations Act 2001 (Cth), s 707, s 708A, s 1322
Result:
Application granted
Category: B
Representation:
Counsel:
| Plaintiff | : | N J Wallwork |
Solicitors:
| Plaintiff | : | Larri Legal |
Cases referred to in decision:
Blaze Asset Pty Ltd v Target Energy Ltd [2009] FCA 698; (2009) 177 FCR 488
Re Austpac Resources NL [2010] NSWSC 1438
Re Bellevue Gold Ltd [2021] WASC 80
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 Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390
Re Micro-X Ltd [2019] FCA 1154
Re Spectur Limited [2019] FCA 867; (2019) 136 ACSR 542
Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418
Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396
HILL J:
On 12 January 2023, the plaintiff, Argent Minerals Limited (Argent), filed an originating process seeking orders under s 1322(4)(d) and s 1322(4)(a) of the Corporations Act 2001 (Cth) (Act) arising out of contraventions of s 708A(11) and s 707(3) of the Act. The contraventions occurred following the issue of shares by the plaintiff on four separate occasions, namely: 15 June 2016, 16 February 2017, 6 December 2019 and 9 November 2022 without the prior lodgement of a cleansing notice pursuant to s 708A of the Act.
Argent has provided a frank and detailed explanation as to the circumstances surrounding these issue of shares. Based on the evidence before me, I was and am satisfied that the failure to issue a cleansing notice was caused by inadvertence rather than any deliberate disregard of the plaintiff's obligations.
In light of the urgency with which the application was brought, I made orders at the conclusion of the hearing on 13 January 2023 granting relief and said that I would subsequently publish reasons for my decision. These are the reasons for my decision.
Part 6D.2, Corporations Act
Part 6D.2 of the Act imposes disclosure obligations in relation to the issue and sale of securities.
In certain circumstances, these obligations can be satisfied by lodging what is commonly referred to as a cleansing notice or a prospectus.[1] If disclosure has not been made by the issuer and the securities are on-sold within 12 months, the party to whom the securities are issued may be obliged to make disclosure.[2]
[1] Corporations Act 2001 (Cth) s 708A(5).
[2] Corporations Act 2001 (Cth) s 707(3). See also ReGolden Gate Petroleum Ltd [2010] FCA 40; (2010) 77 ACSR 17.
Factual background
In support of its application, Argent relied on three affidavits: an affidavit of Johnathon Ronald Busing, the company secretary of the plaintiff, filed 12 January 2023, an affidavit of Pedro Kastellorizos, the managing director of the plaintiff, filed 12 January 2023, and an affidavit of James Lewis Pearse, a director of Larri Legal, filed 13 January 2023.
Argent is an Australian public company, whose securities are listed on the Australian Securities Exchange (ASX). Argent is a mineral exploration and development company focused on the exploration and development of several precious metals, base metal and rare earth projects in New South Wales, Western Australia and Tasmania.[3]
[3] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [9].
As at 9 January 2023, Argent had 1,172,258,342 shares on issue, 2,709 shareholders and a market capitalisation of approximately $17,583,875.[4]
[4] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [17].
On 9 December 2022, Mr Busing was appointed company secretary of Argent.[5] On 9 January 2023, while undertaking a review of the plaintiff's ASX announcements, Mr Busing identified the plaintiff had failed to lodge a cleansing notice following a capital raising and share issue on 9 November 2022.[6] At that time, Mr Kavi Bekarma was the company secretary of Argent.[7]
[5] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [19].
[6] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [28].
[7] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [19].
Having identified this instance of non-compliance, Mr Busing conducted a further review of all share issues undertaken by the plaintiff since its last prospectus was published on 22 October 2019.[8] This review revealed one further instance of non-compliance, being the failure to lodge a cleansing notice following the issue of shares to an employee of the plaintiff on 6 December 2019.[9] At the time of this omission, Mr Vinod Manikandan was the company secretary of Argent.[10]
[8] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [35].
[9] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [36].
[10] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [19].
Mr Busing, with assistance from the plaintiff's solicitors, then undertook a comprehensive review of all the share issues that had been undertaken by the plaintiff since its listing in April 2008, and identified nine further instances in which shares were issued without a cleansing notices or prospectus being lodged.[11] At the time of the first of these share issues, Ms Sarah Shipway was the company secretary but otherwise, Mr Manikandan was the company secretary of Argent.[12]
[11] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [7], [37].
[12] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [19].
On 9 January 2023, the plaintiff requested a trading halt from the ASX,[13] and then a voluntary suspension on 11 January 2023.[14]
[13] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [30] - [31], 'JB-04', 'JB05'.
[14] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [33], 'JB-06'.
On 10 January 2023, the solicitors for Argent informed the court of its intention to lodge the application and sought a date for an urgent hearing of the application. On the same date, Argent's solicitors wrote to the Australian Securities and Investments Commission (ASIC) informing them of the failure to lodge a cleansing notice or prospectus, and that Argent intended to make an urgent application to this court to seek relief under s 1322 of the Act.[15]
[15] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [106], 'JB31'.
On 11 January 2023, Argent lodged four cleansing notices with the ASX.[16] On the same day, Mr Busing notified the recipients of the relevant share issues of the plaintiff's failure to properly cleanse these shares and of the intention to make this application.[17]
[16] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [103], 'JB29'.
[17] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [105], 'JB30'.
On 12 January 2023, Argent:
(a)by its solicitors, wrote to the ASX and ASIC to give notice of this application;[18] and
(b)made an announcement to the ASX advising of its intention to make this application.[19]
[18] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [105].
[19] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [105].
While Argent's solicitors notified the ASX and ASIC of all instances of non-compliance, only four share issues were the subject of this application. The four share issues were:
(a)697,263 shares issued on 15 June 2016 (Issue 1);
(b)645,161 shares issued on 16 February 2017 (Issue 2);
(c)2,528,728 shares issued on 6 December 2019 (Issue 3); and
(d)200,000,000 shares issued on 9 November 2022 (Issue 4).
In respect of the other share issues, having examined the share register of the plaintiff, none of the shares issued, as part of the other seven share issues, were on-traded within 12 months of their issue.[20]
[20] Affidavit of Pedro Kastellorizos filed 12 January 2023 [8].
Mr Busing explained that having discussed with the former company secretaries of Argent the circumstances of the failure to issue cleansing notices, each acknowledged they missed a step in ensuring compliance with pt 6D.2 of the Act,[21] and that the failure to lodge a cleansing notice was an oversight.[22]
[21] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [108].
[22] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [46] - [48], [53] - [54].
With the assistance of the plaintiff's solicitors, Mr Busing has drafted and finalised a compliance protocol checklist for the issue of securities to ensure Argent complies with its obligations under pt 6D.2 of the Act.[23] The managing director of Argent has confirmed this protocol will be adopted in the future for the issue and cleansing of any securities issued by the plaintiff.[24]
[23] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [109] - [111], 'JB-32'.
[24] Affidavit of Pedro Kastellorizos filed 12 January 2023 [24].
Both Mr Busing and Mr Kastellorizos have reviewed the plaintiff's materials (including its ASX announcements) at the time of each of Issues 1 to 4, and believes the plaintiff would have been entitled to lodge a cleansing notice at the date of each of the share issues.[25]
[25] Affidavit of Johnathon Ronald Busing filed 12 January 2023 [112]; Affidavit of Pedro Kastellorizos filed 12 January 2023 [25].
Power under s 1322 of the Act to grant the relief sought
Section 1322 relevantly provides:
(4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:
(a) an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;
(b)an order directing the rectification of any register kept by ASIC under this Act;
(c)an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a);
(d)an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;
and may make such consequential or ancillary orders as the Court thinks fit.
...
(6) The Court must not make an order under this section unless it is satisfied:
(a)in the case of an order referred to in paragraph (4)(a):
(i) that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature;
(ii)that the person or persons concerned in or party to the contravention or failure acted honestly; or
(iii)that it is just and equitable that the order be made; and
(b)in the case of an order referred to in paragraph (4)(c) —that the person subject to the civil liability concerned acted honestly; and
(c) in every case — that no substantial injustice has been or is likely to be caused to any person.
In considering an application under s 1322 of the Act, the essential principles are:[26]
(a)the prescriptive requirements of the wording in s 1322(4) and the pre-conditions in s 1322(6) need to be satisfied;[27]
(b)the court retains a discretion under s 1322(4) as to whether it makes the orders sought;
(c)the broad powers reflect a legislative policy that the law should not inflict unnecessary liability or inconvenience or invalidate transactions because of non-compliance with its requirements, where such non-compliance is the product of honest error or inadvertence, and where the court can avoid its effects without prejudice to third parties or to the public interest in compliance with the law;[28]
(d)limitations to the broad powers in s 1322 will not be readily implied.[29] Section 1322 is remedial in character and should be applied broadly;
(e)the court can make orders under s 1322(4)(a) on conditions and make such consequential and ancillary orders as it thinks fit; and
(f)an order can be made under s 1322(4)(a), notwithstanding that the contravention or failure concerned resulted in the commission of an offence.[30]
[26] Re Helios Energy Ltd [2017] FCA 840; (2017) 122 ACSR 174 [20].
[27] Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396 [43], [53] and [64].
[28] Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418 [29].
[29] Weinstock v Beck [43], [55] - [56], [60], [64].
[30] Corporations Act2001 (Cth) s 1322(5).
Disposition
Application by an 'interested person'
I accept that the plaintiff is an interested person who may seek relief, as required by s 1322(4) of the Act.[31]
Position of ASX and ASIC
[31] Re Wave Capital Ltd [29].
The ASX indicated that it was not in a position to comment on the matter and did not intend to appear at the hearing.[32] ASIC indicated that it neither supports nor opposes the application and did not intend to appear at the hearing of the matter.[33]
Extension of time under s 1322(4)(d)
[32] Exhibit 1.
[33] Affidavit of James Lewis Pearse filed 13 January 2023, 'JP-13'.
In the originating process, the plaintiff sought an extension of the time period within which to lodge a cleansing notice in respect of each of the share issues in Issues 1 - 4.
At the hearing on 13 January 2023, following a query made through my associate to the plaintiff's solicitors, counsel agreed the orders in relation to Issues 1, 2 and 3 were not required, as more than 12 months had lapsed since the issue of these shares. As a consequence, the 12‑month period in s 707(3) of the Act has expired and an order for an extension of time to lodge a cleansing notice is not required in respect of these share issues. The plaintiff retracted the cleansing notices that had been issued and lodged a new cleansing notice prior to orders being made.[34]
[34] Email from Larri Legal to Associate to Justice Hill dated 13 January 2023.
The test under s 1322(4)(d) was set out by Vaughan J in Re Jaxsta Ltd; Ex parte Jaxsta Ltd:[35]
As to s 1322(4)(d), I derived more guidance from the two-stage process embraced by Barker J in Blaze Asset Pty Ltd v Target Energy Ltd.
There Barker J stated:
'[T]he exercise of the power under s 1322(4) [referring to s 1322(4)(d)] involves in effect a two stage process. First, the Court needs to determine whether, having regard to the circumstances of the case and the general objects of the [Corporations Act 2001 (Cth)], it is appropriate to make an order extending a relevant period, or abridging a relevant period. Secondly, if those circumstances are made out, then the Court must address the question whether any substantial prejudice has been or is likely to be caused to any person by the making of such an order.'
Also, the power under s 1322(4)(d) must be exercised having regard to the general objects and purposes of the relevant statutory provision within the Corporations Act 2001 (Cth) - here the statutory purpose evinced by s 723(3). The court's order must not undermine the reasons for the requirements of the Act. The power must be exercised having regard to the interests of all parties affected and the public interest in ensuring compliance with the Act. (footnotes omitted)
[35] Re Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390 [41] - [43].
The period to be extended may be extended even if it has expired. In this case, the period to lodge a cleansing notice in respect of Issue 4 expired on 16 November 2022.
For the following reasons, I was satisfied it was appropriate to extend this time period until 13 January 2023, as sought by the plaintiff in their originating process.
First, the extension sought (of slightly less than two months) is consistent with extensions previously granted by the courts.[36]
[36] See for example Re Austpac Resources NL [2010] NSWSC 1438 (2 months and 8 days extension sought).
Second, the cleansing notice was not lodged due to inadvertence and was promptly rectified upon the plaintiff discovering the error. As soon as Mr Busing, the current company secretary of Argent, became aware of the error, he immediately undertook an investigation and sought the advice of external counsel to rectify the position.
Third, in the absence of an extension, there are adverse consequences for the plaintiff and its shareholders. Unless the orders are made by the court, the plaintiff's shares will continue to be suspended from trading, which will deny the shareholders of the plaintiff the opportunity to trade their shares. In addition, the company will potentially lose its ability to lodge a cleansing notice under s 708A(5)(b), which requires the preparation of a prospectus for future issues of shares.
Fourth, the shareholders who have purchased shares on market since 9 November 2022 may have purchased some of the shares the subject of the July share issue. Given that any such sales will have occurred without disclosure, this potentially means that these transactions are void or voidable, creating title issues for these parties.
Fifth, as has been previously noted by Vaughan J, in facilitating the transaction as originally contemplated, the making of the orders sought is consistent with the conduct of commerce generally.[37] Section 1322(4)(d) should be exercised in a way which does not unnecessarily stifle corporate and financial activity on technical grounds.[38]
[37] Re Jaxsta Ltd; Ex parte Jaxsta Ltd [50].
[38] Blaze Asset Pty Ltd v Target Energy Ltd [2009] FCA 698; (2009) 177 FCR 488 [33].
Sixth, the plaintiff brought the application without delay. It was only four days between Argent becoming aware of the issue and orders being made by the court.
Seventh, the additional orders sought by the plaintiff provide for notice to be given to all persons affected and the ability for them to apply to raise any matters with the court.
Eighth, neither ASIC or the ASX oppose the application, nor do any shareholders of the plaintiff.
Pre-conditions in s 1322(6)(a) of the Act
The plaintiff submitted that, while only one of the pre-conditions in s 1322(6)(a) of the Act needs to be satisfied, each of the preconditions was satisfied.
I accept that the pre-condition in s 1322(6)(a)(i) is satisfied in that the act, matter or thing is of a procedural nature, being the issue of a cleansing notice.
I turn then to the pre-condition in s 1322(6)(a)(ii) that there is no failure of the persons concerned or the company to act honestly. In Re ICandy Interactive Ltd, Banks-Smith J undertook a comprehensive review of the relevant principles in respect of whether there is no failure of the persons concerned or the company to act honestly.[39] Relevantly, Banks-Smith J considered that:
[39] Re ICandy Interactive Ltd [2018] FCA 533; (2018) 125 ACSR 369 [54] - [104].
(a)when determining whether someone has acted honestly for the purposes of s 1322, the courts look to absence of evidence of dishonesty and prompt action to remedy the error;[40]
(b)the concept of acting honestly can embrace:[41]
(i)inadvertence or failure to turn one's mind to an issue;
(ii)active, but incorrect consideration of a legal issue;
(iii)failure to consider an issue at all; or
(iv)failure to understand or appreciate the significance of non-compliance; and
(c)when testing for honesty, the authorities reveal that the courts look at the company itself, the directors, the company secretary and others as may be concerned.[42]
[40] Re ICandy Interactive Ltd [54], [106] - [107].
[41]Re ICandy Interactive Ltd [55].
[42] Re ICandy Interactive Ltd [60] - [104].
In this case, the error occurred in the plaintiff failing to lodge the appropriate cleansing notices for Issue 4. I find that the action of the plaintiff in failing to lodge the cleansing notice as required by s 708A(5) of the Act, was honest and inadvertent.
I am also satisfied that it would be just and equitable to make the orders sought. Section 1322(6)(a)(iii) gives the court a wide discretion in exercising its powers under s 1322 of the Act.[43]
No substantial injustice (s 1322(6)(c) of the Act)
[43] Re Bellevue Gold Ltd [2021] WASC 80 [64] and the authorities cited therein.
I have considered the classes of persons who may be impacted by the making of these orders.
First, the people who were issued the impugned shares. The prejudice to them is that the sale of these securities may be void or voidable for want of compliance with the statutory requirements.
Second, those people who purchased the shares may have re-sold the impugned shares themselves. Any further sales of these shares will also have occurred without the requisite disclosure under pt 6D.2 of the Act.
I find there is no basis for inferring that substantial injustice has been or is likely to be caused to any person by the making of the proposed orders.
I accept that if the orders sought are not made, there may be substantial injustice to the plaintiff as the offers of and sales of shares may be void or voidable. This could give rise to commercial uncertainty and expense for the company, as it must remain involved in problems caused by void or voidable offers and sales of its shares. I also accept there may be substantial injustice to the other ordinary shareholders of Argent, as they may not be able to trade their securities on an open market if the current suspension from trading is not lifted.
It is usual in cases such as these to provide an opportunity for shareholders or other parties to raise a complaint about the proposed orders. The usual timeframe is that there be liberty to apply within 28 days from the date of the orders. I accept this is an appropriate timeframe in this case.
No other discretionary reason to withhold relief
I accept and find there is no evidence of any substantial misconduct, serious wrongdoing or flagrant disregard of the Act or the company's constitution to warrant refusal of the relief sought.[44]
[44] Re Wave Capital Ltd [29].
There is nothing in the evidence before me suggesting that any minority shareholder interest might be oppressed, or any other interest might be affected. I am satisfied that all shareholders impacted by the contravention, as well as the ASX and ASIC, have been notified of the plaintiff's contravention of the Act and been given notice of this hearing. No shareholder or either regulator has sought to intervene in the hearing or given notice that they want to be heard on the application.
In exercising the discretion to grant relief under s 1322(4) of the Act, a relevant factor is the promptness with which the plaintiff has sought to remedy the irregularity once it has been identified.[45] In this case, Argent discovered its failure to lodge a cleansing notice in respect of Issue 4 on 9 January 2023. The plaintiff then conducted a review of its previous share issues to determine whether there were any further instances of contravention. Within three days of discovering the issue, Argent had sought legal advice, notified investors who were issued shares, procured a trading halt, drafted a protocol for the issue of securities, notified ASIC and the ASX of the issue and the plaintiff's intention to seek curative relief, and commenced these proceedings. I accept that Argent has acted diligently after being made aware of the issue.
Orders under s 1322(4)(a) of the Act
[45] Re G8 Communications Ltd [2016] FCA 297; (2016) 112 ACSR 22 [60].
The plaintiff also seeks two declarations under s 1322(4)(a) of the Act. The first is that any offer for sale or sale of the quoted securities during the period of Issues 1 to 4 is not invalid by reason of:
(a)the plaintiff's failure to issue a notice under s 708A(5)(e) of the Act to exempt sellers from the obligation of disclosure under the Act;
(b)the sellers' consequent failure to comply with s 707(3) of the Act.
The second declaration sought is that the notice under s 708A(5)(e) given to the ASX on 13 January 2023, in respect of Issue 4, be deemed to take effect as if it had been given to the ASX on the date of issue of these shares.
I note that the prescriptive requirements of s 1322(4)(a) of the Act are satisfied in that:
(a)the proposed validation orders are framed in a declaratory form;
(b)the act, matter or thing is the offer and sale of securities; and
(c)the contravention is the offering of securities for sale or sales without proper disclosure in contravention of s 707(3) of the Act.[46]
[46] See Re Caeneus Minerals Ltd [2018] FCA 560 [39] ‑ [40]; Re Classic Minerals Ltd [2018] FCA 2039 [35] ‑ [36].
In respect of the second declaration, courts have on a number of previous occasions made similar orders. It is not in doubt that the court has power to make orders that are consequential or ancillary to an order extending the period for doing an act, matter or thing under the Act.
The question as to whether the court should make such a deeming order was discussed by Colvin J in Re Spectur Limited as follows:[47]
Spectur also sought orders to the effect that when cleansing notices are issued in accordance with the orders extending time that the notices be deemed to take effect as if they had been given within the period of five business days specified in s 708A(6)(a). The effect of such an order would be to go further than extend the period after the time for compliance had passed (which is a possibility that is expressly contemplated by s 1322(4)(d)). It would give the cleansing notice retrospective operation.
The Court has power to make orders that are consequential upon or ancillary to an order extending the period for doing an act, matter or thing under the Corporations Act. There may be circumstances in which a period may be extended to a date which has already passed by the time of the application so as to bring an act that has occurred outside a period specified by the Corporations Act within the specified period. In such a case, there may be an ancillary order to the effect that the act which had already occurred was to take effect as if performed when time had been extended. However, the proposed order would go further and give a future act retrospective effect. In particular, it would seek to authorise the service of cleansing notices with retrospective effect. It is an order which would make the extension of the period of time unnecessary. As indicated in the course of submissions in support of the application I am not presently persuaded that such an order would be within the scope of s 1322(4)(d) or the power to make consequential or ancillary orders. In those circumstances, counsel for Spectur did not press for the making of those additional orders.
[47] Re Spectur Limited [2019] FCA 867; (2019) 136 ACSR 542 [11] - [12].
In that case, at the time of the hearing, there was no evidence that there had been any trading in the shares nor had a cleansing notice been lodged. I accept that in such a case, there was no utility in making any orders for declarations of validity nor a deeming order.
In Re Micro-X Ltd, Moshinsky J expressed the view that 'deeming orders' were a corollary of the orders seeking an extension of time.[48]
[48] Re Micro-X Ltd [2019] FCA 1154 [13].
In my view, for the following reasons, I consider it is appropriate in this case to make the ancillary orders sought by the plaintiff, including the 'deemed order'. First, the evidence before me is that some of the shares the subject of the November share issue have been sold and it cannot be discounted that there have been resales of these shares. In these circumstances, I consider that it is appropriate to make the orders sought to remove any question as to title in the shares of the plaintiff. Second, at the time the orders were made by the court, the cleansing notice had already been lodged. For that reason, the order did not concern a future act, but a past act. Third, I agree with Moshinsky J that where shares are on‑sold, the 'deeming order' is a corollary of the orders seeking an extension of time.
Otherwise, for the reasons set out above in respect of the extension of time, which equally apply to these orders, I consider that it is appropriate to make the orders sought.
Conclusion
The conduct of the plaintiff in failing to lodge cleansing notices, in respect of each of the share issues the subject of the application, was inadvertent and not in blatant disregard of its obligations under the Act. In my view, public policy will not be undermined by granting the plaintiff the relief sought, subject to the amendments discussed in these reasons.
I was and am satisfied that in the circumstances of this case, relief should be granted. Accordingly, at the conclusion of the hearing on 13 January 2023, I made orders in the form annexed to these reasons as 'Annexure A'.
Annexure A
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JN
Associate to the Honourable Justice Hill
14 FEBRUARY 2023
12
0