Re Avenira Limited
[2023] WASC 440
•16 NOVEMBER 2023
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE AVENIRA LIMITED; EX PARTE AVENIRA LIMITED [2023] WASC 440
CORAM: LUNDBERG J
HEARD: 16 NOVEMBER 2023
DELIVERED : 16 NOVEMBER 2023
FILE NO/S: COR 172 of 2023
MATTER: IN THE MATTER OF AVENIRA LIMITED
EX PARTE
AVENIRA LIMITED
Plaintiff
Catchwords:
Corporations Law - Securities - Multiple failures to lodge a cleansing notice in accordance with s 708A(5) of the Corporations Act 2001 (Cth) - Disclosure obligations overlooked by the plaintiff - Cleansing prospectus now issued under s 708A(11)(b) - Application for orders extending time under s 1322(4) - Application for declaratory relief to validate trading in securities issued without a cleansing notice - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 707, s 708A and s 1322
Result:
Application granted
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr J Birch |
Solicitors:
| Plaintiff | : | Thomson Geer - Perth |
Case(s) referred to in decision(s):
Diona Pty Ltd, in the matter of Diona Pty Ltd [2022] FCA 1215
In the matter of Weebit Nano Limited [2023] NSWSC 43
Re Astral Resources NL; Ex parte Astral Resources NL [2023] WASC 260
Re Azure Minerals Limited [2013] FCA 63
Re European Lithium Limited [2017] FCA 894
Re Golden Gate Petroleum Ltd [2010] FCA 40
Re Great Boulder Resources Ltd; Ex parte Great Boulder Resources Ltd [2023] WASC 258
Re ICandy Interactive Limited [2018] FCA 533
Re Jaxsta Ltd [2018] WASC 390
Re Metalicity Ltd [2020] WASC 387
Re Yandal Resources Ltd [2022] WASC 338
Sprint Energy Limited; in the matter of Sprint Energy Limited [2012] FCA 1354
Table of Contents
A. Introduction and summary
B. The Application
Material before the court
Factual background
Notice to ASIC and the ASX
C. Legislative framework and relevant principles
Sections 707 and 708A
Section 1322
Relevant principles
D. Disposition
Standing
Order 1 (extension of time)
Order 2 (deeming order)
Order 3 (offers of shares not invalid)
Residual discretion
E. Orders
ATTACHMENT A TABLE OF SHARES ISSUED BY THE PLAINTIFF
ATTACHMENT B PLAINTIFF'S PROPOSED WRITTEN CHECKLIST
LUNDBERG J:
(These reasons were delivered ex temporaneously on 16 November 2023 and have been edited to correct matters of grammar, to add headings and to include complete footnotes and references.)
A. Introduction and summary
These reasons relate to an urgent application filed by the plaintiff company on 14 November 2023 (Application), which was heard this afternoon. The Application seeks orders under s 1322(4) of the Corporations Act 2001 (Cth)[1] extending the period of time prescribed by s 708A(11)(b) for the giving of a cleansing prospectus and for related validating orders in respect of several issuances of fully paid ordinary shares in the plaintiff.
[1] Unless otherwise indicated, all references to statutory provisions are to provisions of the Corporations Act 2001 (Cth).
The plaintiff does not seek orders relieving the directors, other officers, or the plaintiff itself from liability arising from the plaintiff's failure to have issued the relevant notices under s 708A(5).
B. The Application
Material before the court
The plaintiff read three affidavits in support of the Application:
(a)an affidavit of Graeme Ian Smith sworn 14 November 2023 ‑ Mr Smith is the company secretary and chief financial officer of the plaintiff (Smith Affidavit);
(b)an affidavit of Kevin Anthony Dundo sworn 14 November 2023 ‑ Mr Dundo is a director of the plaintiff (Dundo Affidavit); and
(c)an affidavit of Jessica Sara Chapman sworn 16 November 2023 ‑ Ms Chapman is a solicitor at the law firm acting for the plaintiff (Chapman Affidavit).
I have also been provided with a detailed outline of submission prepared by counsel for the plaintiff, dated 14 November 2023.
Factual background
The plaintiff is an ASX listed company. It is a battery cathode and fertilizer focused project developer, with projects located in Western Australia and the Northern Territory.
The plaintiff's company secretary is Graeme Ian Smith. Compliance matters, including the plaintiff's disclosure obligations under pt 6D.2, are the responsibility of Mr Smith. One of the plaintiff's directors has given sworn evidence that the board relied on Mr Smith to manage compliance matters, including to ensure that the plaintiff complied with its pt 6D.2 disclosure obligations, and to seek input and advice from the board as appropriate.
Between 24 March 2022 and 14 April 2023, the plaintiff issued several tranches of ordinary shares to investors, third parties, advisors and directors of the plaintiff. In total, more than 342 million ordinary shares were issued by the plaintiff in contravention of the Act over the 13 month period from March 2022 to April 2023. The largest issue was the most recent, in April 2023, involving an equity raising placement of over 281 million shares. The table in Attachment A to these reasons summarises the various occasions on which shares were issued. It appears from the affidavit of Mr Smith that on each occasion he caused to be lodged with the ASX an Appendix 2A in relation to the shares which were being issued,[2] but failed to issue a cleansing notice as required by s 708A(5).
[2] The Appendix 2A form includes a statement to the effect that the on-sale of the securities will comply with the secondary sale provisions in s 707(3) by virtue of the publication of a cleansing notice under s 708A(5), among other provisions. Obviously enough, this did not occur.
In respect of each instance where a cleansing notice was not issued, Mr Smith's evidence is that while he was aware of the disclosure obligations, he simply forgot, likely resulting from the fact that he did not follow a documented procedure but rather used a mental checklist. Shareholders of listed companies might be rather surprised to learn that such an important task was not the subject of a documented procedure. However, this is not the first occasion the court has been told a company officer has employed a non-written checklist to ensure compliance with disclosure obligations. To state the obvious, and to misquote Samuel Goldwyn, the Hollywood movie mogul, a mental checklist isn't worth the paper it's written on. Rather belatedly, the plaintiff has now prepared a formal compliance checklist, which I have attached at Attachment B to these reasons.
It is also likely, according to the plaintiff, that a significant proportion of the shares have since been on-sold.
On Friday last week (that is, 10 November 2023), Mr Smith discovered the problem in relation to the share issue on 14 April 2023. He promptly sought legal advice. He advised the Board of the plaintiff. He then took the following steps:[3]
(a)he procured a trading halt of the plaintiff's securities;
(b)he reviewed previous issues of securities by the plaintiff to ascertain whether there were any further instances of non-compliance - and then discovered that he had also failed to lodge a cleansing notice in respect of the shares issued on 24 March 2022, 25 July 2022, 4 November 2022, 29 November 2022, and 30 November 2022;
(c)he reviewed the plaintiff's share register to determine whether any of the shares had been on-sold, and found that a significant number had been;[4]
(d)he drafted and adopted a protocol for the issue of securities to ensure compliance with the company's pt 6D.2 obligations - to which I have earlier referred and attached to these reasons; and
(e)he commenced the present proceedings seeking urgent relief.
[3] Smith Affidavit [64] - [74].
[4] Smith Affidavit [74].
These are the types of steps I summarised as being appropriate in Re Astral Resources NL; Ex parte Astral Resources NL.[5] Mr Smith also caused a cleansing prospectus to be issued on 14 November 2023, in respect of which the plaintiff seeks an extension of time in order to validate the previous issuances of shares.
Notice to ASIC and the ASX
[5] Re Astral Resources NL; Ex parte Astral Resources NL [2023] WASC 260 [3].
There has been no appearance this afternoon at the hearing on behalf of the ASIC or the ASX. Both regulatory bodies were given notice of the hearing by the plaintiff on 14 November 2023.
The ASIC responded to the plaintiff on 16 November 2023, that is earlier today. The letter from the ASIC states that it neither supports nor opposes the relief sought and did not intend to appear at the hearing of matter.[6]
[6] Chapman Affidavit [5] - [12] and Attachment JSC-02.
I have no evidence before me that the ASX opposes the orders sought. Rather, the affidavit evidence discloses that the ASX queried with the plaintiff whether it intended to apply for an extension of its current suspension pending the outcome of the Application. In response, the plaintiff requested an extension of its voluntary suspension earlier today.[7]
[7] Chapman Affidavit [13] - [20] and Attachment JSC-04.
In the circumstances, I am satisfied on the affidavit material that both the ASIC and the ASX have been given proper notice of the Application.
C. Legislative framework and relevant principles
Sections 707 and 708A
The relevant statutory framework includes s 707, which is headed 'Sale offers that need disclosure'. Section 707 provides that an offer of securities for sale (in the 12 months following their issue) requires disclosure if the securities were issued without disclosure and either:
(a)the company that issued the securities did so for the purpose that they be further disposed of; or
(b)the person acquiring the securities did so for the purpose of further disposing of them.
Section 707 relevantly states as follows:
707Sale offers that need disclosure
Only some sales need disclosure
(1)An offer of securities for sale needs disclosure to investors under this Part only if disclosure is required by subsection (2), (3) or (5).
Off market sale by controller
(2)An offer of a body's securities for sale needs disclosure to investors under this Part if:
(a)the person making the offer controls the body; and
(b)either:
(i)the securities are not quoted; or
(ii)although the securities are quoted, they are not offered for sale in the ordinary course of trading on a relevant financial market;
and section 708 does not say otherwise.
Sale amounting to indirect issue
(3)An offer of a body's securities for sale within 12 months after their issue needs disclosure to investors under this Part if:
(a)the body issued the securities without disclosure to investors under this Part; and
(b)either:
(i)the body issued the securities with the purpose of the person to whom they were issued selling or transferring the securities, or granting, issuing or transferring interests in, or options over, them; or
(ii)the person to whom the securities were issued acquired them with the purpose of selling or transferring the securities, or granting, issuing or transferring interests in, or options over, them;
and section 708 or 708A does not say otherwise.
The purpose test in subsection (3)
(4)For the purposes of subsection (3):
(a)securities are taken to be:
(i)issued with the purpose referred to in subparagraph (3)(b)(i); or
(ii)acquired with the purpose referred to in subparagraph (3)(b)(ii);
if there are reasonable grounds for concluding that the securities were issued or acquired with that purpose (whether or not there may have been other purposes for the issue or acquisition); and
(b)without limiting paragraph (a), securities are taken to be:
(i)issued with the purpose referred to in subparagraph (3)(b)(i); or
(ii)acquired with the purpose referred to in subparagraph (3)(b)(ii);
if any of the securities are subsequently sold, or offered for sale, within 12 months after issue, unless it is proved that the circumstances of the issue and the subsequent sale or offer are not such as to give rise to reasonable grounds for concluding that the securities were issued or acquired with that purpose.
Section 707 is directed to and sets out anti-avoidance provisions. The purpose of the provision is to prevent the policy of chp 6D being circumvented by the issue of securities to a party to whom disclosure is not required (under s 708 or s 708AA) and that party then offering those securities for sale to investors without disclosure: Re Golden Gate Petroleum Ltd.[8]
[8] Re Golden Gate Petroleum Ltd [2010] FCA 40 [27] (McKerracher J).
There are various exemptions in the Act to the disclosure requirements in s 707, found in s 708, s 708AA or s 708A. Section 708A creates three exemptions from the disclosure requirements, which are referred to in the legislation as 'case 1', 'case 2' and 'case 3' (and which are described in s 708A(5), s 708A(11) and s 708A(12) respectively). I will need only mention case 1 and case 2 in the present context.
Section 708A(1) states as follows:
708ASale offers that do not need disclosure
Sale offers to which this section applies
(1)This section applies to an offer (the sale offer) of a body's securities (the relevant securities) for sale by a person if:
(a)but for subsection (5), (11) or (12), disclosure to investors under this Part would be required by subsection 707(3) for the sale offer; and
(b)the securities were not issued by the body with the purpose referred to in subparagraph 707(3)(b)(i); and
(c)a determination under subsection (2) was not in force in relation to the body at the time when the relevant securities were issued.
The exemption commonly relied upon by listed companies is found in s 708A(5). This provision relevantly states that disclosure in respect of a sale offer of securities (as those terms are defined) is not required if:
(a)the criteria set out in ss 708A(5)(a) to (d) are met; and
(b)under s 708A(5)(e)(i) the body gives to the ASX (which is the relevant market operator) a cleansing notice that complies with s 708A(6) before the sale offer is made which includes the requirement to give the notice within five business days after the day on which the relevant securities were issued by the body.
A further exemption is found in s 708A(11), referred to as the cleansing prospectus or concurrent prospectus exemption. Section 708A(11) states as follows:
Sale offer of quoted securities-case 2
(11)The sale offer does not need disclosure to investors under this Part if:
(a)the relevant securities are in a class of securities that are quoted securities of the body; and
(b)either:
(i)a prospectus is lodged with ASIC on or after the day on which the relevant securities were issued but before the day on which the sale offer is made; or
(ii)a prospectus is lodged with ASIC before the day on which the relevant securities are issued and offers of securities that have been made under the prospectus are still open for acceptance on the day on which the relevant securities were issued; and
(c)the prospectus is for an offer of securities issued by the body that are in the same class of securities as the relevant securities.
The broad policy underlying s 708A appears to be that no further disclosure will be required where investors have the benefit of information comparable to or otherwise available in a prospectus.[9] As to the cleansing prospectus exemption in s 708A(11), this provision recognises that investors may receive relevant information through a prospectus, although not issued pursuant to the specific placement, but that nonetheless relate to the same class of securities as the placement.[10]
Section 1322
[9] Re Golden Gate Petroleum [36] (McKerracher J).
[10] Re Golden Gate Petroleum [27] (McKerracher J).
The foregoing provisions impose important disclosure obligations which relevantly bound the plaintiff at the time various shares in question were issued. I turn now to s 1322, which empowers the court to make orders avoiding the effects of irregularities, extending time and relieving from civil liability. The plaintiff relies on the power in s 1322(4)(a) and (4)(d), in seeking its relief. The relevant parts of s 1322(4) and (6) are extracted below:
(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.
Relevant principles
The principles I will apply in determining this Application are summarised in Re Great Boulder Resources Ltd; Ex parte Great Boulder Resources Ltd.[11] In the interests of brevity, I will adopt those principles without setting them out in full in these reasons.
[11] Re Great Boulder Resources Ltd; Ex parte Great Boulder Resources Ltd [2023] WASC 258 [33] - [40].
D. Disposition
Standing
I accept the plaintiff is an interested person with sufficient standing to seek the relief in the originating process, as is required by s 1322(4). The plaintiff is the natural party to seek the type of relief in question, as the relief is centrally focused on the issued securities of the plaintiff and the validity of offers for, or sales of, a large parcel of those securities. The plaintiff has standing even though it is seeking relief for the benefit of its shareholders and others, and not as to any potential liability on its part or that of its directors.[12]
Order 1 (extension of time)
[12] Re ICandy Interactive Limited [2018] FCA 533 [46] (Banks-Smith J); and Sprint Energy Limited; in the matter of Sprint Energy Limited [2012] FCA 1354 [40] (McKerracher J).
Order 1 seeks an extension of time for the period referred to in s 708A(11)(b)(i), so far as concerns each issue of shares set out in Attachment A to these reasons. The extensions of time vary from around 20 months (in the case of the shares issued on 24 March 2022) to around 7 months (in the case of the shares issued on 14 April 2023).
The preconditions to the making of Order 1 are that the court must be satisfied the order is in relation to an 'act, matter or thing', and that no substantial injustice has been or is likely to be caused to any person, as expressly stated in s 1322(6)(c).
It is established that the sale or offer for sale of securities in contravention of s 707(3) are each an 'act, matter or thing' for which relief can be granted under s 1322(4).[13] This precondition is therefore satisfied.
[13] Re European Lithium Limited [2017] FCA 894 [40] (Barker J); and Re Sprint Energy Limited [41] (McKerracher J).
As counsel for the plaintiff indicated, it is appropriate to approach the extension of time aspect of the Application in the manner described by Vaughan J in Re Jaxsta Ltd.[14] That is, to first determine whether, having regard to the circumstances of the case and the general objects of the Act, it is appropriate to make an order extending the period and, if those circumstances are demonstrated, to then address the substantial prejudice question.[15]
[14] Re Jaxsta Ltd [2018] WASC 390 [41].
[15] See also the authorities collected in Re Yandal Resources Ltd [2022] WASC 338 [106] (Strk J).
The circumstances of the present case provide a proper basis for the extension, in my view. The responsible person within the company overlooked the requirement - as important as it was. Once the company secretary adverted to the issue, it is clear on the affidavit evidence he took prompt action to correct the issue, as I have outlined already. Further, the overall conduct of the plaintiff here provides no basis to think that the objects of the Act would be undermined by the extension which is now sought. This company has no relevant history of significant non‑compliance (there was a short, 3 day suspension referred to in the evidence) and has approached the present failure in a forthright and candid manner. I also accept that in the absence of an extension there would be adverse consequences for the plaintiff and its shareholders in the sense that the company's shares will remain suspended.
I have had regard to the number of contraventions here, the period of time over which they occurred, and the very large number of shares which have been issued in contravention of the Act. These are all relevant considerations. However, they do not outweigh the factors which point to an extension being granted, in my view. I am conscious in this respect that three of the share issues were undertaken to discharge contractual or legal obligations of the plaintiff, and all of the shares issuances were accompanied by Appendix 2A forms.
Further, I am satisfied that no substantial injustice has been caused to any person by reason of the contravention, or is likely to be caused by reason of the proposed order. I refer to and rely upon the affidavit evidence of Mr Smith and Mr Dundo in this regard, who have both directly deposed to this effect. The concept of 'substantial injustice' contemplates a measure of real injustice as opposed to insubstantial or theoretical injustice.[16] A degree of prejudice to a person may be outweighed if the overwhelming weight of justice is in favour of making the order.
[16] Re Azure Minerals Limited [2013] FCA 63 [20].
In weighing the issue of prejudice, I also recognise that the order sought is in the interests of the shareholders of the plaintiff who have received shares through these issues, and who have on-sold their shares. Those shareholders face the risk that they may otherwise be exposed to claims against them in respect of the validation of their shares. Putting the issue more broadly, it remains important that shares in listed entities can be freely traded by all investors upon their quotation, without the prospect of infringing s 707(3).[17]
[17] Plaintiff’s submissions [40]. As such sales will have occurred without adequate disclosure, this potentially means the transactions are void or voidable creating title issues for these parties.
The plaintiff has referred to the fact that, absent an extension, there are adverse consequences for the plaintiff and shareholders as the plaintiff’s shares will continue to be suspended from trading. My attention has been drawn to the ASX Guidance Note 30 in this regard. This would deny the shareholders of the plaintiff the opportunity to trade their shares.[18]
[18] Plaintiff’s submissions [39].
Finally, on the question of substantial injustice, it is typical for the court to make an ancillary order permitting any interested person who may suffer substantial injustice to apply within a set period of time to vary or dissolve the s 1322(4) order. I propose to make such an order here in the terms proposed by the plaintiff. The making of such an order operates to ameliorate any prejudice which might otherwise be suffered by a particular entity or person.
Accordingly, subject to the residual discretion to which I will return later, I accept that the preconditions to the extension of time sought by Order 1 are satisfied.
Order 2 (deeming order)
The plaintiff seeks a declaration that the cleansing prospectus which the plaintiff gave to the ASIC on 14 November 2023, being a notice under s 708A(11)(b)(i) in respect of each share issue, be deemed to take effect as if it had been given to the ASIC on the date of each share issue.
A deeming order such as this is often viewed as a corollary of the extension of time order in circumstances where the relevant shares have been on-sold.[19] Such an order may be in the nature of a 'consequential or ancillary order', coming within the scope of the chaussette to s 1322(4), although such an order does not appear to strictly be necessary given the operative effect of the extension order.[20]
[19] Re Yandal Resources [121(c)].
[20] In the matter of Weebit Nano Limited [2023] NSWSC 43 [16] (Black J).
I accept that Order 2 should be made, subject to the exercise of the residual discretion.
Order 3 (offers of shares not invalid)
This order is sought pursuant to s 1322(4)(a). The plaintiff seeks an order declaring that any offer for or sale of the relevant shares during the period on or after their issue, up to and including the date of these orders, is not invalid by reason of any failure of a notice under s 708A(5)(e) or any failure of a prospectus under s 708A(11) to exempt the sellers from the obligation of disclosure under the Act, or any sellers' consequent failure to comply with s 707(3).
The preconditions to the making of Order 3 are that the court must be satisfied the order is in relation to an 'act, matter or thing' (which I have dealt with already), that one of the three criteria in s 1322(6)(a) is satisfied, and that no substantial injustice has been or is likely to be caused to any person (which I have already addressed).
As to the first criterion in s 1322(6)(a), whether the act, matter or thing was essentially of a procedural nature, the plaintiff notes the divergent views on this issue and thus does not rely on this provision.[21] Rather, the plaintiff submits that the second or third criteria in s 1322(6)(a) are demonstrated in the present circumstances (and of course satisfaction of only one of these is required).
[21] Great Boulder Resources Ltd [59].
I am satisfied that the second criterion is made out here. That is, I am satisfied that the persons concerned in, or party to, the failure acted honestly. The very simple explanation put forward was that the company secretary overlooked the issue. A person who fails to turn their mind to a relevant issue may nonetheless be acting honestly.[22] I have no reason to doubt Mr Smith’s assertion in this regard, and note that he then unilaterally took expeditious steps to correct the issue once he appreciated the problem and its importance to the company and its shareholders. This is also not a case in which the issue or its rectification was identified or prompted by any governmental or regulatory body.
[22] Diona Pty Ltd, in the matter of Diona Pty Ltd [2022] FCA 1215 [20] (Cheeseman J).
I strictly need not formally reach a conclusion on the third criterion, that is whether it is just and equitable that the order be made. I observe that there were numerous contraventions in the present case over a period of 13 months, involving over 342 million shares. There are cases in which relief has been granted in which the number of contraventions were far greater, but naturally enough comparisons with prior cases need to have regard to the entire circumstances of each matter. Ultimately, it seems to me that counsel for the plaintiff’s submission that it is just and equitable that the order be made should be accepted having regard to the particular circumstances of the present Application, rather than by any comparison to other decided cases. Those circumstances include the prompt conduct of the plaintiff upon discovering the problem, the adverse consequences for the plaintiff and its shareholders if the order is not made, the potential invalidity of title of shares purchased on market, the absence of evidence of prejudice or loss suffered by investors, the steps taken to minimise future contraventions, the fact the orders are consistent with the conduct of commerce generally, and the presence of an order allowing for third parties to apply to vacate these orders.[23]
[23] Plaintiff’s submissions [38] – [44].
The final precondition to the making of Order 3 is that no substantial injustice has been or is likely to be caused to any person, as indicated in s 1322(6)(c). I have addressed this issue already. The affidavit evidence demonstrates that no substantial injustice has been caused to any person by reason of the failure, nor is it likely to be caused through the making of the order which is sought. Indeed, the making of the order may avoid or mitigate any injustice.
Accordingly, subject to the residual discretion, I accept that the preconditions to the declaration sought by Order 3 are satisfied and the order should be made.
Residual discretion
Finally, I am of the view that there are no circumstances present in this case that would otherwise justify refusing to make the orders sought, having found the preconditions to s 1322(4) are satisfied. In particular, I do not consider public policy would be undermined by the making of the orders and there is absolutely no suggestion here that the plaintiff's conduct involved any blatant disregard of the provisions of the Act. As I have already said, I am satisfied the plaintiff moved expeditiously to correct the failures once they became apparent and has provided frank and full disclosure to the court. Further, there has been no opposition to the relief from relevant regulatory bodies.
A further point should be made here. That is, the plaintiff has provided evidence to the court that there was no excluded information at the date the cleansing notices ought to have been issued, and no reason to suggest that cleansing notices could not have been issued at the relevant times by the plaintiff.[24] These matters provide strong further support for the court to exercise the discretions which it is empowered to exercise by s 1322 of the Act, in favour of the plaintiff and for the benefit of its shareholders.
[24] Plaintiff's submissions [55] - [58]; Smith Affidavit [75] - [77] and Dundo Affidavit [15] - [17].
Accordingly, I satisfied in the circumstances of this case that the relief should be granted. I am also satisfied that there should be no order as to the costs of the Application.[25]
[25] Re Metalicity Ltd [2020] WASC 387 [62].
E. Orders
I will hear from counsel as to the formal orders which should now be made.
ATTACHMENT A
[26] In respect of each share issue, the plaintiff deposes there was no excluded information and a cleansing notice could have been issued: Smith Affidavit [77(a)] and [77(b)].
| No. | Date of Issue | No. of Shares | Description of Share Issue |
| 1 | 24 March 2022 | 27,000,000 | In lieu of repayment of loan. Issued to Holy Investments Pty Ltd and a nominee of Holy Investments Pty Ltd to repay a loan entered into on 17 February 2022.[27] |
| 2 | 25 July 2022 | 6,250,000 | Consideration provided under native title land access and mineral exploration agreement. Issued to Tarlka Matuwa Piarku Aboriginal Corporation pursuant to a native title land access and mineral exploration agreement.[28] |
| 3 | 4 Nov 2022 | 11,681,416 | Consideration provided for financial advisory services to the plaintiff. Issued to BornVoir Corporate Finance in consideration for the provision of financial advisory services.[29] |
| 4 | 29 Nov 2022 | 6,000,000 | Conversion of unlisted options by directors. Issued to two directors (Ms Winnie Lai Hadad and Mr Kevin Dundo) pursuant to the exercise of options by the directors. The options were approved by shareholders at the AGM on 29 November 2019.[30] |
| 5 | 30 Nov 2022 | 1,350,000 | Conversion of unlisted options by directors. Shares issued to three directors (Ms Winnie Lai Hadad and Mr Kevin Dundo) pursuant to the exercise of options by the directors. The options were approved by shareholders at the AGM on 29 November 2019.[31] |
| 6 | 30 Nov 2022 | 8,000,000 | Shares issued to investor. Shares issued to a sophisticated investor, Chaleyer Holdings Pty Ltd.[32] |
| 7 | 14 April 2023 | 281,763,677 | Equity raising placement. Issued as the first tranche of a two-tranche placement of shares, to existing shareholders and institutional and sophisticated investors.[33] |
| Total number of fully paid ordinary shares issued in contravention of the Act | 342,045,093 | ||
[27] Smith Affidavit [31] - [33].
[28] Smith Affidavit [36] - [37].
[29] Smith Affidavit [40] - [42].
[30] Smith Affidavit [ 47] and [50].
[31] Smith Affidavit [51].
[32] Smith Affidavit [51].
[33] Smith Affidavit [54] - [55] and [57], [60] and [61].
ATTACHMENT B
PLAINTIFF'S PROPOSED WRITTEN CHECKLIST
0
9
1