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Re AXP Energy Ltd

Re AXP Energy Ltd

Case [2021] WASC 418 15 October 2021

Corporate Law & Governance

Commercial Law

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JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE AXP ENERGY LTD; EX PARTE AXP ENERGY LTD [2021] WASC 418
CORAM:   HILL J
HEARD:   15 OCTOBER 2021
DELIVERED          :   15 OCTOBER 2021
PUBLISHED           :   25 NOVEMBER 2021
FILE NO/S:   COR 169 of 2021
MATTER:   IN THE MATTER OF AXP ENERGY LTD

EX PARTE
AXP ENERGY LTD
Plaintiff

Catchwords:

Corporations - Application for orders under s 1322(4)(a) of Corporations Act 2001 (Cth) - Application for declaratory relief to validate trading in shares issued without a valid cleansing notice or prospectus - 17 instances of securities being issued without a valid cleansing notice - Where no blatant or flagrant disregard of obligations - Where no substantial injustice if orders made - Application granted

Legislation:

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

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff

M F Holler & D Hird

Solicitors:

Plaintiff

Steinepreis Paganin

Cases referred to in decision:

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 Strike Energy Ltd [2012] FCA 725
Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418
Weinstock v Beck (2013) 251 CLR 396

HILL J:

On 20 September 2021, the plaintiff, AXP Energy Limited (AXP), filed an originating process seeking curative orders under s 1322(4) of the Corporations Act 2001 (Cth) (Act) relating to contraventions of s 708A(6), s 708A(11), s 707(3) and s 727(1) of the Act. The contraventions occurred as a result of share sales following 17 separate instances of shares being issued between 19 March 2013 and 15 October 2021 without a valid cleansing notice or prospectus (Share Issues).
Despite the large number of instances where shares were issued without a valid cleansing notice or cleansing prospectus, AXP has provided a frank and detailed explanation as to the circumstances surrounding these share issues. On the basis of the evidence before me, I was and am satisfied that the failures were 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 15 October 2021 granting the relief sought and said that I would subsequently publish reasons for my decision. These are the reasons for my decision.

Part 6D.2 of the Corporations Act

Part 6D.2 of the Act imposes disclosure obligations in relation to the issue and sale of shares. 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…

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 AXP Energy Ltd

Details

AGLC: Re AXP Energy Ltd [2021] WASC 418
Case: [2021] WASC 418
Decision Date

CaseChat Overview and Summary

AXP Energy Limited (AXP) sought orders under s 1322(4)(a) of the Corporations Act 2001 (Cth) to validate trading in shares issued without a valid cleansing notice or prospectus between 19 March 2013 and 29 January 2021. This application was heard in the Supreme Court of Western Australia on 15 October 2021. Hill J was satisfied that AXP's failures were caused by inadvertence rather than any deliberate disregard of its obligations and that no substantial injustice would result from granting the relief sought. The court granted the application.

Hill J noted that Part 6D.2 of the Corporations Act imposed disclosure obligations in relation to the issue and sale of shares, which could be satisfied by lodging a cleansing notice or prospectus. The court considered the evidence provided by AXP, including affidavits from the company secretary and non-executive directors, which explained the circumstances surrounding the share issues. The court found that the failures to lodge cleansing notices or prospectuses were inadvertent and not due to any deliberate disregard of the company's obligations.

The court considered the pre-conditions in s 1322(6) of the Corporations Act, which required the court to be satisfied that the act in question was essentially of a procedural nature, the person or persons concerned acted honestly, and it was just and equitable to make the order. Hill J was satisfied that these pre-conditions were met, as the failures to lodge cleansing notices or prospectuses were inadvertent, and there was no evidence of substantial misconduct or flagrant disregard of the company's obligations.

The court also considered whether making the orders sought would cause substantial injustice to any person. Hill J found that there was no basis for inferring that substantial injustice would result from granting the relief sought, as all relevant parties had been notified of AXP's contravention of the Act and given notice of the hearing. The court also noted that the promptness with which AXP sought to remedy the irregularity once it was identified was a relevant factor in favour of granting relief.

For these reasons, Hill J granted the application and made orders validating the trading in shares issued without a valid cleansing notice or prospectus between 19 March 2013 and 29 January 2021.

Orders