Re Caeneus Minerals Ltd

Case [2018] FCA 560

FEDERAL COURT OF AUSTRALIA

Caeneus Minerals Ltd, in the matter of Caeneus Minerals Ltd [2018] FCA 560

File number: WAD 586 of 2017
Judge: BANKS-SMITH  J
Date of judgment: 9 April 2018
Date of  publication of reasons: 23 April 2018
Catchwords: CORPORATIONS - application for declaratory relief to validate share trades and relieve sellers of shares from civil liability – where contraventions of s 707(3) and s 727 as to disclosure – where 31 instances of securities issued where company did not issue valid cleansing notice – where trading in securities prior to issue of cleansing prospectuses – where no blatant disregard for statutory obligations
Legislation: Corporations Act 2001 (Cth) ss 707(3), 727(1), 708, 708A, 708A(1), 708A(5), 708A(6)(a), 708A(11), 709, 727(1), 1322, 1322(4), 1322(4)(a), 1322(4)(c), 1322(6)(a), 1322(6)(c),
Cases cited:

ICandy Interactive Limited, in the matter of ICandy Interactive Limited [2018] FCA 533

Re Golden Gate Petroleum Ltd (2010) 77 ACSR 17

Re Silver Lake Resources Ltd [2012] FCA 32

Re Sprint Energy Ltd [2012] FCA 1353

Re Wave Capital Ltd [2009] FCA 969

Date of hearing: 6 and 9 April 2018
Registry: Western Australia
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 60
Counsel for the Plaintiff: Mr TO Coyle
Solicitor for the Plaintiff: Steinepreis Paganin

ORDERS

WAD 586 of 2017

IN THE MATTER OF CAENEUS MINERALS LTD ACN 082 593 235

CAENEUS MINERALS LTD ACN 082 593 235

Plaintiff

JUDGE:

BANKS-SMITH  J

DATE OF ORDER:

9 APRIL 2018

THE COURT ORDERS THAT:

1.Pursuant to s 1322(4)(a) of the Corporations Act 2001 (Cth), it is declared that any offer for sale or sale of the quoted securities being 100,000,000 ordinary shares in the plaintiff during the period after their issue on 28 October 2015 to 9 November 2017 is not invalid by reason of:

(a)the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b)the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

2.Pursuant to s 1322(4)(c) of the Corporations Act any sellers of securities referred to in order 1 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

3.Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 75,000,000 ordinary shares in the plaintiff during the period after their issue on 1 December 2015 to 9 November 2017 is not invalid by reason of:

(a)the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b)the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

4.Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 3 be relieved from any civil…

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Re Caeneus Minerals Ltd [2018] FCA 560
Case
[2018] FCA 560
Decision Date

CaseChat Overview and Summary

The applicant, Caeneus Minerals Ltd, sought relief from the Federal Court of Australia in relation to 31 instances of securities issued between April 2014 and October 2017 without the required disclosure. The court was required to decide whether to declare the offers and sales of these securities as not invalid due to the failure to issue a cleansing notice and to relieve the sellers from any civil liability arising from the contravention of sections 707(3) and 727(1) of the Corporations Act 2001. The court considered the evidence provided by the applicant, including the testimony of the former company secretary, and determined that the failures to issue cleansing notices were not due to a blatant disregard for statutory obligations. The court found that the applicant had made genuine efforts to comply with the disclosure requirements and that the failures were largely administrative in nature.

The court granted the relief sought by the applicant, declaring that the offers and sales of the securities in question were not invalid due to the failure to issue a cleansing notice and relieving the sellers from any civil liability arising from the contravention of sections 707(3) and 727(1) of the Corporations Act. The court made orders to the effect that the applicant's securities would be reinstated on the Australian Securities Exchange, and that any person who claimed to have suffered substantial injustice could apply to vary or discharge the orders within 28 days of the reinstatement and publication of the orders. The court made no order as to costs.

Orders

Orders of the court

1. Pursuant to s 1322(4)(a) of the Corporations Act 2001 (Cth), it is declared that any offer for sale or sale of the quoted securities being 100,000,000 ordinary shares in the plaintiff during the period after their issue on 28 October 2015 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

2. Pursuant to s 1322(4)(c) of the Corporations Act any sellers of securities referred to in order 1 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

3. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 75,000,000 ordinary shares in the plaintiff during the period after their issue on 1 December 2015 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

4. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 3 be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

5. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 8,150,660 ordinary shares in the plaintiff during the period after their issue on 1 December 2015 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

6. Pursuant to s 1322(4)(c) of the Corporations Act any sellers of securities referred to in order 5 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

7. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 300,000,000 ordinary shares in the plaintiff during the period after their issue on 17 December 2015 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

8. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 7 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

9. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 750,000,000 ordinary shares in the plaintiff during the period after their issue on 17 December 2015 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

10. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 9 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

11. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 600,000,000 ordinary shares in the plaintiff during the period after their issue on 30 June 2016 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

12. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 11 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

13. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 225,000,000 ordinary shares in the plaintiff during the period after their issue on 30 June 2016 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

14. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 13 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

15. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 30,000,000 ordinary shares in the plaintiff during the period after their issue on 30 June 2016 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

16. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 15 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

17. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 40,264,309 ordinary shares in the plaintiff during the period after their issue on 25 July 2016 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

18. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 17 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

19. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 47,500,000 ordinary shares in the plaintiff during the period after their issue on 1 August 2016 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

20. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 19 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

21. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 37,500,000 ordinary shares in the plaintiff during the period after their issue on 3 August 2016 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

22. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 21 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

23. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 50,000,000 ordinary shares in the plaintiff during the period after their issue on 16 August 2016 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

24. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 23 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

25. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 30,000,000 ordinary shares in the plaintiff during the period after their issue on 16 August 2016 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

26. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 25 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

27. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 35,000,000 ordinary shares on 12 September 2016 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

28. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 27 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

29. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 50,000,000 ordinary shares in the plaintiff during the period after their issue on 2 December 2016 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

30. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 29 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

31. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 30,000,000 ordinary shares in the plaintiff during the period after their issue on 2 December 2016 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

32. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 31 above from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

33. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 24,000,000 ordinary shares in the plaintiff during the period after their issue on 2 December 2016 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

34. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 33 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

35. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 140,000,000 ordinary shares in the plaintiff during the period after their issue on 2 December 2016 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

36. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 35 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

37. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 35,000,000 ordinary shares in the plaintiff during the period after their issue on 2 December 2016 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

38. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 37 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

39. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 1,049,431,085 quoted options in the plaintiff during the period after their issue on 24 February 2017 to 25 January 2018 is not invalid by reason of:

(a) the failure to issue a cleansing prospectus under s 708A(11) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

40. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 39 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

41. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 50,000,000 quoted options in the plaintiff during the period after their issue on 24 February 2017 to 25 January 2018 is not invalid by reason of:

(a) the failure to issue a cleansing prospectus under s 708A(11) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

42. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 41 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

43. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 1,181,515,612 quoted options in the plaintiff during the period after their issue on 24 February 2017 to 25 January 2018 is not invalid by reason of:

(a) the failure to issue a cleansing prospectus under s 708A(11) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

44. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 43 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

45. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted options being 220,000,0000 quoted options in the plaintiff during the period after their issue on 13 April 2017 to 25 January 2018 is not invalid by reason of:

(a) the failure of a notice, purportedly issued under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

46. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 45 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

47. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 15,000,0000 ordinary shares in the plaintiff during the period after their issue on 13 April 2017 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a valid cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

48. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 47 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

49. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 125,000,0000 ordinary shares in the plaintiff during the period after their issue on 12 May 2017 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a valid cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

50. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 49 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

51. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 16,000,0000 ordinary shares in the plaintiff during the period after their issue on 20 June 2017 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

52. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 51 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

53. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 100,000,0000 ordinary shares in the plaintiff during the period after their issue on 28 June 2017 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

54. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 53 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

55. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 30,000,0000 ordinary shares in the plaintiff during the period after their issue on 28 June 2017 to 9 November 2017 is not invalid by reason of:

(a) the failure to issue a cleansing notice under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

56. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 55 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

57. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 58,333,333 ordinary shares in the plaintiff during the period after their issue on 28 September 2017 to 9 November 2017 is not invalid by reason of:

(a) the failure of a notice, purportedly issued under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

58. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 57 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

59. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 133,333,333 ordinary shares in the plaintiff during the period after their issue on 23 October 2017 to 9 November 2017 is not invalid by reason of:

(a) the failure of a notice, purportedly issued under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

60. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 59 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

61. Pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities being 138,000,000 ordinary shares in the plaintiff during the period after their issue on 23 October 2017 to 9 November 2017 is not invalid by reason of:

(a) the failure of a notice, purportedly issued under s 708A(5)(e) of the Corporations Act, to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with ss 707(3) and 727(1) of the Corporations Act.

62. Pursuant to s 1322(4)(c) of the Corporations Act, any sellers of securities referred to in order 61 above be relieved from any civil liability arising out of a contravention of sections 707(3) and 727(1) of the Corporations Act.

63. A sealed copy of these orders is to be served on the Australian Securities and Investments Commission (ASIC) as soon as reasonably practicable and upon service of these orders on ASIC, ASIC is to include these orders on its database.

64. A copy of these orders be given to each person to whom the securities referred to in orders 1, 3, 5, 7, 9, 11, 13, 15, 17, 19, 21, 23, 25, 27, 29, 31, 33, 35, 37, 39, 41, 43, 45, 47, 49, 51, 53, 55, 57, 59 and 61 above were issued and as soon as reasonably practicable the plaintiff is to publish an announcement to the Australian Securities Exchange in which a copy of these orders is included.

65. The plaintiff make a request forthwith of the ASX for the class of securities 'CAD' to be reinstated.

66. For a period of 28 days from the date of reinstatement by the ASX of the class of securities "CAD" and the publication of these orders on the ASX website, any person who claims to have suffered substantial injustice or is likely to suffer substantial injustice by the making of any or all of these orders has liberty to apply to vary or to discharge them within that period.

67. There be no order as to costs.

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

Background

Background to the litigation

The cleansing prospectus exception applies (relevantly) where a prospectus is lodged on or after the date that shares are issued but before the day on which a sale offer is made. It will have the effect of meeting disclosure requirements for relevant offers and sales going forward. Facts and background In November 2017, the applicant sought relief with respect to trading in shares arising from two share issues. Those share issues were made on 23 October 2017. On 9 November 2017 the applicant filed a cleansing prospectus (first cleansing prospectus) such that for trading after 9 November 2017, the issue of non-disclosure relating to those share issues does not arise. However, shareholders are vulnerable to claims for offering or trading shares between the date of issue and 9 November 2017 without disclosure, in contravention of s 703(3) and s 727(1) of the Act. Accordingly, the applicant approached the Court seeking relief as to the shareholders' liability under s 1322(4) of the Act. In the course of preparing for the hearing of the application, and following correspondence received from the Australian Securities and Investments Commission (ASIC), the applicant undertook a review of its previous issues of shares and options, and identified that there had been failure to lodge valid cleansing notices on another 29 occasions between April 2014 and October 2017. The originating process was amended so that all 31 instances could be dealt with by the Court at the same time. Mr Keith Bowker was the company secretary during the relevant time until he resigned at the end of November 2017. Mr Johnathon Busing was appointed in his place. Mr Busing was appointed a director of the applicant on 30 November 2017. Mr Bowker deposed as follows as to his knowledge of fundraising disclosure obligations when he was the company secretary:The starting position was that a public company had to make full disclosure in relation to securities issues, so that the market was fully informed and investors were not misled about investment opportunities. Full disclosure meant that a prospectus or a similar document had to be issued.There were some exceptions to the disclosure requirement, one of which was where the securities issue was made to sophisticated investors.If an issue of securities is made without disclosure, then any offers or sales within 12 months of issue will generally require disclosure. Such disclosure will not be required in some situations, including where the company issued a cleansing notice or cleansing prospectus when the securities were issued.A cleansing notice must state that the securities referred to in the notice were issued without disclosure under Part 6D.2 of the Act, that the company had complied with certain provisions of the Act as at the date of the notice, and that there was no information to be disclosed which is excluded information. Excluded information is information about a company's activities that investors and advisors would expect to be set out in a disclosure document.When a public company's shareholders have approved an issue of securities at a general meeting, the company will not need to issue a cleansing notice in order for subscribers to be able to on-sell without disclosure within 12 months. As part of this, I understood that shares issued on conversion of options would not require any further disclosure or a cleansing notice if the issue of those options proceeded with shareholder approval. My understanding has been that a cleansing notice is not required in those circumstances because the announcements in relation to the calling of a general meeting, in particular the details required for a notice of meeting and any associated announcements, would be regarded as sufficient disclosure to the market about the security issues resolved upon by the shareholders. Another type of exemption from the disclosure requirements was where the issue of securities was made as part of a transaction which itself had been the subject of announcements to the market through a prior ASX announcement. My understanding was that through such prior announcements the market would have been fully informed so that there was no excluded information, and a cleansing notice would not be required.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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