FEDERAL COURT OF AUSTRALIA
European Lithium Limited, in the matter of European Lithium Limited [2017] FCA 894
File number: WAD 360 of 2017 Judge: BARKER J Date of judgment: 26 July 2017 Catchwords: CORPORATIONS – application for orders validating trading of shares pursuant to s 1322(4)(a) of Corporations Act 2001 (Cth) – where company not qualified to issue cleansing notices – application for orders relieving sellers from civil liability pursuant to s 1322(4)(c) – where plaintiff breached disclosure requirements under s 707(3) and s 727(1) Legislation: Corporations Act 2001 (Cth) ss 707(3), 708(11), 708A(5), 708A(5)(b), 708A(5)(e), 708A(7), 727(1), 1322, 1322(4), 1322(4)(a), 1322(4)(c), 1322(6)(a)(i), 1322(6)(a)(ii), 1322(6)(a)(iii), 1322(6)(b), 1322(6)(c), 1337B(1), Pt 6D.2, Chapter 6D
Federal Court of Australia Act 1976 (Cth) s 19
Cases cited: Elemental Minerals Ltd, in the matter of Elemental Minerals Ltd [2010] FCA 687
Re Chameleon Mining NL [2009] NSWSC 660
Re Golden Gate Petroleum Ltd (2010) 77 ACSR 17; [2010] FCA 40
Re Silver Lake Resources Ltd (2012) 87 ACSR 436; [2012] FCA 32
Re Wave Capital Limited [2003] FCA 969
Sprint Energy Limited, in the matter of Sprint Energy Limited [2012] FCA 1354
TV2U International Limited, in the matter of TV2U International Limited [2016] FCA 1556
Date of hearing: 26 July 2017 Registry: Western Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 81 Counsel for the Plaintiff: Mr T Coyle Solicitor for the Plaintiff: Steinepreis Paganin ORDERS
WAD 360 of 2017 IN THE MATTER OF EUROPEAN LITHIUM LIMITED
EUROPEAN LITHIUM LIMITED
Plaintiff
JUDGE:
BARKER J
DATE OF ORDER:
26 JULY 2017
THE COURT ORDERS THAT:
1.Pursuant to s 1322(4)(a) of the Corporations Act 2001 (Cth) (Corporations Act), it is declared that any offer for sale or sale of the quoted securities being 13,326,666 ordinary shares in the plaintiff during the period after their issue on 8 June 2017 to 10 July 2017 is not invalid by reason of:
(a)the failure of notices, 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.
2.Pursuant to s 1322(4)(c) of the Corporations Act, any seller referred to in paragraph 1 above be relieved from any civil liability arising out of their contravention of ss 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 6,859,036 ordinary shares in the plaintiff during the period after their issue on 15 June 2017 to 10 July 2017 is not invalid by reason of:
(a)the failure of notices, 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)…
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- Case
- [2017] FCA 894
- Decision Date
CaseChat Overview and Summary
The court found that despite the company's failure to issue cleansing notices, the sales of shares were not invalid because the sellers had acted in good faith and had no reason to know that the notices were invalid. The court also found that the sellers were not liable for civil penalties as they had acted reasonably and without negligence. The court noted that the company had not suffered any loss or prejudice as a result of the invalid notices and the sellers' failure to comply with disclosure requirements. Accordingly, the court made orders validating the sales of shares and relieving the sellers from civil liability. The orders also required the company to take steps to reinstate the shares on the Australian Securities Exchange and to notify relevant parties of the orders.
Orders
Orders of the court
1. Pursuant to s 1322(4)(a) of the Corporations Act 2001 (Cth) (Corporations Act), it is declared that any offer for sale or sale of the quoted securities being 13,326,666 ordinary shares in the plaintiff during the period after their issue on 8 June 2017 to 10 July 2017 is not invalid by reason of:
(a) the failure of notices, 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.
2. Pursuant to s 1322(4)(c) of the Corporations Act, any seller referred to in paragraph 1 above be relieved from any civil liability arising out of their contravention of ss 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 6,859,036 ordinary shares in the plaintiff during the period after their issue on 15 June 2017 to 10 July 2017 is not invalid by reason of:
(a) the failure of notices, 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.
4. Pursuant to s 1322(4)(c) of the Corporations Act, any seller referred to in paragraph 3 above be relieved from any civil liability arising out of their contravention of ss 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 3,444,444 ordinary shares in the plaintiff during the period after their issue on 30 June 2017 to 10 July 2017 is not invalid by reason of:
(a) the failure of notices, 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.
6. Pursuant to s 1322(4)(c) of the Corporations Act, any seller referred to in paragraph 5 above be relieved from any civil liability arising out of their contravention of ss 707(3) and 727(1) of the Corporations Act.
7. 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.
8. A copy of these orders be given to each person to whom the securities referred to in paragraphs 1, 3 and 5 above were issued and as soon as reasonably practicable the plaintiff is to publish an announcement to the Australian Securities Exchange (ASX) in which a copy of these orders is included.
9. The plaintiff make a request forthwith of the ASX for the class of securities ‘EUR’ be reinstated.
10. For a period of 28 days from the date of reinstatement by the ASX of the class of securities “EUR” 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.
11. 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
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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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