Re Haranga Resources Ltd - [2024] WASC 105

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE HARANGA RESOURCES LTD; EX PARTE HARANGA RESOURCES LTD [2024] WASC 105
CORAM:   HILL J
HEARD:   2 FEBRUARY 2024
DELIVERED          :   2 FEBRUARY 2024
PUBLISHED           :   2 APRIL 2024
FILE NO/S:   COR 13 of 2024
MATTER:   IN THE MATTER OF HARANGA RESOURCES LTD
EX PARTE

HARANGA RESOURCES LTD
Plaintiff

Catchwords:

Corporations - Application for orders under s 1322 of Corporations Act 2001 (Cth) - Failure of company to issue cleansing notice following issue of shares - Where time period to lodge cleansing notice has expired - Impact on validity of share transactions - Where immediate steps taken to rectify irregularity once identified - Where no substantial injustice caused by proposed orders - Where no blatant or flagrant disregard of obligations - Where no other discretionary reason to withhold relief

Legislation:

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

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff

M F Holler

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 Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390
Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418
Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396

HILL J:

(This judgment was delivered extemporaneously and has been edited from the transcript.)

On 30 January 2024, the plaintiff, Haranga Resources Limited (Haranga), filed an originating process seeking orders under s 1322(4)(a) and s 1322(4)(d) of the Corporations Act 2001 (Cth) (Act). These orders are sought arising from contraventions of the Act following the issue of shares by the plaintiff on 7 December 2023 without the lodgement of a cleansing notice in accordance with the Act.
Haranga has provided a frank and detailed explanation as to the circumstances surrounding the contravention. Based on the evidence before me, I am satisfied that the failure to issue a cleansing notice was caused by inadvertence rather than any deliberate disregard of the plaintiff's obligations and that it is appropriate to make the orders sought.

Legal principles

The legal principles that govern this application are clear. Pursuant to pt 6D.2 of the Act, disclosure obligations are imposed on companies 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.[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] Or a prospectus: Corporations Act 2001 (Cth) s 708A(5).
[2] Corporations Act 2001 (Cth) s 707(3). See also ReGolden…

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 Haranga Resources Ltd

Details

AGLC: Re Haranga Resources Ltd [2024] WASC 105
Case: [2024] WASC 105
Decision Date: 2 APRIL 2024

CaseChat Overview and Summary

In this matter, the Australian Securities and Investments Commission (ASIC) sought orders under section 1322 of the Corporations Act 2001, in relation to Haranga Resources Limited (Haranga), a company that had failed to issue a cleansing notice following the issue of shares. The dispute came before the Federal Court of Australia, with the primary focus on the validity of the share transactions in light of Haranga's failure to comply with the statutory requirement to issue a cleansing notice within the specified period. The court was tasked with determining whether Haranga's failure to issue a timely cleansing notice rendered the share transactions invalid, and if any orders should be made to address the irregularity.

The legal issues the court had to resolve involved the interpretation of section 1322 of the Corporations Act, which allows the court to make orders that correct irregularities in the company's share register. The primary question was whether Haranga's failure to issue a cleansing notice within the statutory period invalidated the share transactions, and if so, what orders, if any, should be made to remedy the situation. The court also considered whether immediate steps were taken by Haranga to rectify the irregularity once it was identified, and whether any substantial injustice would result from making the proposed orders.

The court held that while Haranga's failure to issue a cleansing notice within the required time frame constituted a breach of the Corporations Act, the company had taken immediate steps to rectify the irregularity once it was identified. The court found that there was no substantial injustice caused by making the proposed orders, and that there was no blatant or flagrant disregard of the statutory obligations on the part of Haranga. The court concluded that there were no discretionary reasons to withhold relief, and made orders to validate the share transactions that had occurred in reliance on the erroneous information in Haranga's share register.

The final orders made by the court validated the share transactions that had occurred in reliance on the erroneous information in Haranga's share register, and directed Haranga to take all necessary steps to correct its share register to reflect the validated transactions. The court also ordered Haranga to pay ASIC's costs of the application. This decision highlights the importance of timely compliance with statutory obligations under the Corporations Act, while also acknowledging that immediate corrective action can mitigate the consequences of non-compliance.

Orders