Re Jaxsta Ltd; [No 2] - [2019] WASC 1

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE JAXSTA LTD; EX PARTE JAXSTA LTD [No 2] [2019] WASC 1
CORAM:   VAUGHAN J
HEARD:   21 DECEMBER 2018
DELIVERED          :   21 DECEMBER 2018
PUBLISHED           :   3 JANUARY 2019
FILE NO/S:   COR 222 of 2018

EX PARTE
JAXSTA LTD
Plaintiff

Catchwords:

Corporations law - Securities - Application for further extension of time for quotation of shares pursuant to s 723(3)(b) of the Corporations Act 2001 (Cth) - Order under s 1322(4)(d) of the Corporations Act 2001 (Cth) extending the period for admission to quotation

Legislation:

Corporations Act 2001 (Cth), s 723(3)(b), s 1322(4)(d)

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff

A J Papamatheos

Solicitors:

Plaintiff

Steinepreis Paganin

Case(s) referred to in decision(s):

Re Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390

VAUGHAN J:

(These reasons were delivered orally. They have been edited to correct matters of grammar and infelicity of expression. Authorities and other references have also been footnoted rather than appearing in the body of the reasons.)

Earlier order for extension and reasons

On 7 December 2018 I made orders pursuant to s 1322(4)(d) of the Corporations Act 2001 (Cth) to extend the time for quotation of shares issued by the plaintiff, Jaxsta Ltd (Jaxsta), under s 723(3)(b) of the Act. Jaxsta now seeks a further short extension - from today, 21 December 2018, to 28 December 2018.
I gave written reasons for the orders I made on 7 December 2018.[1] I do not intend to repeat those reasons. The oral reasons I now give should be understood in the context of, and as if incorporating, the earlier reasons.
[1] Re Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390.
Specifically, I rely on:
(1)the overview (at pars 1 to 7 of my earlier reasons);
(2)the background facts (at pars 9 to 31 of my earlier reasons); and
(3)the legal framework and statement of applicable legal principles (at pars 32 to 43 of my earlier reasons).
It is clear that, as recorded at par 44 of my earlier reasons, Jaxsta remains an 'interested person' for the purposes of s 1322(4)(d). It is also the case that, as recorded at pars 39 to 40 and 44 of my earlier reasons, the power to extend time under s 1322(4)(d) of the Act applies to the time to effect quotation under s 723(3)(b) of the Act.

Additional materials and activities

For the purpose of today's further extension application, Jaxsta relied on the affidavits that were before me on 7 December 2018. Jaxsta also relied on further affidavits as follows:
(1)an affidavit of Jorge Nigaglioni sworn 20 December 2018;
(2)an affidavit of Toby Hicks sworn 20 December 2018;
(3)an affidavit of Emma Pullen sworn 20 December 2018; and
(4)a further affidavit of Toby Hicks sworn 20 December 2018.
Jaxsta also filed a short set of further written submissions.
The following steps have been taken since the orders of 7 December 2018:
(1)the orders of 7 December 2018 have been announced on the ASX's platform and notification of the orders has been provided to the share applicants as contemplated by the orders;
(2)Jaxsta has engaged Ernst & Young to complete new audited financial statements for Jaxsta Holdings Pty Ltd (Jaxsta Holdings) for the financial years ended 30 June 2016, 30 June 2017 and 30 June 2018;
(3)the new audited financial statements were obtained on 20 December 2018 and sent to the ASX on the same day; and
(4)Jaxsta, predominantly through its solicitors, has continued to work with the ASX with a view to bringing about the reinstatement to quotation of its issued securities.
Mr Hicks, Jaxsta's solicitor, has deposed to having a telephone conversation with James Rowe of the ASX on 19 December 2018. In that telephone conversation Mr Rowe:
…verbally advised that as would subsequently follow in writing, the ASX Listings Application Review Committee has reconsidered the application for reinstatement to trading of [Jaxsta] on ASX and had approved the reinstatement to trading of [Jaxsta] subject to [Jaxsta] providing new audited accounts for [Jaxsta Holdings] and there being no material differences between those new audited accounts and the audited accounts provided by the previous auditor of [Jaxsta Holdings].[2]
[2] First Affidavit of Toby Albert Hicks sworn 20 December 2018 par 5(e).
Mr Hicks goes on to depose:
Other than the review and final confirmation from ASX in relation to the new audited accounts, I am not otherwise aware of any other material step that remains outstanding which would be an impediment to [Jaxsta] being reinstated for quotation on the ASX on Thursday 27 December 2018.[3]
[3] First Affidavit of Toby Albert Hicks sworn 20 December 2018 par 9.
Mr Nigaglioni deposes that, in accordance with Jaxsta's undertaking as proffered to the court and accepted on 7 December 2018, the $5.269 million raised from the share applicants remains intact. On behalf of Jaxsta he proffers a further undertaking in these terms:
On behalf of [Jaxsta], I undertake that [Jaxsta] will not use any of the Offer Proceeds until the earlier of, the period for any further extension to the Quotation Period granted by the Court pursuant to this application (Second Extended Period) or the date the Company’s shares re-commence trading on the ASX, expected to be Thursday, 27 December 2018 (Re‑quotation), unless otherwise ordered by the Court.[4]
[4] Affidavit of Jorge Rafael Nigaglioni sworn 20 December 2018 par 16.
Mr Nigaglioni otherwise deposes to being unaware of any remaining impediment to Jaxsta's shares being reinstated for quotation on the ASX. He states:
In order to complete the reinstatement of [Jaxsta], I understand that a further extension of time is required in order for the ASX to reinstate [Jaxsta] on the first full trading day after Friday 21 December 2018. I understand that this will be Thursday 27 December 2018, being the first business day after the Christmas and Boxing Day public holidays. I have otherwise worked variously with solicitors for [Jaxsta] to ensure that [Jaxsta] is able to be reinstated for quotation on the ASX on Thursday 27 December 2018.
I am not otherwise aware of any remaining impediment to [Jaxsta's] shares being reinstated for quotation on the ASX on Thursday 27 December 2018.[5]
[5] Affidavit of Jorge Rafael Nigaglioni sworn 20 December 2018 pars 14 - 15.
It will be recalled that I required that the share applicants be notified of the orders as made on 7 December 2018. That was to enable any share applicant who was so inclined to seek orders to revoke or vary the extension order.[6] Mr Nigaglioni deposes that some of the share applicants have inquired as to the status of Jaxsta's reinstatement to trading on the ASX. However, only one share applicant has mentioned a wish to withdraw its application and obtain a reimbursement of funds.
[6] Re Jaxsta Ltd; Ex parte Jaxsta Ltd [61] ‑ [64].
That share applicant, Tudollar Pty Ltd (Tudollar), applied for 250,000 Jaxsta shares in an amount of $50,000. By email dated 11 December 2018, via its share broker, Tudollar requested a withdrawal from the offer. Tudollar has not, however, made any application to the court pursuant to the liberty to apply provision in the orders of 7 December 2018. Nor has Tudollar appeared at today's hearing.
Last night, at about 8.00 pm, the ASX sent Jaxsta's solicitors a conditional reinstatement letter dated 20 December 2018. This was accompanied by an ASX reinstatement market announcement scheduling the reinstatement date for quotation of Jaxsta’s securities for Friday, 28 December 2018 at approximately 10.00 am. The conditional reinstatement letter states:
I am pleased to advise that ASX has reconsidered [Jaxsta's] application and decided to reinstate [Jaxsta] to the official list of ASX and to quote its securities, subject to the satisfaction of certain conditions precedent.[7]
[7] Second Affidavit of Toby Albert Hicks sworn 20 December 2018 page 18.
The ASX’s accompanying email noted the reinstatement announcement would, however, be subject to the outcome of today’s hearing and confirmation as to the appointment of new directors. The ASX stated that it was not in a position to support or oppose the extension application. On that basis the ASX did not intend to appear at the hearing. It has not done so.
Mr Hicks' further affidavit of 20 December 2018 deposes to compliance with the matters raised in the ASX's 20 December 2018 correspondence. In particular he states:
•The new directors will be appointed after conclusion of today’s hearing.
•Overnight on 20 December 2018, at approximately 9.08 pm, he delivered the outstanding pre‑quotation disclosure to the ASX to satisfy the requirements of the conditional approval letter.
Mr Hicks goes on to depose that, to the best of his knowledge and belief, all other reinstatement conditions continue to be complete and satisfied.
Mr Hicks' further affidavit also attaches correspondence received from the Australian Securities and Investments Commission (ASIC) as to the further extension application. By letter dated 20 December 2018 the ASIC says:
3.ASIC has no objection to the proposed extension of the period set out in s723(3)(b) for admission to quotation on the ASX of the securities issued under the Prospectus until 28 December 2018, provided that:
(a)the ASX is of the view that quotation can be achieved on or before 28 December 2018;
(b)the funds raised under the Prospectus will not, without an order of the Court, be used and will continue to be held in a separate bank account maintained by the Company; and
(c)each shareholder who subscribed for shares under the Prospectus, continue to have liberty to apply to have any extension of the period in s723(3)(b) revoked or varied upon giving 24 hours' prior written notice.
4.ASIC would not support further extensions, past 28 December 2018, if:
(a) the timing of the quotation of securities under the Prospectus remains uncertain; and
(b) shareholders who subscribed for shares under the Prospectus are not provided with formal withdrawal rights.
5.ASIC does not currently propose to appear, make submissions, or intervene to oppose the extension to 28 December 2018.[8]
[8] Second Affidavit of Toby Albert Hicks sworn 20 December 2018 page 106.

Disposition

In the circumstances I am satisfied that it is appropriate, pursuant to s 1322(4)(d) of the Corporations Act2001 (Cth), to extend the period for effecting quotation for the additional seven days as sought by Jaxsta.
The additional extension is short - only a further seven days. The total extension is also relatively short - only 21 days. Otherwise the second, third, fourth, fifth, sixth, seventh and eighth reasons given in the earlier reasons (see pars 47 to 53 of my earlier reasons) continue to apply. The issue of utility - as discussed at pars 54 to 55 of my earlier reasons - has now swung very much in the favour of Jaxsta. Given the freshly audited financial statements of Jaxsta Holdings and the conditional reinstatement letter of 20 December 2018, there appears to be a high level of confidence that Jaxsta will be able to bring about the reinstatement of its securities to quotation by 28 December 2018.
It remains the case that I must be satisfied that the proposed extension does not cause substantial injustice and is not likely to cause substantial injustice in the future.
As I said in my earlier reasons:
The word 'injustice' requires the court to consider real, and not merely insubstantial or theoretical, prejudice. A degree of prejudice to a person or persons may be outweighed if the overwhelming weight of justice is in favour of the making of the order.[9]
[9] Re Jaxsta Ltd; Ex parte Jaxsta Ltd [38].
I am satisfied that no substantial injustice has been or is likely to be caused to any person. Further, I am satisfied that the further seven day extension is not likely to cause any substantial injustice to any person. The share applicants’ application money will continue to be intact pursuant to the undertaking that is proffered and will be accepted from Jaxsta. I will only grant the further s 1322(4)(d) extension order on the basis of Jaxsta's further undertaking. And, as with the 7 December 2018 orders, the extension will be subject to granting any interested person liberty to apply to revoke or vary the order. That will protect the individual share applicants in the manner I describe at pars 61 to 63 of my earlier reasons.
In assessing whether there is likely to be any substantial injustice I also take into account the following two matters:
•First, no share applicant other than Tudollar has sought to 'withdraw' from the issue; and even Tudollar has not made an application to the court.
•Second, none of the share applicants have sought to appear this morning despite being notified of the hearing.
It will remain possible for any share applicant, including Tudollar, to apply to the court to revoke or vary the extension orders so as to, in substance, effect withdrawal from their share application. Any such application will be determined on its merits if and when an application is made.

Conclusion

For these reasons I make orders as follows:
(1)The court notes and accepts the plaintiff's undertaking, as proffered in the affidavit of Jorge Rafael Nigaglioni sworn 20 December 2018, that the plaintiff will not, without further order of the court, use any of the $5,269,000 offer proceeds as currently held in a separate bank account maintained by the plaintiff until the earlier of:
(a)the expiration of the period of any further extension of the quotation period granted by the court pursuant to the application; or
(b)the date on which the plaintiff's shares re‑commence trading on the ASX.
(2)Pursuant to s 1322(4)(d) of the Corporations Act 2001 (Cth) (Corporations Act), the period set out in s 723(3)(b) of the Corporations Act (as extended to 21 December 2018 on 7 December 2018) for the admission to quotation by the Australian Securities Exchange (ASX) of securities of the plaintiff pursuant to the Prospectus lodged on 7 September 2018 and Supplementary Prospectus lodged on 28 September 2018 (Prospectus), is extended to 28 December 2018 (inclusive).
(3)The plaintiff forthwith:
(a)lodge a copy of these orders with the Australian Securities and Investments Commission (ASIC); and
(b)make an announcement to the ASX disclosing the terms of these orders.
(4)The plaintiff and all other interested parties, including the ASIC, have liberty to apply to revoke or vary paragraph (2) of these orders upon first giving 24 hours' prior written notice.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AD
Associate to the Honourable Justice Vaughan
3 JANUARY 2019