Re Mount Burgess Mining N.L.
[2025] WASC 230
•10 JUNE 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE MOUNT BURGESS MINING N.L.; EX PARTE MOUNT BURGESS MINING N.L [2025] WASC 230
CORAM: HILL J
HEARD: 19 MAY 2025
DELIVERED : 19 MAY 2025
PUBLISHED : 10 JUNE 2025
FILE NO/S: COR 76 of 2025
MATTER: IN THE MATTER OF MOUNT BURGESS MINING N.L.
EX PARTE
MOUNT BURGESS MINING N.L.
Plaintiff
Catchwords:
Corporations - Application for extensions of time to lodge cleansing notices - Application for declaratory relief to validate trading in securities issued without a valid cleansing notice - Multiple instance of securities being issued without a valid cleansing notice - Where no blatant or flagrant disregard of obligations - Where no substantial injustice if orders made - Turns on own facts
Legislation:
Corporations Act 2001 (Cth) s 707(3), s 727(1), s 1322(4)
Result:
Application granted
Category: B
Representation:
Counsel:
| Plaintiff | : | C C Spencer |
Solicitors:
| Plaintiff | : | Thomson Geer |
Cases referred to in decision:
Re Austpac Resources NL [2010] NSWSC 1438
Re Beadell Resources Ltd [2013] FCA 13
Re Caeneus Minerals Ltd [2018] FCA 560
Re Charter Hall Ltd [2007] FCA 1316
Re Classic Minerals Ltd [2018] FCA 2039
Re Diversified United Investment Ltd [2008] FCA 720
Re G8 Communications Ltd [2016] FCA 297; (2016) 112 ACSR 22
Re Golden Gate Petroleum Ltd [2010] FCA 40; (2010) 77 ACSR 17
Re ICandy Interactive Ltd [2018] FCA 533; (2018) 125 ACSR 369
Re Imdex Ltd [2020] WASC 298
Re Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390
Re Micro-X Ltd [2019] FCA 1154
Re Poseidon Nickel Ltd [2018] FCA 1063; (2018) 129 ACSR 57
Re RCR Tomlinson Ltd [2009] FCA 1130
Re Sprintex Limited (No 2) [2025] WASC 15
Re Wave Capital Ltd (2003) 47 ACSR 418
HILL J:
(This judgment was delivered extemporaneously and has been edited from the transcript to include references, headings and to correct matters of grammar and expression.)
On 16 May 2025, the plaintiff, Mount Burgess Mining NL (Mount Burgess), filed an originating process seeking orders pursuant to s 1322(4)(a), 1322(4)(c) and s 1322(4)(d) of the Corporations Act 2001 (Cth) (Act) in relation to five separate share issues that it has undertaken since July 2020.
In support of its application, Mount Burgess filed an affidavit of Jan Evelyn Forrester, one of its company secretaries, on 16 May 2025, and an affidavit of Caroline Cecilie Spencer on 19 May 2025, confirming service of the application. I have also had the benefit of a written outline of submissions that was filed on 16 May 2025.
At the time the originating process was filed, Mount Burgess also filed a certificate of urgency requesting that the originating process be listed for hearing on an urgent basis on 19 May 2025. It is for that reason that the application has come before me today at 4.30 pm.
Part 6D.2, Act
Part 6D.2 of the Act imposes disclosure obligations on companies 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.[1]
[1] Corporations Act 2001 (Cth) s 708A(5).
If disclosure has not been made by the issuer and the shares are on-sold within 12 months, the party to whom the shares are issued may be obliged to make a disclosure.[2]
[2] Corporations Act 2001 (Cth) s 707(3). See also ReGolden Gate Petroleum Ltd [2010] FCA 40; (2010) 77 ACSR 17.
Factual background
The factual background to this application, taken from the affidavit of Mrs Forrester, can be briefly summarised as follows.
Mount Burgess is an Australian public company whose securities have been listed on the Australian Securities Exchange (ASX) since 1985. It is a mineral exploration and development company with an asset overseas. At present, Mount Burgess has approximately 351.7 million shares on issue and almost two and a half thousand separate shareholders.
At the time the application was filed, Mount Burgess had five directors, with Nigel Forrester being the chairman and managing director. Mr Forrester resigned with immediate effect on 16 May 2025 because of ill health. The joint company secretaries are Mrs Forrester, who is the wife of Mr Forrester, and Ms Sze Leng Chau. Mount Burgess only had three staff in Perth as at 16 May 2025, who were Mr and Mrs Forrester, and Ms Chau.
Mrs Forrester's tasks as company secretary include supporting the board and management and preparing ASX announcements and other documents. Her evidence is that she has never done any company secretarial courses and has learned on the job over time.
Mrs Forrester is and always has been aware that a cleansing notice is required to be lodged after shares are issued so that the shares can be sold on market immediately. Her usual practise is to lodge the cleansing notice at the same time as the appendix 3B, but did not have a checklist in place at the time of any of the transactions to assist her to keep track of the formal requirements.
When Mount Burgess is required to raise capital (which occurs once or twice a year), it has generally done so by way of placements to sophisticated and professional investors. On occasions, the company has engaged external stockbrokers to assist in its fundraising. Where this has not occurred, Mr Forrester managed the capital raising.
On 17 April 2025, Mount Burgess announced that it proposed to undertake a placement to sophisticated and professional investors by issuing a little over 12 million shares to raise about approximately $55,000. The shares were issued on 23 April 2025, and the relevant appendix 2A forms were lodged that day. At that time, Mrs Forrester was preoccupied with her husband's health issues, who had been hospitalised since 10 April 2025.
On 10 May 2025, Mrs Forrester realised she had not lodged a cleansing notice in relation to the share issue, and prepared and lodged a cleansing notice that day.
On the morning of Monday, 12 May 2025, Mrs Forrester received a call from Mount Burgess's ASX adviser, who informed her that the cleansing notice had been lodged late, that Mount Burgess was in breach of the law, and that she should seek legal advice.
Mrs Forrester immediately sought and obtained legal advice. The advice that she obtained was that not only was the cleansing notice lodged late, but it also did not comply with the Act as it failed to refer to the company's compliance with s 674A of the Act. Mrs Forrester and Ms Chau were unaware of the amendment to the Act that occurred in August 2021.
On receiving this advice, Mrs Forrester took the following steps.
(a)She advised the investors who had received the shares in the April placement that the cleansing notice had not been lodged on time.
(b)She requested that the company's share register place a holding lock on the shares that had been issued. In doing so, she was advised that a number of the shares that had been issued had already been sold or transferred.
(c)On 13 May 2025, she caused Mount Burgess to lodge a corrected cleansing notice and to announce its intention to make this application.
(d)On the same date, Mount Burgess requested the trading of its shares be suspended until the opening of the market tomorrow on 20 May 2025 to enable it to bring this application and to have the application heard.
Since being made aware of the issue, Mrs Forrester (with the assistance of the company's solicitors) has undertaken a review of the previous share issues that have been undertaken since 2015 to identify whether there were any issues with any other share issues that had been undertaken.
As a consequence of that review, the following matters were identified.
(a)All share issues between 2015 and 2018 were compliant and no remedial orders are required in respect of these placements.
(b)In relation to a placement undertaken by Mount Burgess on 3 June 2024, the cleansing notice was not lodged until 26 June 2024, outside the five business days required by the Act.
(c)In relation to a placement in July 2023, a cleansing notice was lodged on 10 August 2023. However, this cleansing notice does not comply with the Act because it does not confirm that the company was in compliance with s 674A of the Act.
(d)In relation to a placement in June 2022, no cleansing notice was lodged. Mrs Forrester believes she may have overlooked this at the time because of some health issues she was experiencing at that time.
(e)In relation to a placement in July 2020, no cleansing notice was lodged. Mrs Forrester does not now recall why this was the case and believed she may have overlooked it at the time, because of the change in the requirements from lodging a single appendix 3B to requiring the lodgement of both an appendix 3B and an appendix 2A.
Should an extension of time be granted to lodge the cleansing notices?
In considering whether an extension of time ought to be granted under s 1322(4)(d) for the lodgement of the cleansing notices in respect of the April 2025 share issue and the June 2024 share issue, the court will consider two matters:[3]
First, the court needs to determine whether, having regard to the circumstances of the case and the general objects of the [Act], it is appropriate to make an order extending a relevant period, or abridging a relevant period. Secondly, if those circumstances are made out, then the court must address the question whether any substantial prejudice has been or is likely to be caused to any person by the making of such an order.
[3] Re Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390 [41] - [43].
The power under s 1322(4)(d) must be exercised having regard to the general objects and purposes of the relevant statutory provision within the Act and must not undermine the reasons for their requirements of the Act. The power must also be exercised having regard to the interests of all parties affected, and the public interest in ensuring compliance with the Act.
Finally, it is also clear that even if the period to be extended has expired, the court may still grant an order extending the period.
In this case, for the following reasons, I am satisfied that it is appropriate to grant the extensions of time sought by Mount Burgess.
First, the orders are required in order for the ASX to lift the suspension of trading in Mount Burgess' shares. I accept that if the suspension is not lifted, shareholders and potential shareholders of Mount Burgess will be prejudiced by not being able to sell or purchase securities in the company.
Second, Mount Burgess has provided explanations for its non-compliance on both occasions. Since Mount Burgess has been listed, it has undertaken numerous securities issues.[4] Most of these securities have complied with the obligations under ch 6D of the Act. In relation to the two share issues in which an extension of time for lodgement of the cleansing notice is sought, I accept and find that the errors have that have occurred have arisen from Mrs Forrester not being aware of the requirement to lodge a cleansing notice within five days of the issue of the shares. Mrs Forrester's evidence, which I accept, is that the errors arose as a consequence of inadvertence. I accept and find that the errors were honest and not intentional. I also accept that there is and was no failure on the persons concerned or on the part of Mount Burgess to act honestly. This finding is supported by the following matters:
(a)the numerous instances since 2015 when Mount Burgess has issued securities in compliance with the Act and ASX Listing Rules; and
(b)the actions of the company on being informed of the issue in relation to the share issues, namely seeking a suspension of its shares from trading and undertaking an audit of all share issues that have occurred since 2015.
[4] Affidavit of Jan Evelyn Forrester filed 16 May 2025 'JF11'.
Third, it is my view that granting the extension of time is consistent with the purpose and policy of the legislation.
Fourth, Mount Burgess has acted promptly in bringing this application, once it became aware of the issue, including bringing this matter on for an urgent hearing.
Finally, the proposed orders that are sought by the plaintiff enable any person who may be affected by these orders to return to the court to raise any matters that they think fit, including, if necessary, to vacate the orders.
Is the pre-condition in s 1322(6) for making the orders satisfied?
Counsel for Mount Burgess submitted that the pre-condition was satisfied, as at least two of the pre-conditions were satisfied.
It is, of course, only necessary that one be satisfied. In respect of the pre-condition in s 1322(6)(a)(ii), a comprehensive review of the relevant principles was undertaken by Banks-Smiths J in Re ICandy Interactive Ltd.[5] Relevantly, her Honour considered that:
[5] Re ICandy Interactive Ltd [2018] FCA 533; (2018) 125 ACSR 369 [54] - [104].
(a)when determining whether someone has acted honestly for the purposes of s 1322, the courts look to absence of evidence of dishonesty and prompt action to remedy the error;[6]
(b)the concept of acting honestly can embrace:[7]
i.inadvertence or failure to turn one's mind to an issue;
ii.active but incorrect consideration of a legal issue;
iii.failure to consider an issue at all; or
iv.failure to understand or appreciate the significance of non-compliance; and
(c)when testing for honesty, the authorities reveal that the courts look at the company itself, the directors, the company secretary and others as may be concerned.[8]
[6] Re ICandy Interactive Ltd [54], [106] - [107].
[7] Re ICandy Interactive Ltd [55].
[8] Re ICandy Interactive Ltd [60] - [104].
On the basis of Mrs Forrester's evidence, I accept that the pre‑condition in s 1322(6)(a)(ii) is satisfied. In my view, it is clear that these errors have occurred as a result of inadvertence and the failure to turn her mind to the issues raised on the application.
Will the orders cause substantial injustice (s 1322(6)(c))?
In considering whether the orders will cause anyone substantial injustice, I have considered the classes of persons who may be impacted by the making of these orders. I find there is no basis for inferring that substantial injustice has been or is likely to be caused to any person by the making of the proposed orders, and in fact, the failure to make the orders will, in my view, cause injustice. This is for the following reasons.
First, in relation to those people or entities who are issued the impugned shares, I consider that they will suffer prejudice if the orders sought are not made, because if they seek to offer to sell or sell the impugned shares, such offers or sales may be void or voidable for want of compliance with the statutory requirements of pt 6D.2 of the Act.[9]
[9] Re Poseidon Nickel Ltd [2018] FCA 1063; (2018) 129 ACSR 57, 67 [63].
Second, any people who purchased shares from on-sellers who have on-sold the impugned shares themselves, it is possible that these further sales of shares will have occurred without the requisite disclosure under pt 6D.2 of the Act.
Third, I accept that if the orders are not made, there may be substantial injustice to Mount Burgess as the offers of and sales of shares may be void or voidable, which can give rise to commercial uncertainty and expense as the company must remain involved in problems caused by void or voidable offers and sales of its shares.
Fourth, there will also be substantial injustice to the other shareholders of Mount Burgess if the orders are not made, as they will not be able to trade their shares on an open market if the ASX does not lift the current suspension from trading.
It is usual in cases such as this to provide an opportunity for shareholders or other parties to raise a complaint about the proposed orders. The usual timeframe is that there be liberty to apply within 28 days from the date of the order, which is the period set out in O 8 of the minute of proposed orders filed on behalf of Mount Burgess. In my view, that is an appropriate timeframe.
No other discretionary reason to withhold relief
While in this case there have been a number of contraventions of the Act, I accept and find that there is no evidence of any substantial misconduct, serious wrongdoing or flagrant disregard of the corporate law or the company's constitution, which would warrant the refusal of the relief sought.[10]
[10] Re Wave Capital Ltd (2003) 47 ACSR 418 [29].
There is nothing in the evidence before me that suggests any minority shareholder interest has or might be oppressed or that any other interest might be affected.
I am satisfied that the company has attempted to notify all shareholders who received the shares as subject of the share issue, as well giving ASX and the Australian Securities and Investments Commission (ASIC) notice of the hearing, including way of an announcement. No shareholder or either regulator has sought to intervene in the hearing or has given notice that they want to be heard on the application.
In this regard, while I accept that ASIC has not responded to the documents being served on it, it is possible to deal with any issue of ASIC by including them in O 8 of the minute of proposed orders as a party who wishes to be heard on any application to set aside the minutes of orders.
In exercising the discretion to grant relief under s 1322(4), a relevant factor is the promptness with which Mount Burgess sought to remedy the irregularity once it had been identified.[11] As I have already noted in this case, Mount Burgess was informed it had not lodged the required cleansing notice on 12 May 2025 and has worked hard to bring this application on. Their originating process was filed on 16 May 2025, less than seven days after first becoming aware of the issue. On this basis, I accept and find that Mount Burgess acted diligently after being informed of the issue.
[11] Re G8 Communications Ltd [2016] FCA 297; (2016) 112 ACSR 22, 34 [60].
Ancillary orders
Mount Burgess also seeks ancillary orders for the cleansing notices for the April 2025 and June 2024 share issues to be deemed to take effect as if they had been given to the ASX on the date the shares were issued.
Courts have made similar orders on a number of previous occasions,[12] and there is no doubt that the court has power to make orders that are consequential or ancillary to an order extending the period for doing an act, matter or thing under the Act.[13]
[12] Re Charter Hall Ltd [2007] FCA 1316; Re Diversified United Investment Ltd [2008] FCA 720; Re RCR Tomlinson Ltd [2009] FCA 1130; Re Austpac Resources NL [2010] NSWSC 1438; Re Beadell Resources Ltd [2013] FCA 13; Re Micro-X Ltd [2019] FCA 1154.
[13] Re Imdex Ltd [2020] WASC 298 [55] - [58].
In my view, where shares are on-sold, I accept that a 'deeming order' is that an appropriate corollary of the orders seeking an extension of time. On this basis, I accept it is appropriate to make the ancillary orders sought.
Should declarations be made under s 1322(4)(a) of the Act?
Mount Burgess seeks declarations that any act, matter or thing purporting to have been done under the Act or in relation to the corporation is not invalid by reason of any contravention of a provision of the Act. These declarations are sought in respect of share issues in April 2025, June 2024, August 2023, June 2022, and July 2020.
I note that:
(a)the proposed validation orders are framed in a declaratory form;
(b)the act, matter or thing, are the lodgement of the notice and the offers and sales of securities; and
(c)the contravention is the offering of securities for sale or sales without proper disclosure in contravention of s 707(3) of the Act.[14]
[14] Re Caeneus Minerals Ltd [2018] FCA 560 [39] ‑ [40]; Re Classic Minerals Ltd[2018] FCA 2039 [35] ‑ [36].
For the following reasons, I consider it is appropriate to make the orders sought by the plaintiff.
First, the evidence before me is that at least some of the shares the subject to the share issues have been sold, and it cannot be discounted that there have been resales of these shares. In these circumstances, I consider it is appropriate to make the orders sought to remove any question as to the title and the shares of Mount Burgess.
Second, at the time the application came on for hearing, the relevant cleansing notices had been lodged. For that reason, the orders that have been sought do not concern a future act but a past act.
Should orders be made to relieve the sellers of shares from civil liability under s 1322(4)(c) of the Act?
Mount Burgess has sought orders relieving those people who were issued the shares, together with any on-sellers, from any civil liability arising out of their contraventions of s 707(3) and s 727(1) of the Act. It is important to note that no relief is sought in respect of the directors or officers of Mount Burgess.
Section 1322(4)(c) of the Act permits the court to make an order relieving a person from civil liability for a broad range of contraventions or failures, subject to the conditions in s 1322(6) of the Act that the person concerned acted honestly, and that no substantial injustice has been or is likely to be caused to any person.
It is a pre-condition to making an order under this section that the person acted honestly.
Mount Burgess has adduced evidence of the lodgement and publication of the relevant appendix 3B announcements to the ASX. These announcements state that any on-sale of the securities would comply with the secondary sale provisions in the Act by virtue of the publication of a cleansing notice. There is no evidence before the court which suggests that any of the people who were issued the shares or who have on-sold any shares were aware of the contraventions by Mount Burgess, or that the shares were subject to any restrictions imposed by the Act. I infer and find that the sellers of the relevant shares acted honestly in selling the shares without making the relevant disclosures.
I also accept that in relation to these people, there is no substantial injustice that has been or is likely to be caused by the making of the orders sought.
On this basis, I consider it is appropriate to make the orders sought under s 1322(4)(c).
What is the appropriate costs order?
Given the numerous instances of non-compliance with their regulatory obligations, counsel for Mount Burgess specifically addressed the appropriate order as to costs in their written outline of submissions. In their submission, notwithstanding the number of instances of non-compliance, the appropriate order was that there be no order as to costs.
I am satisfied that in the circumstances of this case, the application has been brought in the interests of the company and its shareholders. After being made aware of the issue, Mrs Forrester has undertaken a detailed investigation and provided a detailed affidavit, which sets out her recollections of the matters.
None of the circumstances which arose in the matter of Re Sprintex Limited (No 2)[15] arose in this matter. On this basis, I accept that the appropriate order is for the usual order as to costs to be made, namely that there be no order as to costs.
[15] Re Sprintex Limited (No 2) [2025] WASC 15.
Conclusion and orders
Finally, and in conclusion, despite the large number of instances where shares were issued without a valid cleansing notice, Mount Burgess has provided a frank explanation as to the circumstances surrounding these issues. On the basis of the evidence before me, I am satisfied the failures have been caused by inadvertence rather than a deliberate disregard of the company's obligations.
For these reasons, I consider it is appropriate to make the orders sought by Mount Burgess in its minute of proposed orders, subject to the amendment to O 8 referred to above.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KC
Associate to the Honourable Justice Hill
10 JUNE 2025
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