Re RCR Tomlinson Ltd

Case [2009] FCA 1130

FEDERAL COURT OF AUSTRALIA

RCR Tomlinson Ltd (ACN 008 898 486); In the matter of RCR Tomlinson Ltd (ACN 008 898 486) [2009] FCA 1130

CORPORATIONS LAW – application for order under s 1322(4)(a) and (d) of the Corporations Act 2001 (Cth) extending the time for the company to give notice of share placement in accordance with s 708A(5) and (6) – whether failure to issue notice due to inadvertence – whether substantial injustice to any party

Corporations Act 2001 (Cth) ss 111AS, 111AT, 340, 341, 674, 708A(5), 708A(5)(e), 708A(6), 708A(7), 1322(4)(a), 1322(4)(d), 1322(6)(a), 1322(6)(c)

Blaze Asset Pty Limited v Target Energy Ltd [2009] FCA 698
In the Matter of Chameleon Mining NL [2009] NSWSC 660
Charter Hall Limited, in the matter of Charter Hall Limited [2007] FCA 1316 [2007] FCA 1316
Diversified, in the matter of Diversified United Investment Limited ACN 006 713 177 [2008] FCA 720

IN THE MATTER OF RCR TOMLINSON LTD ACN 008 898 486

RCR TOMLINSON LTD ACN 008 898 486

WAD 162 of 2009

MCKERRACHER J
6 OCTOBER 2009
PERTH


IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

WAD 162 of 2009

IN THE MATTER OF RCR TOMLINSON LTD ACN 008 898 486

BETWEEN:

RCR TOMLINSON LTD
ACN 008 898 486
Plaintiff
AND:

JUDGE:

MCKERRACHER J

DATE OF ORDER:

29 SEPTEMBER 2009

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.In respect of the 4,270,644 shares in the Plaintiff issued on 10 July 2009 (the relevant securities), the period of 5 business days referred to in s 708A(6)(a) of the Corporations Act 2001 be extended to the second business day after the day on which these orders are entered.

2.The notice under s 708A(5)(e) of the Corporations Act 2001 given to ASX Limited in respect of the relevant securities within the period provided for in order 1 be deemed to take effect as if it had been given to ASX Limited on 13 July 2009.

3.These orders be entered forthwith.

4.A sealed copy of these orders be served on ASIC, ASX, and each person named in paragraph 6 of the Affidavit of Phillip Crighton sworn 15 September 2009 within 2 business days of the date of these orders.  A copy of these orders also be placed on the website of the Plaintiff as soon as practicable and remain there for at least 28 days.

5.Any interested party have liberty to apply within 28 days of the entry of these orders to revoke or vary the orders.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


The text of entered orders can be located using eSearch on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

WAD 162 of 2009

IN THE MATTER OF RCR TOMLINSON LTD ACN 008 898 486

BETWEEN:

RCR TOMLINSON LTD
ACN 008 898 486
Plaintiff
AND:

JUDGE:

MCKERRACHER J

DATE:

6 OCTOBER 2009

PLACE:

PERTH

REASONS FOR JUDGMENT

  1. The plaintiff (RCR) is…

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AGLC
Re RCR Tomlinson Ltd [2009] FCA 1130
Case
[2009] FCA 1130
Decision Date

CaseChat Overview and Summary

In the matter of RCR Tomlinson Ltd, the plaintiff sought relief under the Corporations Act 2001 (Cth) for an extension of time to provide a Notice under s 708A(6) CA, and for ancillary relief under s 1322(4)(a) CA. RCR, a company listed on the Australian Securities Exchange, had failed to provide the required Notice when issuing shares to the vendors of Eagle Engineering Pty Ltd on 10 July 2009 as part of a share sale agreement executed on 28 April 2007. The failure to provide the Notice in the stipulated timeframe prompted the application to the court for relief under s 1322(4)(a) and (d) CA.

The primary legal issue before the court was whether RCR's failure to issue the Notice within the required period could be rectified under the provisions of the Corporations Act. Specifically, the court had to determine if an extension of time for providing the Notice was permissible and if such an extension could be granted alongside consequential relief under s 1322(4)(a) CA. The court also needed to consider whether the failure to provide the Notice had any substantial impact on the market or shareholders, as this would influence the exercise of its discretion to grant relief.

The court found that RCR's failure to provide the Notice within the required period could indeed be rectified under the provisions of s 1322(4)(a) and (d) CA. The court considered several factors, including the absence of prejudice to any party as a result of the delay in providing the Notice, the promptness of RCR in making the application, and the reasonableness of the delay. The court concluded that the failure to provide the Notice did not substantially prejudice any party and that there was a sufficient basis for granting the extension. Accordingly, the court extended the time for providing the Notice and deemed the notice given to ASX Limited to be effective as of 13 July 2009. Additionally, the court granted ancillary orders to ensure proper disclosure and transparency, including the requirement for a sealed copy of the orders to be served on ASIC, ASX, and relevant parties, and for a copy of the orders to be placed on the plaintiff's website.

The court ordered that the period for providing the Notice be extended to the second business day after the date of the orders, that the notice given to ASX Limited be deemed effective as of 13 July 2009, and that the orders be entered forthwith. Furthermore, the court mandated that a sealed copy of the orders be served on ASIC, ASX, and named individuals within two business days, and that a copy be placed on the plaintiff's website and remain there for at least 28 days. Any interested party was granted liberty to apply to revoke or vary the orders within 28 days of the entry of these orders.

Orders

Orders of the court

1. In respect of the 4,270,644 shares in the Plaintiff issued on 10 July 2009 (the relevant securities), the period of 5 business days referred to in s 708A(6)(a) of the Corporations Act 2001 be extended to the second business day after the day on which these orders are entered.

2. The notice under s 708A(5)(e) of the Corporations Act 2001 given to ASX Limited in respect of the relevant securities within the period provided for in order 1 be deemed to take effect as if it had been given to ASX Limited on 13 July 2009.

3. These orders be entered forthwith.

4. A sealed copy of these orders be served on ASIC, ASX, and each person named in paragraph 6 of the Affidavit of Phillip Crighton sworn 15 September 2009 within 2 business days of the date of these orders. A copy of these orders also be placed on the website of the Plaintiff as soon as practicable and remain there for at least 28 days.

5. Any interested party have liberty to apply within 28 days of the entry of these orders to revoke or vary the orders.

Note:

Background

Background to the litigation

The plaintiff (RCR) is listed on the Australian Securities Exchange (ASX). It applies under s 1322(4)(d) of the Corporations Act 2001 (Cth) (CA) for an order extending the time to give a Notice required under s 708A(6) CA (the Notice) and for consequential ancillary relief under s 1322(4)(a) CA. BACKGROUND On 28 April 2007 a share sale agreement was entered into between RCR and the vendors of Eagle Engineering Pty Ltd (Eagle) (the Placees). Under that agreement (the Acquisition Agreement) RCR acquired all the shareholding in Eagle. The purchase consideration for the Acquisition Agreement was a maximum sum of $21 million to be satisfied by the payment of $15 million in cash on settlement under the Acquisition Agreement. The balance was to be paid over a two year term by way of two annual payments to a maximum of $6 million satisfied through the issue of shares in RCR or cash at the option of RCR. Settlement occurred on 30 April 2007. On 10 July 2009, RCR issued 4,270,644 fully paid ordinary shares with a deemed issue price of 59.6 cents per share to the Placees in satisfaction of part of the purchase price for Eagle pursuant to the Acquisition Agreement. RCR lodged an announcement on 10 July 2009 with ASX in respect of the issue of those shares. In issuing the shares to the Placees under the Acquisition Agreement, it failed to give the Notice (a form of disclosure document) which is required pursuant to provisions of s 708 CA. Irregularities of the nature falling for consideration in this application, may be cured under the following provisions of the CA. Section 1322(4)(a) and s 1322(4)(d) CA respectively provide:1322 Irregularities(4)Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:(a)an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;…(d)an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;and may make such consequential or ancillary orders as the Court thinks fit.NOTICE PROVISIONS – THE STATUTORY FRAMEWORK Chapter 6 CA deals with takeovers. The purpose of the Chapter is to ensure that the acquisition of control of shares in the circumstances of takeovers, takes place in an efficient, competitive and informed market. The provisions aim to achieve reasonable and equal opportunities on the part of shareholders within a relevant class to participate in any benefits accruing to holders through any proposals for which a person would acquire a substantial interests in a company, body or scheme. Appropriate procedures are to be followed.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

MCKERRACHER J

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Ratio Decidendi

Legal Principle Established

Established by: MCKERRACHER J

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