Re Sportshero Ltd - [2021] WASC 108

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE SPORTSHERO LTD; EX PARTE SPORTSHERO LTD [2021] WASC 108
CORAM:   HILL J
HEARD:   10 MARCH 2021
DELIVERED          :   10 MARCH 2021
PUBLISHED           :   14 APRIL 2021
FILE NO/S:   COR 40 of 2021
MATTER:   IN THE MATTER OF SPORTSHERO LTD

EX PARTE
SPORTSHERO LTD
Plaintiff

Catchwords:

Corporations law - Securities - Application for extension of time to lodge cleansing notice – Application for orders that shares issued without a valid cleansing notice or prospectus are not invalid - One 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 - Application granted

Legislation:

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

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff

Mr N J Wallwork

Solicitors:

Plaintiff

Steinepreis Paganin

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

Blaze Asset Pty Ltd v Target Energy Ltd [2009] FCA 698; (2009) 177 FCR 488
Re Austpac Resources NL [2010] NSWSC 1438
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 ICandy Interactive Ltd [2018] FCA 533; (2018) 125 ACSR 369
Re Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390
Re Poseidon Nickel Ltd [2018] FCA 1063; (2018) 129 ACSR 57
Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418
Weinstock v Beck (2013) 251 CLR 396
Whitehawk Limited [2020] WASC 388

HILL J:

On 9 March 2021, the plaintiff, Sportshero Limited (Sportshero), filed an originating process seeking orders under s 1322(4)(a) and s 1322(4)(d) of the Corporations Act 2001 (Cth) (Act) relating to contraventions of s 707(3) and s 727(1) of the Act. The contraventions occurred as a result of a share issue on 22 January 2021 without a valid cleansing notice or cleansing prospectus being lodged.
Sportshero has provided a frank and detailed explanation as to the circumstances surrounding the share issue. On the basis of the evidence before me, I was and am satisfied that the failure was caused by inadvertence rather than any deliberate disregard of Sportshero's obligations.
In light of the urgency with which the application was brought, I made orders at the conclusion of the hearing on 10 March 2021 granting the relief sought and said that I would subsequently publish reasons for my decision. These are the reasons for my decision.

Part 6D.2 Corporations Act

Part 6D.2 of the Act imposes disclosure obligations 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 or a prospectus.[1] If disclosure has not been made by the issuer and the shares are on‑sold within…

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 Sportshero Ltd

Details

AGLC: Re Sportshero Ltd [2021] WASC 108
Case: [2021] WASC 108
Decision Date: 14 APRIL 2021

CaseChat Overview and Summary

The case involved Sportshero Ltd and its application for an extension of time to lodge a cleansing notice and subsequent orders regarding the validity of shares issued without a valid cleansing notice. The matter was heard in the Federal Court of Australia. The primary issue was whether the court should grant the company an extension of time to lodge a cleansing notice and declare the shares issued without a valid cleansing notice or prospectus as not being invalid. The court was also required to determine whether the failure to lodge a valid cleansing notice amounted to a blatant or flagrant disregard of statutory obligations and whether making the orders sought by the company would cause substantial injustice to any party.

The court considered the circumstances surrounding the failure to lodge a valid cleansing notice and noted that while there was a breach of statutory obligations, it was not blatant or flagrant. The court also found that there was no evidence of substantial injustice to any party if the orders were made. The court emphasised the importance of ensuring compliance with statutory obligations but balanced this against the potential impact on the company and its shareholders. Based on these findings, the court granted the application for an extension of time to lodge a cleansing notice and made orders that the shares issued without a valid cleansing notice or prospectus were not invalid. This decision allowed the company to proceed with its business operations without the shadow of invalidity hanging over the issued shares.

Orders