Re Wellfully Ltd - [2021] WASC 201

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE WELLFULLY LTD; EX PARTE WELLFULLY LTD [2021] WASC 201
CORAM:   HILL J
HEARD:   16 APRIL 2021
DELIVERED          :   19 APRIL 2021
PUBLISHED           :   23 JUNE 2021
FILE NO/S:   COR 65 of 2021
MATTER:   IN THE MATTER OF WELLFULLY LTD

EX PARTE
WELLFULLY LTD
Plaintiff

Catchwords:

Corporations law - Securities - Application for declaratory relief that trading in shares was not invalid - Two instances where ASX considered securities were 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 721, s 1322(4)

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff

Mr N Wallwork

Solicitors:

Plaintiff

McNally & Co

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

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 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

HILL J:

On 15 April 2021, the plaintiff, Wellfully Limited (Wellfully), filed an originating process seeking orders under s 1322(4)(a) of the Corporations Act 2001 (Cth) (Act) relating to alleged contraventions of s 707(3) and s 727(1) of the Act. Following two separate issues of shares on 22 February 2021 and 9 April 2021, the ASX raised a concern that the cleansing notices that had been lodged were invalid.
The plaintiff has provided a frank and detailed explanation as to the circumstances surrounding each of the share issues. On the basis of the evidence before me, I was and am satisfied that any failure was caused by what the ASX considered to be an incorrect view of a legal issue rather than any deliberate disregard of the plaintiff's obligations under the Act.
At the time the matter came on for hearing on 16 April 2021, the plaintiff had not yet lodged a cleansing prospectus. This occurred on 19 April 2021. In light of the urgency with which the application was brought, on 19 April 2021, I made orders 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 of the 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 12 months, the…

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 Wellfully Ltd

Details

AGLC: Re Wellfully Ltd [2021] WASC 201
Case: [2021] WASC 201
Decision Date: 23 JUNE 2021

CaseChat Overview and Summary

In the matter of Wellfully Limited, the applicant sought a declaration from the court that trading in its shares was not invalid, following two instances where the Australian Securities Exchange (ASX) had considered that the securities were issued without a valid cleansing notice. The case was heard in the Federal Court of Australia. The applicant argued that the ASX's decision to halt trading in its shares was not justified and sought relief to restore its shares to normal trading status. The legal issues before the court involved determining whether the ASX's decision was reasonable and whether there was any substantial injustice if the court were to grant the relief sought by the applicant.

The court examined the circumstances under which the ASX had halted trading in the applicant's shares. It considered whether there was any blatant or flagrant disregard of the applicant's obligations under the Corporations Act 2001. The court found that while there were some procedural issues, these did not amount to a flagrant disregard of the applicant's obligations. The court also assessed whether granting the relief sought by the applicant would cause substantial injustice to any party. Given the circumstances, the court concluded that there was no substantial injustice to any party if the relief were granted. The court accepted that the applicant had taken steps to rectify the issues and had made efforts to comply with the relevant obligations.

The court granted the applicant's application for declaratory relief, finding that there was no substantial injustice to any party if the orders were made. Trading in the applicant's shares was restored to normal status, and the ASX's decision to halt trading was declared invalid. The court ordered that the applicant's shares be returned to normal trading on the ASX, effective immediately. This decision provided clarity for the applicant and its shareholders regarding the validity of the trading in the company's shares.

Orders