Resource Capital Ltd v Giovinazzo

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2022 03209

IN THE MATTER of GOLDEN PLAINS RESOURCES PTY LTD (ACN 636 974 108)

BETWEEN:

RESOURCE CAPITAL LIMITED	Plaintiff
And
MICHAEL JAMES GIOVINAZZO (and others according to the Schedule attached)	Defendants

-and-

MICHAEL JAMES GIOVINAZZO (and another according to the Schedule attached)	Plaintiffs by Counterclaim
And
ANTON BYRON BILLIS (and others according to the Schedule attached)	Defendants by Counterclaim

---

JUDGE:	M Osborne J
WHERE HELD:	Melbourne
DATE OF HEARING:	6-8, 13-15 May 2024, 17 June 2024
DATE OF JUDGMENT:	6 September 2024
CASE MAY BE CITED AS:	Resource Capital Ltd v Giovinazzo
MEDIUM NEUTRAL CITATION:	[2024] VSC 548

---

CORPORATIONS – Oppression proceeding – Whether affairs of company have been conducted in an oppressive manner – Whether appointment as director valid – Whether issuing of shares in company permitted by company’s constitution – Whether stock option and loan agreements entered into are binding on company – Whether shares held on trust by a person not validly appointed as a director of the company - Corporations Act 2001 (Cth) ss 232(e), 233(1).

PRACTICE AND PROCEDURE – Applications for leave to call further evidence – Witnesses and documentary evidence – Inadequate discovery – Waiving privilege - Application refused for one witness and leave granted for another.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff & First and Second Defendants by Counterclaim	D McAloon	HWL Ebsworth Lawyers
For the First Defendant and Plaintiffs by Counterclaim	B Gibson with D Porteous	Tisher Liner FC Law

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Witnesses............................................................................................................................................. 7

The evidence in detail....................................................................................................................... 7

The $14,600 loan............................................................................................................................ 7
Incorporation of GPR.................................................................................................................... 8
The Rimfire opportunity.............................................................................................................. 8
The Deposit and the acquisition of the 75,000,000 Rimfire shares....................................... 10
The $20,000 loan.......................................................................................................................... 12
The acquisition of 10 million Rimfire shares........................................................................... 12
The $580,000 payment................................................................................................................ 13
Communications with Rimfire.................................................................................................. 22
January 2021 cash call................................................................................................................. 25
The transfer of shares to TLH.................................................................................................... 26
The Avondale agreement........................................................................................................... 26
April 2021 cash call..................................................................................................................... 27
May 2021 cash call....................................................................................................................... 27
GPR buys more shares in Rimfire and the $100,000 cash call.............................................. 28
Ms Pendergast’s resignation...................................................................................................... 29
19 July 2021 cash call................................................................................................................... 32
Davenport Taylor appointed as accountants.......................................................................... 33
Employee Stock Option Agreement......................................................................................... 34
August and December 2021 cash calls..................................................................................... 35
Apple iSports............................................................................................................................... 36
March 2022 cash call................................................................................................................... 37
GPR’s financial statements for 30 June 2021........................................................................... 37
The involvement of CX Law...................................................................................................... 38
The company search of GPR..................................................................................................... 46
RCL proposes new directors..................................................................................................... 46
Another Fifield agreement with Rimfire................................................................................. 46
Letter from JWS to Ms Pendergast........................................................................................... 46
The repayment deed signed by Mr Giovinazzo..................................................................... 47
Exercise of the rights under the Employee Stock Option Agreement................................. 49
The circulating resolutions........................................................................................................ 49
Letter from JWS to Davenport Taylor dated 20 July 2022..................................................... 50
The issue of shares to Mr Giovinazzo and TLH on 19 July 2022......................................... 50
Directors meeting of GPR held 28 July 2022........................................................................... 50
Correspondence between JWS and Tisher Liner FC Law..................................................... 51

The Apple iSports and ABA shares.............................................................................................. 57

The Giovinazzo Parties application to call further evidence.................................................. 60

Background.................................................................................................................................. 60
The Supplementary Court Book filed 5 May 2024................................................................. 62
The Giovinazzo Parties give notice of the application to call further evidence................ 64
The fourth supplementary Court Book.................................................................................... 65
Hearing of the application – Mr Christensen.......................................................................... 66
The relevance of the post-contractual evidence..................................................................... 71
Background to the application to call Mr Davenport and rely on the documents contained in the 4SCB..................................................................................................................................... 72
The Giovinazzo Parties give notice of the application to call Mr Davenport.................... 79
Mr Davenport’s evidence and the documentary evidence about the GPR/Omeo Gold Loan Agreements......................................................................................................................... 82

The reliability and credibility of the key witnesses................................................................. 95

Mr Billis........................................................................................................................................ 95
Ms Pendergast............................................................................................................................. 99
Mr Giovinazzo........................................................................................................................... 100
Mr Davenport............................................................................................................................ 102

Key submissions on the critical question as to the terms on which the GPR Shares are held 104

RCL’s submission...................................................................................................................... 104
The Giovinazzo Parties’ submission...................................................................................... 105

Objective evidence......................................................................................................................... 107

Key findings of fact....................................................................................................................... 111

RCL’s oppression claim................................................................................................................ 122

Principles.................................................................................................................................... 123
Relief sought by RCL................................................................................................................ 127
Mr Giovinazzo’s status as director......................................................................................... 127
The Purported 19 July Share Issue.......................................................................................... 132
The GPR/Omeo Gold Loan Agreements.............................................................................. 136

The counterclaim............................................................................................................................ 145

Summary of conclusions.............................................................................................................. 146

HIS HONOUR:

Introduction

Anton Billis is an 80 year old Croatian-born Western Australian gold prospector. He arrived in Perth in the 1980s intending to invest in real estate. He bought a gold mine instead. He is now the chairman of the ASX listed minerals exploration companies Rand Mining Limited and Tribune Resources Limited. He is also the first defendant by counterclaim and sole director and shareholder of the plaintiff/second defendant by counterclaim, Resource Capital Limited (‘RCL’), a company incorporated in the Marshall Islands and of Lake Grace Exploration Pty Ltd (‘Lake Grace’), the fourth defendant.[1]
[1]The fourth defendant was not represented in the proceeding and played no active part, but was joined as a defendant for reasons of conformity by order made 27 March 2024 by Justice Connock.

In the late 1980s or early 1990, Mr Billis met the first defendant and first plaintiff by counterclaim, Michael Giovinazzo. The two became close friends. Mr Billis was the best man at Mr Giovinazzo’s wedding. To celebrate that event, Mr Billis gifted Mr Giovinazzo a Nissan Patrol motor vehicle.

In the early 1990s, Mr Billis introduced Mr Giovinazzo to the operator of an old goldmine in Omeo, Victoria (the ‘Mt Wills Goldmine’). The gold mine was purchased by Mr Giovinazzo’s wife, Karen Bidstrup, and Mr Giovinazzo and Ms Bidstrup moved to Victoria in around 2003. Later, ABA Resources Pty Ltd (‘ABA Resources’) acquired a number of mining interests including the Mt Wills Goldmine. In return for putting the deal together, Mr Giovinazzo was employed as ABA Resources’ business development officer. ABA Resources is a wholly owned subsidiary of a cooperative, Australian Business Advancement Cooperative Ltd (‘ABA’) and shares in ABA were issued and registered in Ms Bidstrup’s name.

Mr Giovinazzo is the sole director and shareholder of the second plaintiff by counterclaim, Omeo Gold Pty Ltd (‘Omeo Gold’). Mr Giovinazzo and Omeo Gold are referred to collectively as the Giovinazzo Parties.

Records maintained by the Australian Securities and Investments Commission (‘ASIC’), also show him as the sole director of the third defendant/third defendant by counterclaim, Golden Plains Resources Pty Ltd (‘GPR’), purportedly having been appointed on 30 June 2021. At the time of his appointment, GPR had 1,000 ordinary shares on issue of which 990 were registered in the name of RCL (the ‘GPR Shares’). The remaining 10 shares were registered in the name of the second defendant, Tarina Lee Holdings Pty Ltd (‘TLH’), a company which has now been deregistered. Prior to its deregistration TLH was associated with Tarina Pendergast, a former friend and colleague of Mr Giovinazzo. GPR and TLH were not represented at the trial.

On 19 July 2022, Mr Giovinazzo caused GPR to issue 9,000 new shares at $1 per ordinary share, which were allocated as to 8,910 shares to Mr Giovinazzo and 90 shares to TLH. According to Mr Giovinazzo, the shares were issued following his exercise of options conferred by an employee stock option agreement entered into between GPR and Mr Giovinazzo dated 3 August 2021 (the ‘Employee Stock Option Agreement’).

RCL contends that Mr Giovinazzo has conducted the affairs of GPR in an oppressive manner within the meaning of s 232 of the Corporations Act 2001 (Cth) (the ‘Act’) by:

(a) purporting to appoint himself as a director of GPR on 13 July 2021 with effect from 30 June 2021 in a manner contrary to GPR’s constitution and wrongfully signing a resolution to that effect on behalf of RCL;

(b) purporting to issue the 9,000 shares in GPR of which 8,910 were issued to Mr Giovinazzo (the ‘Purported 19 July Share Issue’) in a manner that was not permitted by GPR’s constitution and the effect of which was to dilute RCL’s then existing shareholding in GPR from 99% of the total issued shares to 9.9%; and

(c) purporting to cause GPR to enter into agreements with:

(i) Mr Giovinazzo in the form of the Employee Stock Option Agreement; and

(ii) Omeo Gold comprising a series of loan agreements pursuant to which GPR is said to have borrowed funds from Omeo Gold (the ‘GPR/Omeo Gold Loan Agreements’) at interest rates ranging from 20% to 21.82% and granting security to Omeo Gold over all of GPR’s present and after acquired property.

GPR is a significant shareholder in the ASX listed exploration company Rimfire Pacific Mining NL (‘Rimfire’) which has projects situated in or around Fifield, Broken Hill and Avondale in New South Wales.

In addition to its shareholding in Rimfire, GPR is also party to agreements with Rimfire relating to Rimfire’s exploration projects. The agreements comprise:

(a) three agreements dated 1 May 2020 relating to Rimfire’s ‘Fifield Project’, being a subscription agreement (‘Fifield Subscription Agreement’), a joint venture agreement (‘Fifield JV Agreement’) and an earn-in agreement (‘Fifield Earn-In Agreement’) (together the ‘Fifield Agreements’); and

(b) an agreement dated 24 June 2021 in the form of an earn-in agreement in respect of a separate project in Avondale (‘Avondale Earn-In Agreement’),

(collectively the ‘Rimfire Agreements’).

At its core, this case concerns a dispute between Mr Billis and Mr Giovinazzo over control of GPR and thus control of GPR’s shareholding in Rimfire and its interest in the Rimfire Agreements.

The question of control depends on whether the GPR Shares are owned absolutely by RCL, or alternatively whether those shares are held by RCL on trust for Mr Giovinazzo. RCL contends that it agreed to fund GPR’s obligations under the Fifield Agreements on the basis that it was issued with a controlling interest in GPR which occurred by way of the issue of the GPR Shares. The Giovinazzo Parties contend that Mr Billis agreed to lend funds to Mr Giovinazzo for Mr Giovinazzo to on-lend to GPR on terms which included security over shares which would be issued to Mr Giovinazzo by GPR. The GPR Shares would be registered in RCL’s name but held on trust for Mr Giovinazzo, and the loans made by Mr Billis to Mr Giovinazzo could be repaid by Mr Giovinazzo at which time the legal interest in the GPR Shares would be transferred to Mr Giovinazzo.

The resolution of these competing characterisations largely dictates the outcome of RCL’s oppression claim and determines the fate of the counterclaim brought by the Giovinazzo Parties where they seek declarations, inter alia, that RCL holds the GPR Shares on trust for Mr Giovinazzo as security for advances provided by RCL to Mr Giovinazzo and that Mr Giovinazzo is entitled to redeem the GPR Shares upon repayment of the advances.

Mr Giovinazzo accepts that if RCL owns the GPR Shares absolutely, the Purported 19 July Share Issue cannot be sustained and GPR will not be bound by the terms of the Employee Stock Option Agreement.

Ancillary aspects of the relief that RCL seeks, such as orders to the effect that the affairs of GPR should be conducted on the basis that Mr Giovinazzo does not hold office as a director or secretary and that two other nominees of RCL, Oliver Douglas and Roland Berzins, are directors of GPR and that the benefits of the GPR/Omeo Gold Loan Agreements must be the subject of an order for an account, raise additional issues. However, the question of the beneficial ownership of the GPR Shares remains the central issue. The resolution of this controversy turns on findings of fact to be made in light of the oral evidence given at trial by Mr Billis, Mr Giovinazzo and Ms Pendergast and, to a lesser extent Richard Davenport, a principal of the firm Davenport Taylor Accountants, GPR’s accountant since about mid-2021, and the documentary evidence tendered at trial.

Although the question of whether RCL holds the GPR Shares absolutely or on trust for Omeo Gold is hotly disputed, it is common ground that in the period from 21 September 2020 to 23 May 2022 funds totalling $3,815,000 were transferred from either RCL or Lake Grace (on RCL’s case as agent for RCL) either directly to Rimfire for GPR’s benefit or to GPR for onforwarding to Rimfire so as to facilitate performance of GPR’s obligations under the Rimfire Agreements.

The $3,815,000 was paid as follows:

(a) 24 September 2020 - $580,000 paid by RCL to Rimfire;

(b) 6 November 2020 - $300,000 paid by Lake Grace to Rimfire;

(c) 25 January 2021 - $300,000 paid by Lake Grace to Rimfire;

(d) 29 April 2021 - $300,000 paid by Lake Grace to Rimfire;

(e) 10 May 2021 - $330,000 paid by RCL to Rimfire;

(f) 21 June 2021 - $100,000 paid by Lake Grace to GPR;

(g) 21 July 2021 - $175,000 paid by Lake Grace to GPR;

(h) 25 August 2021 - $300,000 paid by Lake Grace to Rimfire;

(i) 8 February 2022 - $250,000 paid by Lake Grace to GPR;

(j) 8 February 2022 - $300,000 paid by Lake Grace to Rimfire;

(k) 7 April 2022 - $630,000 paid by Lake Grace to Rimfire;

(l) 31 May 2022 - $250,000 paid by Lake Grace to GPR.

It is also common ground that Lake Grace lent Mr Giovinazzo $14,600 in September 2019 and $20,000 in June 2020 for purposes unrelated to GPR.

It is also common ground that on 19 May 2020, Lake Grace funded the acquisition by GPR of 75,000,000 shares in Rimfire acquired for $240,000 and that Lake Grace funded the acquisition by GPR of a further 10,000,000 shares on 5 August 2020 acquired for $50,385.

GPR’s annual financial statements show that as at 30 June 2020, Mr Giovinazzo and Omeo Gold had advanced $106,745 (being loans by Mr Giovinazzo in the amount of $42,745 and Omeo Gold of $64,000) to GPR and that as at 30 June 2021, the loans made by Mr Giovinazzo and Omeo Gold had increased by $148,858 to $255,603 (comprising loans by Mr Giovinazzo in the amount of $138,403 and Omeo Gold of $117,200).

Both parties submitted that the appropriate approach to determining the factual controversy is to place primary reliance on the objective factual surrounding material and the inherent commercial probabilities, together with the documentation tendered in evidence, and make inferences drawn from the documentary evidence and known or probable facts.[2]
[2]3 Apples Childcare Centre Pty Ltd v MMC Pacific International Pty Ltd [2023] VSC 21, [144], approving Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599; Gestmin SGPS SA v Credit Suisse (UK) Ltd (2013) EWHC 3560.

This approach also finds support from the judgment of Lord Goff in Grace Shipping Inc v C F Sharp & Co (Malaya) Pte Ltd[3] where in delivering the judgment of the Privy Council, his Lordship endorsed an earlier passage from the House of Lords in Armagas Ltd v Mundogas SA (The Ocean Frost)[4] where the following was stated:
Speaking from my own experience, I found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witness’s motives and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth.[5]
That observation is, in their Lordships’ opinion, equally apposite in a case where the evidence of the witnesses is likely to be unreliable; and it is to be remembered that in commercial cases, such as the present, there is usually a substantial body of contemporary documentary evidence.[6]
[3](1987) 1 Lloyd’s Rep 207 (‘Grace Shipping’).
[4][1985] 1 Lloyd’s Rep 1 (‘Armagas’).
[5]Grace Shipping (n 3) 215-216, quoting Armagas (n 4) 57.
[6]Grace Shipping (n 3) 216.

Both parties sought to rely upon and tendered a significant body of documentary evidence, arguing that the documentary evidence was supportive of the oral accounts given by their respective principal witnesses.

Accordingly, it is helpful to set out the documentary and oral evidence, in largely chronological order, and in the context of the parties’ pleaded allegations before undertaking the necessary fact-finding.

Witnesses

Mr Billis gave evidence on behalf of RCL, along with Ms Pendergast who was subpoenaed to give evidence. Mr Giovinazzo, and Mr Davenport gave evidence on behalf of the Giovinazzo Parties.

In the section that follows, reference is also made to the amended statement of claim dated 20 February 2023 (the ‘ASOC’), the amended defence to the ASOC and counterclaim dated 7 March 2023 (the ‘Defence and Counterclaim’) and the reply and defence to counterclaim (the ‘Reply’) dated 14 December 2022.

The evidence in detail
The $14,600 loan

At some stage in September 2019, certainly prior to 11 September 2019, Mr Giovinazzo asked Mr Billis if he could borrow some money to pay some legal bills in the United States. According to Mr Giovinazzo, the legal bills were in connection with Apple iSports, Inc (‘Apple iSports’).

On 11 September 2019, Mr Giovinazzo emailed Mr Billis thanking him for his help and saying that he would ‘send (a) copy of transfers when done and (a) copy of share certificates when I receive them’. Mr Giovinazzo provided bank account details for Omeo Gold.

The next day, Mr Billis arranged for funds to be transferred from Lake Grace to Omeo Gold in the amount of $14,600.

There was no substantial difference in the oral evidence of Mr Billis and Mr Giovinazzo in relation to this transaction.

Incorporation of GPR

GPR was incorporated on 22 October 2019. Its 10 issued shares were held by Mr Giovinazzo and Ms Pendergast each of whom held 5 shares. According to Mr Giovinazzo, the decision to set up GPR was a joint one between himself and Ms Pendergast and the two of them discussed that Ms Pendergast was to be the managing director and Mr Giovinazzo was to be the chief executive officer, and that Mr Giovinazzo would fund the company in its entirety, which included Ms Pendergast’s wages and all of the other company expenses. GPR was set up to look for investment or joint venture opportunities. Mr Giovinazzo explained that he had left ABA Resources in March 2019 and Ms Pendergast had left in November 2019 but their discussions as to the setting up a company together took place in July 2019.

Mr Giovinazzo said that from the time GPR was established he spent at least five to six days a week working in the company whilst Ms Pendergast spent about three and a half days per week working for the company.

According to Ms Pendergast, it was Mr Giovinazzo’s decision to start a new company and he asked that she be the director because he was unable to act as a director as he had been in jail. She said that her role in GPR was to do what ‘[Mr Giovinazzo] asked her to do’.

In cross-examination, Ms Pendergast confirmed that Mr Giovinazzo had offered her a job at ABA Resources in about 2018 and that whilst working for ABA Resources she performed administrative work and looked after accounts receivable before becoming Mr Giovinazzo’s executive assistant.

The Rimfire opportunity

In late 2019, Gerry Connelly, a sharebroker, contacted Mr Giovinazzo and said that he had been approached by Craig Riley, Rimfire’s chief executive officer. Rimfire needed capital and was also interested in joint ventures. Mr Giovinazzo said that he contacted Mr Riley in early January 2020. He and Ms Pendergast had numerous meetings with Mr Riley in Wodonga culminating in an agreement to enter into an earn-in agreement and then subsequently a joint venture relating to the Fifield site. Mr Giovinazzo said entry into the Fifield Agreements was dependent on GPR acquiring 75 million shares in Rimfire for $240,000.[7]
[7]This equates to 0.32 cents per share.

The arrangements referred to by Mr Giovinazzo with Rimfire were subsequently documented in the Fifield Agreements which as set out above included:

(a) the Fifield Subscription Agreement by which GPR must subscribe for 75 million fully paid ordinary shares in the capital of Rimfire for $240,000 and Rimfire must issue the shares to GPR free from any encumbrances;

(b) the Fifield Earn-In Agreement by which, in return for the provision of funding, GPR would acquire an interest of 50.1% in a mining plant, land and mining permits, land access agreements, information, records and the like comprising the Fifield Project; and

(c) the Fifield JV Agreement by which GPR and Rimfire agreed to form an unincorporated joint venture and agreed to explore, evaluate and ultimately operate mines and other facilities and equipment at the Fifield Project area together once the commitments under the Fifield Earn-In Agreement had been met.

The Fifield Earn-In Agreement contained conditions precedent which relevantly included GPR or an affiliate of GPR subscribing for:

(a) $240,000 worth of fully paid ordinary shares in the capital of Rimfire;[8]

(b) GPR paying Rimfire a non-refundable deposit in cash in the amount of $66,000 (the ‘Deposit’).[9]

[8]Fifield Earn-In Agreement cl 2.1(a).

[9]Fifield Earn-In Agreement cl 2.1(c).

The Fifield Earn-In Agreement specified the earn-in requirements that needed to be satisfied before the earn-in interest vested in GPR. The requirements comprised, inter alia, payment of an administration fee of $300,000 per annum for three years (in respect of which the Deposit would be credited against the first year administration fee).[10] In addition to the payment of the administration fee GPR was required to pay for exploration expenditure of $3,600,000 at a provisional rate of $1,200,000 per contract year.
[10]Clause 3.6(c) of the Fifield Earn-In Agreement incorrectly lists the amount payable following the Deposit as $264,000. This is an error and the amount payable following the Deposit should read $234,000.

The Deposit and the acquisition of the 75,000,000 Rimfire shares

Omeo Gold deposited $66,000 into GPR’s bank account between 30 April 2020 and 4 May 2020 which enabled GPR to pay the Deposit to Rimfire.

On 19 May 2020, Mr Giovinazzo emailed Mr Billis providing Rimfire’s bank account details. The covering email attached an off-market share transfer dated 15 May 2020 which provided for the transfer by GPR of 75 million ordinary fully paid shares in Rimfire. The consideration for the transfer was not specified. Nor was the name of the transferee. Mr Giovinazzo’s email advised that Mr Giovinazzo would express post the original of the share transfer to Mr Billis that day and asked that Mr Billis provide his postal details by email. The email further advised that Mr Giovinazzo would repay $250,000 by 29 May 2020 to Mr Billis’ nominated account and if the money had not been received by then, Mr Billis needed to transfer the shares to ‘your entity’ by lodging the off-market transfer with Gerry (Mr Connelly) who was aware of the transaction as he was Rimfire’s broker. Mr Giovinazzo’s email concluded by saying that Tarina (Ms Pendergast) and Mr Giovinazzo greatly appreciated Mr Billis’ help.

On 19 May 2020, $240,000 was transferred from a bank account in the name of Lake Grace to a bank account in Rimfire’s name. WhatsApp messages passing between Mr Giovinazzo and Mr Billis on 19 May 2020 convey Mr Billis telling Mr Giovinazzo that the money was in the account. This followed a message in the form of a photo sent by Mr Giovinazzo of an express post bag confirming that the share transfer had been posted to Lake Grace care of Mr Billis.

Whilst there is a degree of consistency between the accounts of Mr Billis and Mr Giovinazzo as to the discussions which preceded this transfer, there is some difference at the margin. According to Mr Billis, he knew little about Rimfire at this stage but had been approached by Mr Giovinazzo who said he had been offered a shareholding in Rimfire at a discounted price as Rimfire had little capital. Mr Giovinazzo asked Mr Billis if he could pay for it and in return signed share transfer forms would be held by Mr Connelly, and if the $240,000 had not been repaid by Mr Giovinazzo to Mr Billis by 29 May 2020, Mr Billis could contact Mr Connelly and take the signed transfer forms (in effect procuring the registration of the Rimfire shares in the name of an entity controlled by him).

According to Mr Giovinazzo, he and Mr Billis had first spoken about GPR’s interest in the joint venture agreement in respect of the Fifield land in March 2020. On Mr Giovinazzo’s account, Mr Billis asked Mr Giovinazzo how he intended to fund the joint venture, to which Mr Giovinazzo replied by telling Mr Billis that he owned various shares in ABA and Apple iSports that he was hoping to sell and that after the first year he would otherwise sell down his interest in GPR, which he described as a ‘normal way of doing things in the mining industry’. Mr Giovinazzo said that Mr Billis told him that the Apple iSports shares would be more valuable, he should hold on to them and that Mr Billis had surplus cash and was prepared to assist Mr Giovinazzo. Mr Billis denied this.

Subsequently, according to Mr Giovinazzo, in May 2020, following the signing of the Fifield Agreements and the announcement of the joint venture to the market, Mr Billis contacted Mr Giovinazzo enquiring as to how he would meet the joint venture commitments. Mr Giovinazzo said that he was looking to sell his ABA shares for $250,000 by the end of the month to which Mr Billis replied by saying that Mr Giovinazzo would need the money before then and that he was prepared to loan the funds to Mr Giovinazzo as long as Mr Billis held security. Mr Billis said he wanted an off-market transfer signed by GPR for the 75 million shares which he would hold. Mr Giovinazzo said that was fine.

It is common ground that Mr Giovinazzo has not repaid the $240,000,[11] nor has Mr Billis exercised any security rights by lodging the blank transfer forms providing for the transfer of the shares registered in GPR’s name into a name of any other entity. It is also common ground that no demand for repayment of the loan has occurred.
[11]For clarity, Mr Giovinazzo said in oral evidence that he wanted to sell his ABA shares for $250,000 to repay Mr Billis however in documentary evidence the amount paid by Mr Billis for the Rimfire subscription was $240,000. The most probable inference is that the additional $10,000 represents interest on the $240,000.

The $20,000 loan

On 26 June 2020, Lake Grace transferred $20,000 into Omeo Gold’s bank account. Omeo Gold’s bank account details had been provided by Mr Giovinazzo to Mr Billis via a WhatsApp message. Once again, there is a degree of consistency about the respective accounts of Mr Billis and Mr Giovinazzo which preceded this transfer. In cross-examination, Mr Billis said that Mr Giovinazzo called him and asked for money and he gave it to him. Mr Billis could not remember what the money was to be used for. He said that Mr Giovinazzo originally asked for $16,000-$17,000 but the parties rounded up the amount to $20,000 to adjust for the payment of the 990 shares in GPR which were later registered in RCL’s name. Mr Giovinazzo’s account was largely to the same effect, save that he made no mention of the discussion about the rounding up to $20,000 which is implicitly denied by Mr Giovinazzo given his account of the conversations concerning that matter. In any event, Mr Giovinazzo accepted that he called Mr Billis because he was short of funds and Mr Billis said he would lend him the money. Mr Giovinazzo could not recall the exact purpose of the funds but thought it had something to do with Apple iSports.

The acquisition of 10 million Rimfire shares

On 5 August 2020, Lake Grace transferred $50,385 to the account of the sharebroker, Morrison Securities.

It is common ground that this related to the acquisition by GPR of a further 10 million shares in Rimfire at a price of 0.5 cents per share.[12] As was the case with the subscription for the original 75 million shares, the funding by Lake Grace of this acquisition by GPR of Rimfire shares was supported by security in the form of an executed transfer, completed by Ms Pendergast on behalf of GPR, which nominated GPR as the transferor with respect to 10 million shares in Rimfire. The consideration was specified as $50,385 although the transferee’s details were left blank.
[12]Which represented an increase of 0.18 cents on the initial subscription rate of 0.32 cents per share.

In cross-examination, Mr Billis said that he advanced $50,385 to fund another 10 million shares in Rimfire for GPR and that he presumed that Lake Grace transferred the funds to Morrison Securities who was the broker for GPR and that the advance was secured in the same way as the other advances. Mr Billis said he had ‘never seen the blank transfer form proffered as security where we understood that its purpose was to act as security’.

Again, Mr Giovinazzo’s account does not differ in any significant respect from Mr Billis’ account, although Mr Giovinazzo provided more detail. According to Mr Giovinazzo, GPR had made a purchase on the market for 10 million shares in Rimfire which GPR was not able to fund. As a result, he called Mr Billis and asked if Mr Billis was prepared to loan the funds to him. According to Mr Giovinazzo, Mr Billis was willing to do so as long as he received security on the same basis as the $240,000 subscription payment which involved the provision of blank transfer forms. Mr Giovinazzo said that he was happy to do this.

The $580,000 payment

It is common ground that on 21 September 2020, Rimfire requested GPR pay $580,000 with respect to the administration and first quarterly annual exploration expenditure payments due under the Fifield Earn-In Agreement which totalled $250,000 and $330,000 respectively.

It is also common ground that on 24 September 2020, RCL transferred $580,000 to Rimfire with the reference ‘JV cash call’.

It is the circumstances which precede this payment which lie at the heart of the critical disputed issue in this proceeding.

According to RCL’s Reply, the payment occurred following a telephone conversation on or around 3 August 2020 between Mr Giovinazzo and Mr Billis to the following effect:[13]
[13]See paragraph [10] of the Reply.

(a) Mr Giovinazzo asked to borrow on behalf of GPR:

(iii) immediately, approximately $50,000 to enable GPR to acquire a further 10 million shares in Rimfire; and

(iv) on an ongoing basis over the following three years, approximately $4 million to enable GPR to make payments to Rimfire under the Rimfire Agreements that GPR had negotiated and agreed with Rimfire;

(b) Mr Billis said, on behalf of RCL, that he would be prepared for RCL to advance (or to direct Lake Grace to advance) these funds to GPR (or to Rimfire directly at the direction of GPR) on condition that RCL owned the majority of the shares in, and had control of, GPR;

(c) Mr Giovinazzo agreed, on behalf of GPR, that in return for RCL agreeing to advance (or to direct Lake Grace to advance) funds to GPR, Mr Giovinazzo would cause 990 new shares in GPR to be issued to RCL at an issue price of $1 per share; and

(d) Mr Giovinazzo and Mr Billis agreed, on behalf of GPR and RCL respectively, that rather than RCL separately transferring $990 to GPR for the issue of the 990 shares, Mr Giovinazzo would transfer $990 to GPR’s bank account and that the amount of $990 would be set-off against the balance owing under the $20,000 loan (that is the balance of the $20,000 loan would reduce to $19,010).

The Giovinazzo Parties’ account as set out in the Defence and Counterclaim is to the following effect:[14]
[14]See paragraph [6A]-[6D] of the Defence and Counterclaim.

(a) on or around 15 September 2020, Mr Billis, RCL, Mr Giovinazzo, Omeo Gold and GPR entered into a loan agreement pursuant to which Mr Billis agreed to lend Mr Giovinazzo funds which were to be on-lent by Mr Giovinazzo to GPR or applied to meet payment obligations of GPR (the ‘Loan Agreement’). The Loan Agreement was constituted by conversations between Mr Billis and Mr Giovinazzo on or around 15 September 2020, and between Mr Giovinazzo and Ms Pendergast (on behalf of GPR) on or around 15 and 16 September 2020;

(b) there were terms of the Loan Agreement that:

(i)Mr Billis agreed to advance funds, on demand, to Mr Giovinazzo or at his direction which funds were to be used by Mr Giovinazzo to meet GPR’s obligations to pay cash calls under the Fifield Earn-In Agreement;
(ii)Mr Giovinazzo agreed to on-lend the advances to GPR, or apply them for GPR’s benefit, for the purpose of meeting GPR’s obligations to pay cash calls under the Fifield Earn-In Agreement;
(iii)in lieu of the payment of interest, in return for the advances of funds by Mr Giovinazzo to GPR, GPR agreed to issue to Mr Giovinazzo or his nominee 990 shares in GPR for the price of $1 per share;
(iv)Mr Giovinazzo agreed to nominate RCL as the holder of the GPR Shares, those shares to be held by RCL on trust for Mr Giovinazzo as security for the advances;
(v)Mr Giovinazzo agreed to cause Omeo Gold to provide further security for the advances by the execution of a transfer form in favour of RCL in respect of 7 million shares in ABA held by Omeo Gold (the ‘Transfer Form’);
(vi)Mr Billis and RCL would have no recourse to the Transfer Form or the GPR Shares including by registering that form or by exercising any of the rights attaching to the GPR Shares, in the absence of any default under the Loan Agreement;

(vii)the advances were repayable by Mr Giovinazzo to Mr Billis on the giving of reasonable notice by Mr Billis;
(viii)upon the repayment of the advances by Mr Giovinazzo to Mr Billis, Mr Billis and RCL were to take all necessary steps to:

A rescind the Transfer Form; and

B cause 990 of the GPR Shares to be transferred to Mr Giovinazzo;

(ix)ensure GPR was liable to repay to Mr Giovinazzo the amounts on-lent by Mr Giovinazzo or applied to GPR’s benefit, on the giving of reasonable notice by Mr Giovinazzo.

(c) on 15 September 2020, Mr Giovinazzo and Mr Billis executed the Transfer Form;

(d) on or around 16 September 2020:

(i)Mr Giovinazzo paid the amount of $990 to GPR;
(ii)GPR issued 990 shares in the name of RCL; and
(iii)Ms Pendergast caused the records of GPR held at ASIC to be updated to reflect the issue of 990 shares to RCL with such shares not being held beneficially by RCL.

Mr Billis’ oral evidence-in-chief about this topic was brief. When he was asked as to why RCL was issued with 990 shares out of the total 1,000 shares on issue, he answered that Mr Giovinazzo ‘came to us and said we can get a joint venture on the ground’ and asked if Mr Billis could assist. He said that Mr Giovinazzo told him that about $4 million over three to four years would have to be spent. Mr Billis said he could (assist) and he was happy to go into the joint venture but had to have control of GPR.

He said that he asked Mr Giovinazzo whether he needed to send him the money for the 990 GPR Shares. Mr Giovinazzo said no, he had enough money in the Omeo Gold account and Omeo Gold also owed Mr Billis money so he would deduct it from the amount owed.

When Mr Billis was asked whether he could recall any discussion about why it was 990 shares out of 1,000 shares as distinct from some other amount, he answered, ‘no, it rounds it up to 1,000 shares in issue in a company’.

According to Mr Giovinazzo, he attended a joint venture meeting in early September 2020 which resulted in two cash calls totalling $580,000. He said that he spoke to Mr Billis during the week of 7 September 2020 and informed him about the cash calls. Mr Billis said, ‘you will obviously be requiring cash’, to which Mr Giovinazzo agreed.

Mr Giovinazzo said that he spoke again with Mr Billis on 14 September 2020 and Mr Giovinazzo told Mr Billis that the cash calls would need to be paid by the end of September. Mr Giovinazzo said he asked Mr Billis if he would be in a position to advance the funds. Mr Billis agreed but said he wanted security. Mr Giovinazzo replied by offering 7 million shares in ABA.

Mr Giovinazzo said he offered to replace the 7 million shares in ABA with shares in Apple iSports because Mr Billis had told him he would prefer the Apple iSports shares but they were yet to be issued. Mr Billis said he would take that security.

Mr Giovinazzo said that later that evening he spoke with Mr Billis again, and Mr Billis now said that he required shares in GPR as security as well. Mr Giovinazzo said that he would issue 90 new shares in Mr Giovinazzo’s name which would result in 100 shares on issue. Mr Billis responded by telling Mr Giovinazzo that he (Mr Giovinazzo) was in a vulnerable position as a shareholder and that he should issue 990 shares to RCL. Mr Giovinazzo said he told Mr Billis that this would only be done if the shares were held on trust for Mr Giovinazzo because it was Mr Giovinazzo’s company and there was a change of control trigger in the Fifield Earn-In Agreement. Mr Giovinazzo said that Mr Billis did not say anything in response.

Mr Billis denied that Mr Giovinazzo ever told him that the shares could not be placed in RCL’s name because of the change of control provision in the Fifield Earn-In Agreement and said that such a change of control provision in such agreements would be ‘very unusual’. Although he further said that he had not seen the Fifield Agreements at that stage because Mr Giovinazzo would not provide him with a copy.

According to Mr Giovinazzo, Mr Billis also said that if the 990 shares were issued, Mr Giovinazzo could sell some of those shares to repay Mr Billis. Mr Giovinazzo said he agreed with that course.

Mr Giovinazzo said he concluded the discussion with Mr Billis by saying that he would organise the issue of shares being held on trust for Mr Giovinazzo, make arrangements to transfer $990 from his personal account to the GPR account to pay for the share issue and provide share transfer forms for the ABA shares.

Mr Giovinazzo said that he went to Ms Pendergast’s house at 1:30pm on 16 September 2020. This was after Mr Giovinazzo had emailed Ms Pendergast at 7:34am on 16 September 2020 in the terms referred to below. Mr Giovinazzo said that when he arrived at Ms Pendergast’s house they worked together to issue the shares and lodge the necessary documents with ASIC. When the documents were being lodged, Mr Giovinazzo said that Ms Pendergast asked him why the shares being issued to RCL were not to be beneficially held by RCL. Mr Giovinazzo said he explained the reasoning to her and she said little in response. Mr Giovinazzo said that he wrote out the share certificate by hand, which Ms Pendergast signed, and then entered it into the GPR share register. Mr Giovinazzo said he does not have a copy of the share certificate or the share register and has not seen the share register since April 2021 as many company records were lost following Ms Pendergast’s resignation on 30 June 2021.

Mr Giovinazzo said that he could not recall any discussion with Mr Billis about any recourse that Mr Billis might have to the shares he was issued in GPR.

In her evidence-in-chief, Ms Pendergast was taken to the email of 16 September 2020 outlined in further detail below. She was then asked by counsel for RCL what she was told about the 990 shares that were issued in September 2020. She said that Mike (Mr Giovinazzo) said he was going to issue shares in GPR to Anton (Mr Billis) and she said that was a good idea. She said that Mr Giovinazzo did not explain why he was going to do it. When she was asked as to whether she had any discussion about any funding that was being provided by any companies associated with Mr Billis to GPR, she said, ‘well, see the thing is, Mike was the one that dealt with Anton, and raised the funds and stuff. I was just – I just did what I was told to do’.

In cross-examination, Ms Pendergast was asked whether she kept an unofficial share register which was described as a document which recorded who held what shares. She answered ‘no, I don’t recall that’. In a different context, she was asked in cross-examination about whether Mr Giovinazzo had said to her that she should set up a trust to hold her five shares in the company for the benefit of her children. She said she tried to get her head around the idea of a trust but ‘even to this day I’ve got no idea’. She knew that the trustee of the trust was TLH but she said, ‘the trustees of the trust, it’s confusing’. When she became aware that Mr Giovinazzo transferred his five shares into the trust as well (which is referred to below), she ‘thought it was a bit weird, but anyway’. In her evidence-in-chief she was also asked about TLH being a shareholder in GPR as at July 2022. She agreed that she knew that, and when she was asked how she understood that, she answered, ‘um, well Mike, um, organised all that so that, that it was a trust or something. I really didn’t understand it at all to be honest because I’m, I’m just a farmer, like country – I’m not corporate like all you guys, so yeah’.

I turn now to the relevant documentary evidence relevant to this factual dispute. On 15 September 2020, funds were debited from an account in Mr Giovinazzo’s name and paid into a GPR bank account in the sum of $990 with the description ‘Resource Capital share payment’.

On 15 September 2020 at 07:28:42 am AWST, Mr Giovinazzo emailed Mr Billis forwarding the payment details. The email read:

Made payments for shares in GPR to be issued to Resource Capital Limited. Today GPR will issue the shares to Resource Capital Limited 990 with 5 shares in my name and 5 shares in Tarina’s name being a total of 1000 shares on issue.

On 15 September 2020 at 3:45:57pm AEST, Mr Giovinazzo emailed Mr Billis forwarding a share transfer form to Mr Billis relating to ABA. The share transfer form related to 7 million shares held by Omeo Gold in ABA. The purchase consideration was $70,000 and the date of purchase was 15 September 2020. The transferee’s name was completed and identified as RCL. The form was signed by Mr Giovinazzo on behalf of Omeo Gold and dated 15 September 2020. Mr Giovinazzo’s email to Mr Billis read:

Could you sign and send back. Was unable to type it but it’s only going to ABA register. I chose $70,000 as transfer figure as you had paid a $50,000 and a $20,000 to [Omeo Gold] account so if anyone queries it is covered Regards Mike

On 16 September 2020 at 7:34:07 am, Mr Giovinazzo emailed Ms Pendergast in the following terms:

Hi Tarina
Details for GPR lodgement
990 new shares to be issued at $1.00 each
In the name of
RESOURCE CAPITAL LIMITED
CARE OF
EQUIOM FIDUCIARY SERVICES PTE.LTD
50 RAFFLES PLACE #15-05/06
Singapore Land Tower
SINGAPORE 048623
We need to issue and lodge the new shares with ASIC update the holder details on ASIC
produce minutes of share issue and issue share certificate. I will help with
this
Regards Mike

An application for shares form was subsequently completed in what appears to be Mr Giovinazzo’s handwriting addressed to the directors of GPR which contains a request that the directors allot RCL 990 fully paid ordinary shares in the company. The document is dated 16 September 2020.

The ASIC records show that a Form 484 was lodged with ASIC on 16 September 2020 at 12:51:20 changing the company details. The Form 484 identifies that the lodgement party was Ms Pendergast and that the form was signed by her. Ms Pendergast certified that the form was true and complete. The Form 484 records the issue of 990 shares increasing the number of ordinary shares to 1,000 and records the details of the new member of the company (RCL). Beneath the section of the Form 484 headed ‘C4 Changes to the register of members’ which identifies the members details, there is a box which comprises nine columns and two rows. Reading left to right, the columns are share class code, shares increased by, shares decreased by, total number now held, total $ paid, total $ unpaid, fully paid, beneficially held and top 20 member. Relevantly, in the second row of the second column from the right which records whether the shares are beneficially held, there is an ‘N’.

Also bearing the date 16 September 2020 is a share certificate which appears to be completed in Mr Giovinazzo’s handwriting which confirms that RCL is the registered holder of the 990 fully paid shares in GPR. The share certificate is signed by Ms Pendergast as the sole director/secretary of GPR.

On 17 September 2020 at 4:44:32pm AEST, Mr Giovinazzo emailed Mr Billis with the subject line ‘Share documents.pdf’. The email read:

Hi Anton
Please find attached copy of [ASIC] lodgement share certificate and share application form. Could you please complete share application and return to me. The share certificate will be replaced in due course with a typed copy.

The enclosures to that email contain an extract from the ASIC registry which shows, among other things, the company share structure comprising ordinary shares of which 1,000 are on issue, with the total amount paid 1,000. Under the subheading ‘members’, it lists the three members, RCL, Mr Giovinazzo and Ms Pendergast, provides their addresses and the total number held, whether they are fully paid or not and whether they are beneficially held. As noted above in the case of RCL, there is an ’N’ in the row underneath showing that RCL does not hold the shares beneficially, in contrast to the shares held by Mr Giovinazzo and Ms Pendergast. The second document enclosed is the handwritten application for shares, whilst the third is the share certificate.

There is an email sent by [email protected] to [email protected] (Mr Billis) at 17:00 which enclosed the application for shares form now signed by Mr Billis as director of RCL.

As part of the same email chain, there is then an email from the [email protected] address to [email protected] sent 17 September 2020 05:20:55pm GST+8 which is then followed by an email from [email protected] to Mr Giovinazzo sent on 17 September 2020 at 7:27:24pm AEST which is then in turn on-forwarded by Mr Giovinazzo to Ms Pendergast the next day at 6:55:09pm.

Communications with Rimfire

On 18 September 2020 at 6:32pm, Ian McCubbin, the chair of Rimfire, sent an email[15] to Mr Billis, copied to the CEO Mr Riley, its chief financial officer, Greg Keane, and Mr Giovinazzo which refers to an earlier email sent by Mr McCubbin to Mr Billis and then ‘confirms that the payment is for $1,080,000 rather than $1,000,000. The additional $80,000 will mean the [sic] all of GPR’S Earn In obligation for the quarter 1work program commitment will have been paid’. The earlier email to which Mr McCubbin refers makes reference to earlier discussions between Mr Billis and Mr McCubbin which confirms Mr McCubbin’s offer of a placement for 500,000 shares in Rimfire at a price of $0.0125 per share. The offer was part of a total proposed placement of 1,500,000 shares at $0.0125 per share and a subsequent share purchase plan of 500,000 at the same price.

On 21 September 2020, Mr Riley emailed Mr Giovinazzo, copied to Mr Keane, confirming that GPR’s total outstanding payment, comprising the admin fee and work program payment, is $580,000 and providing details of same. This is then forwarded on ten or so minutes later by Mr Giovinazzo to Ms Pendergast and Mr Billis. Mr Giovinazzo’s email reads:

Hi Anton
The initial budget I sent through was for $400k has been reduced to $300k and as you can see next call is for 2nd week November.
The payments by GPR are as follows
1^st May. $64,000.00
4^th May $2000.00
26^th June $14,000.00.

On 21 September 2020, Mr Keane emailed Mr Billis, copied to Mr Riley, providing Mr Billis with details of Rimfire’s bank accounts for both share placement funds and the GPR admin fee and first quarter exploration fee. Someone has written in hand ‘500,000’ against the share placement funds and ‘$580,000’ against the GPR admin fee and first quarter exploration fee.

Relevant to the share placement, on 9 October 2020, Mr Riley emailed Mr Giovinazzo, who in turn forwarded the email on to Mr Billis, enclosing details of the top 50 shareholders in Rimfire based on an extract of the Rimfire annual report.

The top 50 shareholders listed second GPR, which held 85,000,000 shares (4.85% of the shares), and third RCL, which held 40,000,000 shares (2.28% of the shares) and the twenty-fourth largest shareholder, Lake Grace, which held 12,500,000 shares (0.71% of the shares). The largest shareholder was Booker Super Services Pty Ltd as trustee for the G & C Booker Super Fund, which held 90,500,000 shares (5.16% of the shares). Reef Investment Pty Ltd, the trustee of the Nairn Family Trust, held 15,600,819 shares (0.89% of the shares), Trevor Douglas Nairn held 13,000,000 shares (0.74% of the shares), and Reef Investments Pty Ltd as trustee of the T D Nairn Super Fund held 12,099,940 shares (0.69% of the shares). Booker Super Services Pty Ltd is associated with Mike Booker, a friend of Mr Giovinazzo’s and he along with Mr Nairn also apparently hold shares in Apple iSports.

On 18 October 2020, Mr Riley emailed Ms Pendergast, Mr Giovinazzo and other Rimfire executives enclosing a copy of the Management Meeting Minutes #2, together with, among other things, a Second Quarter Cash Call and Credit Note.

On 6 November 2020, Mr Keane emailed Mr Giovinazzo and Ms Pendergast, copied to Mr Riley, attaching a further copy of the cash call notice for the second quarter, advising that the payment date had been extended to midday, 9 November 2020 and providing updated bank account details. Mr Giovinazzo forwarded the new bank account details on to Mr Billis by email on the same day informing him that the amount of the cash call is $300,000, not $330,000 as he had earlier told him.

On 6 November 2020, $300,000 was debited from a bank account in Lake Grace’s name and transferred to Rimfire’s bank account.

Rimfire’s annual general meeting was held on 24 November 2020. At the meeting, a series of resolutions were passed, the details of which were forwarded on to Mr Billis by Mr Giovinazzo on the day of the annual general meeting. Mr Billis responded by email the same day conveying in fairly blunt terms his displeasure with the results of the resolutions. Mr Billis told Mr Giovinazzo that he should get a court order to inspect the proxy vote and give a notice under s 249 of the Act removing the directors. Mr Giovinazzo gave evidence, which was not challenged, to the effect that he did not agree with that course including because the directors that Mr Billis sought to remove were directors of GPR’s joint venture partner.

January 2021 cash call

By notice issued on 19 January 2021, Rimfire made a cash call in the sum of $300,000 for the third quarter by invoice sent to GPR that day, which was duly forwarded on by Mr Giovinazzo to Mr Billis the next day. Funds satisfying the cash call were debited from Lake Grace’s bank account and paid to Rimfire on 25 January 2021.

Mr Billis and Mr Giovinazzo communicated regularly by WhatsApp message or WhatsApp calls. On 3 February 2021, Mr Billis messaged Mr Giovinazzo asking Mr Giovinazzo to get him details of the top 50 shareholders in Rimfire.

On 3 February 2021, Rimfire provided a report on its drilling results obtained at various Rimfire locations to Mr Giovinazzo and Ms Prendergast. Mr Giovinazzo forwarded the drilling results on to Mr Billis who responded by email the next day in blunt terms expressing his dissatisfaction with the approach of Rimfire. He told Mr Giovinazzo if he didn’t want to take control he should just move over and that he would throw them out (evidently a reference to his desire to enact change at the management of Rimfire).

On 29 March 2021, Ms Pendergast emailed Mr Riley, copied to Mr Giovinazzo, attaching a new joint venture proposal from GPR which she described as separate to the already existing joint venture agreement between Rimfire and GPR. The attached proposal was for GPR to acquire 70% equity in further exploration licences held by Rimfire which were not already covered by the current Fifield Earn-In Agreement. GPR offered consideration of $5 million by way of direct expenditure for exploration purposes in respect of the new licenced area. The email was forwarded by Mr Giovinazzo to Mr Billis on the same day, who responded by saying he did not think that Rimfire would bite on the offer and that the only way forward for them was for Mr Giovinazzo to talk face-to-face with the former chairman of Rimfire and then call a meeting and get rid of any of the directors they wished to remove.

The transfer of shares to TLH

On 7 April 2021, a Form 484 was lodged with ASIC, purportedly by Ms Pendergast which recorded the transfer of the 5 shares held by each of Mr Giovinazzo and Ms Pendergast to TLH. Mr Giovinazzo said he did this because he wanted to help Ms Pendergast’s children and thought that setting up a trust which contained 10 shares in GPR was a good way to do it. He said that Ms Pendergast did not really understand the trust structure and he explained the mechanism to her.

As discussed above, Ms Pendergast agreed that in or around April 2021, Mr Giovinazzo said to her that she should set up a trust to hold her five shares for the benefit of her children but she did not really understand what a trust was.

When it was put to Ms Pendergast by counsel for the Giovinazzo Parties that Mr Giovinazzo said he was happy to transfer those shares to TLH because he was expecting some other shares to come back to him when the loan made by Mr Billis was paid off, she said she could not recall that. When it was then put to her by counsel for the Giovinazzo Parties that it was possible that Mr Giovinazzo said that but she could not recall it, she said, ‘Nah, he’s never said anything like that’. When it was further put to Ms Pendergast, ‘Would you have understood that if he had said it to you?’ she answered, ‘But he didn’t’. She was next asked, ‘You would have understood that he was not giving away the whole of his interest in the company, wouldn’t you?’ to which she answered, ‘Well, it sort of does mean that he did, didn’t it or not’. When counsel for the Giovinazzo Parties then asked, ‘You did not think at the time that Mr Giovinazzo was giving you his whole interest in the company and it’s mine now?’ she answered, ‘Oh, I sort of did, but then I’m like well, I don’t understand it, so I was just like well, it is what it is’.

The Avondale agreement

On 12 April 2021, Mr Riley emailed Ms Pendergast and Mr Giovinazzo, copied to Mr Keane and another Rimfire employee, with a copy of what he described as a ‘Farm-in agreement’ for a project at Avondale. This was evidently a reference to the further joint venture contemplated by Mr Giovinazzo and Mr Billis on 29 March 2021. Mr Riley provided a copy of the draft joint venture agreement the next day as promised.

April 2021 cash call

By notice dated 14 April 2021 sent to GPR, Rimfire made a call for the fourth quarter exploration cash call in the sum of $300,000 which amount was paid from Lake Grace to Rimfire on 29 April 2021.

On 4 May 2021, Ms Pendergast emailed Mr Riley, copied to Mr Giovinazzo, with comments on the first draft of the Avondale Earn-In Agreement. In her email, she confirmed that she and Mike had reviewed the Avondale Earn-In Agreement and then proceeded to set out further requested amendments.

May 2021 cash call

On 5 May 2021, Mr Giovinazzo emailed Mr Billis in relation to the fourth quarter year 1 exploration cash call and the year 2 administration fee confirming that there were actually two separate cash calls, the first of which was for $300,000 which had been recently paid by Mr Billis and was the administration fee for year 2 and a further cash call of $330,000.

On 11 May 2021, an account in the name of RCL held in Singapore was debited with a payment of $330,000 which was transferred into a Rimfire bank account.

On 5 May 2021, Mr Giovinazzo sent an email to someone called ‘Matthew Sullivan’ and to Mr Billis. The email was copied to Ms Pendergast and to the email address [email protected]. The email contained detailed and specific observations with respect to the deposits on the Sorpresa land and adjacent areas.

On 11 May 2021, Mr Giovinazzo emailed Mr Billis. The subject line of the email was ‘Outstanding’. The email read:

Hi Anton
The outstanding balance is as follows $2,134,985 made up by the following payments
12/09/2019.   Lake Grace. Apple $14,600
19/05/2020.   Lake Grace. Rim shares. Placement $240,000
26/06/2020.   Lake Grace. Rim J/V. $20,000
05/08/2020.   Lake Grace. Rim Shares. $50,385
24/09/2020.   Resource Capital Rim JV. $330,000
24/09/2020.   Resource Capital. Rim JV. $250,000
06/11/2020.   Lake Grace. Rim JV. $300,000
25/01/2021.   Lake Grace. Rim JV. $300,000
29/04/2021.   Lake Grace. Rim JV. $300,000
10/05/2021.   Resource Capital. Rim JV. $330,000
Total:             $2,134,985

Regards Mike

Within an hour, Mr Billis forwarded the email to Lyndall Vaughan who apparently is an accountant who works for Mr Billis. Mr Billis’ email read:

Lyndall
This is what i got from Mike regarding payment for Rim Cash Calls Etc.

Ms Vaughan replied by email sent the same day to Mr Giovinazzo, copied to Mr Billis. In Ms Vaughan’s email, she said that what had been sent looked good but that it missed a payment of $580,000 from RCL direct to Rimfire for a cash call on 24 September 2020.

On 17 May 2021, Ms Pendergast emailed Mr Riley, copied to Mr Giovinazzo, attaching ‘our final offer to earn 75% for 7.5 million dollars’. Mr Riley responded, thanking Ms Pendergast and Mr Giovinazzo for the revised offer and incorporating the revised terms into the joint venture agreement. This related to the project at Avondale.

GPR buys more shares in Rimfire and the $100,000 cash call

On 17 June 2021, GPR bought a further 5 million shares in Rimfire at a price of $0.008 (or 0.8 cents per share). Mr Giovinazzo’s email to Mr Billis confirmed that Omeo Gold had transferred $40,000 to GPR to pay for the shares and that the acquisition would take GPR’s holdings to 90,000,000 Rimfire shares. His email advised that the new joint venture agreement would be signed Wednesday and on signing the amount of $100,000 had to be paid with the balance of $150,000 payable 30 days from signing. Mr Giovinazzo’s email continued:

As [d]iscussed, could you pay the funds 100k direct to GPR account so GPR can pay the 100k on signing.

On 21 June 2021, Lake Grace transferred $100,000 into a bank account in GPR’s name as requested. On 22 June 2021, Mr Riley emailed the Avondale Earn-In Agreement to Mr Giovinazzo and Ms Pendergast, copied to Mr Keane, the form of which incorporated the most recent round of discussions. Mr Riley’s email also refers to feedback from ‘Lee’ as to the terms of the Avondale Earn-In Agreement which is evidently a reference to Lee Christensen from CX Law.

On 24 June 2021, GPR and Rimfire entered into the Avondale Earn-In Agreement. The Avondale Earn-In Agreement provided for GPR to earn an interest in the mining licences, leases and other assets held by Rimfire in New South Wales with the interest being earned if and only if GPR met its funding commitments under the Avondale Earn-In Agreement. The structure of the agreement was similar to the Fifield Earn-In Agreement.

Ms Pendergast’s resignation

On 30 June 2021, Ms Pendergast emailed Mr Giovinazzo attaching her letter of resignation from GPR and Silver Plains Resources Pty Ltd. When counsel for RCL sought to explore the reason for the resignation in Ms Pendergast’s examination in chief, counsel for the Giovinazzo Parties objected. In the face of the objection, the question was not pressed. Mr Giovinazzo replied by email by stating that he could not accept the resignation ‘until we have discussed things further particularly the will ramifications and other things’. He requested that Ms Pendergast have a think and give him a call.

On 1 July 2021, Mr Giovinazzo emailed the sharebroker, Mr Connelly, advising that Ms Pendergast had stepped away from GPR as a director to focus on her children. Mr Giovinazzo advised that he was the new director which would be lodged with ASIC by Tuesday. He requested that Mr Connelly change the billing address to Mr Giovinazzo’s address and remove Ms Pendergast’s email address and replace it with his.

On 2 July 2021 at 5:44:48pm, Jeremy Flynn, a solicitor at White Cleland, emailed Mr Giovinazzo and Ms Pendergast referring to a conference that he had held with Mr Giovinazzo that day and attaching a circulating resolution of members of GPR which approved the resignation of Ms Pendergast as director, appointed Mr Giovinazzo as the new director and secretary and changed the company’s registered address. He requested they both sign and date the resolution. The attached circulating resolution provided for signing by RCL by its director Michael James Giovinazzo and Ms Pendergast. Mr Giovinazzo has never been a director of RCL and at the time the two shareholders were RCL and TLH, not RCL and Ms Pendergast.

On 2 July 2021 at 6:21:31pm, Ms Pendergast emailed Mr Flynn which had beneath it a copy of the circulating resolution which had been signed by Ms Pendergast and dated 2 July 2021. The document tendered which had been discovered by the Giovinazzo Parties is most curious, as it also purports to have been signed by Mr Giovinazzo on 29 July 2021 but not as the director of RCL as the reference to director has been crossed out. Instead, the words ‘AS AUSTRALIAN REP AND BENEFICIAL OWNER’ have been written in hand evidently by Mr Giovinazzo. Plainly the document emailed 2 July 2021 could not have been signed by Mr Giovinazzo at that time.

In fact, the document completed by Ms Pendergast is the document which is attached to Mr Flynn’s email to Ms Pendergast copied to Omeo Gold on 12 July 2021 at 5:36:36pm which included reference to a below email sent 2 July 2021 and attached a circulating resolution of members. However this version of the document had been signed by Ms Pendergast alone on 2 July 2021 and sent at 6:22pm that same day to Mr Flynn. Mr Flynn’s email thanked Ms Pendergast for forwarding the signed copy of the circulating resolution, but also requested that she send through the eight digit ASIC corporate key number for both GPR and Silver Plains Resources, so that he (that is Mr Flynn) could formally remover her as a director of both companies. He advised Mr Pendergast that until she was removed she would remain listed as a director.

The documents tendered in evidence also include another copy of the circulating resolution signed by Ms Pendergast on 2 July 2021, but which has also been signed by Mr Giovinazzo on a date which is a little difficult to read but which is either 5 or 8 July 2021.

On 13 July 2021, Mr Flynn emailed Ms Pendergast thanking her for her assistance in obtaining the ASIC corporate key and confirming that a Brian McDonald would attend Ms Pendergast’s premises the next day to pick up the remaining company files and property. He then set out a list of the company documents that were to be provided to Mr McDonald. The covering email indicates there is an acknowledgement/record of company items that the company agreed that Ms Pendergast could retain and requests Mr Pendergast signs and returns the acknowledgement to Mr Flynn and Mr Giovinazzo. The email tendered in evidence is most curious in form as the first page concludes ‘Regards, Jeremy’ with Mr Flynn’s contact details but is immediately followed by a second page which advises of Mr Giovinazzo’s engagement of Davenport Taylor to resolve the GST lodgements for GPR. The second page further confirms that Mr Giovinazzo said that she could retain the laptop computer but requested that she locate and post to Mr Giovinazzo a copy of the share certificate with regard to the shares held by GPR in Rimfire and Mr Giovinazzo’s mobile phone that he left at Ms Pendergast’s house. Ms Pendergast responded by saying she wanted her share certificates and her kids’ share certificates back and until she received them she would not sign the documents requested of her.

In any event, the ASIC records show that the Form 484 change to company details form was lodged on 13 July 2021. The form recorded the change to the company details in the form of a change of registered address and the appointment or cessation of a company office holder.[16] The obvious inference is that the documents were lodged by Mr Flynn on that day having been provided with the corporate key and a resolution which had been signed by Ms Pendergast on 2 July 2021 and Mr Giovinazzo purportedly as a director of RCL on 5 or 8 July 2021.
[16]The next document lodged at the ASIC registry was on 17 August 2021, which comprised a Form 484C which was a change to the company’s principal place of business, followed by a further form lodged on 23 December 2021, Form 484B, which was a change of registered address.

19 July 2021 cash call

By notice issued 19 July 2021, Rimfire gave notice to GPR of the requirement to pay the second earn-in payment upon execution of the Avondale Earn-In Agreement in an amount of $175,000 (which included GST of $15,909.09).

Mr Giovinazzo forwarded this invoice and one other invoice to Mr Billis by email dated 19 July 2021. The covering email confirmed that the first Avondale joint venture invoice of $99,999 had been paid when the $100,000 had been transferred by Mr Billis to GPR’s account. The second invoice was described as the one for $175,000 and was due on 25 July 2021. Mr Giovinazzo’s email requested that the funds needed to go into GPR’s account and then would be paid to Rimfire. By transfer made 21 July 2021, Lake Grace transferred $175,000 to GPR.

On 27 July 2021, Mr Riley emailed Mr Giovinazzo in relation to an ASX announcement, the terms of which were not tendered in evidence and are not apparent. The email was forwarded on by Mr Giovinazzo to Mr Billis who replied:

Now i can get better picture nobody das not believe Craig and his group all this is Geo’s Wank how to waste OPM money

‘OPM’ is a reference to ‘other people’s money’.

On 28 July 2021, Mr Giovinazzo emailed Mr Billis in relation to drilling results for the project at Avondale, suggesting that:

We need to review and work at a program for the cobalt also should target platinum and gold.

Mr Billis responded saying:
They don’t know how to organise a piss up in a brewery But this is better let them run around wasting money before we kick them out.

As noted above, there is a second version of the circulating resolution of members of GPR which bears Mr Giovinazzo’s signature. According to Mr Giovinazzo, he had told Mr Billis about the first circulating resolution which needed to be signed by RCL following Ms Prendergast’s resignation. Mr Giovinazzo, said that in response Mr Billis said there was no need for RCL to sign the resolution and that Mr Giovinazzo should sign it as ‘it’s your company’. Mr Billis denied this. According to Mr Giovinazzo, in the weeks after signing the resolution, he came to feel uncomfortable about it and spoke with Mr Billis about it on a few occasions. According to Mr Giovinazzo, at the end of July, Mr Billis told him to sign the resolution as ‘Australian rep’, as a result of which Mr Giovinazzo said he cancelled the first resolution and signed the new one on 29 July 2021 adding the words ‘beneficial owner’ as well (which was not suggested by Mr Billis). Mr Giovinazzo said Mr Billis did not explain what was meant by ‘Australian rep’.

Mr Billis did not accept this account. He said that Mr Giovinazzo had told him at some point that Ms Pendergast had resigned and that he was the new director. He said he had never been aware of any of the circulating resolutions, or that Mr Giovinazzo had signed a copy of a resolution in his capacity as a director of RCL, until he saw the document in discovery. Nor had he seen the revised copy of the resolution of members which stated that Mr Giovinazzo had signed as ‘Australian rep and beneficial owner’.

Davenport Taylor appointed as accountants

Mr Davenport gave evidence that shortly after meeting Mr Giovinazzo, Davenport Taylor were appointed as the accountants for GPR in July or August 2021. He said that at that time, GPR’s books and records comprised a collection of bank statements and receipts which he described as a shoebox (of records). Mr Davenport said that GPR had to reconstruct a lot of the records so that they could ascertain what had happened and the process commenced with the bank statements. He had to clarify a number of transactions including because certain expenses had been paid personally by Mr Giovinazzo and that clarification had to be obtained as to which expenses were private and which were personal.

Employee Stock Option Agreement

Mr Davenport also said that shortly after he started working with Mr Giovinazzo sometime in July or August of 2021, he had a discussion with Mr Giovinazzo about employee stock options. According to Mr Davenport, he told Mr Giovinazzo that there were tax advantages in entering into an options agreement when the value of the company was low. He said he recommended that Mr Giovinazzo consider such an agreement. He said he told Mr Giovinazzo he was not willing to risk drafting the agreement in case he got it wrong, so Mr Giovinazzo needed to see a lawyer or do it himself. He said that Mr Giovinazzo brought in some old copies to which Mr Davenport said, ‘Well, the problem with, as in, that we need to avoid and make sure is that they need to be real and that you have to avoid the risk of forfeiture’. When Mr Davenport was in the witness box he was shown a copy of the Employee Stock Option Agreement dated 3 August 2021. Mr Davenport said that he had not seen that document in its final form.

According to Mr Giovinazzo, he provided copies of two different types of employee stock option agreements to a friend of his, Peter McBrearty, a mathematician. Mr McBrearty then prepared the document in the form executed. Mr Giovinazzo said that he was provided with only a hard copy of the document and he later gave a copy to Mr Davenport. Mr Davenport said that he did not recall being provided with a hard copy.

Further, Mr Giovinazzo said that in September or October 2021, he told Mr Billis that the Employee Stock Option Agreement was in place and he was going to sell some stock down to repay the loans Mr Billis had given him. Mr Giovinazzo said he cannot recall what Mr Billis said in response, but there was no objection from him. Mr Billis denied that Mr Giovinazzo had ever raised the Employee Stock Option Agreement with him. Mr Billis said that he first became aware of this document at the shareholders meeting which RCL called in July 2022 in the circumstances described below.

The Employee Stock Option Agreement provides for the grant of an option by GPR to Mr Giovinazzo to purchase 10,000 ordinary shares of the company (the ‘Option Shares’) at an exercise price per share of $1 during the period commencing 3 August 2021 and expiring on 2 August 2026. Clause 3 records that the exercise price of $1 per share represents the fair market value per share of the company at the date of the grant as determined by the director of the company. The vesting schedule attached to the Employee Stock Option Agreement in effect provided for the Option Shares to vest as to 5,000 on 23 March 2022 and as to the balance of 5,000 on 23 April 2022.

On 9 August 2021, Mr Billis messaged Mr Giovinazzo on WhatsApp saying:

Mike I like the way Marino is leading you all by the nose he had no intention of listing as he Das (sic) not own 90% of shares this was his private bank for many years why should he do anything else wake up he will spin you all around for another 5 years.

This is evidently a reference to Marino Sussich, who was a person associated with both ABA and Apple iSports. It is apparent from other messages sent by Mr Billis to Mr Giovinazzo that he had a dim view of Mr Sussich.
August and December 2021 cash calls

By notice given on or about 25 August 2021, Rimfire made a further cash call on GPR in the amount of $300,000, which amount was paid by transfer from Lake Grace to Rimfire on 25 August 2021. A further cash call was made by Rimfire on 15 December 2021 in connection with the Avondale Earn-In Agreement in the amount of $250,000. Mr Giovinazzo forwarded a copy of this cash call notice to Mr Billis on 26 January 2022 along with a further notice relating to the Fifield Agreements. His covering email requested that the $300,000 be paid direct to Rimfire and the $250,000 be paid first to GPR as was normally the case.

Payments of $250,000 and $300,000 were made from Lake Grace’s bank account on 8 February 2022.

Apple iSports

On 10 February 2022, Mr Giovinazzo emailed Mr Billis, Mr Booker, Mr Connelly, Mr Nairn and Mr Davenport. The email subject line was ‘Apple I Sports Confidential’ and the attachment to the email related to a transition of Apple iSports to the ‘over-the-counter’ market. In his evidence, Mr Giovinazzo explained that Apple iSports was the subject of a reverse takeover which resulted in those who owned shares in Apple iSports receiving shares in a company previously known as ‘Prevention Insurance.com’, which later changed its name to Apple iSports Group, Inc. The attachment to the email took the form of an email from a United States attorney, Daniel Luciano, to Mr Sussich which set out details of the process.

Even if it were the case that Mr Giovinazzo was validly appointed as a director, the relevant acts or omissions of Mr Giovinazzo which are sought to be impugned in this proceeding, namely the Purported 19 July Share Issue and the entering into of the GPR/Omeo Gold Loan Agreements, call to be assessed in circumstances where on 18 July 2022, both shareholders of GPR had signed a circulating resolution of members of GPR which removed Mr Giovinazzo as a director of GPR. By reason of s 249A of the Act, the circulating resolution took effect when the last shareholder signed which was 18 July 2022, when Ms Pendergast signed the circulating resolution on behalf of TLH. This was also made clear from the terms of the circulating resolution.

It follows therefore that on 18 July 2022, Mr Giovinazzo was removed as a director of GPR even if he had been validly appointed on 30 June 2021 contrary to my conclusion above.

The Purported 19 July Share Issue

In oral closing submissions, counsel for the Giovinazzo Parties accepted that the Purported 19 July Share Issue could not stand, if I accepted Mr Billis’ evidence as to the terms upon which the GPR Shares were held, that is to say they were not held on trust for Mr Giovinazzo.

That concession was properly made. First, even if I were to accept Mr Giovinazzo’s evidence that the Employee Stock Option Agreement was entered into on the date on which it bears 3 August 2021, then the agreement was executed on GPR’s behalf by Mr Giovinazzo purportedly as a director of GPR. Given my conclusion that he was not validly appointed on 30 June 2021, then the agreement does not bind GPR on that ground alone.

For completion, I am not persuaded that the agreement was in fact executed on 3 August 2021. As stated above, I am not prepared to accept Mr Giovinazzo’s evidence absent reliable corroborating material provided in either documentary form or from a reliable third party witness. That has not been provided. It is generally now the case that the date on which agreements have been created is a matter that can be established without difficulty. Generally, evidence as to the metadata relating to document creation can be produced which for the most part establishes without fear of controversy, the date upon which a document was created. That was not the case here. RCL’s solicitors, JWS, raised concerns with respect to the Purported 19 July Share Issue in letters dated 21 July 2022 and 29 July 2022. Tisher Liner FC Law responded on Mr Giovinazzo’s behalf by letter dated 15 August 2022 stating that the shares had been issued pursuant to the Employee Stock Option Agreement which had been entered into by GPR and Mr Giovinazzo on 3 August 2021 and offered to provide a copy of that agreement upon the receipt of confirmation that RCL would keep the agreement confidential. RCL’s solicitors replied by letter dated 18 August 2022 denying that Mr Billis was aware of the purported agreement, requesting a copy and reiterating that the purported share issue was unauthorised. By a notice to produce served 30 April 2024, RCL requested production at the trial on 6 May 2024 of, among other things, the Employee Stock Option Agreement in its native form or metadata in relation to the Employee Stock Option Agreement evidencing the date upon which the Employee Stock Option Agreement was created, saved and/or edited and any and all drafts of the Employee Stock Option Agreement. No such production was effected presumably on the basis that if Mr Giovinazzo’s evidence is accepted, that it was prepared by the mathematician on his computer and that Mr Billis received only a hard copy which he had allegedly provided subsequently to Mr Davenport (who could not recall seeing the agreement in final form).

Regardless, it was obvious that the date of the creation of the Employee Stock Option Agreement was a live issue.

Despite this, the Giovinazzo Parties did not seek to call Ms Bidstrup who allegedly witnessed the agreement or Mr McBrearty who allegedly prepared it. Although Mr Davenport gave evidence that he had discussed an Employee Stock Option Agreement with Mr Giovinazzo, Mr Davenport’s evidence was vague and imprecise as to the time at which those discussions occurred and Mr Davenport did not produce any form of contemporaneous documentary evidence which would enable the date upon which he had been provided with that agreement or held the discussions, to be ascertained.

Accordingly, the quality of the evidence adduced from the Giovinazzo Parties is not sufficient given my concerns more generally with Mr Giovinazzo’s evidence to enable me to conclude that the agreement was prepared on the date on which it bears.

I do not accept Mr Giovinazzo’s evidence that he discussed the agreement with Mr Billis. It was denied by Mr Billis and I consider it fanciful that Mr Billis would have acquiesced to GPR entering into an agreement with Mr Giovinazzo in those terms. The effect of the agreement would have been to enable the dilution of RCL’s controlling interest in GPR from 99% to 9.9% despite Mr Billis having earlier insisted, as I have found, that the price of RCL’s funding of GPR’s commitments was being given control over GPR. I note that there is no corroborating evidence of Mr Billis having been told about the Employee Stock Option Agreement in any email or WhatsApp messages which passed between the parties. Further the letter from RCL’s solicitors, JWS, dated 18 August 2022 asserting that Mr Billis was not aware of the Employee Stock Option Agreement was not met with any response by Mr Giovinazzo’s solicitors to the effect that the agreement was discussed and acquiesced to by Mr Billis prior to its execution.

Even if Mr Giovinazzo executed the Employee Stock Option Agreement in his capacity as a validly appointed director of GPR and the agreement was entered into on 3 August 2021, Mr Giovinazzo executed the agreement in that capacity as a director of GPR in circumstances which gave rise to an obvious conflict between the interests of GPR as a whole and Mr Giovinazzo’s own personal interests. Otherwise, he executed the agreement on GPR’s behalf in circumstances which were commercially unfair and oppressive to RCL’s interests as the then majority shareholder as it gave rise to the obvious possibility (which then ensued) of diluting RCL’s controlling interest.

On the exercise by Mr Giovinazzo of his rights under the Employee Stock Option Agreement, GPR first had to increase its share capital so as to facilitate the allotment of the additional shares to Mr Giovinazzo. The date upon which the company increased its share capital and then allotted the shares to Mr Giovinazzo and TLH was 19 July 2022. This was also the date on which Mr Giovinazzo paid for the shares allotted to him and facilitated the payment of the shares allotted to TLH, the date on which GPR issued the share certificates to Mr Giovinazzo and TLH and the date on which GPR lodged the necessary forms with ASIC recording the increase in GPR’s issued shares.

By 19 July 2022, Mr Giovinazzo was not a director of GPR, having been removed (if he was ever validly appointed) by the circulating resolution passed 18 July 2022. Accordingly, the increase in GPR’s share capital was not properly authorised by GPR as Mr Giovinazzo had no authority to act as a director in increasing the company’s share capital.

Next, the Purported 19 July Share Issue was contrary to cl 7 of GPR’s constitution which provides that the directors may issue shares in the company at any time but before issuing shares of a particular class, the directors must offer them to existing holders of shares of that class. As far as practicable the number of shares offered to each shareholder must be in proportion to the number of shares of that class that they already hold.

The shares that were newly issued on 19 July 2022 and then allotted to Mr Giovinazzo and TLH were shares in the same class as those previously issued to RCL (and TLH). The shares were not first offered to the existing holders of shares in that class contrary to cl 7.6 of the constitution.

Moreover, as Mr Giovinazzo accepted, the company share capital was increased and the shares were allotted to Mr Giovinazzo and TLH to thwart Mr Billis’ attempt to obtain control of GPR by removing Mr Giovinazzo as a director (in the event that he had been validly appointed) and by appointing two new directors. The notice of meeting sent by RCL’s solicitors, JWS, contemplated a meeting of shareholders on 20 July 2022. The timing of the Purported 19 July Share Issue in those circumstances makes it clear that it occurred as an attempt to thwart the appointment of the alternative directors at that meeting. Mr Giovinazzo confirmed its essential purpose in his evidence, ‘it was done to stop Anton stealing my company’. The sole purpose of the share issue was to create voting power destroying RCL’s existing majority in advance of an anticipated members meeting. In any event, the meeting on 20 July 2022 was no longer required on account of RCL and TLH having both signed the circulating resolution by 18 July 2022.

However, to the extent to which it otherwise would have been a valid share issue and allotment in the sense that it was as a result of the valid increase in share capital and issue of shares by GPR by its duly appointed director (which is not the case), then it is oppressive having occurred for the improper purpose of altering the voting power and influencing the outcome of general meetings.

Accordingly, the Purported 19 July Share Issue is invalid and orders will be made accordingly.

The GPR/Omeo Gold Loan Agreements

In its ASOC, RCL pleaded that Mr Giovinazzo had purported to cause GPR to borrow funds from Omeo Gold on the terms of the GPR/Omeo Gold Loan Agreements and that the conduct was contrary to the interests of GPR’s members as a whole and oppressive to or unfairly prejudicial to RCL.

In particular, RCL complained of:

(a) Mr Giovinazzo purporting to cause GPR to borrow funds from and provide security to a company related to Mr Giovinazzo and Omeo Gold;

(b) Mr Giovinazzo purporting to cause GPR to borrow funds from Omeo Gold in circumstances where Omeo Gold was not a recognised provider of finance on commercial terms, and no documents had been disclosed that suggest that such funds, as were loaned to GPR by reference to the GPR/Omeo Gold Loan Agreements, were directly deposited into the bank account of GPR by Omeo Gold (which was contemplated by the terms of the GPR/Omeo Loan Agreements);

(c) purported to cause GPR to borrow funds on terms that obliged GPR to pay interest to Omeo Gold at interest rates that exceeded commercial interest rates;

(d) purported to cause GPR to incur liabilities in circumstances where GPR was not able to meet those liabilities as and when they fell due;

(e) failed to disclose to RCL that GPR intended to execute the GPR/Omeo Gold Loan Agreements and failed to provide RCL with an opportunity (including in its capacity as a shareholder of GPR) to provide funding to GPR (including on terms more commercially favourable to GPR than the terms of the GPR/Omeo Gold Loan Agreements.

The relief sought by RCL in its originating process filed 22 August 2022 included an order that the affairs of GPR be conducted on the basis that Mr Giovinazzo is not a director or secretary of the company. This form of relief was maintained in the ASOC and is also reflected in the agreed list of issues in dispute filed by the parties on 8 August 2023. Insofar as the list of issues related to the GPR/Omeo Gold Loan Agreements, it identifies the following:

(a)were loan agreements entered into between GPR and Omeo Gold from on or about 28 July 2022 ... and, if so, are the GPR/Omeo Gold Loan Agreements valid, binding and effective;
(b)by his conduct in executing the GPR/Omeo Gold Loan Agreements and by proceeding on the basis that GPR is bound by the GPR/Omeo Gold Loan Agreements, did Mr Giovinazzo conduct the affairs of GPR in a manner that was contrary to the interests of GPR’s members as a whole and/or oppressive to, or unfairly prejudicial to, RCL?

RCL’s prayer for relief also sought an order for an accounting of the benefits received by each of GPR and Omeo Gold in respect of any funds advanced pursuant to the GPR/Omeo Gold Loan Agreements and/or any payments made pursuant to those agreements (including in respect of interest).

In RCL’s opening, as noted above, RCL proffered a form of order in slightly different terms with the proposed form of order being an order that until further order (to afford the new directors an opportunity to undertake an accounting of the benefits received by each of GPR and the second plaintiff by counterclaim (Omeo Gold) by reason of their dealings in the period since July 2022), Omeo Gold is restrained from exercising any rights conferred by the terms of loan agreements entered into by GPR and Omeo Gold in the period on and from 28 July 2022.

RCL also adverted to in its opening to, inter alia, its complete lack of visibility over what money had been provided by Omeo Gold to GPR, what the money so provided by Omeo Gold to GPR had been utilised for and the source of any funds lent by Omeo Gold to GPR.

As noted above, the Giovinazzo Parties obtained leave to adduce evidence from Mr Davenport which included the production of numerous documents which had not previously been discovered, as well as documents between Omeo Gold and the third party lenders, the Wagner Group and National Wealth Education Group.

In written closing submissions, the Giovinazzo Parties argued that Mr Giovinazzo caused Omeo Gold to borrow and on-lend funds to GPR which enabled GPR to meet its earn-in obligations and that the liabilities that had been incurred by GPR to Omeo Gold correlated entirely to the obligations that Omeo Gold had incurred to the third party lenders. Accordingly, they submitted that no untoward benefit had been provided to Omeo Gold and that otherwise the GPR/Omeo Gold Loan Agreements were in GPR’s interest because it preserved the benefit of the Rimfire Agreements and conferred no benefit on Omeo Gold at all. Further that the terms of the GPR/Omeo Gold Agreements were the best terms available in the circumstances as nobody else was willing to lend money to GPR directly given the ongoing litigation.

Accordingly, the Giovinazzo Parties submitted that there was no basis for a finding of oppression, nor any need in light of the evidence adduced at trial from Mr Davenport for any further accounting exercise to be undertaken.

In oral closing submissions, the Giovinazzo Parties however accepted that an order for an account might be appropriate as long as the Court was satisfied that the account was of utility, in circumstances where, the relevant information that was likely to be adduced in relation to a taking of an account had been given by Mr Davenport. The Giovinazzo Parties otherwise opposed that part of the relief which restrained Omeo Gold from seeking to enforce the GPR/Omeo Gold Loan Agreements pending the taking of the account.

Whilst the Giovinazzo Parties purported to provide the type of information that ordinarily would have been the subject of an account and inquiry, the circumstances of the production and the quality of the evidence adduced leave much to be desired. I have set out above aspects of the inconsistency in the material provided.

The quality of the documentary evidence adduced to explain the GPR/Omeo Gold Loan Agreements was unsatisfactory with the exception of the bank statements for the Rimfire accounts. Whilst there is no reason to doubt the authenticity of the bank statements for the Wagner Group and National Wealth Education Group, the bank statements of the Wagner Group seem incomplete which may explain the absence of the repayment and those of the National Wealth Education Group end at 7 July 2023 and are redacted. The timing and arguably the redacted nature impact the utility of that which has been provided.

There are number of issues with the purported GPR/Omeo Gold Loan Agreements.

The agreements were purportedly executed by GPR by Mr Giovinazzo as and from 28 July 2022. On the findings set out above, Mr Giovinazzo was never a validly appointed director of GPR and if he was he had been removed as a director of GPR, by reason of the circulating resolution with effect from 18 July 2022. As GPR’s constitution provided that the business of the company was to be managed by the directors, and Mr Giovinazzo was not a director, the GPR/Omeo Gold Loan Agreements are not binding on GPR for that reason alone.

A company can only act through those who are authorised to act on its behalf. The only purported conferral of authority on Mr Giovinazzo arose from his alleged status as a director. As he was never a director and if he was had been removed on 18 July 2022, he had no authority to enter into the GPR/Omeo Gold Loan Agreements on GPR’s behalf. There can be no question of ostensible authority or the application of the indoor management rule[65] or its statutory equivalent in ss 128 and 129 of the Act, as the counterparty is Omeo Gold. As its sole director, Mr Giovinazzo therefore had knowledge of the defect in his authority as a purported director of GPR.
[65]Royal British Bank v Turquand (1856) 6 E&B 327; 119 ER 886.

To the extent to which they would otherwise have been binding on GPR (which they are not) they are otherwise oppressive in the sense of being contrary to the interests of the company as a whole having been executed by a person acting as director but not validly appointed.

There is another vice with the GPR/Omeo Gold Loan Agreements. The Giovinazzo Parties submit that there was no vice in Mr Giovinazzo purporting to execute the GPR/Omeo Gold Loan Agreements on behalf of both GPR and Omeo Gold on terms which provided, inter alia, for GPR to provide security in favour of Omeo Gold and charged high rates of interest. It was submitted this was as the high rate of interest was that which was charged by the Wagner Group and National Wealth Education Group to Omeo Gold.

I do not accept that this is a sufficient answer to dispose of any complaint by RCL. First, RCL had previously provided finance to GPR on an interest free basis; GPR could thus use the moneys so advanced by RCL[66] without incurring an interest liability. The whole need for an alternative source of finance came about as a result of Mr Giovinazzo’s flawed attempt to rely upon the Purported 19 July Share Issue and remain in control of GPR in the interim. Had it not been for Mr Giovinazzo’s reliance upon the Purported 19 July Share Issue, and his subsequent wrongful assertion that the GPR Shares were held by RCL on trust for him, there would have been no need for the alternative funding. The Giovinazzo Parties’ assertion that RCL ‘refused’ to finance GPR’s obligations under the Rimfire Agreements after May 2022, overlooks the critically important fact that RCL as the 99% shareholder had been wrongly diluted and its attempt to vote its 99% shares in favour of the two new directors had been rendered ineffective by Mr Giovinazzo’s wrongful Purported 19 July Share Issue. Any ‘refusal’ occurred in this context.
[66]Accounted for in its accounts as loans from Lake Grace.

Secondly, whilst it was in Omeo Gold’s interest for GPR to pay Omeo Gold the same interest being charged by the third party lenders to Omeo Gold, it does not follow that it was in GPR’s interest to agree to match the interest rate being charged by the third party lenders to Omeo Gold. The evidence as to the reason why this occurred was provided solely by Mr Davenport which was to the effect that the terms were set by the third party lenders (he being a director of one of those lenders) and that by some unexplained process Mr Giovinazzo then executed the agreements between GPR and Omeo Gold on a basis which conformed to the third party lender’s requirements. The third party was not a party to the GPR/Omeo Gold Loan Agreements so it is difficult to see how it could have set the terms of agreements to which it was not a party. There was no evidence by Mr Giovinazzo as to the circumstances by which the agreements were executed by him in the name of both GPR and Omeo Gold which conformed to the requirements of the third party’s requirements. In fact, the third party was National Wealth Education Group, of which Mr Davenport was a director, and it seems arranged by Mr Davenport.

Mr Giovinazzo’s execution of the agreements on behalf of GPR in those circumstances occurred where he was in a position of conflict between his interests owed to Omeo Gold and his interests owed as a de facto but not actual director of GPR. They were also contrary to the interests of RCL, GPR’s majority shareholder, as they purported to bind GPR to an interest liability to Mr Giovinazzo’s company, in circumstances where, the relevant counterfactual was that RCL’s nominees were the two directors of GPR and that RCL’s hitherto funding on an interest free basis would have continued.

Thirdly, and relatedly, the majority shareholder, RCL and its nominee directors were not informed of these alleged agreements in anything like a timely or comprehensive manner. Such information, as was provided, was obtained only in the course of this litigation and in a most irregular and unsatisfactory manner. This is not a case of a request for information made by a minority shareholder with no legitimate management expectation. RCL held 99% of the shares in GPR and its two nominees were the validly appointed directors of the company. It was excluded from any board role and associated right of management control whilst Mr Giovinazzo purported to bind GPR to loan agreements with Omeo Gold.

Fourthly, such provision of information as occurred mid trial was most unsatisfactory. The GPR/Omeo Gold Loan Agreements were plainly discoverable and the failure of the Giovinazzo Parties to discover the documents in timely manner was egregious and inexcusable. But even so, one would have thought that when the documentation was provided, it would have been relatively easy to explain that third party lenders lent money to Omeo Gold on particular terms and that Omeo Gold loaned the money to GPR on matching terms and that GPR made particular payments to Rimfire. One would have thought that the paper trail would have been easy to establish. Apparently not.

Whilst, some of the lack of clarity may have been the product of the provision of information at a late stage, the evidence about the GPR/Omeo Gold Loan Agreements including the lateness of their provision, gave rise to a number of questions. I also accept RCL’s submissions that the circumstances more generally of the late provision of the GPR/Omeo Gold Loan Agreements were not capable of being tested by RCL.

I accept that the solicitors for the Giovinazzo Parties provided the documents to the solicitors for RCL as soon as practicable after they received them from their client. Given that a substantial number of the purported loan agreements were not provided until such time as the 4SCB was served, despite being allegedly entered into much earlier, an available inference is that the documents did not exist and were being created and then back dated. It is not necessary for me to do draw this inference given the conclusions I have reached as to the enforceability of the GPR/Omeo Gold Loan Agreements in any event.

Notwithstanding the above, I accept that significant moneys were paid to Rimfire for GPR’s benefit by National Wealth Education Group and to a much lesser extent Wagner Group in the period from 28 July 2022 to 21 June 2023 and that other payments were made by persons or parties not identified on the evidence to Rimfire for GPR’s benefit from 30 June 2023 to 29 January 2024.

In the circumstances, GPR is not bound by the GPR/Omeo Gold Loan Agreements. Mr Giovinazzo was not a director of GPR so could not bind it to the agreements. Further the acts or omissions of Mr Giovinazzo, who was not a director of GPR at the time, and in circumstances where Mr Giovinazzo was also a director of the counterparty to the GPR/Omeo Gold Loan Agreements, was conduct which was to the detriment of RCL, in its capacity as the 99% shareholder of GPR, and was commercially unfair and oppressive for the purposes of s 232(e) of the Act.

I do not, however, consider that it is appropriate to grant RCL the relief sought in the form of the injunction sought at trial. Nor do I consider that it is necessary or appropriate to make an order for an account or enquiry.

Although GPR is not bound by the GPR/Omeo Gold Loan Agreements, because, among other things, they were executed by Mr Giovinazzo who was not a director of GPR at the time the agreements were entered into and otherwise were effected by Mr Giovinazzo’s position of obvious conflict of interest, Omeo Gold has not sought to recover the moneys advanced in this action. In that context, there is nothing to restrain. Further although Omeo Gold is not able to enforce the GPR/Omeo Gold Loan Agreements because these agreements are not binding on GPR, to the extent to which moneys were provided, however indirectly (to Rimfire for the purpose of preserving GPR’s interest in the Rimfire Agreements), this may not preclude the party which provided the funds for GPR’s benefit, presumably Omeo Gold, from seeking some form of remedy of restitutionary or quasi restitutionary nature.

Omeo Gold did not seek to recover any moneys advanced by it to GPR pursuant to the GPR/Omeo Gold Loan Agreements, whether as a claim for moneys owing under the agreements or otherwise.

In those circumstances, a remedy which in effect seeks to prevent Omeo Gold from recovering any moneys goes further than is required to deal with the effects of the oppressive conduct and the conclusions as to validity of the GPR/Omeo Gold Loan Agreements.

RCL will be entitled to declaratory relief with respect to the validity of the GPR/Omeo Gold Loan Agreements purportedly entered into from 18 July 2022 (which was the date on which RCL’s nominees were appointed as the directors of GPR).

Nor do I consider that it is appropriate or necessary to order an account and inquiry. Whilst the explanations and accompanying documentation provided by the Giovinazzo Parties left much to be desired, I do not consider that an order for an account and inquiry is appropriate. Although, there is no specific power to make such an order for an account set out in s 233 of the Act, I accept that the broad reach of the section which extends to making any order that the court ‘considers appropriate’ extends to the power to make such an order. The considerations which inform the exercise of the equitable jurisdiction to order such a remedy provide some guidance as to the circumstances when it will be appropriate to do so. The remedy of account is an equitable one which is discretionary.[67] An account will not be ordered if it serves no useful purpose.[68]
[67]Warman International Ltd v Dwyer (1995) 182 CLR 544, 559.
[68]Mulherin as Trustee for the HD Mulherin Family Trust v Quinn Villages Pty Ltd [2007] QSC 231, [122].

I do not propose to order an account and inquiry. Upon finalisation of this proceeding by the making of appropriate orders and declarations, the new directors of GPR will have access to GPR’s books and records, and should have no difficulty in making inquiries of Rimfire to the extent necessary to enable them to ascertain the payments made under the Rimfire agreement. They will be in a position to form a view about the extent of the benefits obtained and to respond accordingly to any claim made by Omeo Gold on whatever basis Omeo Gold may be advised.

It is neither necessary nor appropriate for this proceeding to remain on foot for the purposes of some ongoing investigation in relation to Mr Giovinazzo’s activities as appointed director of GPR, whether in respect of the GPR/Omeo Gold Loan Agreements or more generally.

The counterclaim

In the counterclaim, the Giovinazzo Parties seek declarations that RCL holds the GPR Shares on trust for Mr Giovinazzo as security for the advances and that Mr Giovinazzo is entitled to redeem the GPR Shares upon payment of the advances. The conclusions above to the effect that the shares are not held on trust and that the loan was made by RCL to GPR necessarily carries with it the consequence that this claim for declaratory relief fails.

The Giovinazzo Parties also seek a declaration that RCL holds the Apple iSports shares on trust for Omeo Gold as further security for the advances and that Omeo Gold is entitled to redeem the Apple iSports shares upon repayment of the advances. This claim for declaratory relief fails on the same grounds.

In addition, the agreement by which the Apple iSports shares were said to be held on trust is alleged to have been made orally on or about 28 February 2022. The agreement is said to comprise telephone conversations between Mr Giovinazzo and Mr Billis[69] on or around 28 February 2022 to the effect that Mr Giovinazzo agreed to cause Omeo Gold to direct that 5.7 million shares in Apple iSports, which shares were to be issued in Omeo Gold’s name, be issued in RCL’s name and that RCL would hold those shares on the same terms as the GPR Shares.
[69]Paragraph [6F] of the Defence and Counterclaim.

There was no evidence given by Mr Giovinazzo in support of such agreement; the evidence as to the trust arrangement which I have rejected relating to the GPR Shares was said to be related to the concern with respect to the change of control issue under the Fifield Earn-In Agreement. This had no counterpart with respect to the Apple iSports shares.

In examination-in-chief Mr Giovinazzo was asked questions about matters concerning Apple iSports around February 2022. He was taken to an email from Mr Giovinazzo to Mr Billis, Mr Booker, Mr Connelly, Mr Nairn and Mr Davenport sent 10 February 2022 which forwarded on an email from Daniel Luciano to Mr Sussich which related to a process for the approval of the name change from PVNC to Apple iSports Group, Inc. He was then asked the following:

… Mr Giovinazzo, you say that you’ve given Mr Billis and RCL – amongst other things – Apple iSports shares as security for a loan, and there seems to be a process going on in the background. You referred to it as a ‘reverse takeover’ …. Can you explain to his Honour just what it was that was given up as security in the first instance? And what impact this process might have on that security, if any?

Mr Giovinazzo answered:
So, the reverse of Apple iSports Inc going into – and we’ll call it ‘Apple iSports Group’ because that’s its name, though - is that Apple iSports Inc was issued 200 million shares or thereabouts in Apple iSports Group, my company Omeo Gold had a five percent holding in Apple iSports Inc, as a result of that, I directed that when that shareholding was put through, 5.7 million shares into Resource Capital’s name to be held in trust for me and as security as I had said previously, and the balance of the stock were held in the name of Omeo Gold.

That was the extent of his evidence. It is insufficient to make out the pleaded trust arrangement which is not otherwise referred to in any other document, although the repayment deed prepared by Mr Christensen does contain a recital to the effect. As noted above this document is not signed by Mr Billis and otherwise there is no basis to suggest that Mr Billis agreed that the shares in RCL’s name were held on trust.

In any event, Mr Giovinazzo’s evidence is contradicted by other documentary evidence. In fact, the reverse takeover took place in 2023 not 2022 and the issue of the Apple iSports shares to RCL occurred on 28 February 2022.

Whilst I accept that Mr Billis’ evidence in relation to the Apple iSports shares was unclear and largely unintelligible, the onus in respect of this aspect of the claim rests on Mr Giovinazzo and this has not been discharged.

Summary of conclusions

For the reasons set out above, I have concluded as follows:

(a) The GPR Shares registered in RCL’s name are not held by RCL on trust for Mr Giovinazzo;

(b) RCL advanced the money to GPR on an interest-free basis and accordingly Mr Billis did not advance the moneys to Mr Giovinazzo;

(c) Mr Giovinazzo was never validly appointed as a director of GPR;

(d) To the extent to which Mr Giovinazzo was validly appointed as a director of GPR with effect from 30 June 2021, then by reason of the circulating resolution executed by RCL and TLH on 18 July 2022, he was removed as a director of GPR with effect from that date and Messrs Douglas and Berzins have been the validly appointed directors of GPR since that date;

(e) The Purported 19 July Share Issue is invalid with no effect; and

(f) The GPR/Omeo Gold Loan Agreements are invalid and of no effect on GPR.

Declarations will be made to that effect along with ancillary orders. The counterclaim will be dismissed. Subject to hearing from the parties, the orders I propose to make today are that the parties forward a minute of orders to give effect these reasons including as to costs or in the event that there is no agreement as to the form of order, their respective proposed minutes of order together with short submissions in support, if so advised, by 4:00pm on 11 September 2024.

---

SCHEDULE OF PARTIES

S ECI 2022 03209

BETWEEN

RESOURCE CAPITAL LIMITED	Plaintiff
- and -
MICHAEL JAMES GIOVINAZZO	First Defendant
TARINA LEE HOLDINGS PTY LTD (ACN 636 975 178)	Second Defendant
GOLDEN PLAINS RESOURCES PTY LTD (ACN 636 974 108)	Third Defendant
LAKE GRACE EXPLORATION PTY LTD (ACN 009 406 437)	Fourth Defendant

-and-

MICHAEL JAMES GIOVINAZZO	First Plaintiff by Counterclaim
OMEO GOLD PTY LTD (ACN 633 448 469)	Second Plaintiff by Counterclaim
- and -
ANTON BYRON BILLIS	First Defendant by Counterclaim
RESOURCE CAPITAL LIMITED	Second Defendant by Counterclaim
GOLDEN PLAINS RESOURCES PTY LTD (ACN 636 974 108)	Third Defendant by Counterclaim

[2024] VSC 548

6 September 2024