Verguier Pty Ltd v Ramelius Resources Limited

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FEDERAL COURT OF AUSTRALIA

Verguier Pty Ltd v Ramelius Resources Limited [2019] FCA 796

File number: SAD 141 of 2018
Judge: WHITE J
Date of judgment: 30 May 2019
Catchwords:

CORPORATIONS – application for an order under s 1071F of the Corporations Act 2001 (Cth) and declarations pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) in respect of the Defendant’s failure to register an off‑market share transfer – Defendant’s constitution prohibited it from charging a fee to register a transfer – Defendant’s share registry service provider refused to register the transfer until a “security validation fee” was paid – whether a refusal or failure of the Defendant to register the transfer without just cause.

Held: Defendant has refused or failed without just cause to register share transfer.

Legislation:

Constitution s 55

Corporations Act 2001 (Cth) ss 136(2), 140, 168, 169, 174, 793B, 1070A, 1071B, 1071D, 1071E, 1071F;

Cases cited:

Air Caledonie International v The Commonwealth of Australia [1988] HCA 61, (1988) 165 CLR 462

Airservices Australia v Canadian Airlines International Ltd [1999] HCA 62, (1999) 202 CLR 133

AXA Asia Pacific Holdings Ltd v Direct Share Purchasing Corporation Pty Ltd [2009] FCAFC 15; (2009) 173 FCR 434

Beck v Tuckey [2007] NSWSC 1065; (2007) 213 FLR 152

Gosford Christian School Ltd v Totonjian [2006] NSWSC 725, (2006) 201 FLR 424

Knight v Secretary, Department of Justice [2012] VSC 613

Monardo v Complete Hardware Ltd (1990) 20 NSWLR 489

Northern Suburbs General Cemetery Reserve Trust v The Commonwealth of Australia [1993] HCA 12; (1993) 176 CLR 555

Parton v Milk Board (Vic) [1949] HCA 67, (1949) 80 CLR 229

Re Peninsula Kingswood Country Golf Club Ltd [2014] VSC 437

Re St Barbara Mines Ltd [2000] WASC 300; (2000) 36 ACSR 442

Smolarek v Liwszyc [2006] WASCA 50, (2006) 32 WAR 101

Stillwell Trucks Pty Ltd v Nectar Brook Investments Pty Ltd [1993] FCA 363, (1993) 10 ACSR 615

The New Lambton Land & Coal Co Ltd v The London Bank of Australia Ltd [1904] HCA 23; (1904) 1 CLR 524

William Cable Ltd v Trainor (1957) NZLR 337
Date of hearing: 26 September 2018
Registry: South Australia
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 140
Counsel for the Plaintiffs: Mr S Evans
Solicitor for the Plaintiffs: Finlaysons
Counsel for the Defendant: Mr M Douglas
Solicitor for the Defendant: DMAW Lawyers

ORDERS

SAD 141 of 2018
BETWEEN:

VERGUIER PTY LTD ACN 612 344 939

First Plaintiff

GREGORY DENIS O'REILLY

Second Plaintiff

MARIE JEAN O'REILLY (and another named in the Schedule)

Third Plaintiff
AND:

RAMELIUS RESOURCES LIMITED ACN 001 717 540

Defendant

JUDGE:

WHITE J

DATE OF ORDER:

30 MAY 2019

THE COURT ORDERS THAT:

1.The matter is adjourned to a date and time to be fixed for the hearing of submissions with respect to costs and the form of the declarations and orders to…

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Details
Case
[2019] FCA 796
Decision Date

CaseChat Overview and Summary

The Federal Court of Australia heard a case between Verguier Pty Ltd and Ramelius Resources Limited concerning the latter's failure to register an off-market share transfer. The dispute centred on Ramelius' constitution, which prohibited charging a fee for share transfers. Despite this, Ramelius' share registry service provider, Computershare, refused to register the transfer until a "security validation fee" was paid. Verguier sought an order under section 1071F of the Corporations Act 2001 and declarations under section 21 of the Federal Court of Australia Act 1976, claiming Ramelius had refused or failed to register the transfer without just cause.

The primary legal issues were whether Ramelius had indeed refused or failed to register the share transfer without just cause and whether this constituted a breach of the statutory contract between Ramelius and the transferors. The court examined whether Ramelius' inaction, despite knowing that Computershare had no authority to charge a fee, amounted to a refusal or failure to register without just cause. Additionally, the court had to determine whether the failure to insist on Computershare's compliance with the statutory obligations constituted a breach of the statutory contract.

The court concluded that Ramelius had indeed refused or failed to register the share transfer without just cause. The service provider, Computershare, refused to register the transfer until the plaintiffs paid a fee, which Ramelius was not entitled to charge. The court found that Ramelius' inaction, coupled with its acknowledgment that Computershare did not have authority to charge the fee, meant that Ramelius had failed to ensure compliance with its obligations. This constituted a breach of the statutory contract as Ramelius did not prevent, delay, or interfere with the registration of the transfer as required by its constitution. Consequently, the court ruled that the plaintiffs were entitled to the declarations and injunctions they sought.

Orders

Orders of the court

1. The matter is adjourned to a date and time to be fixed for the hearing of submissions with respect to costs and the form of the declarations and orders to give effect to these reasons.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Given that I uphold the first and second submissions of the Plaintiffs, it is not necessary to consider the merit or otherwise of this submission.Conclusion on “without just cause” For the reasons given above, I conclude that the Plaintiffs have established that Ramelius has refused or failed, without just cause, to register their share transfer. The entity appointed by Ramelius to maintain its Share Register has refused to register the transfer until it is paid a fee to which it has no entitlement. Ramelius has done nothing to insist that Computershare perform its obligations under the RSA. Instead it has sought, inappropriately, to justify Computershare’s refusal. Breach of the statutory contract On the basis of the above findings, there is no difficulty in concluding that Ramelius has also breached its statutory contract with the O’Reilly Plaintiffs. Under its constitution, Ramelius did not have any discretion to refuse to register the transfer, as it was not suggested that the application of a “holding lock” as contemplated by cl 24.2 of the constitution has any application presently. As indicated previously, because Computershare is the instrumentality by which Ramelius discharges its obligations with respect to its Registry, the failure by Computershare to register the transfer has the consequence that Ramelius has failed to register that transfer. Clause 24.2 provides (relevantly) that Ramelius must not “prevent, delay or interfere” with the registration of a paper‑based transfer. The Plaintiffs did not point to positive conduct by Ramelius preventing, delaying or interfering with the registration of the transfer. However, while the verbs “prevent” and “interfere” in cl 24.2 may connote forms of positive action, the verb “delay” is capable of encompassing an omission to act as well as inactivity. The postponement of performance of an act beyond the point of time when the act should have been performed is delay: William Cable Ltd v Trainor (1957) NZLR 337 at 345. Given the length of time which has lapsed since Mr O’Reilly resubmitted the share transfer form on 27 February 2017, there is no difficulty in concluding that Ramelius has “delayed” the registration of the transfer. The inactivity of Ramelius is made all the more significant by Ramelius’ acknowledgement in the trial that Computershare does not have its authority to charge its shareholders a security validation fee.The form of relief For the reasons above, I am satisfied that the Plaintiffs have established that Ramelius has refused or failed without just cause to register the transfer of the shares from the O’Reilly Plaintiffs to Verguier and that, by refusing or failing to register the transfer, Ramelius has breached its statutory contract with the O’Reilly Plaintiffs. The Plaintiffs submitted that the Court should grant the relief which they seek, namely, declarations and injunctions. They referred in this respect to Smolarek v Liwszyc [2006] WASCA 50, (2006) 32 WAR 101 in the which the Court of Appeal in the Supreme Court of Western Australia said at [39]:… The usual remedy for a member who complains of a breach of the statutory contract is a declaration or injunction (see R P Austin and I M Ramsay Ford’s Principles of Corporations Law (12th ed, 2005) at [11.235]) and there seems to be no reason why an injunction of this kind should not be ordered pursuant to the ordinary jurisdiction of the Supreme Court …

Ratio Decidendi

Legal Principle Established

Section 1071D(1) provides that no distinction is to be drawn in relation to the transfer of shares between applications submitted by a transferor and by a transferee. It provides:1071D Registration of transfer at request of transferor(1)A written application by the transferor of a security of a company for the transferee’s name to be entered in the appropriate register is as effective (for the company’s purposes) as if it were an application by the transferee. The application is subject to the same conditions as it would be if it had been made by the transferee. Section 1071E requires a company refusing to register a transfer of a security of that company to give the transferee notice of the refusal, and to do so within two months of the lodgement of the transfer. Finally, s 1071F, pursuant to which Verguier seeks relief in the present proceedings, provides:1071F Remedy for refusal to register transfer or transmission(1) If a relevant authority in relation to a company:(a) refuses or fails to register; or(b) refuses or fails to give its consent or approval to the registration of;a transfer or transmission of securities of the company, the transferee or transmittee may apply to the Court for an order under this section.(2)If the Court is satisfied on the application that the refusal or failure was without just cause, the Court may:(a) order that the transfer or transmission be registered; or(b) make such other order as it thinks just and reasonable, including:(i)in the case of a transfer or transmission of shares—an order providing for the purchase of the shares by a specified member of the company or by the company; and(ii)in the case of a purchase by the company—an order providing for the reduction accordingly of the capital of the company.(3) In this section:relevant authority, in relation to a company, means:(a)a person who has, 2 or more persons who together have, or a body that has, authority to register a transfer or transmission of securities of the company; or(b)a person, 2 or more persons, or a body, whose consent or approval is required before a transfer or transmission of securities of the company is registered. Aspects of s 1071F were discussed in Beck v Tuckey [2007] NSWSC 1065; (2007) 213 FLR 152. Brereton J said:[9]The purpose of s 1071F was to provide an easier remedy than rectification and to widen the power of the Court to do justice to the parties in the case of a dispute about registration of a transfer [Monardo v Complete Hardware Ltd (1990) 20 NSWLR 489, 2 ACSR 605]. It reflects the principle that the holder of a share has a prima facie right to transfer it [Roberts v Coussens (1991) 25 NSWLR 171; 9 ACLC 1403, 1416-7]. The prevailing view is that the onus of showing an absence of just cause for the purposes of s 1071F remains with the applicant for registration, and that the corporation and the directors do not bear any onus of establishing just cause [Roberts v Coussens; Leaver v Taxi Combined Services (Launceston) Pty Limited (2002) 10 Tas R 362; [2002] TASSC 2 [7]]. However, that is not to say that, once it appears objectively that there is no such cause, an evidentiary onus may not easily shift to the directors to raise some cause [Roberts v Coussens]; and while failure to give reasons does not of itself vitiate the decision or prove there is no just cause, at least where reasons are not required to be given, nonetheless, the failure to provide reasons may, in the context of the whole of the evidence, assist in the drawing of an inference that there is no good reason.