Catalyst Metals Limited, in the matter of Catalyst Metals Limited [2025] FCA 1052 (25 August 2025)

1. Pursuant to s 1322(4)(a) of the Act, it be declared that any offer for sale or sale of the Shares during the period after their issue to the date of these orders (inclusive) is not invalid by reason of:

(a) any failure of a seller to give a notice under s 708A(5)(e) and s 708A(6) of the Act to exempt that seller from the need to give disclosure under the Act; and

(b) any consequential contravention of ss 707(1), 707(3) and (or) 727(1) of the Act.

1. Pursuant to s 1322(4)(c) of the Act:

(a) the plaintiff and its current and former directors and officers be relieved from any civil liability in respect of the failure to disclose the information in its consolidated entity disclosure statement described in paragraph 1 of these orders; and

(b) any person offering to sell or selling Shares is relieved from any civil liability in respect of any contravention of s 707(1), 707(3) and (or) 721(1) of the Act described in paragraph 2(b) of these orders.

1. A sealed copy of these orders be served on the Australian Securities and Investments Commission (ASIC) as soon as reasonably practicable and, upon service of these orders on ASIC, ASIC include these orders on its database.
2. As soon as reasonably practicable, the plaintiff publish an announcement to the Australian Securities Exchange (ASX) in which a copy of these orders is included.
3. For a period of 28 days from the date of publication of these orders on the ASX website, any person who claims to have suffered substantial injustice, or who claims that they are likely to suffer substantial injustice, by reason of the failure to disclose or any contravention of the Act or the effect of paragraphs 1-3 of these orders has liberty to apply within that period to vary or to discharge those paragraphs of these orders.
4. There be no order as to costs.

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

1. On 25 August 2025 I made orders on an urgent ex parte originating application the plaintiff filed in which it sought orders under s 1322 of the Corporations Act 2001 (Cth). These are my reasons for those orders. (All references to sections, Parts or Divisions are references to provisions of the Act unless otherwise indicated.)
2. The plaintiff is a public company that is listed on the Australian Securities Exchange. Amongst other things, it is required to prepare a financial report and directors' report for each financial year: s 292(1). The financial report consists of financial statements, notes to those statements (where the accounting standards require a public company to prepare financial statements in relation to a consolidated entity), a consolidated entity disclosure statement and the directors' declaration about the statements and notes: s 295(1).
3. A consolidated entity disclosure statement is a statement that includes certain information for each entity that was, at the end of the relevant financial year, part of the consolidated entity. Part of that information is whether the entity was an Australian resident and (or) a foreign resident for taxation purposes: s 295(3A)(vi), s 295(3A)(vii). The directors' declaration is a declaration by the directors, amongst other things, whether, in the directors' opinion, the consolidated entity disclosure statement is 'true and correct': s 295(4)(da). The directors' declaration must be made in accordance with a resolution of the directors, specify the date on which the declaration is made, and be signed by a director: s 295(5). The directors resolution must only be made after the person who performs the function of a chief executive or chief financial officer in relation to the company has given the directors a declaration under s 295A(2): s 295A(1). The declaration of the chief executive or chief financial officer includes whether, in the person's opinion, the consolidated entity disclosure statement is 'true and correct': s 295A(2)(ca).
4. The plaintiff is required to prepare financial statements in relation to a consolidated entity and include a consolidated entity disclosure statement in its financial report. During the 2023 financial year the plaintiff acquired Superior Gold Inc and that company became a wholly owned subsidiary of the plaintiff. Superior Gold is a Canada-based gold producer. As part of that acquisition, Catalyst (Plutonic) Pty Ltd, a subsidiary of Superior Gold, also became a wholly owned subsidiary of the plaintiff.
5. The plaintiff's financial report for the 2024 financial year contained a consolidated entity disclosure statement that identified Superior Gold and Plutonic as part of the consolidated entity. The statement indicated that Superior Gold was a resident of Canada for taxation purposes and that neither Superior Gold nor Plutonic formed part of the 'income tax consolidated group under the tax consolidated regime' for the plaintiff's consolidated entity group.
6. The plaintiff's financial report for the 2024 financial year contained a directors' declaration dated 29 August 2024. It indicated, amongst other things, that in the directors' opinion the information disclosed in the consolidated entity disclosure statement was 'true and correct', the directors had been given the declarations required under s 295A and the declaration was signed in accordance with a resolution of the directors made pursuant to s 295(5)(a). David Jones AM, chair of the plaintiffs' directors, signed the declaration.
7. After the 2024 financial report was prepared and the directors' declaration signed, the plaintiff made a number of issues of shares. The issue of these shares were, with one exception, for relatively small parcels on the exercise of unlisted options or for securities-based incentive payments. The exception was an issue of 25 million shares pursuant to an institutional placement on 29 May 2025. Unless an exception applies, an offer of these shares for sale within 12 months after the issue needs disclosure under Pt 6D.2: s 707(1), s 707(3). A person must not make an offer for securities that needs disclosure under Pt 6D.2 unless a disclosure document for the offer has been lodged with ASIC: s 727(1).
8. Section 708A contains three exceptions to the need for disclosure under s 707(3). Relevantly, under s 708A(5) the offer for sale does not need disclosure if the shares were quoted securities that met certain criteria including that the plaintiff (as issuer) gave the relevant market operator for the plaintiff (ASX Limited) a notice complying with s 708A(6) (referred to as a 'cleansing notice'). A notice complies with s 708A(6) if it states, amongst other things, that the body has complied with the provisions of Ch 2M that apply to the body. Sections 292, 295 and 295A are all in Ch 2M.
9. After issue of the relevant shares and in the course of preparing the 2025 financial report, the plaintiff sought advice from KPMG concerning the extent to which Superior Gold may be an Australian resident for taxation purposes and whether Superior Gold and Plutonic were eligible to join the plaintiff's income tax consolidated group.
10. Elena Marie O'Connor is the plaintiff's current chief financial officer. She deposed that she was appointed to that position on 24 July 2025 and received a draft advice from KPMG on 27 July 2025. After receiving that draft advice, Ms O'Connor formed the view that Superior Gold was probably a dual resident of Australia and Canada for taxation purposes and Superior Gold and Plutonic were eligible to join the plaintiff's income tax consolidated group. Then, in the course of preparing the 2025 financial report, Ms O'Connor became aware that the consolidated entity disclosure statement in the 2024 financial report had stated that Superior Gold was only a resident of Canada for taxation purposes and that neither Superior Gold nor Plutonic was part of the income tax consolidated group. Ms O'Connor raised this matter with the plaintiff's external auditor on 1 August 2025 and with the plaintiff's managing director and chief executive officer, James Champion de Crespigny, on 7 August 2025. On 7 August 2025 Ms O'Connor also received KPMG's final advice in the form of a 'Reasonably Arguable Position Paper'. Ms O'Connor provided the plaintiff's board with a memorandum dated 20 August 2025 in which she set out her opinion regarding the tax residency of Superior Gold, recommendation for disclosure of dual residency in the 2025 financial report and annexed a copy of KPMG's report.
11. Mr Champion de Crespigny deposed that after speaking with Ms O'Connor on 7 August 2025 he sought legal advice concerning the disclosure made in the 2024 financial report and consolidated entity disclosure statement regarding the tax residency of Superior Gold. Ms O'Connor's memorandum and the matter of the 2024 financial report were discussed at a board meeting of the plaintiff on 21 August 2025. On 22 August 2025 the board resolved to make the application under s 1322.
12. Mr Champion De Crespigny also deposed facts relating to the preparation of the 2024 financial report. That report was prepared by Donna Thornton, the plaintiff's former chief financial officer, Stephen Edwards, the plaintiff's former group financial controller, members of the finance team with oversight of the audit and risk committee, including Mr Champion de Crespigny and the plaintiff's external auditors. The financial report was approved at a board meeting held on 27 August 2024 after the accuracy of the information contained in it was affirmed by Ms Thornton. Mr Champion de Crespigny considered that the disclosure regarding Superior Gold's tax residency was true and correct based on the advice received from the management and that Superior Gold was incorporated in Canada, was a resident of Canada for Canadian tax purposes and, to the best of his knowledge, was not a resident of Australia for taxation purposes at any time before the plaintiff acquired that company.
13. Having regard to the facts to which Ms O'Connor and Mr Champion de Crespigny deposed, I am not convinced that there has been any non-compliance with the requirements of s 295(4)(da) or s 295A(2)(ca). Section 295(4)(da) requires a declaration whether 'in the directors' opinion' the consolidated entity disclosure statement is true and correct. That declaration must be made only after the person who performs the function of chief executive or chief financial officer has made a declaration that in the person's opinion the consolidated entity disclosure statement is true and correct: s 295A(1), s 295A(2)(ca). The opinion of the chief executive or chief financial officer must be in writing, specify the date on which the declaration is made and be signed by the person making the declaration: s 295A(3). The declarations under s 295(4)(da) and s 295A(2)(ca) were made at the date of those declarations. They are opinions that the consolidated entity disclosure statement 'is true and correct'. It can be accepted that the opinion must be genuine in the sense that it is an honestly held opinion and, perhaps, also an opinion for which there is a reasonable basis, but, as will be explained shortly, there is nothing in the evidence before the Court to suggest that the opinions in the directors' declaration or declarations of the chief executive or chief financial officer were not genuinely held opinions at the time of those declarations.
14. Nonetheless, s 295(3A) provides that the consolidated entity disclosure statement is a statement that includes as the information for each consolidated entity whether, at the end of the relevant financial year, that entity was an Australian resident (within the meaning of the Income Tax Assessment Act 1997 (Cth)). If the opinion KPMG has expressed is correct, then the 2024 consolidated entity disclosure statement failed to include that information because Superior Gold was an Australian resident for taxation purposes from 1 July 2023. Further, Superior Gold and Plutonic were eligible to be members of the plaintiff's income tax consolidated group. Therefore, to that extent, the information contained in the 2024 consolidated entity disclosure statement is incomplete and inaccurate.
15. In my view, it is somewhat doubtful that the incomplete information about the residency of Superior Gold and inaccurate information about membership of the income tax consolidated group in this case that was, for the reasons given later, the consequence of an honest yet mistaken view, amounted to non-compliance with s 295(3A) when read with s 295(4)(da). As a result, I have doubts that the statement in a notice given under s 708A(6) to the effect that the company has complied with the provisions of Ch 2M as they apply to the company would be rendered false or misleading in a material particular due to the incomplete and inaccurate information in the consolidated entity disclosure document. I also have doubts that an honest but inaccurate statement to the effect that the plaintiff complied with provisions of Ch 2M as they apply to the plaintiff would deprive a notice given under s 708A(6) of its statutory effect or that it would result in a contravention of one or more of ss 707(1), 707(3) or 727(1).
16. Section 708A contemplates that a notice given under s 708A(6) may be defective and may be false or misleading in a material particular. In such a case, there is an obligation to correct the defective notice, but there is no suggestion in s 708A that the notice is otherwise ineffective for the purposes of s 708A(5): s 708A(9), s 708A(10). Further, a person who relies on a notice that fails to comply with s 708A(6) does not contravene s 727(1): s 727(5). These are firm indications that a minor defect in a notice given under s 708A(6) does not undermine the legal effect of that notice for the purposes of satisfying the criteria for the exemption from disclosure in s 708A(5).
17. Notwithstanding these doubts, I accept that there is a risk that, in the circumstances of this case, the plaintiff has failed to comply with s 295(3A) (a provisions of Ch 2M that applies to it) and that failure exposes the company, its current and former directors and officers and the sellers of shares it issued during the course of the 2025 financial year to the risk of contraventions of and civil liability under the Act. That is, there is a risk that the consolidated entity disclosure statement prepared for the purposes of s 295(3A) and the notices given to the ASX for the purposes of s 708A(6) are 'invalid' in the sense that they do not meet the requirements of the Act for those documents.
18. Relevantly, s 1322 of the Act provides:

...

(4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:

(a) an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;

...

(c) an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a);

...

(6) The Court must not make an order under this section unless it is satisfied:

(a) in the case of an order referred to in paragraph (4)(a):

(i) that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature;

(ii) that the person or persons concerned in or party to the contravention or failure acted honestly; or

(iii) that it is just and equitable that the order be made; and

(b) in the case of an order referred to in paragraph (4)(c) - that the person subject to the civil liability concerned acted honestly; and

(c) in every case - that no substantial injustice has been or is likely to be caused to any person.

1. The applicable principles are well-established. Relevantly for the purposes of this application, the principles may be summarised as follows.

(1) Section 1322 contemplates that there may be instances of non-compliance with the Act and facilitates the validation of certain kinds of non-compliance in certain circumstances. It is remedial in nature and should be given a liberal interpretation: Re ICandy Interactive Ltd [2018] FCA 533; 125 ACSR 369 at [43] (Banks-Smith J).

(2) Section 1322(4)(a) is not confined to procedural or quasi-procedural matters. It may be used to cure substantive as well as procedural contraventions of the Act: Re Golden Gate Petroleum Ltd [2010] FCA 40; 77 ACSR 17 at [40]- [41] (McKerracher J).

(3) There are many authorities in which courts have exercised power under s 1322(4)(a) to validate non-disclosure by holders of securities who have on-sold securities issued to them in contravention of s 707(1), 707(3) and 727(1): ICandy at [43].

(4) A company that has issued securities that have been on-sold in contravention of the Act is an interested party with standing to bring an application for validation of on-sales without disclosure: ICandy at [46].

(5) The factors in s 1322(6)(a) are cumulative. It is only necessary to demonstrate that one of the factors is present: Golden Gate at [39].

(6) For the purposes of s 1322(6)(a)(ii) and s 1322(6)(b) the Court is concerned with the question of whether the person has acted honestly in the ordinary meaning of that term. That is, whether the person has acted without deceit or conscious impropriety, without intent to gain improper benefit for that person or another, and without carelessness or imprudence to such a degree as to demonstrate that no genuine attempt has been made to comply with the applicable provisions of the Act: ICandy at [56].

(7) The concept of acting honestly embraces:

(a) inadvertence or failure to turn a person's mind to the relevant issue;

(b) an active, but incorrect, consideration of a legal issue as well as failure to consider the issue at all; and

(c) failure to understand or appreciate the significance of non-compliance:

ICandy at [55].

(8) When determining whether someone has acted honestly the Court looks to an absence of evidence of dishonesty. It also takes into account whether the applicant has taken prompt action to remedy the error: ICandy at [54].

(9) The obtaining of advice does not conclusively establish that a person was acting honestly. However, it is an important consideration in determining whether proper and competent expert advice was sought and obtained: ICandy at [57].

(10) The honesty of security holders who have on-sold without disclosure is relevant. The Court may infer from the applicable facts of issue and on-sale that the security holders have acted honestly: ICandy at [58].

(11) The Court may also consider the honesty of those responsible, including company officers, for the failure of the company to give the relevant market operator an effective cleansing notice: ICandy at [83], [87].

(12) For the purposes of s 1322(6)(a)(iii), the words 'just and equitable' are of the widest significance and do not limit the jurisdiction of the Court. It is a question of fact and must depend on its own circumstances. There is no necessary limit on their generality, and they are to be applied in their ordinary meaning as calling for the exercise of judgment in a conventional way: Re Superior Resources Ltd [2020] FCA 635; 144 ACSR 677 at [18] (Jackson J).

(13) In considering whether it is just and equitable to validate on-sales, the Court will generally focus on the interests and conduct of the security holders: ICandy at [110].

(14) For the purposes of s 1322(6)(c), the reference to 'substantial injustice' is to a real and not insubstantial or theoretical prejudice. The expression 'has been' invites an inquiry as to the effect of the contravention sought to be cured and the expression 'likely to be' draws attention to the effect of the proposed order. Whether there is real injustice requires a weighing of any prejudice if the order is made against the prejudice that would be suffered by the company, its directors and officers, or third parties if an order were not made. In any given case, the degree of prejudice to a person or persons may be outweighed if the overwhelming weight of justice is in favour of making the order: Re Murray River Organics Ltd [2019] FCA 931; 138 ACSR 365 at [35]- [37] (Anderson J).

(15) In weighing the relative risk of prejudice, as a mechanism for ameliorating against any residual risk of substantial injustice, it is common for the Court to provide a period of time within which any person affected by the orders may apply to set aside or vary the orders: e.g., Golden Gate at [55]; ICandy at [116]; Re Murray River Organics at [38].

(16) Even if all the criteria in s 1322(4) and s 1322(6) are satisfied the Court has a residual discretion as to whether or not to make an order under the section. The public interest is a relevant consideration in the exercise of that discretion: Re Murray River Organics at [39].

1. In substance, the plaintiff sought relief under s 1322(4)(a) to validate the form of the consolidated entity disclosure statement and directors' declaration in its 2024 financial report and to validate the form of the cleansing notices given to ASX Limited. In neither case was it submitted that the contravention or failing was essentially of a procedural nature. In each case it was submitted that the person or persons concerned in or a party to the contravention acted honestly and (or) that it was just and equitable that the order be made.
2. On the facts deposed in the affidavits read in support of the application, I am satisfied that the directors and officers of the plaintiff concerned in the preparation of the consolidated entity disclosure statement and directors' declaration acted honestly in the sense described in the summary of the applicable principles. Likewise, I am satisfied that Mr Champion de Crespigny, who signed the cleansing notices, did so acting honestly and any shareholder who offered for sale or sold the relevant shares also acted honestly. I am also satisfied that an order validating the documents and any transactions is just and equitable in the circumstances.
3. Based on the facts summarised earlier in these reasons, I infer that, as of 27 August 2024, Ms Thornton was of the opinion and find that Mr Champion de Crespigny was, in fact, of the opinion that Superior Gold was not a resident of Australia for taxation purposes and neither Superior Gold nor Plutonic formed part of the plaintiff's income tax consolidated group. There is nothing in the evidence before the Court to suggest that those views were not held honestly and not reasonably held based on the information then available to those officers of the plaintiff.
4. I infer from the directors' declaration Mr Jones signed on 29 August 2024 and s 295(5)(a) of the Act, that the directors' declaration was signed in accordance with a resolution of the directors passed at the board meeting held on 27 August 2024 after Ms Thornton had made the presentation to the board deposed in Mr Champion de Crespigny's affidavit. I infer from s 295A(1) of the Act that the directors' declaration was made after Mr Champion de Crespigny or Ms Thornton gave the directors a declaration under s 295A(2)(ca) of the Act in which an opinion was expressed that the consolidated entity disclosure statement was true and correct. For the reasons already given, there is no reason to consider that the opinion of Ms Thornton or Mr Champion de Crespigny gave under s 295A(2)(ca) of the Act was not held honestly and was not held with reasonable foundation. I infer, in turn, that the declaration given under s 295A(2)(ca) was also part of the foundation for the directors' resolution to make the directors' declarations under s 295(4), including a declaration that, in the directors' opinion, the consolidated entity disclosure statement was true and correct for the purposes of s 295(4)(da). Therefore, there is also nothing in the evidence before the Court to suggest that the opinions in the directors' declaration Mr Jones signed on 29 August 2024 were not held honestly and were not held with reasonable foundation.
5. Taking into account that the residency of Superior Gold for taxation purposes and the inclusion of Superior Gold and Plutonic in the plaintiff's income tax consolidated group is based on the opinions KPMG and Ms O'Connor formed between 27 July 2025 and 20 August 2025 and that before that time the directors and officers of the plaintiff were evidently of the opposite view, I am satisfied that to the extent that the consolidated entity disclosure statement does not include information to the effect that Superior Gold is a resident of Australia for taxation purposes and represents that neither Superior Gold nor Plutonic is part of the plaintiff's income tax consolidated group, the incomplete and inaccurate nature of that document was unintentional and the consequence, in part, of an active but incorrect view about a legal question and, in part, of a failure to advert to the significance of certain matters relating to control of Superior Gold that affected its residency for taxation purposes. Further, based on the facts summarised earlier in these reasons, the plaintiff, through Ms O'Connor and Mr Champion de Crespigny and its board of directors has acted promptly to correct any error in the consolidated entity disclosure statement.
6. For essentially the same reasons that I am satisfied that the person or persons concerned in the preparation of the consolidated entity disclosure statement acted honestly, it is also just and equitable that the order be made. Any error or misstatement in the consolidated entity disclosure statement was unintentional and relatively minor in nature. The evidence is also to the effect that the residency of Superior Gold for taxation purposes for the 2024 financial year will make no difference to the amount of tax payable by the plaintiff's income tax consolidated group as that amount will remain nil.
7. For the same reasons that I am satisfied that the person or persons concerned in the preparation of the consolidated entity disclosure statement acted honestly, I am satisfied that Mr Champion de Crespigny, who signed each of the cleansing notices, stated honestly that as at the date of the relevant notice the plaintiff had complied with the provisions of Ch 2M of the Act as they applied to the plaintiff. As to the shareholders issued with shares, I infer that they acted honestly in offering shares for sale or selling shares. Having regard to the manner in which the shares were issued to the shareholders, I infer that the shareholders and any subsequent purchaser of the shares would have assumed that the plaintiff had given valid cleansing notices and the exception to disclosure in s 708A(5) applied. For the same reasons, I am satisfied that it is just and equitable that any defect in the cleansing notices be cured and any offers for sale or sale of the shares in contravention of the Act be validated.
8. The plaintiff also sought relief under s 1322(4)(c) relieving the plaintiff and its former and current directors and officers from civil liability in respect of the preparation of an inaccurate consolidated entity disclosure statement and any person offering to sell or selling the relevant shares from civil liability in respect of contraventions of the Act associated with such offers or sales. For the reasons already given in relation to s 1322(4)(a) and s 1322(6)(a)(ii), I am satisfied that any person concerned in or a party to the failure or contravention acted honestly and, therefore, the criterion in s 1322(6)(b) for making an order under s 1322(4)(c) is met.
9. For the purposes of s 1322(6)(c), on the facts deposed in the affidavits read in support of the application, I am also satisfied that no substantial injustice has been or is likely to be caused to any person by any order made under s 1322(4)(a) or s 1322(4)(c) of the Act. As already mentioned, any inaccuracy in the consolidated entity disclosure statement was unintentional and relatively minor in nature. The substantive error had no effect on the tax payable by the plaintiff's consolidated income tax group. Mr Champion de Crespigny also deposed the plaintiffs' directors were of the collective view that the error was not material or price sensitive information. Taking into account that the application was made ex parte, any residual risk can be accommodated by an order granting persons who claim to have suffered substantial injustice leave to apply to set aside or vary the orders.
10. Otherwise, I am satisfied that the residual discretion in s 1322 should be exercised in favour of making orders under s 1322(4)(a) and s 1322(4)(c) of the Act. There is no element of public policy or other factor that tends against granting the relief sought in the application.
11. For all the above reasons orders were made substantially in terms of the plaintiff's originating application.

I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Feutrill.