MedAdvisor Limited, in the matter of MedAdvisor Limited [2025] FCA 491 (2 May 2025)

(a) any failure of a notice under s 708A(5)(e) of the Act to exempt the sellers from the obligation of disclosure under the Act; and

(b) the sellers' consequent failure to comply with s 707(3) or s 727(1) of the Act.

1. Pursuant to s 1322(4)(c) of the Act, any person to whom any of the Placement Shares were issued, or have been sold, and who have in turn on-sold any of those shares up until the date of this order, is relieved in whole from any civil liability in respect of:

(a) any failure of a notice under s 708A(5)(e) of the Act to exempt the sellers from the obligation of disclosure under the Act; or

(b) the sellers' failure to comply with ss 707(3) or 727(1) of the Act.

1. The Plaintiff, as soon as reasonably practicable, is to serve a sealed copy of these orders on:

(a) the Australian Securities and Investments Commission;

(b) the ASX; and

(c) each person to whom the Placement Shares were issued.

1. The Plaintiff is to place a copy of these orders on the website of the Plaintiff as soon as reasonably practicable, and to remain there for at least 28 days.
2. For a period of 28 days from the date of publication of a copy of these orders on the ASX market announcements platform, the Australian Securities and Investments Commission or any person who claims to have suffered substantial injustice or is likely to suffer substantial injustice by the making of any or all of these orders has liberty to apply to vary or to discharge the orders within that period.
3. 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. The plaintiff, MedAdvisor Limited has applied for orders under s 1322 of the Corporations Act 2001 (Cth) (the Act) to cure a failure, under s 708A(5)(e), to lodge what is commonly called a "cleansing notice" in respect of the issue of some new shares.
2. In short, the effect of the omission under s 708A(5)(e) of the Act, is that any on-sales of those newly issued shares within 12 months would require disclosure to investors under Pt 6D.2 of the Act, and may thereby place certain on-sellers in breach of their disclosure obligations for on-sales that occurred within the week or so following the issue of those new shares as a "cleansing notice" was issued, albeit late.
3. The orders sought seek to reverse the effect of that omission by way of the ameliorating effect of the orders and declarations sought pursuant to s 1322 of the Act.
4. For the reasons given below, I am satisfied that the orders should be made, with one amendment.

1. MedAdvisor's shares are listed for quotation on the Australian Stock Exchange (ASX). MedAdvisor has been listed, although previously under a different name, since 2011. On 8 April 2025, MedAdvisor issued a total of 47,750,000 new shares (Placement Shares). It is submitted that the Placement Shares were by way of placement to institutional and sophisticated investors at $0.10 per share. The Placement Shares were to raise approximately $5 million which was intended to be used to continue executing strategic and cost optimisation initiatives and working capital requirements of MedAdvisor.
2. MedAdvisor's company secretary has provided an affidavit in support of this application. The company secretary details a list of the institutional and sophisticated advisors. Furthermore, evidence is provided that at least two of those investors have reduced their holdings of the Placement Shares, which may have been by way of sale. A cleansing notice was required to be given by s 708A(5)(e) by 15 April 2025 in relation to the 8 April issue of the Placement Shares. However, a cleansing notice was not issued until 23 April 2025. It was issued promptly, after it became apparent that such a notice had not been issued. As such, this application relates to a discrete historical period of time.

1. Generally, Pt 6D.2 of the Act imposes disclosure obligations concerning the issue and sale of securities or shares. In particular, ss 706, 707, 708, 708A and 727 are relevant to the present context and application. Section 706 provides:

Issue offers that need disclosure

An offer of securities for issue, other than a CSF offer, needs disclosure to investors under this Part unless section 708 or 708AA says otherwise.

1. Relevantly, s 707(1) and s 707(3) provide as follows:

Sale offers that need disclosure

Only some sales need disclosure

(1) An offer of securities for sale needs disclosure to investors under this Part only if disclosure is required by subsection (2), (3) or (5).

...

Sale amounting to indirect issue

(3) An offer of a body's securities for sale within 12 months after their issue needs disclosure to investors under this Part if:

(a) the body issued the securities without disclosure to investors under this Part; and

(b) either:

(i) the body issued the securities with the purpose of the person to whom they were issued selling or transferring the securities, or granting, issuing or transferring interests in, or options over, them; or

(ii) the person to whom the securities were issued acquired them with the purpose of selling or transferring the securities, or granting, issuing or transferring interests in, or options over, them;

and section 708 or 708A does not say otherwise.

1. Section 707(3) is relevant to the possible on-sales, which may have already occurred. The evidence does disclose that some on-sales may have already taken place. It is almost impossible to know whether or not further on-sales have taken place.
2. It is necessary to consider the relevant parts of s 708(8) and (11) of the Act, which provide as follows:

(8) An offer of a body's securities does not need disclosure to investors under this Part if:

(a) the minimum amount payable for the securities on acceptance of the offer by the person to whom the offer is made is at least $500,000; or

(b) the amount payable for the securities on acceptance by the person to whom the offer is made and the amounts previously paid by the person for the body's securities of the same class that are held by the person add up to at least $500,000; or

(c) it appears from a certificate given by a qualified accountant no more than 6 months before the offer is made that the person to whom the offer is made:

(i) has net assets of at least the amount specified in regulations made for the purposes of this subparagraph; or

(ii) has a gross income for each of the last 2 financial years of at least the amount specified in regulations made for the purposes of this subparagraph a year; or

(d) the offer is made to a company or trust controlled by a person who meets the requirements of subparagraph (c)(i) or (ii).

Note 1: Section 9 defines qualified accountant.

Note 2: A financial services licensee has obligations under Division 3 of Part 7.7 when providing financial advice. ASIC has a power under section 915C to suspend or cancel a licensee's licence.

Professional investors

(11) An offer of securities does not need disclosure to investors under this Part if it is made to:

(a) a person covered by the definition of professional investor in section 9 (except a person mentioned in paragraph (e) of the definition); or

(b) a person who has or controls gross assets of at least $10 million (including any assets held by an associate or under a trust that the person manages).

1. It is submitted that these exemptions applied to the direct issue of the Placement Shares by MedAdvisor. In this context, relevantly, s 708A(1), (5) and (6) provide as follows:

Sale offers that do not need disclosure

Sale offers to which this section applies

(1) This section applies to an offer (the sale offer) of a body's securities (the relevant securities) for sale by a person if:

(a) but for subsection (5), (11) or (12), disclosure to investors under this Part would be required by subsection 707(3) for the sale offer; and

(b) the securities were not issued by the body with the purpose referred to in subparagraph 707(3)(b)(i); and

(c) a determination under subsection (2) was not in force in relation to the body at the time when the relevant securities were issued.

Sale offer of quoted securities - case 1

(5) The sale offer does not need disclosure to investors under this Part if:

(a) the relevant securities are in a class of securities that were quoted securities at all times in the 3 months before the day on which the relevant securities were issued; and

(b) trading in that class of securities on a declared financial market on which they were quoted was not suspended for more than a total of 5 days during the shorter of the period during which the class of securities were quoted, and the period of 12 months before the day on which the relevant securities were issued; and

(c) no exemption under section 111AS or 111AT covered the body, or any person as director or auditor of the body, at any time during the relevant period referred to in paragraph (b); and

(d) no order under section 340 or 341 covered the body, or any person as director or auditor of the body, at any time during the relevant period referred to in paragraph (b); and

(e) either:

(i) if this section applies because of subsection (1)--the body gives the relevant market operator for the body a notice that complies with subsection (6) before the sale offer is made; or

(ii) if this section applies because of subsection (1A)--both the body, and the controller, give the relevant market operator for the body a notice that complies with subsection (6) before the sale offer is made.

(6) A notice complies with this subsection if the notice:

(a) is given within 5 business days after the day on which the relevant securities were issued by the body; and

(b) states that the body issued the relevant securities without disclosure to investors under this Part; and

(c) states that the notice is being given under paragraph (5)(e); and

(d) states that, as at the date of the notice, the body has complied with:

(i) the provisions of Chapter 2M as they apply to the body; and

(ii) sections 674 and 674A; and

(e) sets out any information that is excluded information as at the date of the notice (see subsections (7) and (8)).

Note 1: A person is taken not to contravene section 727 if a notice purports to comply with this subsection but does not actually comply with this subsection: see subsection 727(5).

Note 2: A notice must not be false or misleading in a material particular, or omit anything that would render it misleading in a material respect: see sections 1308 and 1309. The body has an obligation to correct a defective notice: see subsection (9) of this section.

1. It is s 708A(5)(e), and s 708A(6) that are of direct relevance to the present application by MedAdvisor. By application of s 708A(5), the seller does not need to comply with the disclosure requirements of Pt 6D.2 if the issuer provided a cleansing notice in relation to the securities or shares.
2. The cleansing notice must have been given by the issuer to the ASX within five days of the issue of the securities or shares and before the sale offer was made. However, if an issuer of securities or shares does not issue a valid cleansing notice, as MedAdvisor did not do so prior to 23 April 2025, then there is a prospect that the party to whom the securities are issued must, itself, cause such disclosure to be given if that party wishes to on-sell those securities within 12 months: see s 707(3) of the Act. There is then a prospect of a contravention of the Act and the commission of an offence if such disclosure does not occur: see Re Spectur Limited [2019] 136 ACSR 542; [2019] FCA 867 at [2].
3. In this regard, s 727(1) provides as follows:

Offering securities without a current disclosure document

Offer of securities needs lodged disclosure document

(1) A person must not make an offer of securities, or distribute an application form for an offer of securities, that needs disclosure to investors under Part 6D.2 unless a disclosure document for the offer has been lodged with ASIC.

1. That provision may have application in the present case in conjunction with the mandate set out in s 707(3), as there has been no cleansing notice issued prior to 23 April 2025, and absent the orders sought by MedAdvisor.
2. The purpose of the provision is to prevent circumvention of the policy of Ch 6D by the issue of securities to a party to whom disclosure is not required under s 708 or s 708AA, and that party then offering those securities for sale to investors without disclosure: see Re Golden Gate Petroleum Limited (2010) 77 ACSR 17; [2010] FCA 40 at [27]. I gratefully adopt the description in relation to the requirements of Pt 6D.2 of the Act provided by Beach J in 333D Limited, in the matter of 333D Limited [2021] FCA 349 at [19] to [20], in which his Honour observed as follows:

1. In summary, Pt 6D.2 of the Act requires the provision of information about securities when an offer to issue or sell them is made. In particular, an offeror of securities for issue must make disclosure to investors under Pt 6D.2, unless s 708 says otherwise (s 706), and an offeror of securities for sale within 12 months after their issue must make a disclosure to investors under Pt 6D.2 of the Act if (s 707(3)):

(a) the shares were issued without disclosure; and > > (b) they were issued by the company or acquired by the recipient for the purpose of being sold; and > > (c) ss 708 and 708A do not say otherwise.

1. An exception applies to an on-sale of shares where the issuer has provided a cleansing notice within 5 days of the issue of the securities, and before the sale offer is made (ss 708A(5) and (6)). If issued, such a notice allows quoted securities to be on-sold without further compliance with the disclosure requirements of Pt 6D.2. But if an issuer of shares does not issue a valid cleansing notice, then there is a prospect that the party to whom the shares are issued must itself cause such disclosure if it wishes to on-sell those shares within 12 months (s 707(3)). Further, there is the prospect of a contravention of the Act and the commission of an offence if such disclosure does not occur (s 727(1)).
2. In this context, given the terms of MedAdvisor's application, it is worth setting out s 1322(4)(a), (c), (d), s 1322 (5) and s 1322(6):

(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);

(d) an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;

and may make such consequential or ancillary orders as the Court thinks fit.

(5) An order may be made under paragraph (4)(a) or (c) notwithstanding that the contravention or failure referred to in the paragraph concerned resulted in the commission of an offence.

(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 company secretary of MedAdvisor inadvertently failed to lodge a cleansing notice following the issue of the Placement Shares. I am satisfied that it could be properly described as an accidental slip or oversight from her usual process. The company secretary has given evidence relevantly that she was relevantly familiar with the requirements of s 706, s 708(8) and (11), s 708A(5)(e), s 707(3) and s 727 of the Act. In this regard, the company secretary previously practised as a solicitor and now has her own law practice focused on the provision of company secretary services.
2. It has been MedAdvisor's practice to issue a cleansing notice in the past when issuing new shares. It is the company secretary's responsibility to ensure that the cleansing notices are lodged. The cleansing notice in relation to the Placement Shares should have been lodged by 15 April 2025.
3. On 31 March 2025, the company secretary emailed MedAdvisor's lawyers and asked that a draft cleansing notice be prepared. Later that evening, MedAdvisor's lawyers provided the company secretary with a draft of the cleansing notice, together with draft versions of Appendix 3B for the Placement Shares, and noted that the cleansing notice was to be lodged on the ASX when the Placement Shares were issued. However, despite these matters, due to the inadvertent oversight, the company secretary did not seek board approval to lodge the cleansing notice within five business days of 8 April. On 22 April 2025, at 4:33 pm, the company secretary received a text message from MedAdvisor's chief financial officer advising of a message from the ASX, following up on the cleansing notice that needed to be lodged. The company secretary did not have mobile phone reception at the time but saw the message once her phone was operational again, which was quite late that evening.
4. A meeting of MedAdvisor's board was held at 7 am the next day, on 23 April 2025. At 9:52 am on 23 April 2025, approval was received from MedAdvisor's chair to lodge the cleansing notice on the ASX. The cleansing notice was lodged on behalf of MedAdvisor at 10:30 am on 23 April 2025.
5. That chronology of events satisfies me that prompt attention to this matter has been given by MedAdvisor once the inadvertent oversight became apparent.
6. The company secretary also gives evidence, supported by relevant documents, that at 5:34 pm on 23 April 2025, with the approval of MedAdvisor's Chair, she submitted a written request to the ASX, on behalf of MedAdvisor, for a trading halt. This was to be pending an announcement by MedAdvisor in relation to a Court order under s 1322 of the Act deeming the cleansing notice on the ASX on 23 April 2025 to be effective from the date of issue of the shares, the subject of the cleansing notice.
7. The trading halt request sought that the trading halt remain in place until the earlier of such time as the company makes the further announcement or the commencement of trading on 29 April 2025. The ASX market announcement of the trading halt is in evidence before the Court dated 23 April 2025. Furthermore, on 29 April 2025, that halt effectively became a suspension from quotation. The ASX market announcement dated 29 April 2025 describing that suspension is in evidence before the Court.
8. Section 1322 is remedial in nature and confers a broad power on the Court: see Weinstock v Beck (2013) 251 CLR 396; [2013] HCA 14 at [39], [53], [56] and [60]. Furthermore, s 1322(4), is "cast in very broad terms", and "is not to be hedged about by any implied limitation": Weinstock, at [53] and [55], respectively.
9. As explained by French J, in Re Wave Capital Ltd (2003) 47 ACSR 418; [2003] FCA 969 at [29], regarding the powers under s 1322(4) of the Act:
   1. As may be seen from the range of these powers there is no unifying theme which links the provisions of Part 9.5 beyond their common subject matter which is the powers of the courts. Sections 1318, 1322 and 1325D however may be taken to reflect a broad legislative policy that the law should not inflict unnecessary liability or inconvenience or invalidate transactions because of non-compliance with its requirements where such non-compliance is the product of honest error or inadvertence and where the Court can avoid its effects without prejudice to third parties or to the public interest in compliance with the law. That broad policy does not authorise the Court lightly to set aside the requirements of the Act where they have not been observed. Each application for the exercise of the Court's relieving power will require consideration of all the circumstances of the case to ensure that the indulgence sought is appropriate and does not undermine the requirements of the Act. Like the discretion to validate invalid share issues under s 254E, the power conferred by s 1322 must be exercised having regard to the requirements of the purposes of the Corporations Act and any other relevant statutes whose application may be in issue. It must also be exercised having regard to the interests of all parties affected and the public interest in ensuring compliance with statute law and company constitutions. Evidence of a blatant disregard of the provisions of the Act or the constitution of the company may lead to refusal of relief - ; and cases there cited. The provision is however remedial in character and should be given a liberal construction - at per Lindgren J citing at 930 and ; at 160.
10. However, having made those observations, the power under s 1322 is not to be exercised merely for the asking, and it is to be exercised, having regard to the general purposes of the Act, including the provisions in respect of which relief is sought; the interests of all parties affected; and the public interest in ensuring compliance with the Act.
11. The relevant exercise of the discretionary power can be described as involving a two-step process. First, is it appropriate for the Court to make some or other of the orders under s 1322(4)? Second, are the conditions in s 1322(6) satisfied?
12. Section 1322(6)(c) provides that any order under s 1322(4) of the Act must not be made unless it is satisfied "that no substantial injustice has been, or is likely to be, caused to any person". However, even if the requirements of s 1322(4) and s 1322(6) are satisfied, a discretion remains as to whether to make the orders sought. In that regard, it is necessary to take into account whether MedAdvisor has taken prompt action to remedy the error. As already observed, I am satisfied that MedAdvisor has taken such prompt action. Further, the public interest is a relevant consideration in the exercise of discretion. MedAdvisor has sought orders, as described, pursuant to s 1322, to negate the effect of the omission of the cleansing notice under s 708A(5)(e) of the Act.
13. In my view, the evidence establishes a sufficient basis for the exercise of my discretion to make the orders sought. Furthermore, there are no discretionary factors against making the proposed orders, subject to one minor amendment.
14. MedAdvisor seeks four substantive orders, and orders in relation to notification, liberty to apply, and costs. It is appropriate and convenient to step through each of those four substantive orders that are sought and express why each is appropriate.
15. Before considering those four orders, it is necessary to observe that MedAdvisor is an interested person for the purposes of s 1322(4) of the Act and therefore has standing to bring this application. I am satisfied that MedAdvisor is an interested person as it is the issuer of the Placement Shares.
16. In relation to order 1 as is sought, s 1322(4)(d) of the Act provides that an order may be made extending the period for doing any Act, including where the relevant period ended before the application was made. The Court is empowered to declare that the period of five business days from the date of issue of the Placement Shares, which is the period within which a cleansing notice had to be issued pursuant to s 708A(6)(A), being 23 April 2025, which is the date upon which the cleansing notice was in fact lodged with the ASX. The purpose of this notice is to effectively validate the cleansing notice actually given on 23 April 2025. MedAdvisor had prepared a draft cleansing notice and was able to give it at the relevant time.
17. In relation to order 2 as is sought, s 1322(4), provides that the court may make such consequential or ancillary orders to other orders made under s 1322(4), Re Imdex Ltd [2020] WASC 298 at [54], and the authority cited therein. The Court is empowered to declare that the cleansing notice given on 23 April 2025 is deemed to take effect as if it had been given to the ASX on the day that the Placement Shares were issued, which is a date before any of the possible on-sales occurred, as contemplated by s 708A(5)(e). Such orders would apply to any past on-sales of the Placement Shares, exempting such sales from disclosure obligations that would otherwise apply.
18. In relation to order 3 as is sought, s 1322(4)(a) provides that the Court can make orders declaring that any act, matter or thing done under the Act or in relation to MedAdvisor is not invalid by reason of any contravention of the Act. This empowers the Court to declare that any of the sales of the Placement Shares during the period after their issue to the date of the Court's orders is not invalid by reason of the initial failure to lodge the cleansing notice or the seller's failure to make disclosure.
19. In relation to the orders sought under s 1322(4)(a), s 1322(6)(a) provides that orders under that provision must not be made unless I am satisfied that the act, matter or thing is essentially of a procedural nature, or that the person concerned in or party to the contravention or failure acted honestly, or that it is just and equitable that the order be made. The evidence in relation to MedAdvisor's failure to lodge the cleansing notice, as deposed to by the company secretary, is set out above.
20. The failure to lodge the cleansing notice as required was the result of an inadvertent and honest oversight. The three matters to be satisfied in s 1322(a)(i)-(iii) are alternatives. It is sufficient to satisfy the requirements of s 1322(6)(a) by the satisfaction of s 1322(a)(i), that is, that the person concerned or party to the contravention or failure acted honestly. In that regard, I am satisfied that that subsection has been met as the company secretary acted honestly.
21. In relation to order 4 as is sought, s 1322(4)(c) provides that the Court may make an order relieving a person from any civil liability in respect of a contravention of a provision of the Act. This empowers the Court to order that any person to whom any of the Placement Shares were issued or may have been sold, and who may have, in turn, on-sold any of those shares up until the date of these orders of the Court, is relieved from any civil liability in respect of the failure to lodge a cleansing notice or the seller's failure to make disclosure. In relation to the orders sought under s 1322(4)(c), s 1322(6)(b) must also be satisfied. It requires that the Court must not make such an order unless satisfied that the person subject to the civil liability concerned acted honestly.
22. In this context, it is relevant to note that Appendix 3B lodged by MedAdvisor in relation to the Placement Shares and is included in the evidence before the Court included a warranty that any sale of the securities within 12 months after their issue would not require disclosure under s 707(3) by virtue of the cleansing notice that was to be issued, but, through inadvertence, was not. In light of this warranty, I infer that shareholders acted honestly in any on-sales, all or in part, of the Placement Shares, potentially, without making disclosure. It is not clear on the evidence before me whether or not that has occurred. Based on that inference, however, s 1322(6)(b) is satisfied.
23. Finally, such orders may not be made under s 1322(4) unless I am satisfied that no substantial injustice has been or is likely to be caused to any person. Although in the circumstances of this case, it is difficult to anticipate what, if any, injustice may be suffered by the shareholders who have inadvertently contravened the disclosure obligations.
24. However, as it is proposed that liberty to apply be granted in the draft orders sought by MedAdvisor, I do not need to dwell on this issue. Any potential injustice can be accommodated by giving liberty to apply to any person who may claim to suffer substantial injustice by reason of the orders to vary or discharge the orders within a limited period. Any potential for injustice can be remedied by invoking the liberty to apply provision in the Orders of the Court: see Micro-X Limited, in the matter of Micro-X Limited [2019] FCA 1154 at [12(h)], and 333D at [40].
25. MedAdvisor has also provided evidence of having served the Australian Securities and Investment Commission (ASIC) and the ASX. At the time of the application, MedAdvisor had received a response from the ASX, stating that it neither supported nor opposed the application. At the time of the application being heard, no response from ASIC had been received. The amendment to the Orders sought is to also expressly include in order 7 that the liberty to apply provision also refer to ASIC or any person who claims to have suffered substantial injustice.
26. Although it might be unnecessary to expressly mention ASIC, given its role in relation to the Corporations Act, I am of the view that it is preferable, in the circumstances of this case, where there has been no such response from ASIC to correspondence about this application. Expressly including ASIC in the liberty to apply provision ensures that ASIC is able to bring the matter back before the Court, should it need to.
27. For all of these reasons, I am satisfied that it is appropriate in these circumstances to make the orders that are sought (with the express reference to ASIC included).

I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wheatley.