METALICITY LTD [2020] WASC 387 (29 October 2020)

1. Part 6D.2 of the Act imposes disclosure obligations in relation to the issue and sale of shares. In certain circumstances, these obligations can be satisfied by lodging what is commonly referred to as a cleansing notice or a prospectus.[1] If disclosure has not been made by the issuer and the shares are on-sold within 12 months, the party to whom the shares are issued may be obliged to make disclosure.[2]
2. The cleansing notice exception can only be relied upon if the preconditions in the Corporations Act, s 708A(5) are met. These preconditions include that:

trading ... 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.[3]

1. The cleansing prospectus exception applies where a prospectus is lodged on or after the date that shares are issued but before the day on which a sale offer is made.[4] Where this occurs, the disclosure requirements for offers and sales of that class of securities are met from that date.

1. In support of its application, Metalicity filed five affidavits being an affidavit of Neil John Hackett (the plaintiff's former company secretary) filed 13 October 2020, an affidavit of Justin Charles Barton (a director of the plaintiff) filed 14 October 2020, and three affidavits of Nicholas Findlay Day (the current company secretary of the plaintiff) filed 14 October 2020, 15 October 2020 and 16 October 2020.
2. Metalicity is an Australian public company whose securities are listed on the Australian Securities Exchange (ASX). Metalicity is a mineral exploration and development company. It was re-admitted to quotation on the ASX on 6 October 2015 and has been continually listed since that date.[5] At present, Metalicity has 1,730,735,820 shares on issue[6] and 5,467 shareholders.[7]
3. On 7 September 2020, Metalicity announced its intention to issue 208,333,333 shares as a placement on 11 September 2020.[8] On 11 September 2020, Metalicity issued these shares.[9] At the time of the issue of these shares, the plaintiff did not lodge an appendix 2A or cleansing notice.[10]
4. Mr Hackett's evidence in relation to this share issue is that he did not give the allotment instructions, although this was a task that he would ordinarily perform.[11] He deposes that he believes that at the time these shares were issued, Metalicity could have issued a cleansing notice under the Act.[12] Mr Hackett deposed that on 12 September 2020 one of his family members had a serious health incident and he was pre‑occupied in dealing with this. At that time, Mr Hackett had resigned from his role with the plaintiff and was making arrangements for his departure. These matters, together with the fact that he had not given the instructions to allot the shares, meant that he did not ensure that the appropriate documents (the appendix 2A and cleansing notice) were lodged.[13]
5. On 9 September 2020, Metalicity issued 51,641,942 shares. Of these shares:

(a) 49,441,942 were issued as a result of conversion of options issued pursuant to prospectuses, which did not require a separate prospectus or cleansing notice;

(b) 1,000,000 shares were issued to Mr Hackett as a result of conversion of performance rights issued on 13 February 2020; and

(c) 1,200,000 were issued as a result of a conversion of options issued to EC Dawson Super Pty Ltd without disclosure.

1. Mr Hackett's evidence is that he did not arrange for a cleansing notice to be lodged in respect of the shares issued in [11(b)] or [11(c)]. He deposed that in June 2020, he had sought and obtained advice from external legal counsel in relation to the issue of shares on a conversion of options or performance rights. He misunderstood this advice to mean that if a prospectus had recently been issued, the plaintiff was not required to provide disclosure on the conversion of options or performance rights. He is now aware that this understanding is incorrect and that the requirement to provide disclosure is only dispensed with where the options or performance rights are issued under a prospectus.[14] Mr Hackett deposes that this misunderstanding, together with the matters referred to in [10], were the reasons a cleansing notice was not lodged in respect of the issue on 9 September 2020.
2. On 28 September 2020, the plaintiff's commercial solicitors advised the plaintiff that it had not lodged a cleansing notice in respect of the issue of the shares on 9 and 11 September 2020.[15] On receipt of this advice, the directors required Mr Day, the new company secretary, with the assistance of the plaintiff's external legal advisers, to review all share issues the plaintiff had undertaken since October 2015, when the plaintiff was readmitted to quotation on the ASX.[16]
3. As a result of this review, the plaintiff identified 15 additional share issues and exercises of share options or performance rights which did not comply with the requirements of ch 6D of the Act (collectively with the two September issues, Impugned Transactions).[17] Specifically, the additional share issues were:

(a) on 15 January 2016, the plaintiff issued 5,250,000 shares as a result of conversion of options which had been issued without a disclosure document;[18]

(b) on 17 February 2016, the former managing director of the plaintiff issued 1,250,000 shares to Borg Geoscience Pty Ltd as consideration for geological consultancy work provided to the plaintiff.[19] A further 4,000,000 shares were issued to Borg Geoscience on 13 June 2016; [20]

(c) the issue of shares to employees or directors of the plaintiff on the conversion of options issued as part of the plaintiff's employee option scheme (ESOP) on 22 February 2016 (6,000,000 shares), 3 November 2016 (4,000,000 shares), 8 March 2017 (2,000,000 shares), 15 January 2018 (2,000,000 shares) and 25 January 2018 (3,400,000 shares). The options had not been issued under a disclosure document and disclosure relief under ASIC Class Order 14/1000 was not available at the time the options were issued;[21]

(d) on 9 March 2017, the plaintiff issued 1,000,000 shares to Mental Investments Pty Ltd on the conversion of options, which had not been issued under a disclosure document;[22]

(e) on 7 September 2017, the plaintiff issued 14,661,149 shares under a share purchase plan (SPP) which allowed for a maximum of 13,888,889 shares to be issued. The current company secretary, Mr Day, was unable to determine why a greater number of shares had been issued. While a cleansing notice was lodged, it was not lodged prior to the open of the offer under the SP and, as a result, the plaintiff could not rely on ASIC Class Order 09/425;[23]

(f) on 7 November 2017, 1,000,000 shares were issued to EC Dawson Super Fund Pty Ltd which ought to have been issued as part of a placement and share purchase plan in August and September 2017 but in error were not;[24]

(g) on 13 February 2020, the plaintiff issued 2,027,777 shares, 266,667 unlisted options and 31,650,000 performance rights.[25] A number of the options and performance rights have subsequently been converted into shares. A cleansing notice was lodged but it was not valid as trading in the company's shares had been suspended for more than 5 days in the previous 12 months;[26]

(h) on 22 May 2020, the plaintiff issued 180,000,000 shares as a placement without a disclosure document;[27]

(i) on 15 July 2020, the plaintiff issued 13,802,941 shares following the conversion of options. Of these, 4,498,096 shares were not issued under a disclosure document. The remaining options were issued under a prospectus and did not require a separate cleansing notice at the time they were exercised;[28]

(j) on 10 August 2020, the plaintiff issued 1,123,745 shares following the conversion of options. Of these, 200,000 shares were not issued under a disclosure document. The remaining options were issued under a prospectus and did not require a separate cleansing notice at the time they were exercised.[29]

1. On 30 September 2020, the plaintiff requested a trading halt and subsequently, on 2 October 2020, a voluntary suspension to enable it to undertake the review referred to at [13] - [14], investigate these matters and to make this application to the court.[30]
2. On 9 October 2020, the plaintiff lodged a cleansing prospectus[31] and, in relation to the shares issued on 8 and 11 September 2020, purported cleansing notices.[32] The cleansing notices were lodged approximately four weeks after the period in s 708A(6) had expired and both contained a typographical error in referring to s 708(5)(e) of the Act rather than 708A(5)(e).
3. On the same date, the plaintiff announced that it was making this application to the court to validate the Impugned Transactions, and to seek an extension of time under s 1322(4)(d) to lodge a cleansing notice, and an order deeming the purported cleansing notice to be effective under s 1322(4)(a). The announcement also notified shareholders and any other parties who may have purchased shares from sales of shares after the dates of the Impugned Transactions that they may not be able to rely on previous documentation for the purpose of any on-selling, until this application had been heard and determined.[33]
4. On the same date, the Company instructed its share registry provider to send emails to the affected shareholders by email or post to notify them of the issue with the shares and to notify them of these proceedings and the hearing date.[34] On 14 October 2020, as a result of a delay in the share registry sending these emails, Mr Day contacted those shareholders who had been issued the shares under the Impugned Transactions and for whom the company had an email address to notify them of these matters.[35]
5. On 13 October 2020, the plaintiff commenced this application which was listed before me on an urgent basis on the morning of 16 October 2020.
6. Mr Hackett, the former company secretary of the plaintiff, was the officer of the plaintiff who was primarily responsible for lodgement of relevant documents with ASIC, including cleansing notices. Mr Hackett is a professional company secretary who was not employed full-time by the plaintiff. As is common with many junior listed mining companies, the plaintiff had limited financial resources and did not always obtain external legal advice on all matters.[36] Mr Hackett's evidence is that he was not always advised of share issues, equity proposals or option issues undertaken by the plaintiff; some of these were authorised by the directors.[37]
7. Mr Hackett has considered each of these share issues and, where possible, provided an explanation why a cleansing notice or prospectus was not lodged. His evidence is that:

(a) in relation to the share issue on 15 January 2016, he and the directors at the time were under the mistaken impression that because the information memorandum that was issued by the plaintiff on its relisting was a disclosure document and it mentioned the options, no further disclosure was required at the time the options were exercised and converted to shares;[38]

(b) in relation to the exercise of options under the ESOP, he mistakenly believed that disclosure was not required in relation to the shares issued because of the class order relief;[39]

(c) in relation to the share issue on 7 September 2017, he may have relied upon the cleansing notice issued on 18 August 2017;[40]

(d) in relation to the share issue on 7 November 2017, these shares ought to have been issued as part of the placement and share purchase plan undertaken in August and September 2017. He was not aware that the subsequent issue of shares required disclosure when they would not have required disclosure if they had been issued at the correct time;[41]

(e) in relation to the share issue on 13 February 2020, he lodged a cleansing notice. At the time, he did not realise the plaintiff was not entitled to lodge a cleansing notice as the company's shares had been suspended from trading for more than five days in the previous 12 months;[42]

(f) in relation to the share issues on 15 July 2020 and 10 August 2020, he misunderstood the advice he received from the plaintiff''s external legal advisers and believed that because a prospectus had recently been issued, the plaintiff was not required to provide disclosure on the conversion of options or performance rights.[43]

1. Mr Barton is a current director of the plaintiff, having been appointed on 1 January 2018. Mr Barton's evidence is that the directors delegated to the company secretary the management of all ASX related and corporate governance tasks which were undertaken without close supervision from the board of directors.[44]
2. Mr Barton deposes that, apart from the share issues on 17 and 22 February 2016, the plaintiff would have been entitled to lodge a cleansing notice at the time of each of the Impugned Transactions.[45] In relation to the share issues on 17 and 22 February 2016, his evidence is that he has been unable to determine whether the plaintiff had information that had not yet been released to the market.[46] Mr Barton's evidence is that many of the shares issued under the Impugned Transactions have been subsequently sold on-market and that it is not possible to ascertain who bought these shares.[47]
3. Mr Barton also gave evidence about the 180 million shares issued on 22 May 2020. His evidence was that the placement was undertaken to satisfy the additional demand for shares under the Entitlement Issue Prospectus, which was oversubscribed, and that additional disclosure obligations or the requirement of a cleansing notice were not discussed, including with external legal counsel. He deposes that this was an inadvertent error.[48]
4. The evidence of Mr Day, the current company secretary of Metalicity, is that the company has reviewed its processes for issuing shares and complying with its obligations under the Act and the ASX Listing Rules. Mr Day, with the assistance of the company's external legal advisers, is developing a protocol for the issue of securities which takes into account the instances of non-compliance by Metalicity. Mr Day deposes that in the future if he or the board of directors have any doubts or queries concerning any requirement associated with future issues of securities, the plaintiff intends to seek external legal advice to ensure that all disclosure requirements are complied with.[49]

The power under Corporations Act s 1322 to grant the relief sought

1. Section 1322 relevantly 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;

(b) an order directing the rectification of any register kept by ASIC under this Act;

(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.

...

(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. In considering an application under s 1322 of the Act, the essential principles are:[50]

(a) the prescriptive requirements of the wording in s 1322(4)(a) and the pre-conditions in s 1322(6) need to be satisfied.[51] In respect of the pre-conditions in s 1322(6), it is sufficient if only one of the pre-conditions is satisfied.[52]

(b) the court retains a discretion under s 1322(4)(a) as to whether it makes the orders sought;

(c) the broad powers reflect a 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;[53]

(d) implied limitations to the broad powers in s 1322 will not be readily implied.[54] Section 1322 is remedial in character and should be applied broadly;

(e) the court can make orders under s 1322(4)(a) on conditions and also make such consequential and ancillary orders as it thinks fit; and

(f) an order can be made under s 1322(4)(a) notwithstanding that the contravention or failure concerned resulted in the commission of an offence.[55]

Disposition Application by an 'interested party'

1. I accept that the plaintiff is an interested person who may seek relief, as required by s 1322(4).[56]

1. The ASX has indicated that it did not oppose the application nor intend to appear at the hearing.[57] ASIC indicated that it neither supports nor opposes the application and did not intend to appear at the hearing of the matter. It formed this view taking into account a number of matters, including that the plaintiff did not seek relief as to its own conduct, its directors or company secretary.[58]

Extension of time under s 1322(4)(d)

1. The test under s 1322(4)(d) was set out by Vaughan J in Re Jaxsta Ltd; Ex parte Jaxsta Ltd:[59]

As to s 1322(4)(d), I derived more guidance from the two-stage process embraced by Barker J in Blaze Asset Pty Ltd v Target Energy Ltd.

There Barker J stated:

'[T]he exercise of the power under s 1322(4) [referring to s 1322(4)(d)] involves in effect a two stage process. First, the Court needs to determine whether, having regard to the circumstances of the case and the general objects of the [Corporations Act 2001 (Cth)], it is appropriate to make an order extending a relevant period, or abridging a relevant period. Secondly, if those circumstances are made out, then the Court must address the question whether any substantial prejudice has been or is likely to be caused to any person by the making of such an order.'

Also, the power under s 1322(4)(d) must be exercised having regard to the general objects and purposes of the relevant statutory provision within the Corporations Act 2001 (Cth) - here the statutory purpose evinced by s 723(3). The court's order must not undermine the reasons for the requirements of the Act. The power must be exercised having regard to the interests of all parties affected and the public interest in ensuring compliance with the Act. (footnotes omitted)

1. The period to be extended may be extended even if it has expired.
2. For the following reasons, I was and am satisfied in the circumstances of this case that it is appropriate to grant the extension of time sought.
3. First, the orders are required in order for the ASX to lift the suspension of trading in the plaintiff's shares. I accept that if the suspension is not lifted, the shareholders and potential shareholders of Metalicity will be prejudiced by not being able to sell or purchase securities in the company. I also accept that if the suspension continues, there is a risk that Metalicity will be delisted from the ASX.
4. Second, Metalicity has provided an explanation as to the reasons for its non-compliance. Since Metalicity was relisted in 2015, it has undertaken numerous securities issues.[60] Most issues of securities by Metalicity since that time have complied with ch 6D of the Act. In relation to the Impugned Transactions, I accept and find that the errors that have occurred have arisen from:

(a) the requirements of ch 6D of the Act for the issues of shares from exercise of options or class orders for share purchase plans not being closely checked;

(b) an understanding, which is now known to be incorrect, that a cleansing notice or prospectus was not required in relation to shares issued under an employee share and option plan;[61]

(c) a misunderstanding of legal advice received from external legal advisers;[62] or

(d) inadvertently overlooking the need for a cleansing notice or prospectus, including, on one instance, because the plaintiff was not entitled to issue a cleansing notice because its shares had been suspended from quotation for more than five days in the previous 12 months.[63]

1. In summary, the errors arose as a consequence of inadvertence or misunderstandings. I accept and find that these were honest and not intentional. I accept that there is and was no failure of the persons concerned or Metalicity to act honestly. This finding is supported by:

(a) the numerous instances since 2015 when Metalicity has issued securities in compliance with the Act and the ASX Listing Rules;

(b) the actions of the company on being informed of the issue in relation to the shares issues in September 2020, namely to undertake an audit of all share issues since the company relisted in 2015 and to issue a cleansing prospectus on 9 October 2020 to address future on-sales of shares in Metalicity.

1. Third, granting the extension of time is consistent with the purpose and policy of the legislation including the facilitation of the conduct of commerce generally.
2. Fourth, Metalicity has acted promptly in bringing this application and there has been no delay in bringing this matter on for an urgent hearing.
3. Fifth, as noted above at [29], both the ASX and ASIC have indicated that they do not support or oppose the application, nor do they intend to appear at the hearing of the matter.
4. Finally, the proposed orders sought by the plaintiff enable any person potentially affected by the orders to return to the court to raise any matters thought fit, including to vacate the orders in so far as the orders affect them.

1. The company submitted that the pre-condition in s 1322(6) is satisfied in that at least one of the pre-conditions is satisfied in each Impugned Transaction.
2. Turning first to the pre-condition in s 1322(6)(a)(ii), in Re ICandy Interactive Ltd, Banks-Smith J undertook a comprehensive review of the relevant principles in respect of whether there is no failure of the persons concerned or the company to act honestly.[64] Relevantly, Banks‑Smith J considered that:

(a) when determining whether someone has acted honestly for the purposes of s 1322, the courts look to absence of evidence of dishonesty and prompt action to remedy the error;[65]

(b) the concept of acting honestly can embrace:[66]

(i) inadvertence or failure to turn one's mind to an issue;

(ii) active but incorrect consideration of a legal issue;

(iv) failure to understand or appreciate the significance of non-compliance; and

(c) when testing for honesty, the authorities reveal that the courts look at the company itself, the directors, the company secretary and others as may be concerned.[67]

1. In this case, in most of the Impugned Transactions apart from the share issues on 17 February 2016, 13 June and 9 March 2017, errors have occurred in the company failing to lodge a prospectus when one was required (because trading has been suspended for more than five days over a 12 month period) or failing to or not being aware that cleansing notice was required to be lodged.
2. I accept that in respect of these Impugned Transactions, these errors have occurred through inadvertence or an incorrect assessment of whether a cleansing notice or prospectus was required to be lodged rather than any deliberate disregard by the plaintiff or its officers of the obligations under ch 6D of the Act.
3. I also accept that this is not a case where there has been a failure of Metalicity's directors to take an active interest in the company's compliance with the Act or to properly define roles of company officers. I accept that the directors had delegated this function to an experienced and professional company secretary.
4. In respect of the share transactions on 17 February 2016, 13 June 2016 and 9 March 2017, there is no evidence before the court in relation to the reasons for the failure to lodge a cleansing notice. For that reason, in respect of these issues, I have considered whether, under s 1322(6)(a)(iii) it is just and equitable to make the orders sought. In my view, for the reasons set out below at [46] - [51], I consider it is just and equitable to make these orders.

1. I have considered the classes of persons who may be impacted by the making of these orders.
2. First, the people who were issued the impugned shares. The prejudice to them is that if they seek to offer to sell or sell the impugned shares, such offers or sales may be void or voidable for want of compliance with the statutory requirements.[68]
3. Second, any people who purchased shares from on-sellers may have on-sold the impugned shares themselves by trading on the open market of the ASX since they were issued. Any further sales of shares will have occurred without the requisite disclosure under the Act, pt 6D.2.
4. I find that there is no basis for inferring that substantial injustice has been or is likely to be caused to any person by the making of the proposed orders.
5. I accept that if the orders are not made, then there may be substantial injustice to the plaintiff as the offers of and sales of shares may be void or voidable which could give rise to some commercial uncertainty and expense for the company as it must remain involved in problems caused by void or voidable offers and sales of its shares. I also accept that there may be substantial injustice to the other ordinary shareholders of the plaintiff, as they may not be able to trade their shares on an open market if the ASX does not lift the current suspension from trading.
6. It is usual in cases such as these to provide an opportunity for shareholders or other parties to raise a complaint about the proposed orders. The usual timeframe is that there be liberty to apply within 28 days from the date of the order. I accept that this is an appropriate timeframe in this case.

1. Notwithstanding the number of instances of contravention that have been identified by Metalicity, I accept and find that there is no evidence of any substantial misconduct, serious wrongdoing or flagrant disregard of the corporate law or the company's constitution so as to warrant refusal of the relief sought.[69]
2. There is nothing in the evidence before me that suggests that any minority shareholder interest might be oppressed or any other interest might be affected. I am satisfied that all shareholders impacted by the contravention as well as the ASX and ASIC have been given notice of this hearing.[70] No shareholder or either regulator has sought to intervene in the hearing or given notice that they want to be heard on the application.
3. In exercising the discretion to grant relief under s 1322(4), a relevant factor is the promptness with which the plaintiff has sought to remedy the irregularity once it has been identified.[71] In this case, on 28 September 2020 the plaintiff was informed by its solicitors that it had not lodged the required cleansing notice in relation to the share issues on 9 and 11 September 2020 share issue. Two days after receiving this advice, on 30 September 2020, the plaintiff sought a trading halt to allow it time to commence these proceedings and undertook a full audit before commencing these proceedings on 13 October 2020.[72] I accept that the plaintiff acted diligently after being informed of the issue.

1. The company also seeks separate declarations under s 1322(4)(a) of the Act. First, a declaration that the cleansing notice be deemed to take effect as it if had been given to the ASX on 9 October 2020 (for the May 2020 to September 2020 share issues) or the period after their respective dates of issue to the date of issue of the next cleansing prospectus issued by the plaintiff (for all other shares issued by the plaintiff) and second, that any act, matter or thing purporting to have been done under the Act or in relation to a corporation is not invalid by reason of any contravention of a provision of the Act.
2. I note that:

(a) the proposed validation orders are framed in a declaratory form;

(b) the act, matter or thing, are the lodgement of the notice and the offers and sales of securities; and

(c) the contravention is the offering of securities for sale or sales without proper disclosure in contravention of s 707(3) of the Act.[73]

1. In respect of the first order, courts have on a number of previous occasions made similar orders.[74] It is not in doubt that the court has power to make orders that are consequential or ancillary to an order extending the period for doing an act, matter or thing under the Act. In Re Imdex Ltd, I discussed whether deeming orders should be made and the circumstances in which deeming orders should be made.[75] I do not propose to repeat those comments. Those comments represent my views on the matter.
2. In this case, for the following reasons, I consider it is appropriate in this case to make the ancillary orders sought by the plaintiff, including the 'deemed order'. First, the evidence before me is that the shares the subject of the share issue have been sold and it cannot be discounted that there have been resales of these shares. In these circumstances, I consider that it is appropriate to make the orders sought to remove any question as to title in the shares of the plaintiff. Second, at the time the application came on for hearing, the cleansing notice had been lodged. For that reason, the order did not concern a future act but a past act. Third, where shares are on-sold, the 'deeming order' is a corollary of the orders seeking an extension of time.

1. Given the numerous instances of non-compliance with the plaintiff's regulatory obligations, counsel for the plaintiff specifically addressed the appropriate order as to costs. He contended that, notwithstanding the number of instances, the appropriate order was that no costs order should be made.
2. I am satisfied that in the circumstances of this case, the plaintiff has brought the application in the company's interests. The plaintiff has undertaken a detailed investigation in relation to the Impugned Transactions. The former company secretary has assisted the plaintiff and provided a detailed affidavit setting out his recollection of matters when he was under no obligation to do so. In my view, the risk of a personal costs order should not impact the decision of directors or officers of a company (either past or present) to investigate matters or to bring an application before the court.
3. From the evidence before me, a number of officers of the plaintiff have been involved in the Impugned Transactions. I accept that the costs to the plaintiff of an inquiry as to who should bear the costs of any application would be likely to be disproportionate to any benefit to be obtained.
4. In addition, it is my view that where the court is satisfied that there has been no failure of the persons concerned or the company to act honestly, under s 1322(6)(a)(ii) of the Act, it would only be in the most unusual circumstances that an order for costs would be made against the officers of the company.
5. For these reasons, I will make no order as to costs.

1. In respect of 14 of the Impugned Transactions, the conduct of the plaintiff in failing to lodge the cleansing notices required under the Act was inadvertent and not in blatant disregard of its obligations under the Act. In relation to the other three transactions, I am satisfied that it is just and equitable to make the orders sought. I do not consider that public policy will be undermined by granting the plaintiff the relief sought.
2. For these reasons, I was and am satisfied that in the circumstances of this case, relief should be granted in the terms sought by the plaintiff. Accordingly, at the conclusion of the hearing, I made orders in the form annexed to these reasons as Annexure 'A'.

IN THE SUPREME COURT OF WESTERN AUSTRALIA

METALICITY LIMITED (ACN 086 839 992) First Plaintiff

UPON APPLICATION of the plaintiff by Originating Process dated 13 October 2020 AND UPON HEARING Mr A J Papamatheos and Ms C C Spencer of counsel for the plaintiff IT IS ORDERED that:

1. Pursuant to section 1322(4)(a) of the Corporations Act, it is declared that any offer for sale or sale of the quoted securities referred to in Annexure A to this originating process, during the period after their respective dates of issue to the date of issue of the next cleansing prospectus issued by the plaintiff (inclusive) is not invalid by reason of:

(a) the failure to issue a prospectus under section 708A(11) of the Corporations Act to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(b) the sellers' consequent failure to comply with sections 707(3) and 727(1) of the Corporations Act.

1. Pursuant to section 1322(4)(d) of the Corporations Act, in respect of the 2,200,000 ordinary fully paid shares in the plaintiff, which were issued on 8 September 2020 (September Option Shares), the period of five business days referred to in section 708A(6)(a) of the Corporations Act be extended to the date of these orders.

1. Pursuant to section 1322(4)(a) of the Corporations Act, it is declared that the notice given to the Australian Securities Exchange Limited (ASX) on 9 October 2020 in respect of the September Option Shares within the period provided for in paragraph 2 above be deemed:

(a) to take effect as if it had been given to the ASX on 8 September 2020; and

(b) to have referred to section 708A(5)(e) of the Corporations Act (rather than 708(5)(e)).

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

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

(b) the sellers' consequent failure to comply with sections 707(3) and 727(1) of the Corporations Act.

1. Pursuant to section 1322(4)(d) of the Corporations Act, in respect of the 208,333,333 ordinary fully paid shares in the plaintiff, which were issued on 11 September 2020 ("the Placement Shares"), the period of five business days referred to in section 708A(6)(a) of the Corporations Act be extended to the date of these orders.

1. Pursuant to section 1322(4)(a) of the Corporations Act, it is declared that the notice given to the ASX on 9 October 2020 in respect of the Placement Shares within the period provided for in paragraph 5 above be deemed:

(a) to take effect as if it had been given to the ASX on 11 September 2020; and

(b) to have referred to section 708A(5)(e) of the Corporations Act (rather than 708(5)(e)).

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

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

(b) the sellers' consequent failure to comply with sections 707(3) and 727(1) of the Corporations Act.

A sealed copy of these orders is to be served on the Australian Securities and Investments Commission (ASIC) as soon as reasonably practicable and upon service of these orders on ASIC, ASIC is to include these orders on its database.

1. The plaintiff is to post or email a copy of these orders to each person to whom the securities referred to in orders 1 to 7 were issued and as soon as reasonably practicable the Plaintiff is to publish an announcement to ASX in which a copy of these orders is included.

1. For a period of 28 days from the date of publication of a copy of these orders on the ASX website, 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 them within that period.

1. The plaintiff have liberty to apply for further orders.

Placement and partial consideration for tenement acquisition

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Corporations Act, s 708A(5).

[2] Corporations Act, s 707(3). See also Re Golden Gate Petroleum Ltd [2010] FCA 40; (2010) 77 ACSR 17.

[3] Corporations Act, s 708A(5)(b).

[4] Corporations Act, s 708A(11).

[5] Affidavit of Justin Charles Barton filed 14 October 2020 [7].

[6] Affidavit of Justin Charles Barton filed 14 October 2020 [8].

[7] Supplementary affidavit of Nicholas Findlay Day filed 15 October 2020 [5].

[8] Affidavit of Justin Charles Barton filed 14 October 2020

[9] Affidavit of Justin Charles Barton filed 14 October 2020 [221].

[10] Affidavit of Neil John Hackett filed 13 October 2020 [23].

[11] Affidavit of Neil John Hackett filed 13 October 2020 [22].

[12] Affidavit of Neil John Hackett filed 13 October 2020 [24].

[13] Affidavit of Neil John Hackett filed 13 October 2020 [27].

[14] Affidavit of Neil John Hackett filed 13 October 2020 [65] - [68].

[15] Affidavit of Justin Charles Barton filed 14 October 2020 [20.

[16] Affidavit of Justin Charles Barton filed 14 October 2020 [23]; Affidavit of Nicholas Findlay Day filed 14 October 2020.

[17] Affidavit of Justin Charles Barton filed 14 October 2020 'JCB3'.

[18] Affidavit of Justin Charles Barton filed 14 October 2020 [29], [32], 'JCB5'.

[19] Affidavit of Neil John Hackett filed 13 October 2020 [35]; Affidavit of Justin Charles Barton filed 14 October 2020 [109], [111].

[20] Affidavit of Neil John Hackett filed 13 October 2020 [42]; Affidavit of Justin Charles Barton filed 14 October 2020 [119], [121].

[21] Affidavit of Neil John Hackett filed 13 October 2020 [38] - [39], [44], [47], [54], [56]; Affidavit of Justin Charles Barton filed 14 October 2020 [57], [60], [69] - [108], [142] - [144], [147].

[22] Affidavit of Neil John Hackett filed 13 October 2020 [48]; Affidavit of Justin Charles Barton filed 14 October 2020 [46], [48].

[23] Affidavit of Justin Charles Barton filed 14 October 2020 [130] - [135].

[24] Affidavit of Neil John Hackett filed 13 October 2020 [52] - [53].

[25] Affidavit of Justin Charles Barton filed 14 October 2020 [159].

[26] Affidavit of Justin Charles Barton filed 14 October 2020 [169] - [173].

[27] Affidavit of Justin Charles Barton filed 14 October 2020 [179].

[28] Affidavit of Justin Charles Barton filed 14 October 2020 [194], [196] - [197].

[29] Affidavit of Justin Charles Barton filed 14 October 2020 [210], [212] - [214].

[30] Affidavit of Justin Charles Barton filed 14 October 2020 'JCB62', 'JCB63'.

[31] Affidavit of Justin Charles Barton filed 14 October 2020 'JCB65'.

[32] Affidavit of Justin Charles Barton filed 14 October 2020 'JCB66'.

[33] Affidavit of Justin Charles Barton filed 14 October 2020 'JCB64'.

[34] Affidavit of Nicholas Findlay Day filed 14 October 2020 [34] - [35].

[35] Supplementary affidavit of Nicholas Findlay Day filed 15 October 2020 [8] - [20], 'NFD9' - 'NFD20'.

[36] Affidavit of Neil John Hackett filed 13 October 2020 [11].

[37] Affidavit of Neil John Hackett filed 13 October 2020 [9].

[38] Affidavit of Neil John Hackett filed 13 October 2020 [34].

[39] Affidavit of Neil John Hackett filed 13 October 2020 [38], [44], [47], [55], [57], [62]

[40] Affidavit of Neil John Hackett filed 13 October 2020 [51].

[41] Affidavit of Neil John Hackett filed 13 October 2020 [53].

[42] Affidavit of Neil John Hackett filed 13 October 2020 [59]

[43] Affidavit of Neil John Hackett filed 13 October 2020 [67] - [68], [70].

[44] Affidavit of Justin Charles Barton filed 14 October 2020 [19].

[45] Affidavit of Justin Charles Barton filed 14 October 2020 [[54], [66], [95], [106], [127], [149], [156], [192], [207], [218], [228], [242].

[46] Affidavit of Justin Charles Barton filed 14 October 2020 [84], [116].

[47] Affidavit of Justin Charles Barton filed 14 October 2020 [32] - [239].

[48] Affidavit of Justice Charles Barton filed 14 October 2020 [179] ‑ [191].

[49] Affidavit of Nicholas Findlay Day filed 14 October 2020 [25] - [32].

[50] Re Helios Energy Ltd [2017] FCA 840; (2017) 122 ACSR 174.

[51] Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396 [43], [53] and [64].

[52] Re Sprint Energy Ltd [2012] FCA 1354 [32]; Re Caeneus Minerals Ltd [2018] FCA 560 [35].

[53] Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418, 426 [29].

[54] Weinstock v Beck [43], [55] - [56] and [64].

[55] Corporations Act, s 1322(5).

[56] Re Caeneus Minerals Ltd [38]; Re Classic Minerals Ltd [2018] FCA 2039 [34].

[57] Supplementary affidavit of Nicholas Findlay Day filed 15 October 2020 'NFD22'.

[58] Further supplementary affidavit of Nicholas Findlay Day filed 16 October 2020 'NFD28'.

[59] Re Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390 [41] - [43].

[60] Affidavit of Justin Charles Barton filed 14 October 2020 'JCB3'.

[61] Affidavit of Neil John Hackett filed 13 October 2020 [38].

[62] Affidavit of Neil John Hackett filed 13 October 2020 [65] - [68].

[63] Affidavit of Justin Charles Barton filed 14 October 2020 [175].

[64] Re ICandy Interactive Ltd [2018] FCA 533; (2018) 125 ACSR 369 [54] - [104].

[65] Re ICandy Interactive Ltd [54], [106] - [107].

[67] Re ICandy Interactive Ltd [60] - [104].

[68] Re Poseidon Nickel Ltd [2018] FCA 1063; (2018) 129 ACSR 57, 67 [63].

[70] Supplementary affidavit of Nicholas Findlay Day filed 15 October 2020 'NFD9' - 'NFD22'; further supplementary affidavit of Nicholas Findlay Day filed 16 October 2020 'NFD28'.

[71] Re G8 Communications Ltd [2016] FCA 297; (2016) 112 ACSR 22, 34 [60].

[72] Affidavit of Justin Charles Barton filed 13 October 2020 [20], [245].

[73] Re Caeneus Minerals Ltd [39] - [40]; Re Classic Minerals Ltd [2018] FCA 2039, [35] - [36].

[74] Re Charter Hall Ltd [2007] FCA 1316; Re Diversified United Investment Ltd [2008] FCA 720; Re RCR Tomlinson Ltd [2009] FCA 1130; Re Austpac Resources NL [2010] NSWSC 1438; Re Beadell Resources Ltd [2013] FCA 13 and Re Micro-X Ltd [2019] FCA 1154.

[75] Re Imdex Ltd [2020] WASC 298 [55] - [58].