A right based on s 1274 of the Corporations Act
58 The first right identified by Mineralogy as being the source or basis of its claims is the right to have its financial report for the year ended 30 June 2014 "made available to Users and be able to be relied upon by Users for the purpose of making economic decisions regarding Mineralogy": amended concise statement at [17(a)]. "Users" in that context, is defined as meaning present and prospective creditors of Mineralogy; present and prospective members of Mineralogy; Mineralogy's corporate adviser IOMG; advisers, consultants and other professionals who will be involved in the Mineralogy IPO; other persons who will be involved in, or have an interest in, the proposed Mineralogy IPO; and Mineralogy itself: amended concise statement at [16].
59 The source of this alleged right is said by Mineralogy to be s 1274(1) and (2) of the Corporations Act, coupled with a duty said to be imposed on ASIC by s 1274(8) and (11) of the Corporations Act.
60 As has been seen, s 1274(1) of the Corporations Act requires ASIC to "keep such registers as it considers necessary in such form as it sees fit" and s 1274(2)(a) provides that a person may "inspect any document lodged with ASIC", other than certain specified types of documents, none of which are relevant to this proceeding. Subsection 1274(8) provides, insofar as it is potentially relevant, that "if ASIC is of [the] opinion that a document submitted for lodgement … (b) contains matter that, in a material particular, is false or misleading … ASIC may refuse to register or receive the document and may request: (f) that the document be appropriately amended or completed and resubmitted; or (g) that a fresh document be submitted in its place". Subsection 1274(11) provides that a member or creditor of a body corporate, or ASIC, may apply to a court to make an order directing the body corporate or an officer of that body corporate to "make good" a default in complying with any provision of the Corporations Act that, relevantly, requires the lodging of a return or account, or any request made by ASIC to amend or resubmit any document.
61 It is common ground that: ASIC keeps a register as required by s 1274(1); Mineralogy lodged its financial report for the year ended 30 June 2014 with ASIC; that report is recorded on ASIC's register and is able to be inspected by any person; and ASIC has not taken any action pursuant to s 1274(8) or (11) of the Corporations Act.
62 The controversy which Mineralogy contends can be quelled by the Court is that ASIC will or has infringed its right under s 1274(1) and (2) of the Corporations Act because "the Audited Accounts cannot be relied upon by Users for the purpose of making economic decisions": amended concise statement at [17(c)(ii)]. It would appear to be on that basis that Mineralogy contends that it is entitled to both a declaration that its audited accounts for the year ended 30 June 2014 provide a true and fair view of its financial position for the year ended 30 June 2014 and a declaration that it has complied with its obligations under Ch 2M of the Corporations Act in respect of the preparation and lodgement of its audited accounts for the year ended 30 June 2014.
63 Mineralogy's argument that ASIC has somehow infringed its right, based on s 1274(1), (2) and possibly (8) and (11) of the Corporations Act, to have its financial report made available to and relied on by users, is, at best, opaque or elusive. It appears to be based on the proposition that, while its financial report has in fact been placed on ASIC's register and is able to be inspected by anyone, those so-called "users" of the report cannot rely on the report, either because note 17(b) to the report is said to be inconsistent with the allegations made in the criminal proceeding against Mr Palmer, or because those allegations somehow suggest or show that ASIC asserts or is of the opinion that note 17(b) to the report is false or misleading.
64 Mineralogy's contention that there is some justiciable controversy concerning a right it has by reason of s 1274 of the Corporations Act is entirely unmeritorious. There is no such right for determination at the suit of Mineralogy and no such justiciable controversy. That is so for a number of reasons.
65 First, it may be accepted that s 1274(1) of the Corporations Act creates a duty on the part of ASIC to keep a register or registers, or at least such register or registers "as it considers necessary". There is, however, no dispute that ASIC has complied with that duty and established a register.
66 Second, it may perhaps also be accepted that, by virtue of s 1274(2) of the Corporations Act, a person has a right to inspect any document that has been lodged with ASIC, other than those listed in s 1274(2)(a). It may be that, if ASIC refused to allow a person to inspect a particular document which had been lodged with ASIC that did not fall within s 1274(2)(a), that person could approach the Court to have its right to inspect the document determined. In the present case, however, there is no dispute that Mineralogy has lodged its financial report for the year ended 30 June 2014 with ASIC, ASIC has placed that report on its register, and any person is able to inspect that document. There is no suggestion that any person has been denied the right to inspect it.
67 Third, the fact that s 1274(2) of the Corporations Act may confer a right on persons generally to inspect documents which have been lodged with ASIC does not create any right on any person to rely on any particular document on the register, or its contents, as being true and correct, or as not containing any false or misleading information. The mere fact that a document has been lodged with ASIC and placed on its register does not somehow mean that ASIC has given the contents of the documents its imprimatur, or has somehow represented, expressly or impliedly, that the contents of the document are true and correct.
68 Mineralogy appeared to contend to the contrary. While it conceded that s 1274 of the Corporations Act did not require ASIC to check the contents of every document lodged with it, it nevertheless submitted that "users" had a right to treat any document that had been lodged with ASIC, and which ASIC had put on its register, as being a document the contents of which ASIC "does not take issue with". That would appear to be tantamount to contending that, by registering a document which has been lodged with it, ASIC effectively represents to anyone who may inspect the document that, so far as ASIC is concerned, the document does not contain any false or misleading information.
69 Mineralogy relied, in support of that contention, on s 1(2) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), which relevantly provides that "[i]n performing its functions and exercising its powers, ASIC must strive to … (e) receive, process and store, efficiently and quickly, the information given to ASIC under the laws that confer functions and powers on it; and … (g) take whatever action it can take, and is necessary, in order to enforce and give effect to the laws of the Commonwealth that confer functions and powers on it".
70 The list of aspirations or objectives in s 1(2) of the ASIC Act, including paragraph (e), does not assist Mineralogy's argument concerning the existence of some right that people have to rely on the contents of documents lodged with ASIC as being true and correct. The fact that ASIC must "strive" to "receive, process and store, efficiently and quickly, the information given to" it by a company or person does not mean that ASIC must check and verify the contents of every document lodged with it and form an opinion as to whether it does or does not contain any false or misleading information. It follows that this provision provides no support for the proposition that, when ASIC registers a document lodged with it, ASIC somehow guarantees or warrants that the information in the document is not inaccurate in any respect.
71 The same can be said in relation to Mineralogy's apparent reliance on s 12A(2) of the ASIC Act, which provides that "ASIC has the function of monitoring and promoting market integrity and consumer protection in relation to the Australian financial system". The fact that ASIC has that function does not mean that ASIC checks and verifies the contents of every document lodged with it, or warrants that the contents of every document that it places on its register is true and correct, or does not contain any false or misleading information.
72 Finally, Mineralogy relied on an introductory passage in one of ASIC's regulatory guides, which indicates that the purpose of requiring companies to prepare and lodge financial reports with ASIC is to "make information available that is useful to a wide range of users, to help them make economic decisions": ASIC Regulatory Guide 43 at [43.2]. It is difficult to see how this general passage of a regulatory guide could inform the proper construction of s 1274(1) and (2) of the Corporations Act. In any event, it indicates no more than that the purpose of ASIC's register is to enable "users" to inspect, amongst other things, the financial statements of companies that are required by the Corporations Act to lodge their financial statements with ASIC. That is not to say that users have a right to treat the document as a document the contents of which ASIC has checked and does not take issue with.
73 There is, in short, no basis for Mineralogy's contention that s 1274(1) and (2) of the Corporations Act somehow give users of a document registered by ASIC, or persons who may choose to inspect the document, any sort of enforceable right to treat or rely on the document as a document the contents of which ASIC has considered and does not take issue with or dispute.
74 Fourth, Mineralogy's reliance on s 1274(8) of the Corporations Act is also misplaced. Subsection 1274(8) gives ASIC the discretionary power to "refuse to register or receive" a document which is "submitted for lodgement", and to request that the document be "appropriately amended … and resubmitted", or that a "fresh document be submitted in its place", if ASIC is of the opinion that the document, relevantly, "contains a matter that, in a material particular, is false or misleading". Mineralogy disavowed any suggestion that s 1278(8) created any right in Mineralogy. Rather, it contended that it gave rise to a duty on the part of ASIC. Indeed, it went so far as to contend that ASIC had a duty in the circumstances of its case to refuse to register or receive its financial report for the year ended 30 June 2014, and perhaps a duty to request that the financial report be appropriately amended and resubmitted, or that a fresh document be submitted in its place.
75 It is perhaps unnecessary to finally determine whether, as a matter of statutory construction, s 1274(8) creates a duty on the part of ASIC. That is because, for the reasons that follow, there could be no suggestion that s 1274(8) could apply in the circumstances of this case in any event. That said, the better view would appear to be that s 1274(8) does not impose a duty on ASIC to either form an opinion about the contents of every document lodged with it, or to take any action concerning the receipt or registration of a document if it forms any adverse opinion about its contents. Rather, as has already been indicated, it confers a discretionary power on ASIC to take certain action if it forms the requisite opinion. The discretionary nature of the power is clear from the multiple use of the permissive or facultative word "may", as opposed to the mandatory word "must".
76 It may be accepted that, at least in some cases or circumstances, a statutory provision can create or give rise to a duty even when it uses a permissive word such as "may", as opposed to a mandatory word such as "must". That is often the case particularly where, as here, the enlivenment of the power is conditioned upon the formation of a particular opinion: Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 84-85 (Brennan J, Toohey and McHugh JJ concurring). This, however, is not such a case. There is nothing in the text or statutory context to displace the prima facie "presumption that permissive or facultative expressions operate according to their ordinary natural meaning": Ward v Williams (1955) 92 CLR 496 at 505, referred to in Royal Insurance at 54.
77 It may also be accepted that, if ASIC positively formed an opinion of the sort specified in one or more of paragraphs (a) to (e) of s 1274(8) and exercised its discretion to refuse to register or receive a document, or its discretion to take one or more of the actions specified in paragraphs (f) to (h) of s 1274(8), the person or corporation who lodged the document with ASIC could seek a review of that decision in the Administrative Appeals Tribunal pursuant to s 1317B of the Corporations Act. Authorities in respect of cognate provisions in earlier versions of companies legislation also tend to indicate that a regulator's decision to refuse to register a document lodged for registration may be amenable to judicial review for jurisdictional error: Mutual Home Loans Fund of Australia (Qld) Ltd v Commissioner for Corporate Affairs [1978] Qd R 487 at 504-505; Re North Queensland Auto Spares Co Pty Limited [1984] 2 Qd R 241 at 262. The fact that a decision by ASIC under s 1274(8) not to receive or register a document is amenable to review does not, however, necessarily mean that ASIC has a duty to form an opinion, one way or another, of the sort referred to in s 1274(8)(a) to (e) in respect of every document lodged with it. Nor does it follow that ASIC has a duty, as opposed to a discretion, to refuse to register or receive a document, or to take one of the steps under s 1274(8)(f) to (h), if it does form such an opinion. It is, moreover, difficult to conceive a case where a failure by ASIC to form an opinion under s 1274(8)(a) to (e), or a failure by ASIC to refuse to receive a document lodged with it, would be reviewable.
78 In any event, there is no basis for contending that any such duty under s 1274(8) of the Corporations Act could arise in the circumstances of this case. Any duty that may arise under s 1274(8) arises when a document is "submitted for lodgement" and before ASIC has registered the document. Subsection 1274(8) does not, in terms, give ASIC the power to remove a document that has already been received and placed on the register. The power or duty also only arises where ASIC "is of the opinion", relevantly, that the document that has been submitted contains false or misleading information. As discussed in more detail later, there is no evidence that ASIC has formed that opinion in respect of Mineralogy's financial report for the year ended 30 June 2014. Indeed, the evidence is to the contrary. ASIC has advised Mineralogy's lawyer, in effect, that it has not formed any such opinion. For the reasons given later, Mineralogy's reliance on the criminal proceeding against Mr Palmer as somehow demonstrating that ASIC has formed an opinion for the purposes of s 1274(8) is misconceived and contrived.
79 Fifth, even if s 1274(8) of the Corporations Act could be construed as giving rise to a duty on ASIC, and even if there was evidence or a basis for finding that ASIC had formed an opinion of the sort referred to in s 1274(8)(a) to (e) about Mineralogy's financial report, and the duty to take some action of the sort referred to in s 1274(8)(f) to (h) was therefore enlivened, it does not follow that s 1274(8) could be said to be the source of a right of any "user" to rely on the report. So much so appeared to be conceded by Mineralogy. It follows that there could be no basis for any contention that, by failing to take action in respect of Mineralogy's financial report as supposedly required by s 1274(8), ASIC has somehow infringed the rights of "users" of the report. The most that could be said is that action may be able to be taken to enforce ASIC's duty under s 1274(8), though it is unclear exactly who would have standing to enforce the duty. The apparent suggestion that Mineralogy, having lodged the financial report for registration by ASIC, could seek to compel ASIC to perform its duty under s 1274(8) to refuse to receive or register the report is fanciful.
80 Sixth, and as just adverted to, Mineralogy's attempt to conjure up a justiciable controversy based on s 1274(8) and (11) of the Corporations Act is entirely contrived and artificial.
81 To briefly recapitulate, the relevant sequence of events is as follows.
82 On 6 February 2020, a criminal complaint was filed against Mr Palmer which alleged, in summary, that in causing Mineralogy to make two payments in August 2013, Mr Palmer dishonestly gained an advantage for his associates and dishonestly used his position as a director. Almost 10 months later, Mineralogy prepared, and its chairman signed, a special purpose financial report for the year ended 30 June 2014. It is unclear why Mineralogy prepared that report over six years after the end of the relevant financial year. In any event, note 17(b) in the report recorded that Mineralogy had obtained an "independent business report" and "further legal advice" to the effect that the two relevant payments, being the payments the subject of the criminal proceeding against Mr Palmer, "were honestly made by [Mr Palmer] in the best interest of the company". It also asserted, presumably on the basis of that advice, that Mr Palmer "has no case to answer and has acted honestly at all times".
83 Mineralogy lodged the financial report with ASIC for recording on the register, no doubt on the basis that it, or its directors, believed that the contents of the report, including the relevant note, were true and correct. The report was duly recorded on the register. It is open for inspection by so-called "users". Needless to say, when it lodged the financial report, Mineralogy did not suggest that ASIC should refuse to receive or register the report pursuant to s 1274(8) of the Corporations Act because it contained false or misleading statements. Mineralogy now appears to contend that ASIC should be compelled to form an opinion under s 1274(8) that the financial report contains false or misleading statements - even though ASIC maintains that is has formed no such opinion - so that Mineralogy can then seek to prove that the opinion in that regard is wrong. It also appears to contend that ASIC should be compelled to refuse to receive or register the report pursuant to s 1274(8) of the Corporations Act - even though the report has already been received and registered - so it can seek to prove that ASIC is not in fact entitled to take that action. The circularity and artificiality of those claims is manifest. They are colourable.
84 Mineralogy also apparently contends that "users" of the report cannot rely on it because ASIC has not refused to receive or register it, or has not taken any action under s 1274(8)(f)-(h) in respect of the report, even though it apparently also claims, or wants to claim, that ASIC has no right or basis to take any such action. Again, the circulatory and artificiality of this claim is demonstrable. The reality, of course, is that "users" are perfectly entitled to rely on the financial report as they see fit. If there is any reluctance on the part of "users" to rely on anything in the financial report, that reluctance is plainly a result of the existence of the criminal proceeding against Mr Palmer, not a result of anything that ASIC supposedly should do pursuant to s 1274(8) of the Corporations Act. There is an obvious inconsistency between the allegations made in the criminal proceeding against Mr Palmer and the advice referred to in note 17 to the financial statements contained in the financial report. So-called "users" of the financial report are, however, entirely free to rely on the advice received by Mineralogy in preference to the allegations made in the criminal proceeding. It is fanciful to suggest otherwise.
85 Indeed, the artificiality, if not absurdity, of Mineralogy's claim and alleged controversy is highlighted by the fact that some of the "users" who it is said cannot, or will not, rely on the financial report are the very advisers whose advice is referred to in note 17. Similarly, Mineralogy itself is said to be a "user" of the financial report who is apparently unable to rely on it. The suggestion appears to be that it cannot rely on the legal and other advice that it sought and received and chose to include in a note to its financial statements. Even putting that absurdity to one side, Mineralogy does not in any event have a right, in a juridical sense, to have "users" rely on the contents of a document that they have lodged with ASIC.
86 Seventh, and related to the previous point, the principal relief that Mineralogy seeks, in order to supposedly quell the controversy it has contrived by including note 17 in its financial report, is clearly hypothetical and advisory in nature. The basis upon which the declaratory relief is supposedly sought by Mineralogy is that "users", in particular those associated with its proposed IPO, are said for some reason to be unable to rely on the financial report. What Mineralogy in effect seeks is an advisory opinion of the Court concerning the financial report which will somehow give "users" some comfort in relying on the accounts for the purposes of the IPO. Yet even that relief, if granted, would be somewhat pointless. Let it be assumed that the Court made the declaration and the IPO goes ahead. If persons who acquired shares in Mineralogy in reliance on the financial report subsequently sued Mineralogy, or its advisers, on the basis that the financial report contained false or misleading statements, those persons would not be bound by any declaration that the Court made in this proceeding. Neither Mineralogy, nor its advisers, could rely on the declaration, or the Court's judgment, to defeat such a claim.
87 Eighth, s 1274(11) of the Corporations Act also does not assist Mineralogy in any respect. There is currently no allegation that Mineralogy is in default of any provision of the Corporations Act which requires it to lodge any return or account or other document. Nor has ASIC made any request to amend or resubmit any document, or to submit a fresh document. Even if there was any such allegation, s 1274(11) provides only that a member or creditor of the relevant company, or ASIC, may apply to a court for an order directing the remedying of the default. No such application has been made in this Court and Mineralogy has no right to make any such application.