Weinstock v Beck

the law 14 Section 1322(4)(d) of the Corporations Act provides as follows: 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) … (b) … (c) … (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. 15 Section 1322(6) imposes constraints on the exercise of power under s 1322(4). The section relevantly provides that: The Court must not make an order under this section unless it is satisfied: (a) …. (b) … (c) in every case - that no substantial injustice has been or is likely to be caused to any person. 16 Section 1322(4) has been given a wide operation and liberal interpretation by the courts. In Weinstock v Beck (2013) 251 CLR 396, French CJ observed as follows at [39]: Corporations, in contemporary Australian society, serve the purposes of enterprises, large and small, owned and operated by men and women, some of whom are sophisticated, knowledgeable and well-advised on matters of corporate governance and some, perhaps many, of whom are not. Section 1322(4) and related provisions reflect a long-standing legislative recognition that mistakes will happen in corporate governance and that it is not in the public interest that the validity of decisions made in relation to corporations be unduly vulnerable to innocent errors which may be corrected without substantial injustice to third parties. In Blaze Asset Pty Ltd v Target Energy Ltd (2009) 177 FCR 488, Barker J stated that: [30] While s 1322(4) does not require the Court in exercising the power to extend time, to take account of any particular criteria. Obviously the power should be exercised having regard to the general objects and purposes of the CA: see Re Wave Capital Ltd (2003) 21 ACLC 1995. Section 1322(6)(c), however, specifies that, in a case such as the present, the Court must not make an order unless it is satisfied that "no substantial injustice has been or is likely to be caused to any person". [31] In my view, the exercise of the power under s 1322(4) 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 CA 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 injustice has been or is likely to be caused to any person by the making of such an order. [32] In dealing with the first consideration, general discretionary matters no doubt included factors touching upon the reasons for the need to extend time. Questions of deliberate strategy and inadvertence may fall for consideration. However, it should be noted that s 1322(4)(d) does not condition the exercise of the Court's power on an applicant showing its conduct was due to inadvertence. In this regard, s 1322(4) may be contrasted with s 1325D under which the Court may declare any act, document or matter not invalid by reason of contravention of a provision of Ch 6, Ch 6A, Ch 6B or Ch 6C, where regard must be had to whether the contravention was caused by a person's inadvertence or mistake, not having been aware of the relevant fact or occurrence, or circumstances beyond the control of the person. In my view, it is clear that mere "inadvertence" is not the sole or a governing criterion by which the Court may be moved to exercise its power under s 1322(4)(d), even though such a factor may be considered relevant. [33] There is no doubt that s 1322 is intended to be exercised liberally, so as not to unreasonably stifle corporate and financial activity; that is to say, restrict such activity merely on technical grounds: Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd (2001) 166 FLR 144, Giles JA (with whom Beazley JA agreed) at [74]; Re Insurance Australia Group Ltd (2003) 128 FCR 581 at [27] per Lindgren J; Re Wave Capital Ltd 21 ACLC 1,995, French J at [30]; Re MacMahon Holdings Ltd (2008) 26 ACLC 861, McKerracher J at [21]. [34] As to what conduct on the part of an applicant may be considered disentitling conduct in relation to the exercise of the Court's power, it is not appropriate to delimit the possibly relevant categories. Each case will suggest circumstances perhaps which should lead to the power not being exercised. Delay may be relevant in some cases: see Re Laserbond Ltd (2007) 25 ACLC 1,658; Re Insurance Australia Group Ltd 128 FCR 581; Re MacMahon Holdings Ltd 26 ACLC 861, McKerracher J at [15]. Similarly, "Evidence of a blatant disregard of the provisions of the Act or the constitution of the company may lead to refusal of relief": Re Wave Capital Ltd 21 ACLC 1,995, French J at [29]. [35] To the extent that "inadvertence" is of itself a relevant consideration to the exercise of the s 1322(4)(d) power, the authorities suggest that inadvertence generally means "not properly attentive" or not directing one's mind to the doing of an act, amongst other things, to being ignorant of a requirement that an act be done, or done in a particular way or by a particular time: Diamond Rose NL v Striker Resources NL (1998) 85 FCR 76, Lee J at 81; Primelife Corporation Ltd v Aevum Ltd (2005) 53 ACSR 283, Hamilton J at [10]. In Re Insurance Australia Group Pty Ltd (2003) 128 FCR 581, Lindgren J made an order under s 1322(4)(d) of the Corporations Act to extend the time for a company to apply for the admission of its securities to quotation where, due to inadvertence, the time limit was not observed. His Honour observed at [28]: Courts have had no difficulty in treating s 1322(4)(d) as being available even though the "period for doing any act, matter or thing or instituting or taking any proceeding under [the legislation] or in relation to a corporation" in question did not form part of a provision which in terms imposed an absolute positive obligation to do the act, matter or thing or to institute or take the proceeding: cf Elderslie (extension of time fixed in a condition of an exemption from ss 1021(5) and 1040 of the Corporations Law (the Law) granted by Australian Securities Commission (ASC) that a report be submitted to ASC within a certain time); Super John Pty Ltd v Futuris Rural Pty Ltd (1999) 32 ACSR 398 (time limit for making of an application by a dissenting offeree under s 701(6) of the Law); Pinnacle VRB Ltd v Reliable Power Inc (2001) 163 FLR 215 (mandatory time for service of any notices varying offers under an off-market bid); Brown v DML Resources Pty Ltd (In liq) (No 6) (2002) 166 FLR 393 (extension of mandatory time limit for liquidator to apply under s 588FF(3)(b) of the Act for leave to bring proceedings to challenge certain transactions as unfair preferences) ... and at [41]-[42]: The additional costs and administrative inefficiencies which would result from a refund of subscription moneys and subsequent redepositing of those moneys by subscribers favours the making of an order: cf Elderslie at 161. I have no hesitation in exercising the Court's discretion in favour of making the order. See too Re Wave Capital Ltd (2003) 47 ACSR 418; [2003] FCA 969.

decision 17 The Court has the power under s 1322(4)(d) of the Corporations Act to extend the time limit for compliance with Bid Condition (e) and the order and declaration sought should be made for the following reasons. 18 First, the need to extend time arises from the fact that written confirmation from ASX of its "in principle" approval of the relisting of the company on the ASX was not received until after 15 July 2015. The approval, nonetheless, was received and confirmed by letter from ASX on 21 July 2015. Additionally, by its letter dated 31 July 2015 ASX has confirmed that subject to Viculus obtaining the order sought, the company will be compliant with Listing Rule 11.1 and Chapters 1 and 2 of the Listing Rules and its securities can be reinstated to official quotation. 19 Secondly, if the Takeover Bid is void, it would have far reaching consequences for Viculus, for its shareholders and for Euro. Those consequences were enumerated by Mr Burrell in his affidavit as follows: (a) Viculus and Euro have invested all their funds and resources towards completing the takeover bid; (b) Euro's rights to the Tenements and Exploration Licence Applications would be at risk of being lost, which would mean Euro shareholders are at risk of losing any value in the capital they have invested and would have received from the relisting; (c) Viculus shareholders would lose the opportunity to release any value from their shareholding as Viculus is currently suspended and has no assets; and (d) all capital raised pursuant to the Prospectus would need to be returned to investors, leaving Viculus without any working capital moving forward. In consequence Viculus would be unlikely to be able to pay its debts as and when they fall due. 20 Thirdly, the board of Euro continues to support the Takeover Bid and the present application by Viculus. 21 Fourthly, I am satisfied that no substantial injustice has been caused, or is likely to be caused, to any person if the order is made. 22 Fifthly, ASIC does not oppose the application. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies.