Australian Securities and Investments Commission v Australian Mines Limited

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judgment Date: 13 January 2023
• Neutral Citation: [2023] FCA 9
• Date: 13 January 2023

Federal Court of Australia

Australian Securities and Investments Commission v Australian Mines Limited [2023] FCA 9

File number:	WAD 84 of 2022
Judgment of:	COLVIN J
Date of judgment:	13 January 2023
Catchwords:	CORPORATIONS - application for declaratory orders and orders for payment of a penalty under s 1317E and s 1317G of the Corporations Act 2001 (Cth) - where first respondent admits to three contraventions of its continuous disclosure obligation under s 674(2) - where first respondent acquired a mining project and entered into an offtake agreement - where contraventions involved failure to disclose material terms of the agreement and making false or misleading statements relating to the agreement - where misleading statements were retracted and where first respondent provided corrective disclosure to the ASX - where applicant and first respondent have agreed on proposed orders - orders made in terms of proposed orders
Legislation:	Corporations Act 2001 (Cth) ss 674, 1317E, 1317G, Part 6CA
Cases cited:	Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) [2011] FCA 382 Australian Energy Regulator v EnergyAustralia Pty Ltd [2022] FCA 644 Australian Securities and Investments Commission v Hochtief Aktiengesellshcaft [2016] FCA 1489 Australian Securities and Investments Commission v Lindberg [2012] VSC 332 Australian Securities and Investments Commission v Newcrest Mining Limited [2014] FCA 698 Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20 Trade Practices Commission v CSR Ltd [1991] ATPR 41-076
Division:	General Division
Registry:	Western Australia
National Practice Area:	Commercial and Corporations
Sub-area:	Regulator and Consumer Protection
Number of paragraphs:	37
Date of hearing:	31 October 2022
Counsel for the Plaintiff:	Mr Y Shariff SC with Ms TR Epstein
Solicitor for the Plaintiff:	Australian Government Solicitor
Counsel for the First Defendant:	Mr SJ Penrose
Solicitor for the First Defendant:	Tottle Partners
Counsel for the Second Defendant:	The Second Defendant did not appear

ORDERS

		WAD 84 of 2022
BETWEEN:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Plaintiff
AND:	AUSTRALIAN MINES LIMITED (ACN 073 914 191) First Defendant ; BENJAMIN JOHN BELL Second Defendant

order made by:	COLVIN J
DATE OF ORDER:	13 january 2023

THE COURT DECLARES THAT:

1. In the period following the first defendant's announcement to the Australian Securities Exchange (ASX) on 19 February 2018, the first defendant contravened s 674(2) of the Corporations Act 2001 (Cth) by failing to notify the ASX of the existence and quantum of a buyer's discount of 15% on the base price to be paid for cobalt and nickel in the Offtake Agreement with SK Innovation Co Ltd (SKI) dated 9 February 2018 (Offtake Agreement), conditional upon SKI exercising an option to acquire 19.9% of the first defendant's shares, at 0.12 AUD per share (Buyer's Discount), in circumstances where this was information that was material and not generally available, within the meaning of ASX Listing Rule 3.1 and Chapter 6CA of the Corporations Act.

2. The first defendant contravened s 674(2) of the Corporations Act:

   1. between 23 April 2018 and 27 June 2018 by failing to notify the ASX that the first defendant:

      1. had not secured finance for the construction of its processing plant for the Sconi project, a cobalt, nickel and scandium resource in North Queensland (Sconi Project); and

      2. SKI had not committed to funding construction of the processing plant,

where this was information that was material and not generally available, within the meaning of ASX Listing Rule 3.1 and Chapter 6CA of the Corporations Act, in circumstances where, at presentations given at conferences in Hong Kong on 23 April 2018 and London on 17 May 2018, the first defendant made false representations to the contrary that:

3. it had secured finance for the construction of the processing plant; and

4. SKI had committed to funding construction of the processing plant; and

1. between 17 May 2018 and 27 June 2018 by failing to notify the ASX that:

   1. it was not a condition of the Offtake Agreement that SKI commit to funding construction of the processing plant for the Sconi Project; and

   2. SKI did not have any other obligation to fund construction of the processing plant,

where this was information that was material and not generally available, within the meaning of ASX Listing Rule 3.1 and Chapter 6CA of the Corporations Act in circumstances where, at a presentation given at a conference in London on 17 May 2018, the first defendant made false representations to the contrary that it was a condition of the Offtake Agreement that SKI commit to funding construction of the processing plant.

3. The first defendant contravened s 674(2) of the Corporations Act between 23 April 2018 and 27 June 2018 by failing to notify the ASX that the value of the Offtake Agreement was reduced by the quantum of the Buyer's Discount where this was information that was material and not generally available, within the meaning of ASX Listing Rule 3.1 and Chapter 6CA of the Corporations Act in circumstances where, at presentations given at conferences in Hong Kong on 23 April 2018 and London on 17 May 2018, the first defendant made inaccurate representations that the value of the Offtake Agreement, based upon the quantities of cobalt and nickel to be sold to SKI pursuant to the Offtake Agreement, was $5 billion.

4. The contraventions referred to in paragraphs 1, 2 and 3 were serious within the meaning of s 1317G(1A)(c)(iii) of the Corporations Act.

THE COURT ORDERS THAT:

5. The first defendant pay to the Commonwealth of Australia a pecuniary penalty in the amount of $450,000, of which $225,000 is to be paid within 60 days, and the balance within 180 days of the making of these orders by the Court.

6. The first defendant contribute to the plaintiff's costs of these proceedings in the agreed amount of $55,550, to be paid within 60 days of the making of these orders by the Court.

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

REASONS FOR JUDGMENT

COLVIN J:

1. Australian Mines Limited (AML) is a listed public company. By operation of Part 6CA of the Corporations Act 2001 (Cth), it had a continuous disclosure obligation that required it to tell the Australian Securities Exchange (ASX) as soon as it became aware of any information concerning AML that a reasonable person would expect to have a material effect on the price or value of its securities. AML has admitted that in 2018 it contravened s 674(2) of the Corporations Act on three occasions by failing to perform its continuous disclosure obligation.

2. The Australian Securities and Investments Commission (ASIC) seeks declaratory orders in respect of each of the contraventions and orders for the payment of a pecuniary penalty and a contribution to ASIC's legal costs. AML consents to the making of the orders. For the following reasons, the orders should be made.

3. The relevant conduct was engaged in by Mr Benjamin John Bell. At the time of the conduct he was the managing...