Australian Securities and Investments Commission v Australian Mines Limited (No 2)

• Jurisdiction: Australia Federal only
• Court: Federal Court (Australia)
• Judgment Date: 12 May 2023
• Neutral Citation: [2023] FCA 468
• Date: 12 May 2023

Federal Court of Australia

Australian Securities and Investments Commission v Australian Mines Limited (No 2) [2023] FCA 468

File number:	WAD 84 of 2022
Judgment of:	COLVIN J
Date of judgment:	12 May 2023
Catchwords:	CORPORATIONS - applications for declarations, a pecuniary penalty and a disqualification order under s 1317G and s 206C of the Corporations Act 2001 (Cth) - where statements made by the second respondent which he knew to be false or ought to have known were materially misleading - where admission of breach of s 180 of the Corporations Act 2001 (Cth) - consideration of appropriate disqualification period start date - where applicant and second respondent have agreed on proposed orders - orders made in terms of proposed orders
Legislation:	Corporations Act 2001 (Cth) ss 180, 1317G
Cases cited:	Australian Securities and Investments Commission v Australian Mines Limited [2023] FCA 9 Australian Securities and Investments Commission v Blue Star Helium Limited (No 4) [2021] FCA 1578
Division:	General Division
Registry:	Western Australia
National Practice Area:	Commercial and Corporations
Sub-area:	Regulator and Consumer Protection
Number of paragraphs:	18
Date of hearing:	12 May 2023
Counsel for the Plaintiff:	Mr Y Shariff SC with Mr T Chalke
Solicitor for the Plaintiff:	Australian Government Solicitor
Counsel for the First Defendant:	The first defendant did not appear
Counsel for the Second Defendant:	Mr PD Evans
Solicitor for the Second Defendant:	HFW Australia

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:	12 MAY 2023

BY CONSENT BETWEEN THE PLAINTIFF AND THE SECOND DEFENDANT

THE COURT DECLARES THAT:

1. Pursuant to s 1317E(1) of the Corporations Act 2001 (Cth) (Corporations Act), the second defendant contravened s 180(1) by failing to exercise his powers and discharge his duties with the degree of care and diligence that a reasonable person would exercise if they were a director of a corporation in the first defendant's circumstances; and occupied the office held by, and had the same responsibilities within the corporation as, the second defendant:

   1. by making the following representations, while he was aware, or ought reasonably to have been aware, that the representations were false in a material particular or were materially misleading:

      1. at presentations given at conferences in Hong Kong on 23 April 2018 and London on 17 May 2018:

         1. that the first defendant had secured finance for the construction of its processing plant (Plant) for the Sconi Project, a cobalt, nickel and scandium resource in North Queensland; and

         2. that SK Innovation Co Ltd (SKI) had committed to funding construction of the Plant (Funding Commitment Representations);

      2. at presentations given at conferences in Hong Kong on 23 April 2018 and London on 17 May 2018, that the value of the Term Sheet for an Offtake Agreement with SKI dated 9 February 2018 (Offtake Agreement) to the first defendant, based upon the tonnes per annum of nickel sulphate and cobalt sulphate to be supplied under the Offtake Agreement, was $5 billion (Value Representation); and

      3. at a presentation given in London on 17 May 2018, that it was a condition of the Offtake Agreement that SKI commit to funding construction of the Plant (Offtake Condition Representation),

(collectively, the Representations);

2. having made the Funding Commitment Representations and Offtake Condition Representation, by failing to cause the first defendant to correct those representations, or to tell the Australian Securities Exchange (ASX) that:

   1. the first defendant had not secured finance for the construction of the Plant, and SKI had not committed to funding construction of the Plant; and

   2. it was not a condition of the Offtake Agreement that SKI commit to funding construction of the Plant, and SKI did not have any other obligation to fund construction of the Plant,

(together, the SKI Funding Information);

3. by making the Value Representation notwithstanding that he was aware that the making of similar $5 billion statements by the first defendant on the ASX Market Announcement Platform on 21 February 2018, had resulted in the ASX making inquiries of the first defendant as to its compliance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code) and led to the first defendant issuing a retraction via the ASX Market Announcement Platform on 28 February 2018;

4. by failing to take reasonable steps to determine or ensure that the Value Representation would not lead to the ASX again requiring the first defendant to make corrective statements and issue retractions in respect of its compliance with the JORC Code;

5. having made the Value Representation, by failing to cause the first defendant to correct that representation, or to inform the ASX of:

   1. the modifying factors and other matters required by the JORC Code; and

   2. the value of the Offtake Agreement to the first defendant was reduced by a buyer's discount of 15% on the base price to be paid for cobalt and nickel; and

6. by causing the first defendant to contravene s 674(2) of the Corporations Act by:

   1. between 23 April 2018 and 27 June 2018, 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; 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 and second defendant made the Funding Commitment Representations.

2. 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 Plant; and

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

where that information 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 and second defendant made the Offtake Condition Representation.

3. 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 and second defendant made the Value Representation,

and thereby exposing the first defendant to the risk of proceedings for contraventions of the Corporations Act, legal costs and penalties, which were in fact...