FEDERAL COURT OF AUSTRALIA Wave Capital Limited [2003] FCA 969 CORPORATIONS – prospectus – rights issue – representation in prospectus that application would be made for quotation of New Shares on ASX – statutory requirement to make application for quotation within seven days of date of prospectus – requirement overlooked – application to extend period – discretion of Court – general principles – period extended – order that costs of application not to be met out of company funds Corporations Act 2001 (Cth) s 723(3), s 723(4), s 724, s 1322 Re Onslow Salt Pty Ltd (2003) 198 ALR 344 cited In the matter of Insurance Australia Group Ltd [2003] FCA 581 cited Re Australian Koyo Ltd (1984) 8 ACLR 928 cited Elderslie Finance Corporation Ltd v Australian Securities Commission (1999) 11 ACSR 157 cited IN THE MATTER OF WAVE CAPITAL LIMITED W3022 OF 2003 FRENCH J 12 SEPTEMBER 2003 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W3022 OF 2003 IN THE MATTER OF SECTION 1322 OF THE CORPORATIONS ACT AND: IN THE MATTER OF WAVE CAPITAL LIMITED ACN 006 031 161 APPLICANT JUDGE: FRENCH J DATE OF ORDER: 12 SEPTEMBER 2003 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The period of seven days referred to in paragraph 723(3)(a) and in sub-paragraph 724(b)(i) of the Corporations Act 2001 in respect of the prospectus dated 29 July 2003 ('the Prospectus') issued by the Applicant be extended to the date contemplated by paragraph 3 hereof. 2. Upon service of this Order on the Australian Securities and Investments Commission ('ASIC'), ASIC will include such Order on its database. 3. The date fixed for the purposes of paragraph 1 is to be the next day following the lodgment by the Company of an application to Australian Stock Exchange Ltd as provided for in the Prospectus and in any event no later than three days from the date of this Order. 4. The Applicant and all other interested parties including ASIC have liberty to apply to revoke or vary the Orders (1) and (3) above. 5. The costs of this application are not to be met out of company funds. 6. There by liberty to the Company to vary or revoke the last mentioned order. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W3022 OF 2003 IN THE MATTER OF SECTION 1322 OF THE CORPORATIONS ACT AND: IN THE MATTER OF WAVE CAPITAL LIMITED ACN 006 031 161 APPLICANT JUDGE: FRENCH J DATE: 12 SEPTEMBER 2003 PLACE: PERTH REASONS FOR JUDGMENT Introduction 1 Wave Capital Limited ('Wave') is a publicly listed company which, under its former name Waivcom Worldwide Limited, was in voluntary administration and subject to a Deed of Company Arrangement with its creditors from 25 June 2001 until 7 July 2003 when the Deed was terminated. The company's shares have been suspended from trading since 19 March 2001. It has now embarked upon a process of restructuring and recapitalisation. The company issued a Prospectus for a Rights Issue of new shares to existing shareholders and an offer of new shares to Convertible Note holders. The Prospectus was issued on 29 July 2003. The object of the offers is to raise new capital and to retire debt represented by the Convertible Notes. In the Prospectus, the company indicated its intention to seek quotation for the new shares with the Australian Stock Exchange ('ASX') within seven days of the date of the Prospectus. However because of an error, for which the company secretary takes responsibility, it did not do that. An application to the ASX for quotation of the new shares within seven days of the date of Prospectus is a condition of the validity of their issue by operation of s 723(3). 2 The company has now applied to this Court, as a matter of urgency, for an order under s 1322(4) extending the time for complying with the requirements of s 723(3). It seeks a like order with respect to the related provisions of s 724(1)(b) of the Act. Factual Background 3 Wave is a company which was incorporated in Victoria in 1982. Until 1 September 2003 it was known as Waivcom Worldwide Limited. It was first listed on the ASX in January 1986. 4 On 16 March 2001, the company went into voluntary administration. Trading in its shares was suspended by the ASX on 19 March 2001. A Deed of Company Arrangement was agreed by a meeting of creditors on 4 June 2001 and executed on 25 June 2001. The administrators have sold the businesses of the company in accordance with the terms of the Deed. Attempts to sell the limited shell were unsuccessful. However, in October 2002 18,237,358 shares together with Convertible Notes were sold to interests associated with the present directors for $550,000, $275,000 of which was payable on 7 July 2003 and the balance on or before 7 September 2003. The purchasers paid $50,000 to the Deed administrators in full and final satisfaction of the requirements of the Deed so that it could be terminated. 5 The Deed of Arrangement was terminated on 7 July and at that date Messrs. Jeremy Shervington, Adam Rankine-Wilson, Geoffrey Lambert and Philip Rees were appointed as directors. Mr Rees was also appointed as company secretary. Messrs. Fearis Salter Power Shervington, of which Mr Shervington is a partner, were appointed as the company's solicitors. The company presently has 1,261 shareholders and remains suspended from trading on the ASX. 6 The new board set about the restructuring and recapitalisation of the company. On 29 July 2003, the company issued a Prospectus for an offer comprising the following elements: (a) A Rights Issue to existing shareholders of up to 405,350,268 New Shares for subscription by way of a non-renounceable offer at an issue price of ˝ cent per share payable in full on application. This offer was made on the basis of an entitlement to subscribe for six new shares for every existing share held at the date of the offer. The new shares offered pursuant to the Rights Issue would, when issued, rank equally in all respects with each other and with the Existing Shares. This issue is calculated to raise $2,026,751 before costs. (b) 120,000,000 New Shares are offered to Convertible Note holders who elect to convert their Convertible Notes and Administrator Loan into shares at the rate of one New Share for every 0.5 cents of the written down face value of the Convertible Notes and to capitalise their contribution to the Administrator Loan at the rate of one New Share for every 0.5 cents of loan amount contributed. The conversion will not involve the injection of cash into the company but the retirement of the written down value of the debts of $550,000 represented by the Convertible Notes and $50,000 represented by the Administrator Loan. (c) This involves the issue of 95 million Underwriter Options to the Underwriter and parties nominated by the Underwriter (including directors). The Underwriter Options are to be granted for no consideration. The offers were expressed to close at 5pm on 1 September 2003 unless extended. 7 The Prospectus explained that the company was seeking to raise $2,026,751 pursuant to the rights issue. The purpose of the issue was to raise working capital for the company and to retire debt represented by the Convertible Notes. 8 Clause 2.12 of the Prospectus referred to a proposed application for ASX Quotation thus: 'Application will be made to ASX no later than 7 days after the date of this Prospectus for the official quotation of the New Shares offered pursuant to this Prospectus. If permission is not granted by ASX within 3 months after the date of this Prospectus the Company will repay, all application moneys received pursuant to this Prospectus.' 9 According to Mr Rees' affidavit, the board of the company delegated to him administration of the finalisation, lodgment and processing of the Prospectus. He caused a copy of the Prospectus to be served on the ASX on 29 July. However, he overlooked the requirement of s 723(3) of the Act that the company apply for ASX quotation within seven days of the issue of the Prospectus. He said in his affidavit: 'I mistakenly understood that no further steps were required to be taken with ASX in respect of the Prospectus until such time as applications were received under the Prospectus. Specifically I was not aware that an application in the form of Appendix 3B of the ASX Listing Rules was required to be lodged with ASX within seven days of the date of the Prospectus. Through my lack of knowledge and inadvertence, therefore, the Company failed to make the Quotation Application to the ASX described in paragraph 6 hereof within the said 7 days.' Paragraph 6 of the affidavit referred to s 2.12 of the Prospectus. 10 As at 2 September 2003 the following applications had been received by the company under the Prospectus: 'Date Amount Banked Number of Total Funds applications banked $ $ 27-Aug 104,859 21 104,859 28-Aug 57,788 40 162,647 29-Aug 78,792 18 241,439 1-Sep 45,828 23 287,267 2-Sep 222,239 25 509,506 TOTAL 509,506 127' According to Mr Rees no further amounts have been banked by the company's Share Registry since 2 September. 11 The underwriter of the issue is Paterson Ord Minnett Ltd which has been coordinating shortfall applications. Mr Rees has been informed by Paterson Ord Minnett Ltd and believes that most such applications have been lodged on or since the closing date under the Prospectus which was 1 September. The company has not issued any securities pursuant to the Prospectus. 12 A meeting of shareholders of the company was held on 1 September 2003. A number of resolutions were passed at that meeting for the allotment and issue of shares to companies associated with the directors. The meeting also resolved that approval be given to the Rights Issue being non-renounceable. The name of the company was changed by special resolution to Wave Capital Ltd. The remuneration of the non-executive directors of the company was fixed and a new company Constitution adopted. 13 At the hearing of the application I requested the filing of a further affidavit to disclose the time at which the error became known and the steps taken by the company since that time. A supplementary affidavit by Mr Rees was filed on 12 September. It appears from that affidavit that Mr Rees was not conscious of the error prior to the week commencing 1 September 2003. Because of his absence during that week he arranged for Mr Alex Pismiris to oversee the affairs of the company and particularly secretarial matters relating to the proposed shareholders' meeting. Mr Pismiris is currently the company secretary of a listed company and has acted in that role and as a director for a number of other public and listed companies. He has an office in the same group of offices occupied by the company. On 2 September 2003, Mr Pismiris was contacted by Mr Walsh of ASX who informed him that the company had not lodged an application in relation to the Prospectus in the form contained in Appendix 3B of the ASX Listing Rules. Following that discussion Mr Pismiris telephoned Mr Shervington to inform him of it. 14 After Mr Pismiris had rung him, Mr Shervington rang Mr Walsh at the ASX on 2 September 2003 who confirmed that a quotation application had not been lodged by the company. Mr Shervington then discussed the implications of the failure to lodge the application with his fellow director Mr Rankine-Wilson and with a Mr Constantine, a director of the Underwriter. In the course of these discussions consideration was given to the possibility of the company issuing a Supplementary Prospectus to overcome the difficulties created by the failure to lodge the quotation application. 15 At 5pm on 2 September 2003, Mr Shervington telephoned Mr Blakiston of the firm of solicitors Blakiston and Crab to seek his independent advice in relation to the issues arising from the failure to lodge the quotation application. Mr Blakiston was committed to a meeting with a client and telephoned Mr Shervington later that evening. On the following day Mr Shervington sent Mr Blakiston an email with details of the oral instructions he had given him the previous evening. He forwarded a follow-up email to Mr Blakiston on 5 September 2003. Late that day they had a discussion about the possibility of issuing a Supplementary Prospectus or making an application to the Court under s 1322 of the Corporations Act. Mr Blakiston told Mr Shervington that he wanted to discuss the matter further with ASIC. On Monday 8 September 2003, Mr Blakiston sent an email to Mr Shervington covering advice which canvassed the two alternatives of issuing a Supplementary Prospectus and making an application to the Court under s 1322. He recommended that Mr Shervington seek advice from senior counsel on the likelihood of the success of an application under s 1322. On the afternoon of Tuesday, 9 September 2003 Mr Shervington, following discussions with Mr Rees and other members of the board, instructed Mr Jooste QC for the purposes of the present application. The application was lodged on 11 September 2003. 16 Mr Rees says that the company now needs to issue the securities pursuant to the approvals obtained at the meeting and to raise the equity under the Prospectus for the following reasons: '(a) in order to enable the Company to repay/capitalise the "Convertible Notes" as described in the Prospectus; (b) for the Company to have sufficient working capital to continue with its efforts to seek out business opportunities to enable the Company's securities to be reinstated to quotation by ASX.' The Application 17 On 11 September 2003, the company filed an urgent application in this Court seeking an extension of time for compliance with the requirements of the Corporations Act 2001 in connection with an application for the admission of the company's securities to quotation which should have been made within seven days after the date of the Prospectus. This requirement arises out of the provisions of s 723(3) of the Corporations Act and s 724(1)(b). The application is brought under s 1322(4)(d) read with s 1322(6). The orders sought are in the following terms: '1. The period of seven days referred to in paragraph 723(3)(a) and in sub-paragraph 724(1)(b)(i) of the Corporations Act in respect of the prospectus dated 29 July 2003 ("the Prospectus") issued by the Applicant be extended to the date contemplated by paragraph 3 hereof. 2. Upon service of this Order on the Australian Securities & Investments Commission ("ASIC") ASIC will include such Order on its database. 3. The date fixed for the purposes of paragraph 1 is to be the next day following the lodgement by the Company of an application to Australian Stock Exchange Ltd as provided for in the Prospectus and in any event no later than three days from the date of this Order. 4. The Applicant and all other interested parties including ASIC have liberty to apply to revoke or vary the Orders (1) and (3) above.' The Submissions 18 Mr Rees contends in his affidavit that no person would be prejudiced by the extension of time sought for the following reasons: '(a) As is evidenced by the passage of the resolutions at the Meeting the shareholders of the Company are in favour of the Company raising funds in the terms provided for in the Prospectus; (b) I crave leave to refer to Section 5.1 of the Prospectus, which shows that prior to the issue of securities pursuant to the Prospectus the Company has a deficiency of assets of some $4,961,194. The position of the creditors of the Company will be enhanced and the position of any future creditors will be improved as a result of the equity proposed to be raised by the Prospectus; (c) The proposed issue of shares by the Company will still be pursuant to the Prospectus the contents of which are regulated by the provisions of the Corporations Act; (d) The net asset backing per share and, therefore, the financial position of the shareholders of the Company will be strengthened by the successful raising of equity under the Prospectus. The Company currently has 1,261 shareholders. I crave leave to refer to Section 5.2 of the Prospectus for details of the Company's existing capital structure and the proposed capital structure if the issues of securities contemplated by the Prospectus occur. (e) It is a condition of paragraph 723(3)(b) of the Corporations Act that not only must an application be made pursuant to paragraph 723(3)(a) of the Corporations Act within seven days of the date of the Prospectus but that the relevant securities must be admitted to quotation by ASX within three months of the date of the Prospectus. That is, in my respectful opinion, the real protection afforded by Sub-Section 723(3) of the Corporations Act is conferred by paragraph 723(3)(b) and the late lodgement of the Quotation Application will not affect that protection. The three month period prescribed by paragraph 723(3)(b) of the Corporations Act will expire three months after 29 July 2003.' He also says that if the extension sought by the company is not granted there is a serious risk that the delays caused to the issue of securities pursuant to the Prospectus will have a materially adverse impact on the company. 19 It appears that the Australian Securities and Investments Commission was notified on 10 September 2003 of the company's intention to make application to this Court. A letter received from ASIC dated 11 September 2003 said: 'ASIC is concerned at the extremely short notice of the hearing given to it (ie advised by facsimile received at 12.22pm today of a 3.30pm hearing). Further, the papers were not provided until 1.15pm. However, ASIC does not oppose the orders sought in the Minute of Proposed Orders, which I understand is to be amended to extend order 1 to sub paragraph 724(1)(b)(i) of the Corporations Act 2001. ASIC does not intend to appear at the hearing.' 20 Mr Rees also said that he had discussed the application with the Assistant Manager (Companies) of the Perth office of ASX on 11 September 2003. Mr Walsh, who is that officer, informed him during that discussion that provided the extension sought by the application were granted ASX would process the Quotation Application in the ordinary course and the fact that it was lodged outside of the relevant seven day period would not matter. Mr Walsh also informed Mr Rees that if such a Quotation Application were made by the company it would be processed by ASX within four business days. 21 Mr Rees says he has checked the Constitution of the company and was satisfied that it did not prohibit the company from lodging the Quotation Application if the relief sought by the company's application were granted. 22 Senior counsel for the company pointed out that the three month period allowed under s 723(3)(b) within which the securities must be admitted to quotation, being three months after the date of the Prospectus, has not elapsed. It elapses on 28 October 2003. Counsel referred to s 1322(6) and the requirement that the Court must not make an order under that section unless it is satisfied that 'no substantial injustice has been or is likely to be caused to any person'. It was submitted that no substantial injustice has been or would be likely to be caused to any person. If the order were not made there was likely to be a materially adverse impact on the company and on the creditors of the company. Statutory Framework 23 Section 723(3) of the Corporations Act provides: '723(3) If a disclosure document for an offer of securities states or implies that the securities are to be quoted on a financial market (whether in Australia or elsewhere) and: (a) an application for the admission of the securities to quotation is not made within 7 days after the date of the disclosure document; or (b) the securities are not admitted to quotation within 3 months after the date of the disclosure document; then: (c) an issue or transfer of securities in response to an application made under the disclosure document is void; and (d) the person offering the securities must return the money received by the person from the applicants as soon as practicable.' Also relevant is s 724(1) which provides, in the relevant parts: '724(1) If a person offers securities under a disclosure document and: … (b) the disclosure document states or implies that the securities are to be quoted on a financial market (whether in Australia or elsewhere) and: (i) an application for the admission to quotation is not made within 7 days after the date of the disclosure document; or (ii) the securities are not admitted to quotation within 3 months after the date of the disclosure document; or … the person must deal under subsection (2) with any applications for the securities made under the disclosure document that have not resulted in an issue or transfer of the securities. For the purpose of working out whether a condition referred to in paragraph (a) has been satisfied, a person who has agreed to take securities as underwriter is taken to have applied for those securities. … 724(2) The person must either: (a) repay the money received by the person from the applicants; or (b) give the applicants: (i) the documents required by subsection (3); and (ii) 1 month to withdraw their application and be repaid; or (c) issue or transfer the securities to the applicants and give them: (i) the documents required by subsection (3); and (ii) 1 month to withdraw their application and be repaid.' 24 The power of the Court to make orders avoiding the effects of irregularities is set out in s 1322. Relevantly for present purposes, s 1322(4) provides: '1322(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: … (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. 1322(5) An order may be made under paragraph (4)(a) or (c) notwithstanding that the contravention or failure referred to in the paragraph concerned resulted in the commission of an offence. 1322(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.' 25 Also relevant for present purposes are Rules 2.8 and 12.1 of the Corporations Law Rules of the Federal Court. Rule 2.8(3) provides: '2.8(3) Unless the Court otherwise orders, if a person makes an application under a provision of the Corporations Act mentioned in column 2 of an item of the following table, the person must serve on the Commission, a reasonable time before the hearing of the application, a copy of the originating process, or interlocutory process, and supporting affidavit in respect of the application.' The table that forms part of this rule does not include any reference to applications under s 1322. Nor does it include any reference to applications under Chapter 9 of which s 1322 is part. It does however refer to applications under Chapter 6D. There may be a constructional question whether an application under s 1322 in respect of an act required to be done under Chapter 6D is in truth an application under Chapter 6D. However, counsel for the applicant appears to regard the rule as applicable. Plainly this is a case in which ASIC should have been served with a copy of the originating process and supporting affidavit. It was so served, albeit not a reasonable time before the hearing of the application. 26 Rule 12.1, also referred to by counsel for the applicant, provides: '12.1 If the Commission is not a party to an application made under Chapter 6, 6A, 6B, 6C, 6D or 7 of the Corporations Act, the plaintiff must serve a copy of the originating process and the supporting affidavit on the Commission as soon as practicable after filing the originating process.' 27 Again, the same constructional question arises in relation to Rule 12.1. Whether the Orders Sought Ought to be Made 28 Chapter 9 of the Corporations Act is entitled 'Miscellaneous Provisions' and contains twelve parts dealing with a variety of topics. Part 9.5 in which s 1322 appears is entitled 'Powers of Court'. There is a number of powers conferred upon courts by that Part: 1318 – Power to relieve a person wholly or partly from liability for negligence, default, breach of trust or breach of duty honestly committed. 1319 – Power to give directions with respect to court ordered meetings. 1321 – Power to reverse or modify the acts or decisions or remedy the omissions of receivers, receivers and managers, administrators, liquidators and provisional liquidators. 1322 – Power to make orders rectifying irregularities and validating invalid acts. 1323 – Power to prohibit payment or transfer of money, financial products or other property. 1324, 1324A and 1324B – Power to grant injunctions and make disclosure orders or orders for corrective advertisements. 1325 – Power to make other orders compensating persons for loss or damage because of the conduct of another in contravention of a provision of the Act. 1325A – Orders in relation to contraventions. 1325B – Order to bidder to make offers. 1325C – Orders in relation to unfair or unconscionable agreements, payments or benefits. 1325D – Orders validating acts, documents or matters where there has been a contravention if satisfied that the contravention ought to be excused. 1325E – Orders to secure compliance with other orders. 1327 – Power to punish for contempt. 29 As may be seen from the range of these powers there is no unifying theme which links the provisions of Part 9.5 beyond their common subject matter which is the powers of the courts. Sections 1318, 1322 and 1325D however may be taken to reflect a broad 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. That broad policy does not authorise the Court lightly to set aside the requirements of the Act where they have not been observed. Each application for the exercise of the Court's relieving power will require consideration of all the circumstances of the case to ensure that the indulgence sought is appropriate and does not undermine the requirements of the Act. Like the discretion to validate invalid share issues under s 254E, the power conferred by s 1322 must be exercised having regard to the requirements of the purposes of the Corporations Act and any other relevant statutes whose application may be in issue. It must also be exercised having regard to the interests of all parties affected and the public interest in ensuring compliance with statute law and company constitutions. Evidence of a blatant disregard of the provisions of the Act or the constitution of the company may lead to refusal of relief – Re Onslow Salt Pty Ltd (2003) 198 ALR 344 and cases there cited. The provision is however remedial in character and should be given a liberal construction – In the Matter of Insurance Australia Group Ltd [2003] FCA 581 at [27] per Lindgren J citing Re Australian Koyo Ltd (1984) 8 ACLR 928 at 930 and Elderslie Finance Corporation Ltd v Australian Securities Commission (1999) 11 ACSR 157 at 160. 30 There is a constructional question whether the time limits for seeking quotations referred to in ss 723 and 724 are time limits which can be extended by the Court under s 1322(4)(d). The power conferred by s 1322(4)(d) is to make an order 'extending the period for doing any act … under the Act or in relation to a corporation'. Section 723(3) does not in terms impose an obligation to apply for quotation within seven days after the date of the Prospectus. Rather, it conditions the validity of the share issue or transfer in response to an application under the Prospectus upon the application for quotation having been made within that time. I am satisfied however that the ordinary meaning of the words of s 1322(4)(d) can readily accommodate the extension of the period for making an application for quotation. The same is true in my opinion of the seven day period referred to in s 724(1)(b). This accords with the approach taken by Lindgren J in In the matter of Insurance Australia Group Ltd [2003] FCA 581 at [28] where his Honour said: '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.' - citing Elderslie; Super John Pty Ltd v Futuris Rural Pty Ltd (1999) 32 ACSR 398; Pinnacle VRB Ltd v Reliable Power Inc (2001) 39 ACSR 8 and Brown v DML Resources Pty Ltd (In liq) (No 6) (2002) 166 FLR 393. 31 I am satisfied on the facts of the case that no substantial injustice has been caused or is likely to be caused to any person if the orders sought are made. On the other hand there is the risk of unnecessary expense and administrative inefficiency if the company is required to take the steps otherwise mandated by s 724. Once the omission was discovered the directors acted promptly to seek advice about the best ways to rectify it and brought the application in this Court promptly when that advice was provided. Although ASIC was served at unacceptably short notice, it has taken the view that there is no requirement for it to appear and intervene in the application. 32 I am of the opinion however that this is a case in which responsibility for the error rests with the directors and/or the company secretary personally. Clause 2.12 of the Prospectus specifically promises that the relevant application for quotation would be made within the statutory time period. It is surprising that the company secretary overlooked the requirement and that members of the board, including a partner of the company's solicitors, which have acted for the company in bringing this application, had no mechanism for checking that statutory requirements were being complied with. In the circumstances it would be unfair and inappropriate for the newly raised capital of the company to be expended on this application to the detriment, however minor, of the new shareholders. In the circumstances I propose to make an ancillary order that the costs of bringing this application not be paid out of company funds. I will, however, allow the applicant seven days within which to make an application by way of written submission to vary the last mentioned order if it wishes to do so. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.. Associate: Dated: 12 September 2003 Counsel for the Applicant: Mr P Jooste QC Solicitor for the Applicant: Fearis Salter Power Shervington Date of Hearing: 11 September 2003 Date of Judgment: 12 September 2003