BPESAM IV M Limited v DRA Global Limited [2020] FCA 738

FEDERAL COURT OF AUSTRALIA

BPESAM IV M Limited v DRA Global Limited [2020] FCA 738 File number: WAD 103 of 2020

Judge: MCKERRACHER J

Date of judgment: 29 May 2020

Catchwords: CORPORATIONS – selective share buy-back scheme – procedures in Div 2 of Pt 2J.1 of the Corporations Act 2001 (Cth) – general duty to make full and fair disclosure to shareholders – duty under s 257D(2) to disclose all information material to the decision how to vote on the resolution – special resolution passed approving share buy-back scheme – whether resolution invalid on the basis of incorrect financial information provided to shareholders – where valid shareholder approval was a condition precedent of the share buy-back agreements – whether s 259F of the Corporations Act cures any defect in the resolution – Knauf Plasterboard Pty Ltd v Plasterboard West Pty Ltd (in liq) (2017) 254 FCR 559 considered CORPORATIONS – misleading or deceptive conduct – s 1041H of the Corporations Act and s 12DA of the Australian Securities and Investments Commission 2001 (Cth) (ASIC Act) – materiality – financial statements issued and then re-issued due to discovery of substantial errors – whether initial financial statements were materially misleading in relation to shareholder approval of a share buy-back scheme – where company represented that the erroneous financial statements were a true and fair view of the company's position – where errors were not known and could not have been ascertained at the time of approval – consideration of subjective knowledge test under s 257D(2) and the objective test under s 1041H of the Corporations Act – principle in Fraser v NRMA Holdings Ltd (1995) 555 FCR 452 applied CONTRACTS – construction – condition precedent for execution of share buy-back agreement – waiver clause – whether authority to waive is absolute or confined to certain circumstances – where the terms require consideration only of likelihood and timing of the condition precedent being satisfied – whether ambiguity in the terms is required for regard to be had to the commercial context – where both the terms and the commercial context indicate authority to waive is confined to specific circumstances only REMEDIES – injunctions and declarations – sources of power to grant orders sought derived from s 23 of the Federal Court of Australia Act 1976 (Cth), s 1324 of the Corporations Act and s 12GD of the ASIC Act – whether a sufficient nexus exists between the injunction sought and the conduct that constitutes the contravention – whether policy considerations underlying s 259F(1) provide a discretionary reason not to grant an injunction – whether the applicants lack standing to pursue injunctive relief REMEDIES – injunctions and declarations – relief sought in relation to share buy-back agreements – where applicant is not a party to the agreements – where the relevant counterparties to the agreements have not been joined – whether counterparties must be joined in order for the relief to be granted – consideration of the effect of the relief on the counterparties – whether counterparties would be entitled to set aside any adverse orders based on the principle in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 – where relief sought is confined to enforcing the proper construction of the agreement – principle in News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 applied