Federal Court of Australia

The Whiskey Project Group Ltd, in the matter of The Whiskey Project Group Ltd [2026] FCA 1625

ORDERS

THE COURT NOTES THAT:

In these orders:

2025/2026 Convertible Notes     means 58,880 convertible notes which were issued between late November 2025 and early 2026 at a face value of $100.00 each.

2023 Convertible Notes     means 2,000,000 convertible notes which were issued between 3 January 2023 and 7 March 2023 at a face value of $1.00 each.

Incentive Options     means 740,477 options issued under the terms of an Employee Incentive Plan in place as at the time of their issue.

Performance Rights     means 748,437 performance rights issued under the terms of an Employee Incentive Plan in place as at the time of their issue.

2021 $8.00 Ordinary Shares     means 1,203,427 ordinary shares which were issued between 21 January 2021 and 23 December 2021 at a face value of $8.00 per share.

2023 Ordinary Shares     means 415,907 ordinary shares which were issued between 13 April 2023 and 22 June 2023 at a face value of $8.00 per share.

THE COURT DECLARES THAT:

1.    Pursuant to s 1322(4)(a) of the Corporations Act 2001 (Cth), each issue of:

(a)    2025/2026 Convertible Notes, and the Ordinary Shares issued on conversion of those 2025/2026 Convertible Notes prior to the date of the order;

(b)    2023 Convertible Notes and the Series A Preference Shares issued on conversion of those 2023 Convertible Notes;

(c)    Incentive Options, and the Ordinary Shares issued on exercise of those Incentive Options prior to the date of the order;

(d)    Performance Rights, and the Ordinary Shares issued on conversion of those Performance Rights prior to the date of the order;

(e)    2021 $8.00 Ordinary Shares; and

(f)    2023 Ordinary Shares,

is not and has never been invalid by reason of the fact the issue was effected in contravention of the Plaintiff’s constitution in force at the relevant time.

THE COURT ORDERS THAT:

2.    Pursuant to sections 37AF(1) and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) that:

(a)    the unredacted affidavit of Paul Andrew Billingham affirmed 28 August 2026;

(b)    the unredacted affidavit of Brett Hilton Sangster affirmed 1 September 2026;

(c)    the unredacted affidavit of Paul Andrew Billingham affirmed 1 September 2026; and

(d)    the unredacted affidavit of Paul Andrew Billingham affirmed 29 September 2026,

be maintained on the Court’s electronic file as confidential documents and not made available for inspection by any person without leave of the Court.

3.    There be no order as to costs.

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

ORDERS

THE COURT ORDERS THAT:

1.    By 4:00pm AEST on 3 November 2026, the plaintiff advise whether any redaction or suppression of the reasons for judgment delivered on 29 October 2026 is necessary to prevent prejudice to the administration of justice, and if so, provide complete particulars of any redaction or suppression sought, accompanied by supporting submissions of not more than two pages.

2.    Pursuant to s 37AI of the Federal Court of Australia Act 1976 (Cth), there be no publication of the reasons for judgment delivered on 29 October 2026 before 3 November 2026, or until a date provided by further order.

3.    In the event that the plaintiff does not advise that any redaction or suppression is necessary pursuant to order 1, the reasons for judgment delivered on 29 October 2026 be published on or after 3 November 2026.

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

REASONS FOR JUDGMENT

MEAGHER J

introduction

1    By an originating process filed on 28 August 2026 (Originating Process), the plaintiff, Whiskey Project Group Ltd, seeks declarations (Declarations) pursuant to s 1322(4) of the Corporations Act 2001 (Cth) that certain issues of securities were not and have never been invalid by reason of the fact that the issues were effected in contravention of the plaintiff’s constitution in force at the relevant time (Potential Contraventions).

2    It also seeks suppression and non-publication orders pursuant to ss 37AF(1) and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) in respect of unredacted versions of two affidavits. Such orders are sought by way of the plaintiff’s written submissions in respect of two further affidavits filed later in this proceeding.

3    On 22 October 2026, I made orders in the form sought by the plaintiff. These are my reasons for doing so.

Materials relied upon

4    The plaintiff relied upon the following material:

(1)    The Originating Process.

(2)    Affidavits of Mr Paul Billingham, a non-executive director and non-executive chair of the plaintiff, and an insolvency practitioner, filed on 28 August 2026 (First Billingham Affidavit), 1 September 2026 and 29 September 2026.

(3)    An affidavit of Mr Brett Sangster, a director of the plaintiff, and a partner of a firm of solicitors, filed on 1 September 2026 (Sangster Affidavit).

(4)    An affidavit of Ms Emma Cook filed on 29 September 2026.

(5)    An affidavit of Mr Heath Cruden filed on 20 October 2026.

background

5    There is no contradictor in the Application. The plaintiff notified the Australian Securities and Investments Commission (ASIC) and all current and known former shareholders of the plaintiff. Ultimately, none of the current and former shareholders indicated their opposition to the relief sought in the proceeding, or appeared at the hearing. ASIC neither consented to nor opposed the Originating Process, and did not appear at the hearing. The background therefore emerges from the plaintiff’s affidavit evidence, which was not contradicted.

6    The plaintiff is an Australian unlisted public company which, with its subsidiaries, designs and develops vessels for Australian and New Zealand Federal and State Government agencies, as well as for the United States Department of Defense. The plaintiff is currently preparing for an initial public offering (IPO). It retained its solicitors to assist with due diligence in November 2025. In the course of the due diligence process undertaken by its solicitors between March and August 2026, it became aware of five potential failures to comply with the constitution in force at the relevant time, in relation to the issuing of securities. The Potential Contraventions relate to the following:

(1)    The issue of 58,880 convertible notes between late November 2025 and early 2026 at a face value of $100.00 each (2025/2026 Convertible Notes Issue) and the issue of the Ordinary Shares on conversion of those convertible notes .

(2)    The issue of 2,000,000 convertible notes between 3 January 2023 and 7 March 2023 at a face value of $1.00 each (2023 Convertible Notes Issue), and the issue of the Series A Preference Shares issued on conversion of those convertible notes.

(3)    The issue of 740,477 options under the terms of an employee incentive plan (Incentive Options Issue) .

(4)    The issue of 748,437 performance rights under the terms of an employee incentive plan (Performance Rights Issue).

(5)    The issue of 1,203,427 ordinary shares between 21 January 2021 and 23 December 2021 at a face value of $8.00 per share (2021 Ordinary Shares Issue).

(6)    The issue of 415,907 ordinary shares between 13 April 2023 and 22 June 2023 at a face value of $8.00 per share (2023 Ordinary Shares Issue).

7    Determining the plaintiff’s application is a precursor to finalisation and auditing of the plaintiff’s 2026 financial accounts, and providing them to its shareholders, which must be completed by 31 October 2026, which will impact on its planned IPO. Those deadlines are imposed by s 319(3)(b) and s 315(1) of the Act, and non-compliance gives rise to strict liability offences. Section 250N(2) of the Act requires the plaintiff to convene its annual general meeting by 30 November 2026, non-compliance with which is also a strict liability offence.

The plaintiff’s constitutions

8    The relevant provisions of the plaintiff’s constitutions are set out below.

9    Between 7 March 2019 and 14 December 2021, a constitution referred to as the 2019 Constitution applied to the plaintiff. It conferred on the directors of the plaintiff the power to control the allotment and issue of ordinary shares, subject to the Act, without requiring shareholder approval.

10    On 14 December 2021, the plaintiff’s shareholders adopted a new constitution (2021 Constitution). It included, in rule 12, a requirement that if the board of the plaintiff resolved to issue shares, options, convertible notes, warrants or other convertible securities (defined as “Equity Securities” in the 2021 Constitution), it needed to offer the Equity Securities to all members (referred to as the “Pre-Emptive Rights Procedure”). Rule 12 of the 2021 Constitution contained a formula by which the board was required to offer each member a number of Equity Securities in proportion to the number of shares held by that member, out of the total number of shares held by all members, on the assumption that all Equity Securities had been converted into shares.

11    Rule 12 further provided for the contents of the offer to be made to each member, and subject to the plaintiff’s board resolving that the funds were required urgently, required each member to respond within 15 business days stating (1) whether it accepted all or a specified number of Equity Securities or rejected the offer, and (2) if it wanted to subscribe for a greater number of Equity Securities than the amount in the offer (Over-acceptance), that it offered to subscribe for a specified number of Equity Securities not subscribed for by other members under their offers.

12    Rule 12 also provided for the board to allot, grant options over or otherwise dispose of Equity Securities not taken up, to any members who had given notice of Over-acceptance. Rule 12 then provided for the board to allot, grant options over or otherwise dispose of Equity Securities that were not taken up by members to whom offers had been made or were left over after accounting for those giving notice of Over-acceptance, to other persons on terms no more favourable than those offered to the members. The board was entitled to do so at any time within 45 days after the end of the period by which members were required to give notice as set out at [11] above.

13    The plaintiff was not allowed to issue any new Equity Securities ranking in preference to any ordinary shares on issue, without first obtaining approval of the holders of at least 75% of all ordinary shares on issue.

14    Rule 12 did not apply to, inter alia, the following issues of Equity Securities (Excluded Issues):

(1)    Issues with the prior approval of shareholders in a general meeting.

(2)    Issues to employees, directors or consultants of the plaintiff under an equity incentive scheme approved by the board, provided that the Equity Securities to be issued represented no more than 10% of the shares on issue.

15    On 17 May 2024, the 2021 Constitution was amended (2024 Constitution), such that rule 12 was amended to include, as an Excluded Issue, an issue of Equity Securities on conversion or settlement of a convertible Equity Security, or on exercise of an option, where such convertible Equity Security or option was issued on or before 17 May 2024, or in accordance with the terms of the constitution.

16    On 27 July 2026, the plaintiff’s shareholders resolved to adopt a new constitution, which is not relevant to this proceeding.

The irregularities

The 2021 Ordinary Shares Issue

17    The 2021 Ordinary Shares Issue spanned the period during which the 2019 Constitution applied (i.e., to 14 December 2021) and during which the 2021 Constitution applied (i.e. from 14 to 23 December 2021). An issue of 250,000 shares forming part of the 2021 Ordinary Shares Issue occurred on 23 December 2021; therefore, the Pre-Emptive Rights Procedure needed to be followed. The plaintiff accepts that there is no evidence of any resolutions having been put to the plaintiff’s shareholders in order to obtain prior approval for the issue of 250,000 shares as part of the 2021 Ordinary Shares Issue, or of the plaintiff having followed the Pre-Emptive Rights Procedure. Accordingly, rule 12 of the 2021 Constitution was not complied with.

18    Mr Billingham’s explanation in the First Billingham Affidavit is that the non-compliance with rule 12 of the 2021 Constitution was inadvertent. He says that the 250,000 shares issued were part of a capital raising which commenced on 21 January 2021, when the 2019 Constitution was in force. The regime in rule 12 was adopted to ensure existing shareholders had the opportunity to participate in financing rounds potentially involving dilution of their position. The adoption of the 2021 Constitution was a condition of the entities receiving the 250,000 subscribing for their shares, though at the time of subscription, the plaintiff’s shareholders had not yet resolved to adopt the 2021 Constitution. The plaintiff’s board had not considered that in relation to the tranches of the 2021 Ordinary Shares Issue issued after 14 December 2021, the 2021 Constitution would apply. At that time, subscription funds were already to be held in escrow.

19    Mr Billingham is unable to locate any document suggesting that this non-compliance was intentional.

The 2023 Ordinary Shares Issue

20    The plaintiff, as part of the 2023 Ordinary Shares Issue, on 22 June 2023 issued 7,392 shares to a third party approximately 19 days after the 45-day period set out in rule 12 had concluded, prior to which an offer had been made to each member by way of subscription notices.

21    Mr Billingham accepts in the First Billingham Affidavit that the issue of those shares occurred in contravention of the 2021 Constitution, but says that the non-compliance was inadvertent because the plaintiff’s board had not considered the timing requirement in rule 12 of the 2021 Constitution. Further, he has been unable to locate any document suggesting that the contravention was intentional, and notes that the contravention occurred only 19 days outside the 45-day time period. He says that discussions commenced with the subscriber within the 45-day period, and while a copy of a board report dated 5 April 2023 noted that any shares not taken up by existing investors may be allocated within 45 days after the settlement process, this “must have been subsequently overlooked”.

The 2023 Convertible Notes Issue

22    The offer of a convertible note, which would ultimately result in the 2023 Convertible Notes Issue, was approved by way of a circular resolution dated 21 December 2022. Convertible note deeds were executed on 6, 8 and 22 March 2023 between the plaintiff and three institutional investors, being, respectively, National Nominees Ltd as nominee for Perennial Investment Management Ltd as responsible entity for the Perennial Value Microcap Opportunities Trust, National Nominees Ltd as nominee for Copia Investment Partners Ltd, and Ellerston SIV Unlisted Opportunities Fund I, LP.

23    On 31 July 2024, the convertible notes were converted into preference shares issued as an Excluded Issue.

24    The plaintiff accepts that it did not comply with rule 12 of the 2021 Constitution, because the plaintiff neither obtained shareholder approval nor followed the Pre-Emptive Rights Procedure. Further, the convertible notes comprising the 2023 Convertible Notes Issue were Equity Securities ranking in preference to ordinary shares on issue, and the plaintiff did not obtain the approval of holders of at least 75% of all ordinary shares on issue. The plaintiff accepts that the non-compliance was not inadvertent, but says that it was explicable.

25    Mr Billingham in the First Billingham Affidavit details the circumstances in which the 2023 Convertible Notes Issue occurred. At the time, the plaintiff was in financial distress and its board was contemplating a formal insolvency process. Mr Billingham recommended that the board seek advice on its eligibility for the “safe harbour” protections under s 588GA of the Act.

26    Advice received on 13 December 2022 from Vantage Performance (Vantage Advice) was to the effect that there was a pressing need for capital in circumstances where a cash flow forecast indicated that the plaintiff would have a negative cash balance by February 2023. The advice indicated that the better outcome was for the plaintiff to continue trading, with a view to preserving and enhancing the overall value of its business. A going concern sale of the plaintiff would likely result in a full return to creditors, with shareholder equity being approximately $8,600,000.00, while in a liquidation scenario, for the plaintiff and the group of which it was a part, a full return to creditors was possible, but shareholder equity was significantly depleted by an estimated $120,000. In a liquidation scenario, shareholders would suffer a loss. As to two of the plaintiff’s Australian subsidiaries, going concern sales would likely result in full returns to creditors, but in a liquidation scenario, unsecured creditors of the respective subsidiaries would likely only recover 10 and 36 cents in the dollar.

27    Recorded in the Vantage Advice as one of the options in light of the “strategic issues” was to consider “capital solutions”, including sourcing debt by issuing convertible notes. A three-point plan was developed, which included progressing capital raising initiatives to recapitalise the plaintiff, including by way of convertible notes.

28    On 13 December 2022, the plaintiff was informed of its success in a tender submitted to the United States Marine Corps; however, the plaintiff’s modelling, also received on that date, indicated a minimum additional cash need of $1,000,000.00 by the end of January 2023, increasing to $2,000,000.00 by April 2023.

29    A board meeting was held on the same date, a portion of which Ms Bromley of Vantage Performance attended by invitation. The Chairman’s introduction to that meeting noted that it would focus on, inter alia, the potential to improve short-term liquidity. As the minutes of that meeting record, Ellerston had, by then, commenced documenting a convertible note proposed to be issued by the plaintiff. Ms Bromley advised the board of her opinion that, inter alia, with the new debt raised by way of the 2023 Convertible Notes Issue, the plaintiff’s actions were “reasonably likely to deliver a better outcome”, and therefore the plaintiff was in safe harbour. On the basis of the plaintiff’s success in securing the United States Marine Corps tender, the board unanimously re-formed its view that based on the advice received that the plaintiff was in safe harbour, the convertible debt raise of $2,000,000.00 was appropriate, and should proceed without delay.

30    Mr Billingham deposes that in light of the effective shutdown in the financial services sector between Christmas Day and Australia Day, and given that the plaintiff would run out of funds “imminently after Christmas”, he considered it necessary to secure funds immediately. He understood his directors to be of the same view.

31    On 21 December 2022, Mr Sangster, at that time a director and the secretary of the plaintiff, requested legal advice from McCullough Robertson in relation to accepting a convertible note offer, having regard to the Pre-Emptive Rights Procedure. His email noted that he was preparing a board resolution in respect of accepting the convertible note, in circumstances in breach of the Pre-Emptive Rights Procedure. Relevantly, Mr Sangster’s email to McCullough Robertson included the following:

Reality is that we will be balancing potential insolvency with a potential breach of the constitution. Under safe harbour, we are obligated to ensure that we are ensuring that creditors are in a better position by taking steps to the [sic] raise capital to avoid insolvent trading. …

32    In his email Mr Sangster noted that running the Pre-Emptive Rights Procedure would take the plaintiff to the last weeks of January 2023 due to the timeframes for notices set out in the 2021 Constitution, at which point the plaintiff would have run out of cash. Further, deferring the raising of capital would jeopardise the likelihood of progressing the contract with the United States Marine Corps as it performed due diligence, thus potentially placing the plaintiff’s entire business in jeopardy. Additionally, there was “a calculated view” that the shareholders would be unlikely to take issue with a decision to raise capital, where the alternative might place creditors in a worse position. In light of the above, he indicated that the board was considering, on balance, to proceed, that afternoon, with the convertible note which ultimately led to the 2023 Convertible Notes Issue, and asked:

On this basis though, can you please advise us on the consequences – both as a business and as directors – on making this decision.

33    On 21 December 2022, in response to Mr Sangster’s request, McCullough Robertson advised the plaintiff that it was required to follow the Pre-Emptive Rights Procedure, and that arguably approval of at least 75% of the holders of all ordinary shares was required, as 2023 Convertible Notes Issue likely involved preference securities. The risk of a knowing and wilful breach of the 2021 Constitution involved, inter alia, the risk of a breach of directors’ duties under the Act and of their duties at common law. The advice also noted that while the plaintiff could seek retrospective approval for any convertible note deed from a commercial perspective, this did not retrospectively validate a breach of the 2021 Constitution.

34    The plaintiff’s board (save for Mr Billingham) met at 2:00pm on 21 December 2022, and resolved by a circular resolution to accept Ellerston’s offer of a convertible note. The resolution noted McCullough Robertson’s advice that acceptance of what would become the 2023 Convertible Notes Issue might trigger the Pre-Emptive Rights Procedure. However, it noted that the raising of capital through this process would place the plaintiff’s creditors and shareholders in a better position going forward notwithstanding that it was “potentially outside the provisions” of the 2021 Constitution, having regard to its current cash reserves and their forecast depletion in late January 2023, and the plaintiff’s ability to continue to negotiate and perform major contracts with the United States Department of Defence, which were considered material to the plaintiff’s strategic objectives. Following the Pre-Emptive Rights Procedure would take a minimum of 25 days, and a meeting of shareholders would not be able to be scheduled before late January 2023. The board assessed that this was too close to the forecast date of cash depletion. The minutes of meeting noted the following:

On the balance of what is known to the Board at the date of this resolution, and in consideration of all risks to the Company, the Board has resolved that the raising of capital by way of convertible note will place our creditors and shareholders in a better position going forward, notwithstanding that it is potentially outside of the provisions of the Constitution, and that the executive should accept the Convertible Note Deed from Ellerston by 2.00pm today.

35    Mr Billingham’s evidence is that the board decided that the plaintiff would likely be insolvent without an immediate capital raise, though the proposed capital raise might not comply with the 2021 Constitution. He considered it to be in the best interests of the plaintiff, its creditors and shareholders to immediately raise funds. Doing so in December 2022 was necessary having regard to the timeframes under the 2021 Constitution, the date on which Ellerston’s investment committee was due to meet again, and the projected depletion of the plaintiff’s cash reserves. The plaintiff’s largest shareholders, who were also directors, did not have capacity to invest further, and the other shareholders were significantly smaller than Ellerston, Perennial and Copia.

The Incentive Options Issue and Performance Rights Issue

36    The Incentive Options Issue comprises the issue of 740,477 options under employee incentive plans between November 2019 and March 2024. The Performance Rights Issue comprises the issue of 471,937 performance rights to directors and employees under an incentive plan prior to August 2026, as well as the issue of 276,500 further performance rights which remain subject to shareholder approval at the 2026 annual general meeting. No shareholder approval was at the time sought in respect of the Incentive Options Issue or Performance Rights Issue.

37    The plaintiff accepts that the Incentive Options Issue and Performance Rights Issue were not undertaken in accordance with rule 12 of the 2021 Constitution, because the issue of those securities in aggregate exceeded 10% of the plaintiff’s share capital, and therefore the issues did not constitute an Excluded Issue. The plaintiff notes that this characterisation is premised on a conservative reading of rule 12, because if the issues were not aggregated each would comprise an Excluded Issue, being less than 10% of the plaintiff’s share capital. I consider that that reading was correct because otherwise, the plaintiff could issue up to 10% of its share capital each day, for example, and thereby circumvent the obvious purpose of rule 12, that is to ensure that shareholders were able to take part in the issue of shares and to protect them against dilution.

38    On this reading, Mr Billingham estimates that the Incentive Options Issue and Performance Rights Issue exceeded the 10% cap on 26 March 2024 because of an issue of 500,000 incentive options to Mr Carmichael, a director of the plaintiff, on 26 March 2024. No shareholder approval was sought in respect of this issue. Mr Billingham’s understanding is that the issue to Mr Carmichael occurred because options issued to him on his commencement with the plaintiff had expired, or were about to do so.

39    Mr Billingham says that the non-compliance with rule 12 of the 2021 Constitution and 2024 Constitution in respect of the Incentive Options Issue and Performance Rights Issue was inadvertent. Inter alia, advice from McCullough Robertson indicated that an allocation not exceeding 10% of the plaintiff’s share capital did not require a resolution at a general meeting. The board did not appear, however, to have considered that in relation to the Incentive Options Issue and Performance Rights Issue under the 2021 Constitution and 2024 Constitution, the Equity Securities issued would need to represent no more than 10% of the share capital in the aggregate, in order to constitute Excluded Issues. Mr Billingham has not located any document suggesting that the non-compliance was intentional.

The 2025/2026 Convertible Notes Issue

40    The plaintiff accepts that the 2025/2026 Convertible Notes Issue was not compliant with rule 12 of the 2024 Constitution. The plaintiff did not obtain shareholder approval before issuing Equity Securities ranking in preference to ordinary shares. The convertible notes ranked above the Equity Securities on issue in the capital of the plaintiff, and would convert upon, inter alia, the plaintiff’s IPO. Mr Billingham deposes that the convertible notes were issued in circumstances where the plaintiff critically required additional financing to ensure its ongoing viability. In particular, there was a delay in the United States Department of Defence providing a follow-on contract, creating a concern that the plaintiff’s overheads would exhaust its remaining cash reserves.

41    On 23 October 2025, Mr Billingham received advice from the plaintiff’s group’s senior finance manager that, along with savings and cash inflows, the plaintiff required an immediate cash injection of $1,500,000.00 in November 2025. Absent an injection, Mr Billingham held considerable doubt as to the plaintiff’s future viability, having regard to the uncertain timing of the follow-on contract. Ultimately, the plaintiff did not receive the follow-on contract until around June 2026.

42    A cash injection of $1,500,000.00, coupled with spending being properly timed, would see the plaintiff through to the end of the financial year. Absent the injection, the plaintiff would be in deficit by February 2026. Those projections were discussed at a board meeting held on 29 October 2025, along with a safe harbour report which, due to a proposed capital raising which was likely to be oversubscribed, might become moot. The safe harbour report noted the plaintiff’s likely eligibility for safe harbour, but the board refrained from seeking further advice because of the impending capital raise.

43    The plaintiff’s letter to shareholders of 23 October 2025 (October 2025 Letter) advising them of the 2025/2026 Convertible Notes Issue was non-compliant with the requirements under rule 12 of the 2024 Constitution that:

(1)    The number of Equity Securities be calculated in accordance with the formula set out in rule 12. The letter stated that shareholders had equal rights to participate, which did not reflect the pro-rata entitlement in rule 12.

(2)    The offer state the total number of Equity Securities available for subscription, the number offered to each member, the type being offered, and the terms of issue.

(3)    It be an “offer”. Instead, it merely invited “expressions of interest” from shareholders.

44    The terms of the convertible note, outlined in the letter, provided that it would have a coupon of 8% per annum, and would rank above Equity Securities on issue. The letter also identified the formula by which the convertible notes would be converted to shares. That part of the letter in which the conversion price was discussed identified the discount to the market value of shares as 30%. The offer was open to shareholders until 28 November 2025. Formal documentation would be provided on receipt of an expression of interest.

45    The October 2025 Letter referred to a “full presentation” to be provided to shareholders at an extraordinary general meeting of members. The board would also outline its plan towards a potential IPO on the Australian Securities Exchange. Shareholders would have an opportunity to consider “the opportunity to make a follow on investment in a convertible note”.

46    It appears that discussions as to the $1,500,000 capital raise occurred leading up to, and in the context of, discussions regarding an IPO, and the capital raised was ultimately intended to cover the plaintiff’s working capital needs and costs related to its IPO. The plaintiff says that in the context of its “rapid evolution” from raising funds through the 2025/2026 Convertible Notes Issue to a proposed listing on the Australian Securities Exchange, the plaintiff’s directors did not consider the impact of rule 12 of the 2024 Constitution on the 2025/2026 Convertible Notes Issue. Its lawyers were not involved in the issue, or in preparing the October 2025 Letter.

47    An extraordinary general meeting was held on 20 November 2025. Its purpose was to update the shareholders as to recent trading, consider the issue of convertible notes, and consider the plaintiff’s potential IPO in 2026. The chief executive officer and chairman took the shareholders through a presentation which summarised the group’s finance and capital requirements, outlined the proposed IPO, and outlined the 2025/2026 Convertible Notes Issue. The presentation invited existing shareholders to “apply” by 28 November 2025.

principles

Section 1322 of the Act

48    Section 1322 of the Act provides as follows:

1322  Irregularities

(1)     In this section, unless the contrary intention appears:

(a)     a reference to a proceeding under this Act is a reference to any proceeding whether a legal proceeding or not; and

(b)     a reference to a procedural irregularity includes a reference to:

(i)     the absence of a quorum at a meeting of a corporation, at a meeting of directors or creditors of a corporation, at a joint meeting of creditors and members of a corporation or at a meeting of members of a registered scheme; and

(ii)     a defect, irregularity or deficiency of notice or time.

…

(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:

(a)     an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;

…

and may make such consequential or ancillary orders as the Court thinks fit.

…

(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)     …

(c)     in every case—that no substantial injustice has been or is likely to be caused to any person.

49    The requirements that must be satisfied by the plaintiff are analogous to those set out by McKerracher J in Re Golden Gate Petroleum Ltd [2010] FCA 40; 77 ACSR 17 at [37]. The plaintiff must demonstrate that:

(1)    It is an interested person within the meaning of s 1322(4) of the Act.

(2)    There was an act, matter or thing purporting to have been done under the Act or in relation to a corporation that may be invalid by reason of a contravention of a provision of the Act or a provision of the constitution of a corporation: s 1322(4)(a) of the Act.

(3)    One of the following applies (s 1322(6)(a) of the Act):

(a)    The act, matter or thing was essentially of a procedural nature.

(b)    The person or persons concerned in or party to the contravention or failure acted honestly.

(c)    It is just and equitable that the order be made.

(4)    No substantial injustice has been or is likely to be caused to any person: s 1322(6)(c) of the Act.

50    Section 1322 of the Act is remedial in nature and is to be given a liberal interpretation: Golden Gate at [38]. It is to be construed broadly and applied pragmatically, principally by reference to considerations of substance rather than form: Diona Pty Ltd, in the matter of Diona Pty Ltd [2022] FCA 1215 at [14], citing Weinstock v Beck [2013] HCA 14; 251 CLR 396 at [39]. Section 1322(4) of the Act is “cast in very broad terms” and “is not to be hedged about by any implied limitation”: Weinstock at [53], [55]. The word “contravention” in s 1322(4)(a) of the Act is to be given the broadest of constructions, and extends to contraventions of company constitutions that are not necessarily expressed as obligations or prohibitions: Weinstock at [41]; In the matter of Order of AHEPA NSW Inc [2018] NSWSC 458 at [24]. Nothing in s 1322 of the Act prevents the Court from making the order retrospectively: Re Wood Parsons Pty Ltd (in liq) [2002] NSWSC 1058; 43 ACSR 257 at [52].

51    However, “the power is not to be exercised lightly and is to be exercised having regard to the general purposes of the Act, including the provision in respect of which relief is sought, the interests of all parties affected and the public interest in ensuring compliance with the Act”: ComfortDelGro Corporation Australia Pty Ltd, in the matter of ComfortDelGro Corporation Australia Pty Ltd [2020] FCA 378 at [41].

52    The three criteria in s 1322(6)(a) are disjunctive and not cumulative. Therefore, only one of the three criteria needs to be satisfied for an order under s 1322(4) to be granted: Re Elemental Minerals Ltd [2010] FCA 687; 79 ACSR 277 at [30].

53    The plaintiff bears the onus of showing the fulfilment of one of the three conditions for the grant of an order, as well as the absence of substantial injustice: Jordan v Avram (1997) 141 FLR 275 at 281 – 282.

54    Section 1322(4)(a) is not confined to procedural irregularities: Weinstock at [10]; it covers irregularities of a general nature, and is expressed in wide language: Jordan at 279 – 280; Biodiesel Producers Ltd v Stewart [2007] FCA 722 at [365]. Substantive irregularities may be cured by way of either s 1322(6)(a)(ii) or (iii).

“Acted honestly”

55    The concept of acting honestly for the purposes of s 1322 of the Act was considered by Banks-Smith J in Re iCandy Interactive Ltd [2018] FCA 533; 125 ACSR 369 at [54] – [56]. There, her Honour stated:

When determining whether someone has acted honestly for the purposes of s 1322 of Act the court looks to an absence of evidence of dishonesty. It also takes into account whether the applicant has taken prompt action to remedy the error.

The concept of acting honestly can embrace the following:

(a)     inadvertence or a failure to turn their mind to the relevant issue.

(b)     an active, but incorrect, consideration of a legal issue as well as failure to consider the issue at all.

(c)     failure to understand or appreciate the significance of non-compliance.

Consideration of the honesty of an applicant also arises in the context of s 1318 of the Act. In Hall v Poolman (2007) 65 ACSR 123; [2007] NSWSC 1330 Palmer J stated (at [325]):

In my view, when considering whether a person has acted honestly for the purposes of a defence under … s 1317S(2)(b)(i) or s 1318 [of the Act], the Court should be concerned only with the question whether the person has acted honestly in the ordinary meaning of that term, ie whether the person has acted without deceit or conscious impropriety, without intent to gain improper benefit or advantage for himself, herself or for another, and without carelessness or imprudence to such a degree as to demonstrate that no genuine attempt at all has been to carry out the duties and obligations of his or her office imposed by the Corporations Act or the general law. A failure to consider the interests of the company as a whole, or more particularly the interests of creditors, may be such a high degree as to demonstrate failure to act honestly in this sense. However, if failure to consider the interests of the company as a whole, including the interests of its creditors, does not rise to such a high degree but is the result of error of judgment, no finding of failure to act honestly should be made, but the failure must be taken into account as one of the circumstances of the case to which the Court must have regard under … s 1317S(2)(b)(ii) and s 1318 [of the Act].

(Footnotes omitted.)

56    In Australian Securities and Investments Commission v Healey (No 2) [2011] FCA 1003; 85 ACSR 654, Middleton J held at [88], for the purpose of ss 1317S and 1318 of the Act, that:

… a person acts honestly, in the ordinary meaning of the term, if the person’s conduct is without moral turpitude, that is:

(a)     without deceit or conscious impropriety;

(b)     without intent to gain an improper benefit or advantage; and

(c)     without carelessness or imprudence that negates the performance of the duty in question.

“Just and equitable”

57    In Re Superior Resources Ltd, in the matter of Superior Resources Ltd [2020] FCA 635; 144 ACSR 677, Jackson J at [18] stated as follows as to the meaning of “just and equitable” in the context of s 1322(6)(a)(iii) of the Act:

The words ‘just and equitable’ are words of the widest significance and do not limit the jurisdiction of the court to any case. It is a question of fact, and each case must depend on its own circumstances. The words give the court a wide discretion. There is no necessary limit on their generality, and they are to be applied in their ordinary meaning as calling for the exercise of judgment in the conventional way.

(Footnotes omitted.)

58    In Nenna v Australian Securities and Investments Commission [2011] FCA 1193; 198 FCR 386, Middleton J at [80] – [81] stated:

… s 1322(6)(a) envisages that the Court can make an order under s 1322 even where the Court is not satisfied that the person concerned in the contravention acted honestly. So even where a person acts dishonestly, which would normally involve an element of deliberate behaviour, the legislation will permit the Court to make an order under s 1322(4)(a). For instance, if the Court is satisfied that it is just and equitable that the order sought be made (see s 1322(6)(a)(iii)), then an order under s 1322(4)(a) can be made, even though an element of dishonesty is involved. The Court, of course, may not make the order sought, but s 1322(6) does not prevent the Court from doing so in the appropriate circumstance.

In my view, the terms “irregularities” and “procedural irregularity” can involve deliberate acts of noncompliance. The question will then arise, if the act is deliberate, whether the requirements of s 1322(6) are otherwise complied with so the court can make an order under s 1322. This latter enquiry is quite separate from whether there was an irregularity.

59    The weight of authority favours the view that an irregularity can include a deliberate act of non-compliance with the Act: Primary Securities Ltd v Aurora Funds Management Ltd [2020] NSWCA 230 at [142].

No substantial injustice

60    The concept of “substantial injustice” was explained by Anderson J in Re Murray River Organics Ltd [2019] FCA 931; 138 ACSR 365 at [35] – [37]:

The court must not make any order under s 1322 unless it is satisfied that no substantial injustice has been or is likely to be caused to any person. There are two aspects to this requirement:

(a)     the expression “has been” invites an inquiry as to the effect of the irregularity sought to be cured; and

(b)     the expression “likely to be” draws attention to the effect of the proposed order.

A degree of prejudice to a person or persons may be outweighed if the overwhelming weight of justice is in favour of making the order.

The reference to “substantial injustice” in s 1322(6)(c) is to a real and not insubstantial or theoretical prejudice. Whether there is real injustice requires a weighing of any prejudice if the order is made against the prejudice which would be suffered by the corporation and its directors and officers if an order was not made.

61    The question of whether the making of the order will cause any person substantial injustice directs attention to the interests of, at least, the creditors and shareholders of the company: Entertainment Publications of Australia Pty Ltd v Australian Securities and Investments Commission [2022] FCA 960 at [63].

Residual discretion to refuse to make an order

62    Even where the preconditions in s 1322(6) are satisfied, the Court retains a discretion to refuse to grant the relief sought under s 1322(4) of the Act. That discretion must be exercised judicially. The public interest is a relevant consideration in the exercise of that discretion: Murray River at [39]; Lock, in the matter of Cedenco JV Australia Pty Ltd (in liq) (No 2) [2019] FCA 93 at [98].

63    The following factors may be relevant to the exercise of the Court’s discretion:

(1)    Any conclusion that the making of the relevant declaration would be just and equitable, and that no substantial injustice has been or is likely to be caused to any person: Re Austpac Resources NL [2023] FCA 108; 167 ACSR 1 at [106].

(2)    That the making of the declaration will remove doubts as to the integrity of dealings in the shares caused by any contraventions: Austpac at [107].

(3)    Whether the company’s shareholders or ASIC have been on notice of the application and have sought to be heard in opposition or support: Austpac at [108] – [109].

(4)    Whether public policy would be undermined by making the declarations, or whether there is evidence of substantial misconduct, serious wrongdoing or flagrant disregard of the constitution: Caeneus Minerals Ltd, in the matter of Caeneus Minerals Ltd [2018] FCA 560 at [58]; Re Nanoveu Ltd [2024] WASC 329 at [88].

(5)    Whether the company has not taken steps to address the causes of its previous failures to meet its obligations, and its promptness in any action taken to remedy the error: Austpac at [111] – [112].

(6)    Whether the company has given a frank explanation for its non-compliance: Caeneus at [4].

(7)    Whether the non-compliance was as a result of inadvertence or an incorrect assessment of the legal position, rather than deliberate disregard of its obligations: Caeneus at [4].

consideration

The plaintiff is an “interested person”

64    The term “interested person” in s 1322(4) of the Act is not defined; however, it has been interpreted broadly: Austpac at [92]. In Golden Gate, McKerracher J at [44] stated as follows:

… The legislature intended that s 1322(4) be available to a wide class of applicants. It is wide enough to include an applicant whose material legal rights or pecuniary or other economic interests are or may be substantially affected by the matter in issue.

(Footnotes omitted.)

65    In Re QBiotics Ltd [2016] FCA 873, the plaintiff company was held to have standing for the purposes of s 1322(4) of the Act in circumstances where the shares the subject of the relevant transactions were shares in that company. Accordingly, it was an “interested person” on the basis that it had assumed the validity of the transactions when updating its share register, and if the status quo were allowed to persist, it would be left in a position where its share register was inaccurate: at [33].

66    For the same reason as in QBiotics, the plaintiff in this proceeding is an interested person for the purpose of s 1322(4) of the Act. It has assumed the validity of the various issues of securities. Alternatively, its pecuniary interests will be affected if any of the issues are invalidated, because it may have to repay amounts of capital raised, its planned IPO may not occur, and it may become insolvent.

The plaintiff seeks a declaration in relation to an “act, matter or thing”

67    The power in s 1322(4) of the Act is directed to declaring that an “act, matter or thing” is not invalid by reason of a contravention of, inter alia, a provision in a company’s constitution. The act, matter or thing which is the subject of this proceeding is the various issues of shares by the plaintiff which are affected by the Potential Contraventions: see, e.g., Biodiesel at [367]. For the reasons set out at [17] – [47] above, each of the issues the subject of this proceeding was contrary to rule 12 of the plaintiff’s constitution in force at the relevant time.

68    The word “contravention” is broad enough to encompass the failure to comply with the Pre-Emptive Rights Procedure, which is largely expressed in the form of obligations and prohibitions applicable to the board. The requirement that any issue of Equity Securities to persons other than securityholders occur within 45 days after the end of the period by which members were required to give notice in response to an offer as set out at [11], is not expressed as an obligation or prohibition; however, as it is a requirement of an issue of Equity Securities to such persons, I consider that a failure to comply with it falls within the broad definition of “contravention”.

The irregularities

69    The plaintiff says that the orders sought pursuant to s 1322(4) in respect of the Potential Contraventions should be made because:

(1)    The irregularities affecting the 2021 Ordinary Shares Issue, the 2023 Ordinary Shares Issue and the Incentive Options Issue and Performance Rights Issue were the consequence of mere inadvertence.

(2)    While the 2023 Convertible Notes Issue occurred in the knowledge that rule 12 had arguably not been complied with, both this and the 2025/2026 Convertible Notes Issue occurred while the plaintiff was in “safe harbour” under s 588GA of the Act, and facing liquidity issues.

The first category of irregularities: mere inadvertence or substantive irregularities

70    As to the first category, the plaintiff in writing submits that the incidents of non-compliance with rule 12 were procedural irregularities, though in oral submissions does not rely on the “procedural” limb of s 1322(6)(a), being s 1322(6)(a)(i). In respect of each of the irregularities, it relies on s 1322(6)(a)(ii) and (iii) of the Act, stating that the plaintiff acted honestly or, alternatively that it is just and equitable to make the Declarations. I will proceed on the basis that the first category of irregularities involved substantive irregularities.

71    In the case of the 2021 Ordinary Shares Issue, this was a failure to comply with rule 12 once it commenced. In the case of the 2023 Ordinary Shares Issue, this was a failure to comply with the 45-day time limit in rule 12. In the case of the Incentive Options Issue and the Performance Rights Issue, this was a failure to comply with the 10% limit in the Excluded Issues.

72    The plaintiff submits, and I accept, that there is no suggestion that any person acted other than honestly in respect of each of the issues in the first category. In the case of each issue, the non-compliance with rule 12 was inadvertent, or alternatively resulted from a failure to consider the issue of compliance with rule 12 at all.

73    In the case of the 2021 Ordinary Shares Issue, the non-compliance arose at a time when the issue of 250,000 shares had already essentially been confirmed when the 2021 Constitution was adopted, and subscription funds were already in escrow. The board simply did not consider that the requirements of rule 12 would apply. The concept of acting honestly is broad enough to embrace such conduct: iCandy at [55](a) – (b). As to the 2023 Ordinary Shares Issue, while the board’s report records of 5 April 2023 the need to comply with the 45-day time period after the settlement process in relation to issues to persons other than shareholders, that requirement appears to have been overlooked. Again, that non-compliance was inadvertent and is not inconsistent with acting honestly: iCandy at [55](b).

74    As to the Incentive Options Issue and the Performance Rights Issue, the evidence is that the plaintiff’s exceeding the 10% cap in rule 12 of the constitution was inadvertent. Alternatively, it resulted from an active, but incorrect, consideration of a legal issue: iCandy at [55](a) – (b). Legal advice from McCullough Robertson was to the effect that if an issue of securities did not exceed 10% of the share capital on issue, it was an Excluded Issue. Further, the largest issue, being of 500,000 incentive options to Mr Carmichael, occurred in order to replace those that were about to expire. There is nothing to suggest that the board was acting other than honestly.

75    Further, I accept the plaintiff’s submission that it is just and equitable that the Declarations be made in respect of the first category of irregularities. The Equity Securities were issued for value, and if not validated, the issues may be void, and the recipients would lose the value of the consideration paid by them for those securities (whether by way of payment or as part of their employment). Finally, no or very minor real injustice to the plaintiff’s other shareholders results if these issues are validated. The share issues are relatively minor: 257,000 shares and approximately 500,000 incentive options out of almost 7,000,000 ordinary shares. In the case of the Performance Rights Issue, 99.07% of shareholders ratified the issues that were above the 10% cap for the purposes of rule 12 of the 2021 Constitution at a general meeting held on 27 July 2026 (with 0.93% voting against). Having regard to the prejudice that would be suffered by shareholders of the plaintiff, I consider that the overwhelming weight of justice is in favour of making the Declarations in respect of the first category of issues: Murray River at [36].

76    On these bases, it is appropriate that in the exercise of the Court’s discretion, the Declarations be made in respect of the 2021 Ordinary Shares Issue, the 2023 Ordinary Shares Issue, the Incentive Options Issue and the Performance Rights Issue.

The second category of irregularities

77    The plaintiff accepts that neither the 2023 Convertible Notes Issue nor the 2025/2026 Convertible Notes Issue was of a procedural nature. It also accepts that it failed to comply with the 2021 Constitution and the 2024 Constitution in relation to these issues, and that the non-compliance in respect of the 2023 Convertible Notes Issue was deliberate. I agree with those submissions.

Acted honestly: s 1322(6)(a)(ii) of the Act

78    The plaintiff says that the decisions that led to both the 2023 Convertible Notes Issue and the 2025/2026 Convertible Notes Issue were not made dishonestly.

79    As to the 2023 Convertible Notes Issue, it says that this occurred in the knowledge that the plaintiff had arguably not complied with rule 12. However, it says that the decision was made considering the interests of the plaintiff and its creditors, as it was a genuine concern for the plaintiff to raise capital to meet its cashflow requirements. At its highest, it characterises this non-compliance with rule 12 as an “error of judgment”, referring to Hall v Poolman [2007] NSWSC 1330; 65 ACSR 123; at [325], cited in iCandy at [56]. It submits that the decision was an “active, but incorrect, consideration of a legal issue”: iCandy at [55]. There was “no deceit or conscious impropriety, no intention to gain an improper benefit or advantage and no carelessness or impudence”. The plaintiff took what it considered to be the “lesser of the two evils”: contravening rule 12 rather than not raising capital and allowing the plaintiff to become insolvent. In oral submissions, the plaintiff characterises this as the “invidious position” where if it failed to raise capital, it would be insolvent by the end of January 2023, while if it raised capital as proposed, it would breach rule 12 of the 2021 Constitution.

80    As to the 2025/2026 Convertible Notes Issue, it says that there is no suggestion of dishonesty, as it allowed the shareholders to subscribe for the convertible notes, though it did not do so in the manner prescribed by the 2024 Constitution.

81    I consider that the plaintiff acted honestly in relation to this issue. First, it is significant that lawyers were not involved in preparing the October 2025 Letter or in the 2025/2026 Convertible Notes Issue. Second, while the October 2025 Letter did not follow the requirements of rule 12 of the 2024 Constitution, including by failing to afford to the shareholders pro-rata entitlements to participate in the subscription, various opportunities were provided to the plaintiff’s shareholders to make expressions of interest in the convertible notes which it planned to issue, and the terms of the proposed issue were provided to the shareholders by way of the October 2025 Letter, which set out that the 2025/2026 Convertible Notes would rank in preference to Equity Securities on issue, and that the conversion price represented a 30% discount. Information regarding the proposed issue was also provided at the presentation at the meeting of 20 November 2025. In these circumstances, there is no suggestion that the plaintiff acted dishonestly in the manner described by Palmer J in Hall at [325]. Rather, this is an instance where the plaintiff either failed to turn its mind to the relevant issue or failed to consider the issue at all: iCandy at [55(a)] – [55(b)].

82    Because I consider that it is just and equitable that a declaration be made in the form sought in respect of the 2023 Convertible Notes Issue, it is not necessary to consider the “acted honestly” limb of s 1322(6)(a).

Just and equitable: s 1322(6)(a)(iii) of the Act

83    In the alternative, the plaintiff submits that in the absence of dishonesty (which it denies), it is just and equitable for the Court to make the Declaration. Doing so will protect the interests of the noteholders, who have paid $2,000,000.00 for the 2023 Convertible Notes Issue and $5,880,000.00 for the 2025/2026 Convertible Notes Issue, respectively. Not validating those issues may result in disputes as to validity and the plaintiff’s ability to repay the amounts paid. Because I am satisfied that the plaintiff acted honestly in relation to the 2025/2026 Convertible Notes Issue, it is unnecessary for me to also consider whether the Declaration in respect of this issue is just and equitable.

84    I consider that at least the “just and equitable” limb of s 1322(6)(a) of the Act is satisfied in relation to the 2023 Convertible Notes Issue. It is to be emphasised that the words “just and equitable” are of the widest compass and give the Court a wide discretion. They call for the exercise of judgment in the conventional way: Superior Resources at [18]. The irregularities that can be cured by s 1322 of the Act extend to deliberate acts of non-compliance. The question will be whether the requirements of s 1322(6) of the Act are met: Nenna at [80] – [81]; see also Primary Securities at [142].

85    First, the authorities to which the plaintiff referred me emphasised generally that it is just and equitable to grant relief to the extent necessary to reasonably protect the interests of the current securityholders in the plaintiff, whether they be parties who received notes as part of the 2023 Convertible Notes Issue and subsequently converted them to shares, or who acquired shares on-market as a result of on-sales of the converted notes: see Re Poseidon Nickel Ltd [2018] FCA 1063; 129 ACSR 57 at [83]; Re Novonix Ltd [2019] FCA 2198 at [32]. Were I not to grant the relief sought in respect of the 2023 Convertible Notes Issue, holders of Equity Securities issued as part of, or as a direct or indirect result of, that issue would suffer prejudice due to the issue being invalidated. Granting the relief sought would provide certainty as to their interest in any securities.

86    Second, the documentary evidence surrounding the 2023 Convertible Notes Issue indicates that while the plaintiff’s directors apprehended that they were likely acting in contravention of the 2021 Constitution, they did so in the context of their grave concerns as to the plaintiff’s solvency and the ongoing viability of its contracts. The board was actively taking steps to shore up the plaintiff’s cash flow, with a view to securing the best possible outcome for its shareholders and creditors. Further, it had sought advice in relation to the plaintiff’s eligibility for “safe harbour” protection under s 588GA of the Act, and its decision to raise capital by way of the 2023 Convertible Notes Issue was approved in furtherance of its advice that the plaintiff was in safe harbour in light of it raising this new debt, and in light of its obligations to ensure a better outcome to creditors and to avoid insolvent trading.

87    While the board knew of a risk of breaching directors’ duties under the Act and at common law by reason of the advice received from McCullough Robertson on 21 December 2022, I accept that their actions represented a calculated risk which sought to ensure the plaintiff’s ongoing viability and had in mind the best interests of shareholders and creditors. It could not be said that the board sought advice as to whether or not the 2023 Convertible Notes Issue complied with the 2021 Constitution with an intention to proceed with the capital raise regardless of that advice. Rather, it sought that advice cognisant of the requirements in rule 12, and considered the advice as part of its assessment of the risk in balancing raising capital against the prospects of some form of external administration. Overall, the documentary evidence indicates that the board took considered steps to ensure the plaintiff’s ongoing viability under severe financial and temporal pressures.

88    Third, it would appear that, absent the shutdown of financial services during the Christmas and New Year period, the board would have put the proposed 2023 Convertible Notes Issue to the plaintiff’s shareholders, given that it did not anticipate any objection to this issue, nor did it anticipate that the current shareholders would be able to subscribe to any Equity Securities at this time.

89    In these circumstances, while the 2023 Convertible Notes Issue occurred in the circumstances of a knowing contravention of the 2021 Constitution, I consider that it is just and equitable to make a declaration that the 2023 Convertible Notes Issue is not invalid by reason of the contravention.

90    As the criteria in s 1322(6)(a) are disjunctive, in light of the above, it is not necessary to consider the “acted honestly” limb of s 1322(6)(a) of the Act in respect of the 2023 Convertible Notes Issue.

No substantial injustice: s 1322(6)(c) of the Act

91    The plaintiff concedes that this hurdle is the most difficult for it to overcome. It notes that validating the second category of irregularities will confirm the issue of $7,880,000.00 of securities ranking in priority to ordinary shareholders. This will dilute them on conversion in circumstances where rule 12, which was designed to allow shareholders to approve and participate in such issues, was not complied with.

92    However, the plaintiff says that at least in respect of the 2025/2026 Convertible Notes Issue, shareholders were notified of the issue and invited to participate. Whilst they were not given the opportunity to vote on the issue, they were allowed to participate. Additionally, 93.47% of shareholders subsequently voted to ratify the 2025/2026 Convertible Notes Issue for the purposes of rule 12 of the 2024 Constitution (with 1.14% voting against, and 5.39% not voting). They did so, after having been offered the opportunity to participate in the issue and having been told of their dilutive effect.

93    Further, and significantly, no shareholder, nor ASIC, opposes the Originating Process, despite being on notice of it. One shareholder initially filed a notice of appearance, but by email has since withdrawn his appearance.

94    Additionally, were the relief sought by the plaintiff not granted, it says that the relative prejudice to the plaintiff, its shareholders and creditors would be substantial. First, there may be real prejudice to the original securityholders, if there is uncertainty about whether the issues of securities were void or voidable. The relief sought would ensure the validity of those rights and of any subsequent transfers. In this regard, the plaintiff says that this consideration is significant in similar cases where the relevant non-compliance is a failure to lodge cleansing notices, relying on Queensland Bauxite Ltd, in the matter of Queensland Bauxite Ltd [2018] FCA 2113; 364 ALR 661 at [45]; iCandy at [117]; Nanoveu at [82].

95    Second, the orders sought would avoid commercial uncertainty and expense for the plaintiff if the convertible notes are void or voidable. Certainty as to its membership and the validity of its share issues is necessary prior to any further capital raising and its IPO. The plaintiff’s accounts cannot be finalised for the financial year ending on 30 June 2026, due to the plaintiff’s potential liability to shareholders if the abovementioned issues are not valid.

96    Third, absent the orders, the plaintiff may be exposed to claims and damages. Fourth, the IPO likely will be unable to proceed, and the plaintiff may need to enter external administration, especially if it is required to repay all or most of the $7,880,000.00 raised. The draft financial accounts for the financial year ending on 30 June 2026 record that the plaintiff suffered a loss of approximately $11,600,000.00, and has net liabilities of approximately $4,200,000.00. The directors’ view is that the group’s ability to continue as a going concern is dependent on its successful completion of its IPO or alternative funding initiatives, along with continued generation of revenue from existing and future contracts. The plaintiff refers to Re Kinetiko Energy Ltd; Ex Parte Kinetiko Energy Ltd [2020] WASC 169 at [40], where similar factors were considered.

97    I agree with the plaintiff that there is no substantial injustice in respect of either the 2023 Convertible Notes Issue or the 2025/2026 Convertible Notes Issue. Having regard to both the retrospective and prospective effect of the relief sought, I consider that any prejudice to a person caused by the relief sought is outweighed by the consequences of not granting the relief.

98    First, in both cases, it is significant that no shareholder, or ASIC, opposes the relief that the plaintiff seeks. It suggests to me that any injustice caused by the relief would be minor: Austpac at [108] – [109]. In the case of the 2025/2026 Convertible Notes Issue, overwhelmingly the shareholders subsequently voted to ratify the issue. That factor also evidences the plaintiff taking steps to address the cause of that instance of non-compliance, and weighs in favour of making the declaration sought: Austpac at [111] – [112].

99    Second, the relief sought would ensure the validity of the shareholders’ rights in Equity Securities in the plaintiff, as well as of any transfer thereof: Austpac at [107]. As the plaintiff submits, the latter consideration is frequently a consideration that weighs in favour of the Court granting the relief sought: Queensland Bauxite at [45]; iCandy at [117]; Re Nanoveu Ltd [2024] WASC 329 at [82]. Validating the issue of a large number of shares, and therefore the interests of a large number of affected persons, weighs in favour of granting the relief sought. The alternative would be that the issue of approximately $7,880,000.00 of shares in the plaintiff would be invalidated, exposing them and the plaintiff to potential claims, and likely leading to the plaintiff’s demise. Similar circumstances were considered in Kinetiko, where the refusal to grant relief under s 1322(4)(d) of the Act would have resulted in share issues being void, requiring the company to return funds, and rendering it unable to comply with its obligations imposed by the Australian Securities Exchange, which would have resulted in it being delisted. This would have resulted in the incurring of legal and corporate costs, as well as costs associated with an IPO and re-admission fee: at [40]. That consideration is even stronger here, where the refusal to grant relief might operate as far as to render the plaintiff insolvent and liable to being placed in external administration.

100    In the above circumstances, I consider that the weight of justice is in favour of making the Declarations. What prejudice may accrue as a result of the Declarations being made is far outweighed by the consequences that will flow if the Declarations are not made, having regard to the interests of the plaintiff, its creditors and shareholders, in light of the potentially disastrous consequences of the Declarations not being made.

Discretionary considerations

101    The plaintiff submits that the Declarations ought be made, in the exercise of the Court’s discretion, on the basis that (1) they would restore integrity in the plaintiff’s share dealings, (2) the application was brought promptly, on 28 August 2026, after Mr Billingham identified the issues during his review in August 2026, (3) none of the plaintiff’s current and former shareholders opposes the relief sought, (4) ASIC, which has been informed of the application, has not opposed the relief sought, and (5) the plaintiff provided a frank and detailed account of the circumstances surrounding each of the share issues.

102    I agree with the plaintiff’s submissions and consider that the Court’s discretion should be exercised in its favour. First, as already indicated, it is just and equitable that the Declaration be made in relation to the 2023 Convertible Notes Issue: Austpac at [106]. Second, they would restore integrity to the plaintiff’s share dealings: Austpac at [107]. Third, the plaintiff’s application has not been opposed, despite both ASIC and the plaintiff’s shareholders being on notice thereof: Austpac at [108] – [109]. Fourth, while the 2023 Convertible Notes Issue arguably resulted from a deliberate disregard for the 2021 Constitution, the issue occurred in furtherance of the plaintiff’s and its directors’ obligations under the Act. No misconduct is shown in relation to the 2025/2026 Convertible Notes Issue. Fifth, the plaintiff has, in relation to the 2025/2026 Convertible Notes Issue, taken steps to ratify its conduct: Austpac at [111] – [112]. Sixth, the plaintiff has given frank explanations for both the 2023 Convertible Notes Issue and the 2025/2026 Convertible Notes Issue: Caeneus at [4].

103    In these circumstances, it is appropriate for the Court to exercise its discretion in the manner sought by the plaintiff.

Confidentiality orders should be made

104    The plaintiff seeks orders maintaining confidentiality over certain portions of the Billingham Affidavits and the Sangster Affidavit (Confidentiality Orders). The Confidentiality Orders are sought in respect of:

(1)    Personal details of the relevant securityholders, including their email and postal addresses. In some instances, that includes their “Investor ID” number and their “ID” number.

(2)    Applications for shares which contain confidentiality provisions prohibiting disclosure of confidential information, including the terms of the document, and confidential information disclosed therein.

(3)    Reports and forecasts relating to the plaintiff’s financial circumstances, which are commercially sensitive.

(4)    Correspondence from the Defence Innovation Unit as to a contract with the plaintiff, which is commercially sensitive. The correspondence outlines the kind of work which the plaintiff completed, including the specifications required to be met.

105    Copies of those affidavits were also filed with redactions, which are not the subject of the Confidentiality Orders sought.

106    Section 37AF(1) of the FCA Act grants the Court the power to make orders for the suppression or non-publication of, inter alia, information that comprises evidence, and information lodged with or filed in the Court. The grounds for which an order of this kind may be made include that it is necessary to prevent prejudice to the proper administration of justice: s 37AG(1)(a) of the FCA Act. In deciding whether to make a suppression or non-publication order, the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice: s 37AE of the Act.

107    In Country Care Group Pty Ltd v Director of Public Prosecutions (Cth) (No 2) [2020] FCAFC 44; 275 FCR 377, the Court at [7] – [9] stated as follows:

The relevant principles in relation to the making of suppression or non-publication orders under s 37AF of the FCA Act are fairly well settled.

Suppression or non-publication orders should only be made in exceptional circumstances. That is both because the operative word in s 37AG(1)(a) is “necessary” and because the court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice. The paramount consideration is the need to do justice; publication can only be avoided where necessity compels departure from the open justice principle.

The critical question is whether the making of a suppression or non-publication order is “necessary to prevent prejudice to the proper administration of justice”. The word “necessary” in that context is a “strong word”. It is nevertheless not to be given an unduly narrow construction. The question whether an order is necessary will depend on the particular circumstances of the case. Once the court is satisfied that an order is necessary, it would be an error not to make it. There is no exercise of discretion or balancing exercise involved.

(Footnotes omitted.)

108    These principles were affirmed by the Full Court in AHG WA (2015) Pty Ltd v Mercedes-Benz Australia/Pacific Pty Ltd (No 2) [2025] FCAFC 97 at [10].

109    The plaintiff did not advance substantial submissions as to why the Confidentiality Orders were necessary to prevent prejudice to the proper administration of justice. However, for the following reasons, I am of the view that they should be made.

110    First, making the Confidentiality Orders in respect of securityholders’ personal details is plainly necessary to prevent prejudice to the proper administration of justice. Recently in Deputy Commissioner of Taxation v Peever [2025] FCA 460, Wheatley J at [17] considered that publishing personal details, which there included sensitive financial information, would leave the particular individuals vulnerable to identity theft. Her Honour cited several authorities in which suppression and non-publication orders had been made in respect of personal information including, inter alia, email and residential addresses. Publishing such information would bring the administration of justice into disrepute.

111    While in this proceeding the personal information largely does not include sensitive financial information, the abovementioned information is of a personal nature and may leave the individuals to whom it relates vulnerable to identity theft. On this basis, I am satisfied that it is necessary to prevent prejudice to the administration of justice that the Confidentiality Orders be made in respect of it.

112    Second, it is necessary to prevent prejudice to the proper administration of justice to make orders in respect of the applications for shares for similar reasons to those discussed in relation to the personal details of individual shareholders. The applications for shares contain information that relates to investors of the plaintiff. Further, the terms of the application are of a confidential nature.

113    Third, as to the reports and forecasts regarding the plaintiff’s financial circumstances, and the correspondence from the Defence Innovation Unit, those documents are confidential, and it would clearly be of benefit to the plaintiff’s competitors, and to the plaintiff’s detriment, if they were disclosed. In Lamson Concepts Pty Ltd v Oscuro (No 2) [2025] FCA 1100, Vandongen J made orders pursuant to s 37AF of the FCA Act in respect of affidavits containing, inter alia, details of the applicant’s commercial projects, its other commercial opportunities, its financial results, past and ongoing revenue sources, circumstances in which it had sustained losses, its clients, the terms and value of contracts, and its business operations: at [18] – [19]. That information was considered to be plainly confidential, and his Honour made orders on the ground in s 37AG(1)(a) of the FCA Act. I consider that the position is the same here. The information is in the same vein, is commercially sensitive and would be of benefit to the plaintiff’s competitors. It would bring the administration of justice into disrepute if that information were publicly available. Accordingly, it is necessary to prevent prejudice to the proper administration of justice that it be ordered to be confidential.

costs

114    No order as to costs was sought. Accordingly, none is made.

Associate:

Dated:    29 October 2026