RE STRATEGIC ENERGY RESOURCES LTD; EX PARTE STRATEGIC ENERGY RESOURCES LTD [2026] WASC 200

[2026] WASC 200 Page 1 JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA IN CHAMBERS CITATION : RE STRATEGIC ENERGY RESOURCES LTD; EX PARTE STRATEGIC ENERGY RESOURCES LTD [2026] WASC 200 CORAM : HILL J HEARD : 13 APRIL 2026 DELIVERED : 13 APRIL 2026 PUBLISHED : 26 MAY 2026 FILE NO/S : COR 39 of 2026 MATTER : IN THE MATTER OF STRATEGIC ENERGY RESOURCES LTD EX PARTE STRATEGIC ENERGY RESOURCES LTD Plaintiff Catchwords: Corporations - Invalid appointment of company auditor - Application for declaratory relief to validate appointment of current company auditor - Application for declaratory relief to validate trading in securities - Where no blatant or flagrant disregard of obligations - Where no substantial injustice if orders made - Turns on own facts Corporations - Application to relieve company directors and officers of civil liability - Where no evidence of dishonesty identified - Where no substantial injustice if orders made - Turns on own facts -- 1 of 15 -- [2026] WASC 200 Page 2 Legislation: Corporations Act 2001 (Cth), s 302, s 320, s 324AA, s 327B, s 327C, s328B, s 329, s 707, s 708A, s 1322(4)(a), s 1322(4)(c) Result: Application granted Category: B Representation: Counsel: Plaintiff : E Fearis Solicitors: Plaintiff : GrilloHiggins Lawyers Case(s) referred to in decision(s): Re Caeneus Minerals Ltd [2018] FCA 560 Re Classic Minerals Ltd [2018] FCA 2039 Re Golden Gate Petroleum Ltd [2010] FCA 40; (2010) 77 ACSR 17 Re Murray River Organics [2019] FCA 931; (2019) 138 ACSR 365 -- 2 of 15 -- [2026] WASC 200 HILL J Page 3 HILL J: (This judgment was delivered extemporaneously and has been edited from the transcript to include references, headings and to correct matters of grammar and expression.) 1 By originating process filed 8 April 2026, the plaintiff, Strategic Energy Resources Limited (Strategic Energy), seeks orders under s 1322(4)(a) and (c) of the Corporations Act 2001 (Cth) (Act) arising from its failure to comply with the obligations imposed by the Act in relation to the appointment of Nexia Perth Audit Services Pty Ltd (Nexia) as its auditor, and the resulting impact on the cleansing notices it has issued since this time. 2 Strategic Energy also seeks relief from civil liability in respect of each of these contraventions for both it and its current and former directors and officers. 3 At the time the originating process was filed, Strategic Energy filed a certificate of urgency certifying the application was of such an urgent nature that it was required to be heard immediately. The basis for the urgency is that its shares are currently suspended from trading pending resolution of these proceedings. For this reason, the application has been listed before me today on an urgent basis. 4 In support of its application, Strategic Energy relied on three affidavits, being: (a) an affidavit of Matthew Leslie Watkins, the company secretary of Strategic Energy, filed on 8 April 2026; (b) an affidavit of David Alan DeTata, the managing director of Strategic Energy filed on 8 April 2026; and (c) an affidavit of Tony Mario Petani, a solicitor and partner of the plaintiff's solicitors, filed on 13 April 2026. 5 I have also had the significant benefit of a written outline of submissions, as well as oral submissions from counsel who appeared before me this morning. 6 On the evidence before me, I am satisfied that notice of the application has been given to the Australian Securities and Investments -- 3 of 15 -- [2026] WASC 200 HILL J Page 4 Commission (ASIC) and the Australian Securities Exchange (ASX).1 Neither regulator has given notice they want to be heard on the application and neither consent nor oppose the orders sought. Factual background 7 Strategic Energy is an Australian public company whose shares have been listed on the ASX since 1991. As at 8 April 2026, it had approximately 1,008 shareholders and a market capitalisation of approximately $10.18 million.2 8 On 21 November 2024, following a competitive tender process, Strategic Energy's board of directors resolved to appoint Nexia as its auditor. On 9 January 2025, the company's previous auditor, Grant Thornton Audit Pty Ltd (Grant Thornton), obtained ASIC's consent to resign as the company's auditor.3 9 On 10 January 2025, Nexia was formally appointed as auditor of Strategic Energy, which was the subject of an ASX announcement on the same day. The announcement noted that formal approval of shareholders would be sought at the company's next annual general meeting (2025 AGM).4 10 On 17 October 2025, a notice of the 2025 AGM was issued to shareholders which did not include any resolution for the appointment of Nexia as auditor. As a result, no resolution to approve Nexia's appointment as auditor was put to or passed by its shareholders at the 2025 AGM.5 Mr Watkins' evidence is that this occurred as a matter of administrative oversight as a result of the delay since the date that Nexia had been appointed as Strategic Energy's auditor. 11 The evidence before the court is that Nexia has acted as Strategic Energy's auditor since January 2025, including by reviewing the company's financial report for the half year to 31 December 2025.6 12 On 23 February, 25 February and 18 March 2026, Strategic Energy issued a total of 17,625,000 shares following the exercise of options by shareholders. On each of these dates, Strategic Energy lodged cleansing notices with the ASX in respect of the relevant share 1 Affidavit of Mathew Leslie Watkins filed 8 April 2026, 'MW-14', 'MW-15'. 2 Affidavit of Mathew Leslie Watkins filed 8 April 2026 [6] - [7], 'MW-1'. 3 Affidavit of Mathew Leslie Watkins filed 8 April 2026 [14] - [15]. 4 Affidavit of Mathew Leslie Watkins filed 8 April 2026 [16], 'MW-3'. 5 Affidavit of Mathew Leslie Watkins filed 8 April 2026 [18] - [19], 'MW-5'. 6 Affidavit of Mathew Leslie Watkins filed 8 April 2026 [24] - [25], 'MW-12'. -- 4 of 15 -- [2026] WASC 200 HILL J Page 5 issue (Cleansing Notices). Each of the Cleansing Notices stated that as at the date of the issue of the relevant shares, Strategic Energy was in compliance with the provisions of ch 2M of the Act as they applied to the company. Strategic Energy now believes this statement may be incorrect due to the issue relating to the appointment of Nexia as its auditor that has been identified. 13 Mr Watkins has recently reviewed data from the share registry and believes that 8,500,000 of these shares have since been traded.7 14 On 1 April 2026, Mr Watkins conducted a routine audit and compliance check as part of his regular duties as company secretary, and became aware that shareholder approval had not been obtained in relation to Nexia's appointment as auditor. Shortly after this, on 2 April 2026, Mr Watkins sought legal advice on the matter from Strategic Energy's external solicitors.8 15 On 7 April 2026, at its request, Strategic Energy went into a trading halt and subsequently, on 9 April 2026, its shares were suspended from trading pending resolution of this application.9 Should the proposed declarations be made? 16 Chapter 2M of the Act is entitled 'Financial Reports and Audit'. The process for the appointment and removal of auditors is set out in pt 2M.4 of the Act. 17 Pursuant to s 324AA(1) of the Act, an individual, a firm or a company may be appointed as auditor of a company. 18 Section 329 of the Act deals with the resignation and removal of auditors. Relevantly, pursuant to s 329(5), an auditor may, by notice in writing, resign as auditor where notice of the resignation is given to ASIC, and ASIC's consent is applied for and obtained. Where a company has received notice of resignation of its auditor, the company is required under s 329(11) to lodge with ASIC notice of the resignation in the prescribed form. 19 Where there is a vacancy in the officer of auditor, pursuant to s 327B(1)(b) of the Act, a public company must appoint an auditor to fill the vacancy at each annual general meeting subsequent to the 7 Affidavit of Mathew Leslie Watkins filed 8 April 2026 [20] - [23], 'MW-6' - 'MW-11'. 8 Affidavit of Mathew Leslie Watkins filed 8 April 2026 [26] - [29]. 9 Affidavit of Mathew Leslie Watkins filed 8 April 2026 [30], 'MW-13'. -- 5 of 15 -- [2026] WASC 200 HILL J Page 6 company's first annual general meeting. Section 327B(3) of the Act requires the director of the company to take all reasonable steps to comply with or to secure compliance with s 327B(1). 20 Section 327C deals with the circumstances where an auditor is appointed to fill a casual vacancy other than at an annual general meeting. Where a vacancy occurs in the office of auditor of a public company which is not caused by the removal of the auditor from office, and there is no surviving or continuing auditor of the company, the directors must, within one month of the vacancy occurring, appoint an auditor to fill the vacancy, unless the company at a general meeting has appointed an auditor to fill the vacancy (s 327C(1)). An auditor appointed to fill a casual vacancy under s 327C(1) holds office until the company's next annual general meeting (s 327C(2)). 21 Section 328B of the Act sets out the procedure that governs the nomination of an auditor. Pursuant to s 328B(1) of the Act, a company may appoint an individual firm or company as auditor of the company at its annual general meeting only if a member of the company gives the company written notice of the nomination of the individual firm or company before the meeting is convened, or not less than 21 days before the meeting. If a company purports to appoint an auditor in contravention of s 328B(1), the appointment is of no effect (s 328B(2)(a)), and the company and each officer of the company who is in default are guilty of an offence (s 328B(2)(b)). 22 On the evidence before me I make the following findings of fact: (a) Grant Thornton obtained ASIC's consent to resign as auditor of Strategic Energy on 9 January 2025, and their resignation took effect from that date. (b) Following the resignation of Grant Thornton as auditor, the directors of Strategic Energy complied with their obligations under s 327C(1) of the Act by appointing Nexia as auditor with effect from 10 January 2025. However, by reason of s 327C(2) of the Act, the appointment to fill the casual vacancy only extended until the company's next annual general meeting. (c) No shareholder proposed a resolution for the appointment of Nexia at the 2025 AGM, nor was a resolution passed at the 2025 AGM to this effect. -- 6 of 15 -- [2026] WASC 200 HILL J Page 7 (d) As a consequence, the effect of s 327C(2) of the Act is that Nexia ceased to hold office as auditor of Strategic Energy at the conclusion of the 2025 AGM. (e) From this date, the directors of Strategic Energy were required pursuant to s 327C(3) of the Act to take all reasonable steps to comply with or to secure compliance with s 327C(1) of the Act to appoint an auditor to fill the casual vacancy. This has not occurred. 23 In its originating process, Strategic Energy seeks two sets of declarations under s 1322(4)(a) of the Act. The first is to validate Nexia's appointment as auditor from 18 November 2025, and to validate the company's half-year financial report and attached auditor's report dated 31 December 2025, which was lodged on 12 March 2026. 24 The second seeks to validate the Cleansing Notices issued by the Strategic Energy on 23 and 25 February, and 18 March 2026. Specifically, the company seeks a declaration that any offer for sale or sale of its securities is not invalid by reason of the failure to issue a cleansing notice and the consequent failure to comply with s 707(3) and s 708A(5)(e) of the Act. 25 I note that in respect of both declarations, the prescriptive requirements of s 1322(4)(a) of the Act are satisfied in that: (a) the proposed validation orders are framed in a declaratory form; (b) the act, matter or thing has been identified; and (c) the contravention has been identified. Are the pre-conditions in s 1322(6) of the Act satisfied? 26 Counsel for Strategic Energy submitted in respect of the appointment of the auditors that the preconditions in s 1322(6)(a)(ii) and (iii) of the Act were satisfied. 27 In circumstances where Nexia was appointed as auditor following a competitive tender process, I accept Mr Watkins' evidence that the failure to comply with ch 2M of the Act occurred because of an administrative oversight, and there was no failure on the part of any company officer to act honestly. I also accept, given that all relevant parties have proceeded on the basis that Nexia has been validly -- 7 of 15 -- [2026] WASC 200 HILL J Page 8 appointed as Strategic Energy's auditor, that it would be just and equitable to make the orders sought. 28 In my view, the making of the orders sought by Strategic Energy would be consistent with the public policy of ch 2M of the Act, which is to ensure that public companies appoint independent auditors to audit or review the company's accounts and that audited accounts are lodged within the timeframe specified by the Act.10 29 It is relevant that all relevant parties have proceeded on the basis that Nexia has been validly appointed as the plaintiff's auditor and that no issue or complaint has been raised in relation to the accounts or the conduct of Nexia's review of Strategic Energy's half-year accounts. 30 In my view, the granting of the relief sought will remove any doubt as to the compliance by Strategic Energy with its financial reporting obligations and the potential impact on the operations of the company. 31 The issue in respect of the cleansing notices arises from the failure to comply with pt 6D.2 of the Act, which imposes disclosure obligations on corporations in relation to the issue and sale of quoted securities. In certain circumstances the disclosure obligations can be satisfied by lodging a cleansing notice (s 708A(5)). Section 708A(6) of the Act sets out the requirements of a valid notice. Relevantly, this includes the obligation for the notice to state that as at the date of the notice the company has complied with 'the provisions of chapter 2M as they apply to the body' (s 708A(6)(d)). If disclosure has not been made by the issuer and the shares are on-sold within 12 months, the party to whom the shares are issued may be obliged to make disclosure.11 32 In relation to the cleansing notices, Strategic Energy seeks a declaration that these notices were effective when given, and that any offer for sale or sale of securities will not be invalid by reason of the failure to issue a cleansing notice and the consequent failure to comply with s 707(3) and s 727(1) of the Act. 33 I accept that Strategic Energy's conduct in incorrectly stating in the Cleansing Notices that they were in compliance with ch 2M of the Act was inadvertent and was not done in blatant disregard of its 10 See for example, Corporations Act 2001 (Cth) s 302, s 320. 11 Corporations Act 2001 (Cth) s 707(3). See also Re Golden Gate Petroleum Ltd [2010] FCA 40; (2010) 77 ACSR 17. -- 8 of 15 -- [2026] WASC 200 HILL J Page 9 obligations under the Act. In my view, public policy will not be undermined by the granting of the relief sought.12 34 Counsel for Strategic Energy submitted that in relation to the Cleansing Notices, each of the preconditions in s 1322(6)(a) are satisfied. I accept this submission. 35 The issue of a cleansing notice has been routinely accepted by the courts as being a procedural matter within the terms of s 1322(6)(a)(i) of the Act. In relation to the precondition in s 1322(6)(a)(ii) on the evidence before me, I accept and find that the impact of the Cleansing Notices arising out of the failures with the auditor appointment process was both honest and inadvertent. I also accept in the circumstances of this case that it would be just and equitable to make the orders sought under s 1322(4) of the Act. Will making the orders cause any substantial injustice? 36 In considering whether there would be any substantial injustice if the orders sought are made, I have considered the classes of persons who may be impacted by the making of these orders. In relation to the declarations concerning the appointment of Nexia as auditor, these classes include Strategic Energy, its shareholders, as well as both Nexia and Grant Thornton. 37 For the following reasons I do not consider that any substantial injustice would be caused by the making of the declarations sought by Strategic Energy, and in fact consider the reverse to be the case. 38 First, I accept that if the orders sought are not made, there may be substantial injustice to each of Strategic Energy, its shareholders and its past and present auditors. In the event that Nexia's appointment is not validated and a complaint is raised about the work they have done, it is possible that a legal issue could be raised as to whether an auditor who is not appointed at law is liable for the work performed by them, and whether the work is covered by their professional indemnity insurer. 39 Second, there would be prejudice to the recipients of the share issues that are the subject of the cleansing notices if the orders sought are not made, as any future sales of these shares may be void or voidable. Alternatively, the consequence would be that the recipients may be prevented from dealing with their assets for a further 11-month 12 See Re Caeneus Minerals Ltd [2018] FCA 560 [39] - [40]; Re Classic Minerals Ltd [2018] FCA 2039 [35] - [36]. -- 9 of 15 -- [2026] WASC 200 HILL J Page 10 period through no fault of their own. As noted above, Mr Watkins' evidence is that a relatively significant portion of these shares that are the subject of these share issues have already been traded. In these circumstances, I consider it is appropriate to make the orders sought to remove any question as to the title of these shares. 40 Third, there would be ongoing prejudice to Strategic Energy in continuing to have concerns over the validity of some of its shares on issue and the possibility that it may be required to stay involved until the 12-month period has expired. 41 Finally, in relation to its shareholders more broadly, the failure to comply with the relevant provisions of the Act has caused Strategic Energy shares to be suspended from trading. If orders are not made by the court, all shareholders will not have the benefit of an active market for their shares. Should the court exercise its discretion to grant the relief sought? 42 In exercising the court's discretion to grant relief, a relevant factor is the promptness with which Strategic Energy has sought to remedy the irregularity once it was identified. 43 The evidence before the court in this regard is that Strategic Energy first became aware of these issues on 1 April 2026. I am satisfied that since becoming aware of the issues, Strategic Energy has worked diligently to remedy the irregularity, including by seeking urgent relief in this matter. 44 Additionally, Mr DeTata's evidence is that the company has reviewed its compliance processes and intends to implement additional steps to ensure the issue does not occur again.13 45 I accept and find that there is no evidence of any substantial misconduct, serious wrongdoing or flagrant disregard of the Act that would warrant the exercise of the discretion to refuse the relief sought. 46 There is nothing in the evidence before me that suggests any minority interest could be oppressed, or that any other interest could be affected by the orders that have been sought. 47 I am satisfied that shareholders, ASIC and the ASX have been notified of the issue that has arisen, and were given notice of the 13 Affidavit of David Alan DeTata filed 8 April 2026 [18]. -- 10 of 15 -- [2026] WASC 200 HILL J Page 11 application. No one has sought to be heard or to intervene in the hearing today. 48 I also do not consider that public policy would be undermined by granting the relief sought,14 and in these circumstances consider it appropriate to make the declarations sought by the plaintiff. Should orders be made to relieve Strategic Energy and its current and former directors from civil liability? 49 Strategic Energy has also sought orders to be made under s 1322(4)(c) of the Act to relieve Strategic Energy, as well as its current and former directors and officers, from any civil liability arising out of any contravention of s 329(11) of the Act arising out of the sections of the Act identified in order 2 of its minute of proposed orders. These arise from the company's failure to adopt the process prescribed in the Act for the appointment of Nexia as its auditor. 50 Section 1322(4)(c) permits the court to make orders relieving a person from civil liability for a broad range of contraventions or failures subject to the conditions in s 1322(6) of the Act that the persons concerned acted honestly, and that no substantial injustice has been or is likely to be caused to any person.15 51 As noted, a precondition to making an order under s 1322(4)(c) is that the persons seeking to be relieved from civil liability acted honestly.16 52 In this case, I accept the contravention occurred by way of administrative oversight and that there is no evidence that Strategic Energy, or any of its current or former directors or officers, acted dishonestly. I also accept that the relief sought by Strategic Energy with the amendment proposed by counsel for the plaintiff is appropriately confined to the specific omissions that caused the contravention. 53 For these reasons, I consider it appropriate that Strategic Energy and its current and former directors and officers be relieved from any civil liability arising out of the contraventions of the Act for the specific omissions that have been identified in order 2 of the minute of proposed orders. 14 See Re Caeneus Minerals Ltd [2018] FCA 560 [39] - [40]; Re Classic Minerals Ltd [2018] FCA 2039 [35] - [36]. 15 Re Murray River Organics [2019] FCA 931; (2019) 138 ACSR 365 [28]. 16 Corporations Act 2001 (Cth) s 1322(6)(b). -- 11 of 15 -- [2026] WASC 200 HILL J Page 12 Conclusion and orders 54 In relation to costs, Strategic Energy submitted the appropriate order is that there be no order as to costs. I accept that this is the appropriate costs order in these circumstances. 55 I also accept that the form of ancillary orders sought in terms of service of the court's orders, publication of an announcement containing these orders on the ASX, and service on ASIC and Nexia, and for there to be an allowance for any aggrieved party to apply to the court to vacate or vary these orders, will protect any relevant person from any possible prejudice arising from the application. For these reasons, I consider it is appropriate to make orders in terms of the minute of proposed orders filed 13 April 2026 with an amendment.17 17 At the conclusion of the hearing, orders were made in terms of Annexure A. -- 12 of 15 -- [2026] WASC 200 HILL J Page 13 Annexure A -- 13 of 15 -- [2026] WASC 200 HILL J Page 14 -- 14 of 15 -- [2026] WASC 200 HILL J Page 15 I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia. VA Associate to the Hon Justice Hill 26 MAY 2026 -- 15 of 15 --