‘An effort in subterfuge’: Criminal conviction in Bellamy’s substantial holding disclosure case

The issues in the case related to:

1. whether Ms Cameron had a ‘relevant interest’ in the Bellamy’s shares which were held by Black Prince;
2. whether Ms Cameron failed to disclose her relevant interest in the Bellamy’s shares and association with Black Prince as required at the time the shares were acquired under section 671B of the Corporations Act; and
3. whether, in the SHN lodged by Ms Cameron in February 2017, Ms Cameron had committed an offence under section 1308(2) of the Corporations Act by omitting information about the true extent of her relationship with Black Prince, without which the document was to Ms Cameron’s knowledge materially misleading.

The case centred on whether Ms Cameron had used Black Prince as a vehicle to ‘warehouse’ shares in Bellamy’s – that is, effectively providing a ‘private’ and ‘confidential’ means by which Ms Cameron could control the relevant shares without the market or Bellamy’s being aware.

Ms Cameron’s substantial holding in Bellamy’s

The Court was of the view, beyond reasonable doubt, that there were four avenues by which Ms Cameron had a ‘substantial holding’ in Bellamy’s through either a ‘relevant interest’ under section 608 of the Corporations Act in Black Prince’s shareholding, or by being an ‘associate’ of Black Prince. The four avenues were:

1. a relevant interest by way of a loan agreement between Black Prince and an entity, Lengkap Ltd (Lengkap), controlled by Ms Cameron;
2. a relevant interest by way of Lengkap being the ‘perceived’ founder of Black Prince;
3. practical control by Ms Cameron over Black Prince’s shares in Bellamy’s; and
4. an association between Black Prince and Ms Cameron.

First avenue – loan agreement between Lengkap and Black Prince

The Court found that Ms Cameron had a relevant interest in Bellamy’s shares, as Lengkap had the power to dispose of or control the exercise of a power to dispose of Bellamy’s shares as a result of a loan agreement between Lengkap and Black Prince.

The Court was of the view that, under the loan agreement, Lengkap could insist on the execution by Black Prince of a mortgage, which would prevent Black Prince from disposing of the Bellamy’s shares without Lengkap’s approval. The fact that such a power would be subject to restraint or restriction (i.e. repayment default by Black Prince) would not negative this conclusion.

The Magistrate noted:

‘… I am satisfied that the text of both s 608(8) and 609(1)(a) support the proposition that a “relevant interest” may arise via a security arrangement. Section 608(8) is satisfied here because Black Prince owns the shares (s608(8)(a)); Black Prince entered the BPLA [the loan agreement between Lengkap and Black Prince] with Lengkap (s608(b)(1)(i)); the BPLA gives Lengkap an enforceable right (whether the right is enforceable presently or in the future and whether or not on the fulfilment of a condition) (s608(b)(ii)); and if the agreement were performed, Lengkap would have a relevant interest if clause 3(a) were enforced and the shares registered in its name (clause 608(c)).’

Second avenue – Lengkap was the perceived founder of Black Prince

The Court found that Black Prince acted as if Lengkap was the founder of Black Prince in relation to the acquisition of Bellamy’s shares. This was because the Magistrate accepted that the decision-making relating to the Black Prince’s holding of the Bellamy’s shares was ‘significantly if not wholly dependent’ on the control exercised by Ms Cameron through Lengkap. This was supported by evidence that the shares were acquired by Black Prince based on Lengkap’s wishes.

As such, the Court found that Lenngkap had a relevant interest in Black Prince’s Bellamy’s shares through being the ‘perceived’ founder of Black Prince as there was an agreement, arrangement or understanding to the effect that Lengkap had indirect control of the exercise of a right to vote attached to those shares.

Third avenue – power to control the exercise of a right to vote

The Court held that Ms Cameron’s power to control the exercise of a right to vote attached to the Bellamy’s shares held by the Black Prince was inferred because Black Prince’s acquisition of the shares was done at the former director’s behest, with Black Prince ‘warehousing’ those shares for Ms Cameron’s benefit. The Court found, amongst other things, that:

1. arrangements had been put in place which were designed to benefit Ms Cameron, under which she could exercise control over the voting rights attached to Black Prince’s shares and/or the sale of those shares, even if those arrangements were not documented in such terms;
2. Ms Cameron established an ‘opaque and complex structure’ which disguised her substantial shareholding in Bellamy’s purchased with her money from the sale of the Bicheno interest pre-IPO;
3. Ms Cameron incorporated Lengkap and employed Black Prince for the express purpose of keeping her interest in Bellamy’s ‘private’ and ‘confidential’; and
4. it could be inferred that the proceeds of the sale by Bicheno of its pre-IPO stake in Bellamy’s were used to purchase a new stake in Bellamy’s.

Fourth avenue – ‘associate’ of Black Prince

Having regard to the principles in Re Viento Group Ltd [2011] ATP 1 and Bank of Western Australia v Ocean Trawlers Pty Ltd (1995) 13 WAR 407, the Court was also satisfied beyond reasonable doubt that Ms Cameron was an ‘associate’ of Black Prince. Amongst other things:

1. there was an informal and ‘not strictly documented’ but shared goal or purpose between Black Prince and Ms Cameron being her wish to participate in the Bellamy’s IPO and obtain a parcel of Bellamy’s shares via ‘private’ and ‘confidential’ means;
2. there was a ‘significant and structural link’ between Ms Cameron and Black Prince, which included the loan agreement above, the establishment of Lengkap and the agreements through which funds flowed for the purpose of Black Prince’s acquisition of Bellamy’s shares;
3. there were common investments and dealings between Ms Cameron and Black Prince. In particular, the money that Black Prince received to purchase its Bellamy’s shareholding came from the proceeds of the pre-IPO sale of Ms Cameron’s shares in Bellamy’s held via Bicheno;
4. an agreement reached to delete the clause in the loan agreement which provided Lengkap with security for the funds advanced to Black Prince discussed above was otherwise ‘uncommercial’ and ‘irrational’.

The Court found that Ms Cameron was an associate of Black Prince because Ms Cameron and Black Prince had an understanding or agreement in relation to the shares in Bellamy’s relating to Ms Cameron’s control of those shares and therefore a ‘relevant agreement’. The parties were also ‘acting in concert’ in relation to Bellamy’s membership and the power to exercise, or control the exercise of, the rights to vote attached to Black Prince’s Bellamy’s shareholding or to dispose of, or to exercise control over the disposal of, such shares.

The Magistrate noted that:

‘I accept the submission by the prosecution that the arrangements … (referred to as the “commercial rigmarole”) was only explicable as an effort in ensuring that the identity of the defendant was not disclosed as being linked to Black Prince’s shareholding (not unfairly referred to be the prosecution as "an effort in subterfuge").’

Section 1308(2) of the Corporations Act

The section 1308(2) charge was on the basis that Ms Cameron had not disclosed in her February 2017 SHN that she had a relevant interest in Black Prince’s shareholding in Bellamy’s dating back from August 2014 and that she was an associate of Black Prince.

At the time of the offence, section 1308(2) of the Corporations Act provided as follows:

‘A person who, in a document … lodged with or submitted to ASIC, makes or authorises the making of a statement that to the person’s knowledge is false or misleading in a material particular, or omits or authorises the omission of any matter or thing without which the document is to the person’s knowledge misleading in a material respect, is guilty of an offence.’

The Court found that Ms Cameron submitted the SHN knowing that it omitted to disclose her relevant interest in Black Prince’s Bellamy’s shares, as a result of which the SHN was, to the Ms Cameron’s knowledge, misleading in a material respect.