Re Industrial Equity Limited and Portfolio Services Limited v North Broken Hill Holdings Limited; Leith Maurice Jarman; Richard Lawrence Baillieu; Francis Mark Bethwaite; Peter Charles Barnett; Geoffrey William Forster; Colin James Harper; Ian Andrew R [1986] FCA 44 (3 March 1986)

FEDERAL COURT OF AUSTRALIA

Re: INDUSTRIAL EQUITY LIMITED and PORTFOLIO SERVICES LIMITED
And: NORTH BROKEN HILL HOLDINGS LIMITED; LEITH MAURICE JARMAN; RICHARD
LAWRENCE BAILLIEU; FRANCIS MARK BETHWAITE; PETER CHARLES BARNETT; GEOFFREY
WILLIAM FORSTER; COLIN JAMES HARPER; IAN ANDREW RENARD; DAVID ROY STEWART;
PETER HAROLD WADE and RICHARD FLEMING WALCH
No. 23 of 1986
Trade Practices Act s.52

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Burchett J.

CATCHWORDS

Trade Practices Act s.52 - Whether arguments advanced in advertisement responding to take-over announcement are misleading - Statements of opinion - Importance of context - Motion for summary dismissal - Whether shareholders are consumers - Associated jurisdiction under Companies (Acquisition of Shares) (Vic) Code.

Trade Practices Act 1974, s.52

Federal Court Rules, Order 20 r. 2

General Steel Industries Inc. v. Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 C.L.R. 125

Universal Telecasters (Queensland) Ltd. v. Ainsworth Consolidated Industries Ltd. (1983) 5 A.T.P.R. 44,523

Parkdale Custom Built Furniture Proprietary Limited v. Puxu Proprietary Limited [1982] HCA 44; (1982) 149 C.L.R. 191

Global Sportsman Pty. Ltd. v. Mirror Newspapers Pty. Ltd. (1984) 2 F.C.R. 82

Bond Corporation Holdings Ltd. v. Grace Bros. Holdings Ltd. (1983) 8 A.C.L.R. 61

Stack v. Coast Securities (No. 9) Proprietary Limited [1983] HCA 36; (1983) 154 C.L.R. 261

HEARING

SYDNEY
3:3:1986

ORDER

(1) The application be dismissed.

(2) The applicants pay the costs of the respondents, North and its Directors, Leith Maurice Jarman, Richard Lawrence Baillieu, Francis Mark Bethwaite, Peter Charles Barnett, Geoffrey William Forster, Colin James Harper, Ian Andrew Renard, David Roy Stewart, Peter Harold Wade and Richard Fleming Walch.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

This is a motion for summary dismissal of an application.

2. The application in question was filed on 30 January 1986, supported by an affidavit of that date sworn by Gary Hilton Weiss annexing or exhibiting relevant documents. No statement of claim has been filed.

3. The applicants, Industrial Equity Limited ("IEL") and Portfolio Services Limited, seek declarations and orders against North Broken Hill Holdings Limited ("North") and a number of persons being its directors. The dispute arises out of a partial takeover offer by IEL in respect of North. The offer was announced by the Chairman of IEL, Mr. Brierley, on 16 January 1986, when he also released a brochure entitled "The Demerger of North Broken Hill Holdings Limited - The IEL Plan For The Future". On 23 January 1986, advertisements were published, on behalf of North and its directors, in a number of leading newspapers, replying to the brochure. The application of IEL and Portfolio Services Limited, which is a shareholder in North, seeks declarations and orders upon the basis that, by the publication of the advertisement, North and its directors: (1) engaged in conduct that was misleading or deceptive or was likely to mislead or deceive within the meaning of s. 52 of the Trade Practices Act 1974; (2) contravened s. 32 (2) of the Companies (Acquisition of Shares) (Vic) Code; and (3) contravened s. 34 (6) of the Companies (Acquisition of Shares) (Vic) Code.

4. At the hearing of the motion with which these reasons are concerned, it was contended on behalf of North that the affidavit in support of IEL's application disclosed no facts upon which it would be open to the court to find any breach of s. 52 of the Trade Practices Act. It was not in dispute that if IEL's claim under s. 52 is "so clearly untenable that it cannot possibly succeed" (one formulation of the test for striking out a claim as stated by Barwick C.J. in General Steel Industries Inc. v. Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 129 quoted by the Full Court in Universal Telecasters (Queensland) Ltd. v. Ainsworth Consolidated Industries Ltd. (1983) 5 ATPR 44,523 at 44,526), the claims to bring under the associated jurisdiction of this Court allegations of breaches of Companies Code provisions must inevitably fail also, for want of independent jurisdiction.

5. So I turn first to the claims under s. 52 of the Trade Practices Act, bearing in mind the tests laid down in the two cases mentioned, and in The Church of Scientology Inc. v. Woodward [1980] HCA 38; (1983) 154 CLR 25 at 31 and 55 and Dey v. Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 91.

6. The sufficiency of the s.52 claims was argued on the basis of two documents referred to in the affidavit in support of IEL's application, namely, its brochure and North's advertisement. Although Mr. T.E.F. Hughes QC, senior counsel for IEL, wished the case to proceed upon pleadings, he did not contend that the motion could not properly be dealt with as the application stood, nor that there was any critical matter in respect of which the affidavit required to be supplemented. He stated clearly IEL's position when he said:

"We found upon the document ut out by

Industrial Equity, which is in evidence, and
what it discloses to the world with what is
said in the advertisement. They are the
material facts."

And again:

"As to the section 52 claim, the material that
we put before the Court as the basis for
making it, consists in the IEL pamphlet and
the statements in the advertisement. . .".

7. Mr. A. Chernov QC, senior counsel for North, contended that there was no reasonable basis for any argument to sustain any of the allegations made on the basis of those documents.

8. It is accordingly necessary to make some analysis of the brochure Mr. Brierley released on behalf of IEL, and of the advertisement published on behalf of North.

9. The brochure consists of three pages and a cover page, bearing the title I have previously set out. In substance the brochure commences by stating that IEL holds 20% of the capital of North, and is seeking to acquire a further 20% which would "represent an effective measure of control which it is proposed to utilise in the manner set out herein". In block letters the brochure then proceeds:

"THE IEL PROPOSAL IS TO SELL ALL OF (NORTH'S)
ASSETS AND TO PROGRESSIVELY RETURN THE
PROCEEDS TO SHAREHOLDERS. AN ESTIMATED NET
PRESENT VALUE OF $3 TO $3.30 PER SHARE WOULD
BE REALISED IN A 12 TO 18 MONTHS DISPOSAL
PROGRAMME."

The brochure proceeds to assert IEL's belief that North has outlived its usefulness, and should be broken up into its component activities. These are identified as two operating subsidiaries, EZ Industries Limited (EZ) and Associated Pulp & Paper Mills Limited (APPM), the North Broken Hill Mine and an investment portfolio. Some brief comments are made about each of APPM, EZ, a parcel of shares held by North in Alcoa of Australia Limited, and North's holding in Energy Resources of Australia Limited. There is a list, described as "the individual components of (North)", showing book values at 30 June 1985, at the bottom of which appears the statement:

"IEL has undertaken a detailed evaluation of
these holdings for the purpose of a proposed
12 to 18 month programme of disposal.

Individual valuations are not disclosed at
this stage for commercial and strategic
reasons, but our estimate of aggregate
current realisable value is $1.3 billion to
$1.45 billion ($3 to $3.30 per (North)
share)."

10. The brochure concludes as follows (references to NBH are references to North):

"DISTRIBUTIONS TO SHAREHOLDERS

It is proposed that the proceeds from the
realisation of NBH's assets be progressively
returned to shareholders by way of reduction
of capital and other distributions structured
in the most tax effective manner prevailing
at the time.

WHY NBH SHAREHOLDERS MUST ACCEPT THE IEL
OFFER

The IEL offer enables NBH shareholders to
obtain a premium price for at least 25% (and
probably more) of their holdings and to
retain any balance of shares with the
assurance of a positive and attractive policy
for the future of their investment.

The cash offer of $2.50 is very fair relative
to anticipated future realisations and, more
particularly, in comparison with other
alternatives. Based on present performance
and prospects, we believe the current market
value of NBH shares would be less than $2,
other than for IEL purchases and associated
speculative influences in recent months.

If sufficient acceptances are not received to
allow the implementation of "The IEL Plan",
the outlook for the share price will be very
bleak indeed.

IEL proposes a profitable partnership with
NBH shareholders but sufficient acceptances
must be received to guarantee its
implementation.

SUMMARY

. The IEL offer represents a premium price
for NBH in the present adverse metal
market conditions.

. A $3 to $3.30 per share realisation
(present value) is proposed over the next
12 to 18 months.

. The full value of NBH assets will be
returned to shareholders.

. The relisting of APPM and EZ Industries as
independent entities will provide a more
economic and effective operating
environment for these companies.

This plan has been prepared by Industrial
Equity Ltd in conjunction with a proposed
offer to acquire shares in North Broken Hill
Holdings Ltd."

11. The advertisement inserted on behalf of North is a full page advertisement headed with the word "North" followed by the words:

"ADVICE TO SHAREHOLDERS OF
NORTH BROKEN HILL HOLDINGS LIMITED
in relation to the
Proposed Partial Offer by Industrial Equity Limited".

After referring to IEL's offer and proposal to split up North's operations and sell its assets, the advertisement continues:

"NORTH DIRECTORS ADVISE THAT:

. THE PROPOSED OFFER IS TOTALLY INADEQUATE.
. THE PROPOSED OFFER IS PARTIAL ONLY,
LEAVING THE VALUE OF YOUR REMAINING NORTH
SHARES AT RISK.
. IEL IS SEEKING TO DIVERT TO ITSELF FUTURE
GAINS THAT SHOULD PROPERLY FLOW TO ALL
NORTH SHAREHOLDERS.
. IEL'S PROPOSAL TO BREAK UP NORTH IS
MISGUIDED AND POORLY CONCEIVED. IT DOES
NOT ADD VALUE TO NORTH SHAREHOLDERS - IT
DESTROYS VALUE.

This announcement:

. states why North Shareholders should not
accept IEL's proposed Offer, and
. explains why North's PRESENT STRATEGY for
the Company, which is in the process of
implementation offers far more than IEL's
proposal to break up North.
To reject the IEL Offer, simply do not act
upon any document sent to you by IEL.

SHAREHOLDERS ARE ADVISED NOT TO SELL THEIR
SHARES AND TO REJECT THE IEL OFFER."

The advertisement then asserts that North has been vigorously pursuing a strategy of expansion with diversification, that it has made gains in productivity which "leave North poised to take maximum advantage of improvements in metal markets", that a large investment programme has been undertaken in respect of APPM which is making and will make significant gains, and that North "has been pursuing a program of selective disposal of minority investment interests", selling for maximum return and not according to a timetable. The advertisement then proceeds as follows:

"WHY NORTH SHOULD NOT BE BROKEN UP

The proposal by IEL to break up North by
separating the two main operations, Forestry
& Paper and Mining & Smelting, does not add
value to North Shareholders - it destroys
value.

. By their nature, the Mining & Smelting
operations are subject to highly cyclical
earnings. Forestry & Paper operations
provide a stable income stream which
reduces overall earnings volatility.
Their collective contribution maximises
tax effectiveness and borrowing capacity
at minimum cost.

. The existing Group structure ensures
earlier utilisation of present and future
mining tax deductions against profits of
the Forestry & Paper Division with
consequent cash flow advantage.

. The short history of the North Group since
merging with APPM and EZ has shown mutual
benefits. North brought to APPM the
financial strength to invest in improving
competitiveness. Forestry & Paper's
strength is now enabling North to make
substantial capital investments to improve
efficiencies in its Mining & Smelting
operations, despite the trough in base
metal prices.

. North is now a major resource Company with
the financial strength to capitalise on
future growth opportunities for the
benefit of Shareholders. These future
gains will not accrue to Shareholders if
the Company is broken up.

. North's exports of Mining & Smelting
products provide a natural hedge against
foreign currency exposure on Forestry &
Paper imports.

. The merger of North, EZ and APPM has
enabled considerable rationalisation of
Corporate overheads to be achieved over
the past 18 months. Separate head offices
for each company no longer exist. North
operates with a small and efficient Head
Office, the costs of which are more than
offset by savings resulting from Group
purchasing and insurance, and lower
borrowing costs. If the Group was broken
up, central costs would be duplicated with
an adverse effect on total profitability.
Costs would not be 'eliminated' as IEL
would have you believe.

. Greater opportunities for employees exist
in the larger organisation as shown by
former EZ and APPM personnel now occupying
senior management positions in North.
Transfers between operating groups are
beneficial to operations and individuals.

. The costs of refloating the operations of
North would be substantial and would be
borne by North Shareholders. There is no
evidence to support IEL's assertion that
North's component parts are worth more
than the whole.
The IEL Offer and proposal is nothing more
than a paper shuffle providing substantial
gain to IEL at the expense of existing
North Shareholders.

WHY IEL'S OFFER SHOULD BE REJECTED

IEL is seeking to take control of North with
a partial Offer for as little as 25% of each
Shareholder's shares. Once it has gained a
controlling interest IEL plans to break up
North by selling North's assets over the next
12 to 18 months.

North Shareholders are advised NOT TO ACCEPT
the IEL Offer. The offer is unsolicited and
totally inadequate. Acceptance of the Offer
would put at risk rather than increase future
returns to Shareholders. IEL WOULD BENEFIT
BY YOUR ACCEPTANCE AT YOUR EXPENSE.

This advice is based on the following:

. IEL's partial Offer is an attempt to
capitalise on the natural lag between the
restructuring already undertaken and its
positive financial effects by diverting to
itself future gains that should properly
flow to all North Shareholders.

. North's own Strategy for expansion and
optimisation of its Mining & Smelting and
Forestry & Paper operations and sale of
its minority interests is well advanced.
North's Strategy is designed to maximise
Shareholder value.

. IEL's proposal is based on IEL purchasing
some of your shares cheaply and, in
respect of those shares, reaping the
substantial profits that properly belong
to North's Shareholders.

. IEL's proposed Offer is partial only. 75%
of North Shareholders' investment would
depend on IEL's ill-conceived proposal to
break up the Company if its partial Offer
succeeds.

. A partial Offer does not provide the same
value to Shareholders as a full offer
which, at IEL's Offer price, would still
be regarded by North Directors as totally
inadequate.

. What evidence exists that the IEL proposal
would work? North Directors believe it to
be poorly conceived and ill-advised. The
proposal shows a total lack of
understanding of North's businesses and of
the issues associated with any dismantling
of the Group. IEL has advanced no details
of how it would achieve its stated aims.

. IEL's timetable of 12 to 18 months for
dismantling the Company would preclude it
from realising maximum value for the
assets. The significant debt service
costs which IEL would incur would be
likely to force the sale of North's assets
at prices and times which significantly
underrate their worth.

. North's earnings are sensitive to metal
prices and exchange rate movements. The
metals industry is cyclical, but currently
depressed. A return to higher prices will
lift North's earnings with consequent
benefit to its Shareholders.

. The diversified nature of North's
principal operations is a strength, not a
weakness. North operates with a small and
efficient Head Office. The costs are more
than offset by Group savings resulting
from Group purchasing and insurance, lower
borrowing costs and central foreign
currency expertise.

. Adverse tax implications for both North
and its Shareholders are raised by the IEL
proposal. In the case of North as a
company, premature payout of income tax
will result from loss of Group taxation
advantages.

North Shareholders will be disadvantaged
by:

. taxation of the profit on sale of
contributing shares and any fully paid
shares purchased within 12 months prior
to acceptance of the Offer

. the possibility that the distributions
to Shareholders of the proceeds of
asset sales will be taxable, and

. the effect of the new capital gains
tax, which will apply to any shares and
other investments (with minor
exceptions) you may acquire with the
proceeds of disposals of your North
shares or by distributions resulting
from the IEL proposa.

North Directors consider the taxation
implications of IEL's proposed Offer are
sufficiently serious to warrant
Shareholders consulting their own taxation
or financial advisors."

12. At the bottom of the advertisement are the following injunctions:

" DO NOT SELL YOUR NORTH SHARES.
REJECT THE IEL PROPOSAL.

Do not act upon any document sent to you by IEL."

13. The first aspect of the advertisement the subject of complaint in IEL's application is the statement: "IEL is seeking to divert to itself future gains that should properly flow to all North shareholders." Complaint is also made of a repetition of this proposition in more elaborated form in the section dealing with North's own programme of selective disposal of minority investment interests. In that section, the advertisement suggests that North has sold at the most appropriate prices, and will continue its own programme, with particular reference (among others) to interests held in Alcoa of Australia Limited and Energy Resources of Australia Limited. The advertisement states:

"As with prior disposals, sales will only
occur when the price offered reflects the
future earnings potential and asset values of
these investments. This contrasts with the
IEL proposal which envisages sale of all
assets within a 12 to 18 month period.

It is apparent that IEL has recognised
North's progress in implementing its
Strategy."

Immediately following this passage is the repeated statement of which complaint is made:

"IEL's partial Offer is an attempt to
capitalise on the natural lag between the
restructuring already undertaken and its
positive financial effects by diverting to
itself future gains that should properly flow
to all North Shareholders."

Again complaint is made of the further repetition of the same statement which appears in the section headed "Why IEL's Offer Should Be Rejected".

14. Mr. Hughes contended that this statement "implies or infers that (IEL) will appropriate to itself exclusively future gains resulting from the trading activities of (North) at the expense of other shareholders." He pointed out that IEL, if successful in its offer, would own but 40% of the shares. He said:

"What they are saying, on a reasonably
arguable construction of their advertisement,
is that IEL intends improperly to deprive
North shareholders of future profits, or
perhaps capital gains, which would otherwise
accrue to them. That is . . . something that
cannot result from the success of a partial
takeover for a cash consideration. That is
the simple argument. It is either right or
wrong, but it cannot be dismissed as
vexatious or totally unreasonable."

15. It seems to me that the advertisement is not capable of being construed in the manner which this argument would require. The advertisement clearly accepts, indeed asserts, the partial nature of the takeover offer. It contains, for instance, the statement: "IEL's proposal is based on IEL purchasing some of your shares cheaply and, in respect of those shares, reaping the substantial profits that properly belong to North's shareholders." (The application seeks no declaration that this statement is misleading.) The fact that the offer is a partial offer is emphasised in two out of three statements the subject of the particular complaint which I am presently considering. Nowhere in the advertisement is it suggested that IEL would or could in some manner deprive shareholders of their remaining shares or any of the legal rights appertaining to those shares. What is clearly stated about the remaining investment of the North shareholders is that it "would depend on IEL's ill-conceived proposal to break up the Company if its partial offer succeeds." In the context of the advertisement as a whole, the passages complained of are an argumentative opinion about the partial offer. The argument is that North has itself been pursuing a programme of disposal of certain investment assets while expanding its operating interests, that the positive effects of that programme are yet to be fully reaped, and that IEL, in seeking to persuade shareholders to sell some of their shares to it, is attempting to obtain for itself the harvest which those shares will shortly yield. The statement is, of course, expressed in terms intended to make some appeal to the emotions of the shareholders addressed. It suggests that the future gains in question should "properly" flow to them and not be diverted by the sale of their shares to IEL. But s. 52 is not directed at statements which are persuasive; it is concerned with conduct that is misleading or deceptive.

16. Also as Gibbs C.J. said in Parkdale Custom Built Furniture Proprietary Limited v. Puxu Proprietary Limited [1982] HCA 44; (1982) 149 CLR 191 at 199:

"The conduct of a defendant must be viewed as
a whole. It would be wrong to select some
words or act, which, alone, would be likely
to mislead if those words or acts, when
viewed in their context, were not capable of
misleading. It is obvious that where the
conduct complained of consists of words it
would not be right to select some words only
and to ignore others which provided the
context which gave meaning to the particular
words."

The Chief Justice, in the same judgment, drew attention to the class of consumers likely to be affected. In the present case the persons most likely to be affected would be shareholders in a public company, and I do not think they could possibly understand the passages complained of, in their context, as conveying the suggested meaning. If that meaning were derived, by a particular individual, not from those passages in themselves, but from some misconception of his own about company law or some other matter, the passages ought not, for that reason, to be seen as misleading: Parkdale Custom Built Furniture Proprietary Limited v. Puxu Proprietary Limited (supra) at 198-9, 203-4.

17. Furthermore, I do not think the statements in question are capable in their context of being understood otherwise than as statements of a conclusion or opinion about IEL's partial offer. They do not assert some matter of physical observation such as the dimensions of a block of land. The cases have emphasised the limitations upon the use of statements of this kind in proceedings based on a provision such as s. 52. See Bill Acceptance Corporation Ltd. v. GWA Ltd. (1983) 50 ALR 242 at 247, 250; Lyons v. Kern Konstructions (Townsville) Pty. Ltd. (1983) 47 ALR 114 at 123; Western Mail Ltd. v. West Australian Newspapers Ltd. (1985) ATPR 47, 151 at 47, 153; and Steedman & Ors. v. Golden Fleece Petroleum Limited (unreported, Woodward J., 24/12/85). In Global Sportsman Pty. Ltd. v. Mirror Newspapers Pty. Ltd. (1984) 2 FC.R 82 at 88, the joint judgment of Bowen C.J., Lockhart and Fitzgerald JJ. contains the following:

"A statement which involves the state of mind
of the maker ordinarily conveys the meaning
(expressly or by implication) that the maker
of the statement had a particular state of
mind when the statement was made and,
commonly at least, that there was basis for
that state of mind. If the meaning contained
in or conveyed by the statement is false in
that or in any other respect, the making of
the statement will have contravened s.52 (1)
of the Act. . . .

(T) he incorrectness of an opinion (assuming
that can be established) does not of itself
establish that the opinion was not held by
the person who expressed it or that it lacked
any, or any adequate, foundation.

The applicants argued that, nevertheless, the
statement of an incorrect opinion is
misleading or deceptive or likely to mislead
or deceive merely because it misinforms or is
likely to misinform. An expression of
opinion which is identifiable as such conveys
no more than that the opinion expressed is
held and perhaps that there is basis for the
opinion. At least if those conditions are
met, an expression of opinion, however
erroneous, misrepresents nothing."

18. Applying the Full Court's general proposition to the particular circumstances of a debate, conducted by public announcement and advertisement, about a proposed partial takeover of a public company, I do not think s.52 should be construed as evincing a legislative intention to lay down a rule that statements made by way of argumentative opinion in a debate of that kind should, simply because the Court thinks them incorrect, amount to misleading or deceptive conduct, in the absence of evidence that the opinion was not honestly held (cf. Evans v. Crichton-Browne [1981] HCA 14; (1981) 147 CLR 169 at 206-7).

19. The next statement in the advertisement, the subject of complaint, was the statement lastly appearing under the heading "Why North Should Not Be Broken Up", namely, "The IEL Offer and proposal is nothing more than a paper shuffle providing substantial gain to IEL at the expense of existing North Shareholders." This statement is the last sentence in a paragraph, the previous portion of which reads: "The costs of refloating the operations of North would be substantial and would be borne by North Shareholders. There is no evidence to support IEL's assertion that North's component parts are worth more than the whole."

20. As to this, senior counsel for IEL contended that the description "paper shuffle" is not warranted, having regard to the terms of the brochure. It seems to me that on a reading of the statement in the context of the advertisement as a whole, the reference to a "paper shuffle" is just a rhetorical flourish. It is merely a way of saying that IEL's proposal offers nothing new of any substance to North's shareholders.

21. Apart from asserting that the expression is pejorative and not warranted, senior counsel did not suggest any particular representation, of a misleading or deceptive character, which it conveyed. I do not think any such representation, by any process of plausible or implausible interpretation, can be extracted from it. Moreover, the statement complained of is simply another argument presented by the author of the advertisement, in what he presumably considered an attractive form, but which cannot be held to contravene s.52 in the absence of any allegation that the view put forward in it was dishonestly asserted.

22. The next statement complained of is the statement in the same section of the advertisement: "IEL has advanced no details of how it would achieve its stated aims." It is argued that this is plainly misleading, or reasonably capable of being so regarded, because there is in the brochure a very explicit description in detail of the steps that IEL would propose to take to "demerge" the corporate enterprises of North.

23. The single sentence plucked from the advertisement by this complaint provides, in my opinion, a clear example of Gibbs C.J.'s proposition quoted above, that it would be wrong to select some words, which alone would be likely to mislead, if those words, when viewed in their context, were not capable of misleading. Whether a proposal is properly to be characterised as a detailed one, or as one presented without details, is very much a matter of evaluation and opinion. The opinion is likely to depend largely upon what is understood by the word "details", and upon what aspect of the matter it is, concerning which the question is asked whether details have been furnished. It is apparent, on the face of the advertisement, that IEL's proposal involves splitting up the operating businesses of North, and conducting a sale of its assets which IEL envisages will occur within a 12 to 18 month period. The particular statement complained of is the final sentence of a paragraph reading as follows:

"What evidence exists that the IEL proposal
would work? North Directors believe it to be
poorly conceived and ill-advised. The
proposal shows a total lack of understanding
of North's businesses and of the issues
associated with any dismantling of the Group.
IEL has advanced no details of how it would
achieve its stated aims."

In this context, the statement must be regarded as a further argumentative comment upon IEL's proposal. The "stated aims" referred to are the aims stated in the brochure, namely the sale of the component parts of North in a disposal programme over 12 to 18 months for a return equal to $3 to $3.30 per North share, or $1.3 billion to $1.45 billion.

24. It is the fact that the proposal to effect sales of this magnitude, in such a time span, is outlined in three pages of IEL's brochure. No individual values of any of the component parts are stated, and there is no discussion of the factors warranting the fixing of a 12 to 18 months limitation upon the programme of disposal. No particulars are given of the anticipated effect upon the market of public knowledge that a vendor of such substantial assets will have limited itself to such a period. The brochure refers to "appropriate steps", it uses qualifying phrases such as "if a satisfactory price is available", and it makes extremely general statements about the proposed refloating of APPM and EZ. As regards APPM, the proposal is not elaborated to the point of deciding whether the investments in Edwards Dunlop Ltd. and Hardboards Australia Ltd. would be retained within the new APPM structure, and as regards EZ, its present value is stated to be "highly subjective", though it is asserted that IEL believes investors will welcome its re-entry to the sharemarket "particularly if the company's gearing is organised to allow wide margin for unfavourable trading cycles." The brochure concedes that base metal market trends are beyond IEL's control, but this factor is said to be covered by contingencies built into an overall estimate of values, the details of which however are not disclosed.

25. It does not seem to me possible to find, simply upon a comparison of IEL's proposal with the advertisement, that the authors of the advertisement could not honestly have asserted the proposition that IEL has advanced no details of how it would achieve its stated aims. In any case, I do not think it could possibly be held that any person to whom the statement was addressed could reasonably have been misled thereby. It does not stand alone. The immediately preceding sentence refers to "the issues associated with any dismantling of the Group." The next sentence in the advertisement refers to the timetable and its effect upon realisation at maximum values. In such a context, the statement can only fairly be read as asserting that IEL's proposal is presented in generalities which do not permit an accurate assessment of its prospects of successful implementation; at all events it cannot sensibly be understood as denying the existence of any particulars at all of the very kind conveyed by that context (cf. the comments of Sheppard J. in Bond Corporation Holdings Ltd. v. Grace Bros. Holdings Ltd. (1983) 8 ACLR 61 at 71-2).

26. The only other statements complained of under s.52 are "To reject the IEL Offer, simply do not act upon any document sent to you by IEL", and the repetition, at the end, of the same injunction. Senior counsel advanced no argument in support of the allegation that these portions of the advertisement infringe s.52, and I can find no basis on which they could be claimed to do so.

27. I am very conscious that a Court must show the restraint enjoined by the cases I referred to earlier in these reasons, before dismissing a claim as so clearly untenable that it cannot possibly succeed. However, I have felt compelled to the conclusion that this claim is of that character. Accordingly, the motion succeeds and, as it is not suggested there is any better case to be made by the applicants by way of any amendment, the appropriate order is to dismiss the application and to order the applicants to pay the costs of the respondents.

28. There are some matters I should add. First, an argument was raised on behalf of North that, even if the advertisement could otherwise have infringed s.52, it could not do so because it was addressed to North's shareholders who were not relevantly consumers. I think it would be wrong to hold, on this ground, that the applicants do not have a sufficiently tenable case. Senior counsel for IEL pointed out that in Unity Corporation Ltd. & Anor. v. Industrial Equity Limited & Ors. (unreported, Franki J., 19/8/85), unit holders in a unit trust were held to be in a sufficient sense consumers of the services offered by a company seeking appointment as manager of the trust. Franki J. said: "(A) fairly broad interpretation has been given to s.52", and left open the question whether it was actually necessary that the applicants be consumers. See also Global Sportsman Pty. Ltd. v. Mirror Newspapers Pty. Ltd. (supra) at p 86. In Universal Telecasters (Queensland) Ltd. v. Ainsworth Consolidated Industries Ltd. (supra) the Full Court referred to statements in Hornsby Building Information Centre Proprietary Limited v. Sydney Building Information Centre Limited [1978] HCA 11; (1978) 140 CLR 216 and Parkdale Custom Built Furniture Proprietary Limited v. Puxu Proprietary Limited (supra) to the effect that s.52 is concerned with conduct which is deceptive of members of the public as consumers. The Full Court distinguished those decisions as not relating to the kind of commercial activity which, while directed to a section of the public, does not involve the effecting of any sales of goods or services to members of that section of the public. It was not necessary in that case for the Full Court to state a definitive principle, but the views expressed make it clear that I ought not, on this ground, to accede to the motion. At the least, they suggest that the boundaries of the territory within which s.52 operates have not been finally drawn, and important questions of construction remain to be resolved: cf. the remarks of Lockhart J. in Hanimex Pty. Ltd. v. Kodak (Australasia) Pty. Ltd. (1982) 4 ATPR 43,593 at 43,599.

29. It was also submitted, on behalf of North, that even if I did not rule in its favour upon the claims under s.52, I should dismiss those which are reliant upon s.37 (2) and s.44 (6) of the Companies (Acquisition of Shares) (Vic) Code, either as not sufficiently connected with the federal claim to sustain the jurisdiction of this Court, or in the exercise of the discretion of the Court to decline jurisdiction with respect to non-federal claims. If I had not reached the conclusions which I have already stated, I would not have acceded to this submission. I would in that event have regarded the non-federal claims, which arise out of the same advertisement, as aspects of a single justiciable controversy of which the federal issues form an integral part, and which might conveniently have been determined in the one proceeding (see Stack v. Coast Securities (No. 9) Proprietary Limited [1983] HCA 36; (1983) 154 CLR 261).

30. In the result, I dismiss the Application, and order the Applicants to pay the costs of the Respondents North and its directors.