Perseverance Co Ltd v Australian Securities & Investments Commission [1999] FCA 98 (2 February 1999)

Last Updated: 17 February 1999

CATEGORY: NO QUESTION OF PRINCIPLE

FEDERAL COURT OF AUSTRALIA

Perseverance Co Ltd v Australian Securities & Investments Commission

[1999] FCA 98

CORPORATIONS - takeover offer - failure to lodge Part D statement with the Australian Securities and Investments Commission within the time fixed by s 683(4) of the Corporations Law - whether contravention should be excused

Corporations Law ss 683(4) and 743(1)

PERSEVERANCE CO LTD V AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION AND MELBOURNE SQUARE PTY LTD

NO V 3035 OF 1999

JUDGE: FINKELSTEIN J

PLACE: MELBOURNE

DATE: 2 FEBRUARY 1999

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 3035 OF 1999

BETWEEN:	PERSEVERANCE CO LTD Applicant
AND:	AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION and MELBOURNE SQUARE PTY LTD Respondents
JUDGE:	FINKELSTEIN J
DATE OF ORDER:	2 FEBRUARY 1999
WHERE MADE:	MELBOURNE

THE COURT DECLARES THAT:

1. The applicant's contravention of s 683(4) of the Corporations Law in failing to lodge its Part D statement dated 31 December 1998 with the ASIC on 31 December 1998 be excused.

2. The applicant's Part D statement dated 31 December 1998 is not invalid by reason of the said contravention and has effect, and at all times has had effect, as if there had been no such contravention.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 3035 OF 1999

BETWEEN:	PERSEVERANCE CO LTD Applicant
AND:	AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION and MELBOURNE SQUARE PTY LTD Respondents

JUDGE:	FINKELSTEIN J
DATE:	2 FEBRUARY 1999
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1 On 18 December 1998, Melbourne Square Pty Ltd (Melbourne Square) by its broker, E L and C Baillieu Stockbroking Ltd, made an announcement that, for a period of one month beginning the first trading day fourteen days after the announcement, the broker would acquire on behalf of Melbourne Square at a price of 30 cents per share all the fully-paid ordinary shares in Perseverance Corporation Ltd (Perseverance). The announcement was made at an official meeting of the Australian Stock Exchange. By s 675 of the Corporations Law that offer may be accepted by shareholders at an official meeting of the Australian Stock Exchange, or in certain specified circumstances, by notice served on the company's home exchange.

2 Section 679(1) of the Corporations Law required Melbourne Square to serve a Part C statement relating to its offer on Perseverance, serve a copy of the statement on the Australian Stock Exchange and lodge a copy of the statement with the Australian Securities and Investments Commission (ASIC). Each of those obligations was satisfied.

3 The purpose of a Part C statement is to provide shareholders in a target company with information that will enable them to better determine whether they should accept or reject the offer that has been made for their shares. The requirements of a Part C statement are set out in s 750.

4 On receipt of the Part C statement (it was received on 18 December 1998) Perseverance was required to serve a Part D statement on the Australian Stock Exchange, lodge a copy of the statement with the ASIC and give a copy to Melbourne Square within 14 days of the announcement of the offer: see s 683(1) and s 683(4). The purpose of a Part D statement is to provide shareholders with further information, this time from the point of view of the target company, on which to base their decision whether to accept or reject the offer that has been made for their shares.

5 In accordance with s 683(1) and s 683(4), Perseverance served its Part D statement on the Australian Stock Exchange and sent a copy to Melbourne Square. Also on 4 January 1999 a copy of the Part D statement was sent to all the shareholders of Perseverance. However, Perseverance did not lodge a copy of the statement with the ASIC. The reason for this failure was that the company's solicitors had inadvertently failed to advise their client of the requirement. Immediately upon realising that the statement had not been lodged with the ASIC, the position was regularised. This occurred on 28 January 1999.

6 Perseverance now applies for an order that its contravention of s 683(4) be excused and that it be declared that the Part D statement is not to be regarded as invalid by reason of the contravention. The application is made under s 743(1) which permits the making of such orders if "in all the circumstances the contravention ought to be excused".

7 In my view, the orders sought should be made for the following reasons. First, the contravention was not deliberate. If the company had been advised that the Part D statement was required to be lodged with the ASIC, it is clear that it would have done so within time. Secondly, I do not believe that any prejudice has been occasioned to any person by reason of the failure to lodge the document with the ASIC. The offeror had been provided with a copy of the statement as had the Australian Stock Exchange and the company's shareholders. Thus, all shareholders and their advisers had access to the information contained in the Part D statement and the shareholders were in a position either to decide for themselves or receive advice on issues relating to the offer that had been made. Thirdly, no useful purpose would be served if the company is left in default under s 683(4). Finally, the ASIC does not oppose the application, it being satisfied that no harm has been caused in consequence of the contravention.

I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein

Associate:

Dated: 2 February 1999

Counsel for the Applicant:	Mr P Bick QC
Solicitor for the Applicant:	Dunhill Madden Butler
Counsel for the First Respondent:	Mr P Hiland
Solicitor for the First Respondent:	Australian Securities and Investments Commission
Date of Hearing:	2 February 1999
Date of Judgment:	2 February 1999