Burmine Ltd v Mount Edon Gold Mines (Aust) Ltd (ACN 009 138 523)

[1993] FCA 768

JUDGMENT No. ........ ..,. 7 6 8 , 93 , .... , ,,,,

IN THE FEDERAL COURT OF AUSTRALIA )	NO. VG 3302 of 1993
VICTORIA DISTRICT REGISTRY	)
GENERAL DIVISION	1

IN THE MATTER of CHAPTER 6 OF THE CORPORATIONS LAW

BETWEEN: BURMINE LIMITED

(ACN 008 054 546)

Applicant

MOUNT EDON GOLD MINES (AUSTI LIMITED

(ACN 009 138 523)

Respondent

MINUTES OF ORDERS

JUDGE MAKING ORDER:	Drummond J
DATE OF ORDER:	15 October, 1993
WHERE MADE:	Melbourne

UPON the undertaking as to damages given by the applicant by its counsel, THE COURT ORDERS THAT:

1.        The respondent whether by itself, its servants or agents or otherwise is restrained from:

proceeding or further order.

(a)	making offers to acquire shares in the applicant being offers in relation to which a statement dated 24 September, 1993 purporting to be a Part A statement was served on the applicant on 29 September, 1993; and
(b)	sending to the holders of ordinary shares in the applicant:

(i)   any such offers; and

(ii)  any copy of the said statement purporting to be a Part A statement,

until the hearing and determination of this

THE COURT ORDERS THAT:

1. The costs of today will be reserved to the trial judge.

THE COURT ORDERS, BY CONSENT. THAT:

1. The directions hearing in the action be adjourned to a date to be fixed.

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

IN THE FEDERAL COURT OF AUSTRALIA )	No. VG 3302 of 1993
VICTORIA DISTRICT REGISTRY	1
GENERAL DIVISION	1

IN THE MATTER of CHAPTER 6 OF THE CORPORATIONS LAW

BETWEEN: BURMINE LIMITED

(ACN 008 054 546)

Applicant

AND :  MOUNT EDON GOLD MINES 1AUST) LIMITED
(ACN 009 138 523)

Respondent

Coram:	Drummond J
Date:	15 October, 1993

Place: Melbourne

EX TEMPORE REASONS FOR JUDGMENT

This is an application for an interlocutory

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injunction to restrain the despatch by the respondent to shareholders in the applicant of an offer in the form of a Part A statement to acquire their shares in the applicant.

respondent's offer is in a number of respects misleading and	The ground on which the injunction is sought is that the
in contravention of S. 52 of the Trade Practices Act 1974 and in contravention of ss. 704 and 995 of the Corporations Law. It is also said that the deficiencies in the respondent's offer constitute infringements of certain of
the requirements of S. 750 of the Law.

The proceedings being for interlocutory relief, I have first to determine whether the applicant has made out an arguable case in any of these respects. The respondent's offer is, subject to certain conditions, to acquire the shares in the applicant for a cash payment of $2.30 plus one of the respondent's options for each of the applicant's shares. The conditions are set out in clause 7 of the offex document. In its solicitor's letter of 11 October last, the applicant referred to what it claimed were numerous deficiencies in the respondent's offer documents. The respondent rejected these complaints. The applicant commenced proceedings on Wednesday,

13 October last.

Later that day it served material on the respondent, which, in addition to repeating its original complaints,

referred to a further deficiency. In clause 12 of its Part A

document the respondent set out, as it was bound to do,

information within its knowledge relevant to an assessment of

its offer concerning the applicant's financial position. The

respondent there referred to the applicant's April quarterly

report as the most recent report available to it. However,	I
the further deficiency the applicant raised on Wednesday was
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the absence of any reference to the applicant's report for the quarter ending 31 July, 1993.
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That report disclosed a 44 per cent increase in gold production over the previous quarter, with reduced production	I
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costs and other information that would, as counsel for the

respondent put it, be likely to cause the applicant shareholders to retain rather than sell their shares. So obviously relevant is this material to an assessment of both the cash and option elements of the respondent's offer that the respondent's counsel did not seek to dispute that, if known to the respondent when it prepared its Part A documents, it should have made reference therein to that information.

In the affidavit of its managing director Mr. Brennan, which the respondent produced at the start of yesterday's hearing, and which I ultimately gave the respondent leave to file and read, over the applicant's objection that Mr. Brennan who lives in Perth should attend for cross-examination, the respondent dealt with this matter of the July quarterly report in this way. Mr. Brennan, after referring to an affidavit sworn by Mr. Kaczmarek on behalf of the applicant, said:

"Mr. Kaczmarek deposes to the fact that no reference is made in clause 12.2 of the respondent's Part A

Statement to the Applicant's Quarterly Report for	the period ending 31 July 1993, which was (according
to Mr. Kaczmarek's affidavit) released to the Australian Stock Exchange on 31 August 1993. I am informed by Neil Christian Fearis, a partner in Blake Dawson Waldron, the Respondent's solicitors, and verily believe that on 17 September 1993 he caused a search to be made of the Applicant's file at the Australian Stock Exchange, and there was no Quarterly Report for the period ending 31 July 1993 on that file.
On 5 October 1993 I was informed by Mark Jenkins of Porter Weston Limited, a Member Organisation of the Australian Stock Exchange, and verily believe that the Applicant's Quarterly Report for the period ended 31 July 1993 had been released to the Australian Stock Exchange on that day - some 11 days after the Respondent's Part A Statement had been signed and lodged with the Australian Securities
Commission. "

Although Mr. Brennan in his affidavit deals at some length with what he claims to be the non-availability to the respondent of the applicant's July quarterly report prior to lodgment of the respondent's Part A document with the Australian Securities Commission ("ASC"), he does not mention whether the respondent was aware of its significant contents even though it may not have then had a copy of the report itself in its possession. The court was thus invited to accept, by what Mr. Brennan had to say, that the respondent could not have had access to this report until after its Part A statement had been finalised and lodged with the ASC. It was also thereby invited to infer that the respondent was then unaware of the important information contained in this report to which I have referred.

However, Mr. Kaczmarek in his further affidavit

which I gave the applicant leave to file and read towards the

well before the respondent prepared its offer documents, the	end of argument yesterday, give evidence that indicated that
respondent was- in possession of the relevant and important information in the applicant's July quarterly report because it, along with all other shareholders, had been sent in early September a letter from the applicant in the following terms.

"Please find enclosed the Highlights of the Burmine Second Quarterly Report. Shareholders wishing to receive a copy of the complete report should contact [and then various officers of the applicant are named] at the Company's Perth office."

The document accompanying this letter set out the information to which I have referred. Having taking instructions, counsel for the respondent did not seek an opportunity to put in evidence challenging what appears from Mr Kaczmarek's latest af f idavit. Nor, as I have said, did he advance any argument in answer to the contentions of the applicant as to the significance of the omission of this information from the respondent's Part A documents. At best for the respondent, the applicant has an arguable case that there is a dispute of fact as to whether the respondent had significant information in its possession which, if it had, should have been disclosed in its Part A document.

However, on the state of the evidence before me, I consider that the applicant has an arguable case that the Part A documents are deficient and do not meet the requirements of section 750 and contravene section 704 and 995

of the Corporations Law because they fail to disclose relevant

and significant information concerning the applicant's
financial position that was in the respondent's possession
prior to preparation of its Part A documents. This being so,
and there being no dispute that the balance of convenience
favours the grant of the relief sought, the application
succeeds.

Having regard to the course proceedings before me took and to the conclusion I have reached concerning the omission of reference to the July quarterly report information, I do not propose to deal with the other complaints of the alleged defects in the respondent's material.

By consent, I will order that the directions hearing

in the action be adjourned to a date to be fixed.

I certify that this and the preceding
five pages are a true copy of the
reasons for judgment herein of the

Honourable Mr. Justice Drummond.

Associate: L- ' p L-

Date:  15 October, 1993