Chapmans Ltd v Australian Stock Exchange

[1995] FCA 472

CATCHWORDS

CORPORATIONS - Stock Exchange - application to Stock Exchange for listing - construction of contract - terms of contract - identification of contract documents - whether contract documents included Articles of Association of respondent

Kwikasair Industries Ltd v Sydney Stock Exchange Ltd (1968) ASLC 30,701

CHAPMANS LIMITED v AUSTRALIAN STOCK EXCHANGE

No. NG 20 of 1994

BEAUMONT J

SYDNEY

26 JUNE 1995

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
NEW SOUTH WALES DISTRICT REGISTRY  )    No.  NG 20 of 1994
  )
GENERAL DIVISION                 )

BETWEEN:CHAPMANS LIMITED

Applicant

ANDAUSTRALIAN STOCK EXCHANGE LIMITED

Respondent

CORAM:    Beaumont J.

DATE:     26 June 1995

MINUTES OF ORDER

THE COURT ORDERS that the question reserved be answered as follows:

Q."Was there a contract between the parties as alleged by either of the parties in their pleadings respectively ?"

A."The contract documents consisted of the following;

1.The original application to the Sydney Stock Exchange signed by the applicant dated 15 April 1950 and the associated documentation, as described in the reasons for judgment;

2.The forms of application for official quotation of additional securities executed by the applicant in 1980, 1981 and 1982 described in the reasons for judgment;

3.The respondent's Listing Requirements or Listing Rules from time to time."

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

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
NEW SOUTH WALES DISTRICT REGISTRY  )    No.  NG 20 of 1994
  )
GENERAL DIVISION                 )

BETWEEN:CHAPMANS LIMITED

Applicant

ANDAUSTRALIAN STOCK EXCHANGE LIMITED

Respondent

CORAM:    Beaumont J.

DATE:     26 June 1995

REASONS FOR JUDGMENT (No. 2)

By consent of the parties, I have set aside a further two preliminary questions for separate determination. 
         The questions are as follows:

1. Was there a contract between the parties as alleged by either of the parties in their pleadings respectively?

1. If so, what were the terms of that contract?

I have heard argument on the first question and  propose to answer the question, for the reasons which I will now give, as follows. 

The contract between the parties was in writing and was evidenced by three categories of documents which I will indicate shortly.  However, in my opinion, the contract documents did not include the Articles of Association of the respondent, again for reasons which I will give shortly.

During the course of the hearing, it emerged that the parties were in agreement that the contract between them was in writing and that the spirit and intent of the first question was to require the court to identify what were, in effect, the contract documents. 

In my reasons for judgment dated 8 July 1994, in dealing with an objection to the competency of the principal proceedings in the matter, I described the general nature of the case sought to be made by the applicant in its application and statement of claim as they then stood.  By a further amended statement of claim, filed on 8 February 1995, the applicant has in the light of my earlier judgment, but without prejudice to its rights of appeal, now sought to make a case which, so far as presently material, is anchored in a claim in which the cause of action alleged is breach of contract.  However, there are other allegations in the further amended statement of claim which provide a background and a context to the contractual claim now advanced and to which reference should be made. 

In para 4 of the further amended statement of claim it is intended that the applicant was admitted to the Official List of the respondent (which was then known as the Sydney Stock Exchange Limited), pursuant to an agreement with the respondent dated April 1950.  The terms of that agreement are then pleaded, in part, in para 5 of the further amended statement of claim, including a term that it was agreed with the Committee of the Sydney Stock Exchange Limited that the applicant should remain on the Official List subject to the pleasure of the Committee.

The allegations made in paras 4 and 5 are in substance now common ground between the parties.  In para 6 of the further amended statement of claim, reference is made to section 36L(2) of the Securities Industry Code which, in essence, novated the listing agreement in favour of the respondent in substitution for the Sydney Stock Exchange Limited as a party to that agreement.  Again, this allegation is common ground.  It is now also common ground between the parties that their contract was in writing, and if one puts apart for the moment the question of the relevance, if any, of the respondent's Articles of Association, there is really no longer any serious dispute between the parties as to the identification of the contract documents.

The first category of contract documents consists of the original Application to The Sydney Stock Exchange dated 15 April 1950, and associated documentation.  There is in evidence an Application by the applicant to the Sydney Stock Exchange, dated 15 April 1950, signed by the chairman of the applicant and its secretary, seeking official quotation of the company's ordinary shares and its preference shares.  Amongst other things the application for admission contained the following statement:

"We agree that the Company shall remain on the Official List subject to the pleasure of the Committee of the Stock Exchange."

Also in evidence is a document dated 18 April 1950, signed by the chairman of the applicant, another director and the secretary of the applicant, headed "Australian Associated Stock Exchanges, Agreement to be made Part of Application for Official Listing."  In this document the applicant states the following, inter alia:

"In consideration of the official listing on The Sydney Stock Exchange of the securities covered by this application ... [The Applicant] agrees with the Committee of such Stock Exchange that the company shall remain on the Official List, subject to the pleasure of the Committee".

A number of conditions are then set out including,as the final condition, the following:

"24.To comply within a reasonable time with such further Requirements as may, subsequent to the Company's Listing, be promulgated by The Stock Exchange as a general Requirement for new Listings or, failing compliance with any such new requirement, to request The Stock Exchange to de-list the Company."

There is also in evidence a minute of a meeting of the Committee of the Sydney Exchange held on 17 April 1950 acknowledging the present application.  There is further in evidence a minute of a meeting of the Committee held on 1 May 1950 in which it is stated that the applicant had been added to the Official List.

The second category of contract documents consists of several forms of Application for Official Quotation of additional securities executed by the applicant in 1980, 1981 and 1982.  For instance, by a letter written by the applicant dated 26 September 1980, the applicant applied for the Official Quotation of additional securities.  In that form of application the following was stated:

"The company warrants ... and acknowledges and agrees that, subject to those securities being granted Official Quotation, retention of the company on the Official Lists of the aforesaid Exchanges and retention of Official Quotation for those securities and all other presently quoted securities will be at the absolute discretion (without qualification whatsoever) of the aforesaid Exchanges and that in particular (but without restricting the generality of the foregoing) removal from those Official Lists or withdrawal of Official Quotation may, at the absolute discretion of the Exchanges, take place, if the Company becomes unable or unwilling or in any respect fails to comply with the Listing Requirements of the Australian Associated Stock Exchanges for the time being in force or if the Exchanges, in their absolute discretion, think fit."

There were other applications, relevantly in the same terms, dated 24 July 1980, 29 July 1981 and 26 September 1982.
         The third category of contract documents consist of the respondent's Listing Requirements or Listing Rules from time to time.  Reference has previously been made to the provisions of para 24 of the agreement made as part of the application for an Official Listing, which referred to "General Requirement for new Listings".  There has been received into evidence as Ex 2 the respondent's Official Listing Rules, amended as of 1 July 1993.  The Foreword to those rules explains their objective and purpose and states the following:

"The Main Board Listing Rules that follow are additional and complementary to companies' common law and statutory obligations.  The Rules impose strict requirements on companies which, if not complied with, render them liable to removal from the Official List and the securities to lose Official Quotation."

It seems clear that there is no difference, either as a matter of form or substance, between the Listing Requirements and the Listing Rules, so that Ex 2 should be treated as the General Requirements of the respondent for the purposes of para 24 of the 1950 agreement.

As has been noted, the only real matter of contention in this area is the respondent's Articles of Association. 

In this connection I was referred to the observations made by Street J in Kwikasair Industries Ltd v The Sydney Stock Exchange Ltd (1968) ASLC 30,701 at 30,707-8.   I would readily accept that it would always be open to a court to infer that an article such as Article 74 of the respondent's Articles of Association could be incorporated by reference, or otherwise picked up, as part of a contractual arrangement between an exchange and a listed corporation.
         Article 74 provides as follows:

"OFFICIAL LIST

74.(1)  The official list of the Exchange shall consist of the corporations of other entities which have been admitted to the official list of the Exchange and have not been removed from the official list.

(2)The official list of second board companies of the Exchange shall consist of the corporations or other entities which have been admitted to the official list of second board companies of the Exchange and have not been removed from the official list of second board companies.

(3) The list of corporations or other entities comprising the official list of second board companies of a State Subsidiary shall not form part of the official list of the Exchange.

(4)(a) The admission of corporations or other entities to the official list or the official list of second board companies shall, except as determinied by the Board, be upon application in such form and on such terms and conditions (whether before or after admission) as the Board shall from time to time determine.

(b)The Board shall have power to remove any corporations or other entities from the official list or the official list of second board companies.

(5)(a)The Board may grant official quotation of the Securities of corporations or other entities which have been admitted to the official list or the official list of second board companies and may suspend official quotation of such Securities for any period.

(b)The suspension of any Securities from official quotation shall not constitute the removal from the official list or the oficial list of second board companies of the
corporations or other entities which issued the suspended Securities.

(6) Any decision by the Board to admit a corporation or other entity to the official list or the official list of second board companies, to remove a corporation or other entity from the official list or the official list of second board companies, to admit any Securities to official quotation or to suspend any Securities from official quotation may be made by the Board at any time in its discretion without assigning any grounds or reasons therefor and its decision shall be final and conclusive.

(7) In this Article, the expression "corporations or other entities" includes any unincorporated body or association or any institution or trust or government or governmental or semi-government authority, instrumentality or agency."

The difficulty I have in principle in accepting that such an article can by force of law and independently of the particular circumstances of the case, become incorporated as a term of the contract between the exchange and the corporation is not one that I need resolve in the present case. 

It is clear and indeed acknowledged, that the terms of Article 74 are in all essential respects to the same effect as the other documentation which constitutes the contract documents in this case.  For those reasons I answer the first question by holding that the contract documents consisted of the classes of written material previously described.

I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Beaumont.

Associate

Dated26 June 1995

Counsel and Solicitors      Mr E Strasser instructed by

for applicant:              Rummery Glynn Chaffey

Counsel and Solicitors      Mr J Hilton SC with Mr T Castle

for respondent:             instructed by Allen Allen & Hemsley

Date of hearing:            26 June 1995

Date of Judgment delivered:  26 June 1995