National Exchange Pty Ltd v Australian Securities and Investments Commission

In the case of National Exchange Pty Ltd v Australian Securities and Investments Commission, the Court was asked to determine whether the conduct of National Exchange in issuing offers to purchase shares in Onesteel Ltd contravened the misleading or deceptive conduct provisions of the Corporations Act 2001 (Cth). ASIC alleged that the offers, which proposed to pay two dollars per share but required payment to be made in fifteen annual instalments, were misleading and deceptive. The Court had to decide if this conduct was misleading or deceptive or likely to mislead or deceive, as defined in the Act.

The primary legal issue was whether the two dollar offers issued by National Exchange were misleading or deceptive. The Court considered whether the offers were likely to mislead or deceive an ordinary or reasonable member of the class, as per the principles established in Campomar Sociedad Limitada v Nike International Ltd. The Court examined the evidence of shareholders who had reacted to the offers, including those who were confused or misled by the deferred payment terms.

The Court found that the offers were indeed misleading or deceptive as they created a false impression that the full purchase price would be paid upon acceptance, whereas it would be paid in instalments over fifteen years. This conclusion was based on the objective assessment of the likely reactions of ordinary or reasonable shareholders, who would expect immediate payment upon acceptance of the offer. The Court held that the deferred payment terms were significant enough to mislead or deceive the average shareholder, thereby breaching the statutory provisions.

The appeal by National Exchange and the cross-appeal by ASIC were both dismissed. The Court upheld the primary judge's findings that the two dollar offers were misleading or deceptive. The Court ordered that National Exchange and Mr Tweed pay ASIC's costs of the appeal, while ASIC was ordered to pay the costs of the cross-appeal to National Exchange and Mr Tweed.