Pinnacle VRB Ltd v Reliable Power Inc - [2001] VSC 262

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

CORPORATIONS LIST

No. 6822 of 2001

PINNACLE VRB LTD	Plaintiff
v
RELIABLE POWER INC	Defendant

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JUDGE:	Mandie J
WHERE HELD:	Melbourne
DATE OF HEARING:	27, 30 July 2001
DATE OF JUDGMENT:	30 July 2001
CASE MAY BE CITED AS:	Pinnacle VRB Ltd v Reliable Power Inc
MEDIUM NEUTRAL CITATION:	[2001] VSC 262	Revised 1 August 2001

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Corporations—off-market takeover bid—whether purported extension of offer period an invalid variation of offer under Corporations Act 2001, ss. 650A(1) and 650C—whether required notices given to offerees after expiry of the offer period—whether "give" in Corporations Act, s. 650D(1)(c), means "send" or "serve"—whether ss. 1322 and 1325D of the Corporations Act are available to cure any such invalid variation of offer or excuse the "contravention"–whether an extension of time which permits the giving of notices beyond the expiry of the offer period can and, if so, should be granted under s. 1322(4)(d) of the Corporations Act.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N. O’Bryan SC with Mr B. Quinn	Minter Ellison
For the Defendant	Mr A. Archibald QC with Mr R. Strong	NM Taylor
For the Australian Securities and Investment Commission	Mr G. Bloch	ASIC

HIS HONOUR:

The plaintiff (Pinnacle) is a listed public company. The defendant (Reliable) is a company registered in Delaware in the United States of America. On 22 January 2001, Reliable announced on the ASX that it intended to make an off-market cash takeover bid for all ordinary shares in Pinnacle at no less than 55 cents per share conditional upon a minimum acceptance of 51 per cent and upon a number of other conditions.

A Bidder's statement was lodged on 5 March 2001 and on 20 March 2001 Reliable made such a cash offer at 65 cents per share, the offer to expire at 7.30 p.m. on Tuesday 22 May 2001 unless withdrawn or extended. On or about 14 May 2001, Reliable extended the offer period until 7.30 p.m. on 10 July 2001. Reliable has since purported to extend the offer period again and it is that extension which is challenged by Pinnacle in this proceeding.

Pinnacle seeks by a proceeding commenced on 20 July 2001 declarations that Reliable's offer lapsed at 7.30 p.m. on 10 July 2001 and that Reliable failed to comply with ss.650C and 650D of the Corporations Act 2001 when attempting to extend its offer. Reliable denies that its extension of offer was invalid but, in the alternative, relies upon ss.1322(4) and 1325D of the Act and seeks an extension of time or to have any invalidity cured or any contravention excused.

On Friday 6 July 2001, Reliable lodged with ASIC a notice of extension purporting to extend the offer period until 7.30 p.m. on Tuesday 21 August 2001. Thereafter on the same day the notice was given to Pinnacle. Notices were not dispatched to shareholders before Tuesday 10 July 2001. It cannot be disputed, on the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] VSC 262
Decision Date: 30 July 2001

CaseChat Overview and Summary

The case of Pinnacle VRB Ltd v Reliable Power Inc involved a dispute over an off-market takeover bid. Reliable Power, the bidder, had made an offer to acquire shares in Pinnacle VRB, the target company. The crux of the dispute was whether Reliable Power’s purported extension of the offer period constituted an invalid variation of the offer, and whether the required notices were given to the offerees after the offer period expired. Additionally, the court had to determine the interpretation of the term "give" in the context of Corporations Act 2001, s. 650D(1)(c), and whether certain sections of the Corporations Act could be used to cure any invalid variation of the offer or to excuse any contravention.

The court addressed several legal issues, including whether the purported extension of the offer period was an invalid variation of the offer under Corporations Act 2001, ss. 650A(1) and 650C. It was necessary to determine whether the required notices were provided to the offerees after the offer period had expired. The interpretation of the term "give" in s. 650D(1)(c) was also scrutinised to understand whether it meant "send" or "serve." Furthermore, the court examined whether sections 1322 and 1325D of the Corporations Act could be used to cure any invalid variation of the offer or to excuse the contravention. Finally, the court considered whether an extension of time, allowing for the giving of notices beyond the expiry of the offer period, could be granted under s. 1322(4)(d) of the Corporations Act.

The court concluded that the extension of the offer period by Reliable Power was indeed an invalid variation of the offer under the Corporations Act. It found that the required notices were not given to the offerees after the offer period expired, thereby breaching the Act. The term "give" in s. 650D(1)(c) was interpreted to mean "serve," which Reliable Power had failed to do. Although sections 1322 and 1325D of the Corporations Act provide mechanisms for curing certain breaches, the court found that these sections did not apply to the circumstances of this case. The court also determined that an extension of time under s. 1322(4)(d) of the Corporations Act was not appropriate, given the nature of the invalid variation and the failure to provide the necessary notices.

The final orders of the court reflected its findings. It declared that the extension of the offer period was invalid and that Reliable Power had contravened the Corporations Act. The court also ruled that Reliable Power was liable to compensate Pinnacle VRB for any losses incurred due to the invalid variation and the failure to provide the required notices. Additionally, the court ordered that Reliable Power take all necessary steps to ensure compliance with the Corporations Act in future dealings.

Orders