Stirling Resources Nl v Capital Energy Nl (No 2)

[1996] FCA 248

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
NEW SOUTH WALES DISTRICT REGISTRY  )     No NG 3201 of 1996
  )
GENERAL DIVISION                  )

BETWEEN:STIRLING RESOURCES NL

Applicant

AND:CAPITAL ENERGY NL

Respondent

CORAM:    HILL J
PLACE:    SYDNEY
DATED:    3 APRIL 1996

NUMBER 2 JUDGMENT OF 3 APRIL 1996

REASONS FOR JUDGMENT

Following orders I made on 1 April 1996 continuing an injunction granted by Finn J, Capital Energy NL ("Capital") has approached the Australian Securities Commission for exemption under s728 of the Corporations Law ("the Law")in respect of the matters which are now the subject of a judgment delivered by me this afternoon.  The exemption granted by the Commission is an exemption from the requirement that there be complete identicality between the offers actually made and those registered with the Commission.

A document of the Commission sets as a condition of granting the exemption the requirement that the offers dispatched include in the offers and copies of Part A Statements respectively, the changes specified in Schedule D. There is some ambiguity but I think that is the preferable construction.  On this basis it would be necessary to comply
with the conditions of the Commission that there be an alteration of the actual documents transmitted to shareholders.

I have been asked to lift the injunction in the circumstances of the Commission granting the exemption, but in circumstances where Capital are not able to undertake that they will include in the offers and Part A Statements dispatched the respective changes.  They recognise that it may be necessary to go back to the Commission to get a further variation in more precise terms, excluding them from the requirement to actually vary the documents and instead setting as a condition, and a sole condition, the matter referred to in paraE, namely, that they set out a covering letter dealing with the variation.  I am not prepared to lift the injunction conditional upon some document being given which may or may not ultimately be satisfactory.

The second matter complained of by Stirling Resources NL ("Stirling") was that a minimum acceptance condition was subject to advice by Silksafe Pty Limited ("Silksafe"), that in the absence of a higher takeover offer that company intended to accept Capital's offer for its shares in Stirling as soon as practicable following receipt of the offer.

Counsel for Stirling submits that the result of forwarding the letter of additional information would be that there would be a breach of s662(2)(b) of the Law. Indeed, the breach is really said to arise out of the fact that because Silksafe can exercise thirteen percent, or influence the acceptance of the offer by thirteen percent, of shareholders that there is a defeating condition, the fulfilment of which depends upon the happening of a particular event, namely the acceptance by Silksafe, so that the offers, if sent out, would be void.

No doubt there may be some argument arising out of s662 of the Law but it does not seem to me at the moment that Stirling has made out an arguable case for a breach of s662. The offer is subject to one condition and one condition alone, that is to say, acceptance by thirty percent of shareholders unless waived. Fulfilment of that condition is not dependent upon either an act of Capital or an act of Silksafe. So as far as I can see s662(2) has no application.

The final matter put by counsel for Stirling concerned the alteration to cl18 by eliminating the words "it is the intention of Capital that if the takeover scheme is successful and Capital's nominees constitute the majority of directors on the board of Stirling".  It is said that if this alteration were made, cl18 would then not set out what the intentions would be in the event that Capital did not end up
with control of Stirling.  It was said that it would be necessary for Capital to advise whether it would remain as a passive shareholder or what other steps it might take.

Again I do not think that, if the amendment is made to cl18 as suggested, the Part A Statement in cl18 is in any way misleading or may cause shareholders to be misled.  It is clear that as written with the appropriate alteration the clause sets out the intentions that Capital has so far as they are able to be achieved and it is not necessary for a clause such as cl18 to deal with every possible alternative.

It follows that I would not lift the injunction at this stage but I would reserve liberty to apply in the event that there is some further document obtained from the Commission which permits the offers to be dispatched in the form they are, albeit with an expansion memorandum indicating the way those offers are to be read.  I express no view as to whether that is possible under the Code.

I certify that this and the
preceding three (3) pages
are a true copy of the Reasons
for Judgment herein of his Honour
Justice Hill.

Associate:

Date:  17 April 1996

Counsel and Solicitors      SD Rares SC with VF Kerr

for Applicant:              instructed by Hunt & Hunt

Counsel and Solicitors      PM Jacobson QC with AI Tonking

for Respondent:             instructed by Deacons Graham & James

Date of Hearing:            1 April 1996

Date Judgment Delivered:         3 April 1996