-? CATCHWORDS Companies (Acquisition of Shares) Act 1980 ~ Part A of Schedule - extent of particularity required by sub-para. l(c) - whether Part A statement complied with sub-paras. l(c) and 3(b) = whether minimum acceptance condition complied with Act - whether National Companies and Securities Commission bound to refuse registration pursuant to s. 18(2A) ~ interpretation and applicability of ss. 47 and 48 of Act. Companies (Acquisition of Shares) Act 1980: ss. 6, 7, 9, 18, 20, 47, 48, 49, 58, 59 and Part A Schedule. Companies Act 1980: s. 537 TARGET PETROLEUM N.L. v. PETROZ N.L. G 197 of 1987 CORAM: LOCKHART, SHEPPARD and EINFELD JJ. 15 MAY 1987 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. G 197 of 1987 GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY TARGET PETROLEUM N.L. Appellant PETROZ N.L. Respondent JUDGES MAKING ORDER: LOCKHART, SHEPPARD and EINFELD JJ. DATE OF ORDER: 15 MAY 1987 WHERE ORDER MADE: SYDNEY MINUTES OF ORDER THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The cross appeal be allowed. 3. The appellant pay the costs of the respondent of the appeal and cross appeal. 4. The orders made by the Supreme Court of the Australian Capital Territory on 4 May 1987 be set aside and in lieu thereof it be ordered that the application to the Supreme Court be dismissed with no order as to costs. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. G 197 of 1987 GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY TARGET PETROLEUM N.L. Appellant PETROZ N.L. Respondent COURT: LOCKHART, SHEPPARD and EINFELD JJ. 15 MAY 1987 REASONS FOR JUDGMENT THE COURT: On 10 April 1987 Petroz N.L. ("Petroz") served on Target Petroleum N.L. ("Target") a Part A statement and a copy of a proposed take-over offer for shares in the capital of Target. On the same day Petroz lodged a copy of both documents with the National Companies and Securities Commission ("the Commission") which thereupon registered them. On 24 April 1987 Target commenced proceedings in the Supreme Court of the Australian Capital Territory seeking declarations that the Part A statement was invalid and injunctions restraining Petroz from acting pursuant to the statement and from proceeding with the proposed offer. The proceedings were heard before the Supreme Court 2. and judgment was given on 4 May 1987. The Supreme Court's jurisdiction to hear the matter arose from the fact that Target was incorporated in the Australian Capital Territory. In the meantime, on 29 April 1987, the Commission made a declaration, pursuant to s. 58 of the Companies (Acquisition of Shares) Act 1980 ("the Act"), that there should be added to the Part A statement two new sub-paragraphs, 6.3 and 10.3, and that there should be substituted for sub-para. 8.2.2 of the proposed offer a new sub-paragraph. Paragraphs 6 and 10, as amended by the Commission's declaration, read as follows (the emphasis is added by us): "6. SHARES AND MARKETABLE SECURITIES IN THE COMPANY TO WHICH PETROZ IS ALREADY ENTITLED. At the date of this Statement:- 6.1. Petroz and its associates are entitled, within the meaning of the Code to 1,833,000 Fully Paid Shares and to 1,610,000 Partly Paid Shares in the capital of the Company. 6.2. Petroz and its associates are not entitled, within the meaning of the Code, to any marketable securities (other than Shares referred to in paragraph 6.1 of this Statement) of the Company. 6.3 The shares referred to in sub-paragraph 6.1 above are held by the associates of Petroz as follows: Shareholder/ Fully Paid Partly Paid Associate Shares Shares Parry Corporation Ltd 898,000 1,576,000 Havegib Pty Ltd 81,000 34,000 NBN Investments eet via att Superannuation Fund) 854,000 None" 3. "10. CONSIDERATION FOR THE OFFERS. 10.1. 10.2. 10.3 Sub-paragraph 8.2.2 of the proposed offer, as substituted by the Commission's declaration under s. 58, is a condition of the offer The consideration for the acquisition of:- (a) the Fully Paid Shares is seventy five cents (75¢c) in cash for each Fully Paid Share; and (b) the Partly Paid Shares is forty five cents (45¢c) in cash for each Partly Paid Share. The cash consideration required by Petroz to fulfil its obligations under the Offers will be financed by a loan from FAI Insurances Ltd of $15,521,200.00. The loan from FAI Insurances Limited is subject to a condition that it be secure ya first ranking mor gage over the shares to be acquired y Petroz pursuant to the scheme subject to Petroz irst entering into suc further legal documentation as_ the Solicitors tor FAI Insurances Limited ma reasonab require and that the final draw down must take piace before 30 September 1987." and it provides (again, the emphasis is ours): "8.2.2 Petroz receiving before the expiration of the offer period valid acceptances of the offers under the scheme in respect of 90% of the shares and not less than three uarters of the offerees have sposed o to petroz (whether under the Scheme or otherwise) the shares subject to the scheme Ghich-are held by then? y them. Target submitted, both before the Supreme Court and this Court, that the Part A statement and the proposed offer were defective in three respects. First, it submitted that Petroz had not set out full particulars of the shares in Target to which it was entitled within the meaning of the Act as it was required to do by sub-para. l(c) of Part A of the Schedule to the Act. That sub-paragraph provides: "1. The statement shall - (c) set out full particulars of the shares in the target company to which the offeror is entitled or, if there are no such shares, set out a statement to that effect; ..." It was submitted that sub-para. 6.3 of the Part A statement erroneously stated that Petroz's associates held 1,833,000 Fully paid and 1,610,000 partly paid shares in Target. The true position revealed by the evidence was said to be that 67,000 fully paid and 34,000 partly paid shares included in these figures were not registered in the names of the relevant associates of Petroz and therefore not "held" by them. Hence, so it was asserted, the statement in sub-para. 6.1 of the entitlement of Petroz and its associates was erroneous, with the result that sub-para. l(c) of Part A of the Schedule was contravened. The second alleged defect in the Part A statement was said to be that Petroz failed to comply with the provisions of sub-para. 3(b) of Part A of the Schedule. That sub-paragraph provides: "3. If the consideration for the acquisition of the shares to which the take-over offers relate or for the acquisition of any shares, ... is to be satisfied in whole or in part by the payment of cash, the statement shall set out - (a) if the offeror is to provide some or all of the cash from his own funds - particulars sufficient to identify the cash amounts held by the offeror for or in respect of payment of the consideration; and (b) if the offeror is not to provide all of the cash, or is not to provide any of it, from his own funds - particulars sufficient to identify the other person who is, or each of the other persons who are, to provide, whether directly or indirectly, some or all of the cash from his or their own funds and particulars of the arrangements by which that cash will be provided by that other person or those other persons." It was submitted by Target that, although Petroz had identified another person (F.A.I. Insurances Limited) which was to provide the cash to be used to finance the offer, sub-para. 10.3 of the Part A statement had not set out particulars of the arrangements by which that cash was to be provided by that other person. It was said that although sub-para. 10.3 of the statement states that the loan from F.A.I. Insurances Limited is subject to a condition that it be secured by a first mortgage over the shares to be acquired, the condition also states that the loan is subject to Petroz first "entering into such further legal documentation as the solicitors" for F.A.I. Insurances Limited may reasonably require. It was submitted that arrangements of this kind could not be legally binding upon Petroz and that sub-para. 3(b) of Part A of the Schedule is directed solely to legally binding arrangements. 6. The third alleged defect was said to exist in the proposed offer document and to have arisen from the minimum acceptance condition. It was argued that Petroz had attempted to reserve to itself a power or privilege which the Act did not countenance, namely, the "right" to control the question of whether or not the minimum acceptance condition was satisfied. It had purportedly imposed a minimum acceptance condition of 90%; yet Petroz, through its associates, controls more than 10% of the share capital of Target. Hence, so the argument ran, Petroz can by its own acts decide unilaterally whether the take-over offer should be accepted or not by directing its associates to accept or reject it as the case may be. Sub-paragraph 8.2.2, as amended by the Commission's declaration, would place Petroz in a position where it can collude with its associates until the last moment to "keep its options open". This was said to conflict with the intent of sub-s. 18(2A) of the Act which provides: "where a copy of a Part A statement and a copy of a proposed offer are lodged with the Commission for registration under sub-section (1), the Commission may refuse to register the copy of the proposed offer if the proposed offer is subject to a prescribed condition the fulfilment of which depends on - (a) an opinion, belief or other state of mind of the offeror or of a person associated with the offeror; or (b) whether or not ae particular event happens, being an event that is within the sole control of the offeror or of a person associated with the offeror." It was submitted that the word "may" should be understood in the imperative sense, otherwise the offeror could unilaterally determine whether a condition of a take-over offer might be fulfilled or not and that would be contrary to the spirit and intendment of the 7. Act in general and sub-s. 18(2A) in particular. It was submitted that in this case the Commission was required to refuse and should have refused registration of the copy of the proposed offer as it is subject to a prescribed condition of the kind described in the sub-section. This was said to follow from the fact that Petroz can, through its control of its associates and more than 10% of the shares in Target, determine whether the offer should be accepted by deciding for or against acceptance. It could thereby determine the fate of the take-over scheme. As the Commission was not a party to this appeal and as na relief was sought against it for its alleged breach of a statutory obligation, the reliance on sub-s. 18(2A) was said to be limited to the spirit and intendment of the Act. Reliance was also placed upon sub-ss. 20(2) and 20(3) of the Act as further indications of the alleged spirit and intendment of the Act. Those sub-sections provide: "20(2) An offeror shall not make a take-over offer subject to a prescribed condition (however expressed) that the offeror receives an acceptance Or acceptances of an offer or offers under the relevant take-over scheme in respect of a number of shares referred to in the take-over offer unless that number of shares is specified in the take-over offer, and - (a) any provision in the take-over offer by virtue of which the number so specified may be varied is void; and (b) if a take-over offer is made subject to a condition in contravention of this sub-section, the condition is void. 20(3) The number of shares specified in a take-over offer in accordance with sub-section (2) may be expressed as a number of shares or as a percentage of the total number of shares included in the class of shares to which the take-over offer relates or of the total number of shares included in that class of shares to which the offeror is not entitled." The learned trial Judge held that Petroz failed to comply with the provisions of sub-para. 1(c) of Part A of the Schedule to the Act. The Court found that the full particulars required by sub-para. l(c) of Part A of the Schedule included, as a minimum, the names of the registered holder or holders of the shares referred to, particulars sufficient to enable identification, whether by the number allotted to them or otherwise, of the shares so set out and whether the holder or holders of the shares so set out had power - (a) to exercise or control the exercise of the right or rights to vote attached to those shares; or (b) to dispose of or to exercise control over the disposal of those shares; and if not in whom those powers were vested. The trial Judge found that 67,000 fully paid shares and 34,000 partly paid shares, included in sub-para. 6.1 of the Part A statement as shares to which Petroz and its associates are entitled, were not registered in the name of the relevant associate of Petroz, namely, Havegib Pty. Limited, and hence were not shares to which Petroz and its associates are entitled. The evidence on which his Honour relied to support the finding was the affidavit of Mr. G.H. Ross-Jones sworn on 29 April 1987. Mr. Ross~Jones, a member of the firm of Marshall Marks, the Sydney solicitors for Target, said that he was also the Executive Chairman of Directors of Target and he annexed certain letters to his affidavit. One of these letters, annexure "E", is dated 29 April 1987 from Marshall Marks to Phillips Fox, the solicitors for Petroz, and states, so far as is presently relevant: "The proposed new paragraph 6.3 to the Part A Statement states that the shares 'are held by associates of Petroz'. That statement would (according to Target's Share Register) appear to be factually inaccurate in the following respects:- (i) Havegib Pty. Ltd. is the registered holder of 14,000 fully paid shares. There are no registrations under the name of Havegib Pty. Ltd. in respect of 67,000 fully paid shares and 34,000 partly paid shares. (ii) NBN Investments Pty. Limited is not the registered holder of any shares. However, in response to a Section 261 request Target has previously been advised that ANZ Nominees Limited is the registered holder of 854,000 fully paid shares which relate to the NBN Staff Superannuation Fund." There was no response to this letter. The trial Judge referred to the decision of the High Court in Walker v. Walker (1937) 57 C.L.R. 630 in support of his finding. His Honour found that Target's complaint that the offer document was defective in relation to the minimum acceptance condition, in that sub-para. 3(b) of Part A of the Schedule had not been complied with, had not been established. The trial Judge held that, as a Part A statement is required by s. 6 of the Act to be in accordance with Part A of the Schedule to the Act, it followed that the statement must be held to be invalid because it was defective in one particular. His Honour's reference to s. 6, the Act's definition section, was to the definition of "Part A Statement" as meaning "a statement in writing that complies with the requirements of Part A of the Schedule and of sub-section 16(2A)". 10. His Honour went on to say that the question was whether the invalidity required that the statement be struck down. This led his Honour to consider ss. 47, 48 and 49 of the Act. Sub-section 47(1) reads relevantly as follows: "Where a Part A statement relating to offers under a take-over scheme has been served on a target company or a take-over announcement has been made, the Court may, on the application of the Commission, the offeror, the on-market offeror, the target company or any person who holds shares in the target company or held shares in the target company at the time when the Part A statement was so served or the take-over announcement was made, if the Court is satisfied that a provision of this Act has been contravened or has not been complied with make such orders as it thinks necessary or expedient to protect the rights of a person affected by the take-over scheme or take-over announcement (including a person who is the holder of non-voting shares in, or renounceable options or convertible notes granted or issued by, the target company), including, but without limiting the generality of the foregoing, one or more of the following orders: (a) an order directing the offeror, the on-market offeror or the target company to supply to the holders of shares in the target company such information as is specified in the order;" Section 48 is concerned with a contravention or failure to comply with a provision of the Act where that contravention or failure was due to inadvertence, mistake or circumstances beyond the control of the contravener. The section provides that, where that contravention or failure ought to be excused, on one or more of those grounds or the Court is satisfied on any other grounds that the contravention or failure ought to be excused, the Court may make such order as it thinks fit declaring any act or matter not to be invalid 11. by reason of the contravention or failure and declaring any act or matter to have force or effect as if there had been no such contravention or failure. Sub-section 48(3) provides that where a document purporting to be a Part A statement is served on a company and does not comply with all the requirements of Part A of the Schedule and the Court is satisfied that the non-compliance was due to inadvertence, mistake or circumstances beyond the control of the person by whom or on whose behalf the document was served and that the non-compliance ought to be disregarded, or is satisfied on any other grounds that- the non-compliance ought to be disregarded, the Court may make an order directing that the document shall be deemed to be and at all relevant times to have been a Part A statement. Sub-section 49(1) provides that the Court shall not make an order under ss. 47 or 48 if it is satisfied that the order would unfairly prejudice any person. The trial Judge held that s. 48 had no application to this case but that s. 47 did apply. His Honour said that, as he had found that there was a failure to comply with sub-para. l(c) of Part A of the Schedule and therefore a failure to comply with a provision of the Act, the Court was entitled to make such orders as it thought expedient or necessary to protect the rights of person affected by the take-over. He said that he was satisfied that a failure to set out the full particulars of Petroz's interests in Target may reasonably be expected to affect adversely the rights of the person affected by the take-over scheme. Section 47 must be concerned with contraventions or 12. failures to comply which are not ordinarily excusable but which may be remedied by the use of one or more of the orders provided for in the section. His Honour said that he saw no harm being done to Target if the information which was required by sub-para. l(c) of Part A of the Schedule was furnished before the offer was forwarded, particularly in view of Target's "oft- reiterated statement that it did not desire to impede a properly documented takeover offer". His Honour said that.s. 47 could be used to remedy breaches of the Act which could properly be dealt with before the Part A statement and accompanying offer were forwarded to shareholders. His Honour noted that Petroz indicated to the Supreme Court its willingness to consent to an order in respect of sub-para. l(c) of Part A of the Schedule. The orders made by the Supreme Court were as follows: "1. That in respect of the proposed takeover of Target Petroleum N.L. (the applicant) by Petroz N.L. (the respondent) in accordance with the statement dated 6 April 1987 served on the applicant on 10 April 1987 the respondent furnish to the applicant and any person or stock exchange entitled to receive a Part A statement under the Companies {Acquisition of Shares) Act 1980 by not later than 5 p.m. Eastern Standard Time on Wednesday, 6th May 1987 the following particulars concerning the shares set out in the Schedule below:- (a) The registered holder(s) of the shares so set out; (b) Particulars sufficient to enable the applicant to identify, whether by number allotted to them or otherwise, the shares so set out; (c) Whether the holder(s) of the shares so set out has or have power: (i) to exercise or to control the exercise of the right or rights to vote attached to those shares; or 13. (ii) to dispose of or to exercise control over the disposal of those shares and if not in whom are those powers or any part of them vested. SCHEDULE Shareholder/ Fully Paid Partly Paid Associate Shares Shares Parry Corporation Limited 898,000 1,576,000 Havegib Pty Ltd 81,000 34,000 NBN Investments Pty Ltd (via NBN Staff Superannuation Pund) 854,000 None 2. That the respondent forward with any offer in respect of its proposed takeover of shares in the applicant a statement setting out plainly the particulars referred to in Order 1 above. 3. That the document or documents containing the statement referred to in Order 2 above shall contain a notation that the statement is furnished pursuant to the order of the Court made this day but that the Court takes no responsibility as to its content. 4. That the respondent pay the applicant's costs eof and incidental to the summons dated 24 April 1987 including costs reserved by the Honourable Mr. Justice Gallop on 24 April 1987. 5. That the injunctions granted by the Honourable Mr. Justice Gallop on 24 April 1987 and continued be dissolved." The reference to the orders of Gallop J. is to ex parte injunctions granted by his Honour as a Judge of the Supreme Court of the Australian Capital Territory on 24 April 1987 before whom this matter first came. 14. Target appealed to this Court from the Supreme Court's judgment by filing a notice of appeal on 5 May 1987. The status quo has been preserved from the inception of the proceedings in the Supreme Court until delivery of this Court's judgment by interlocutory injunctions. Petroz filed a cross appeal pursuant to leave granted by this Court during the hearing of the appeal. In its cross appeal Petroz: (a) (b) (c) (d) (e) challenges the finding of the Supreme Court that there had been a contravention of the Act by it in that particulars furnished pursuant to sub-para. l(c) of Part A of the Schedule were incomplete; asserts that the Supreme Court erred in not finding that, by reason of the declaration made by the Commission under s. 58, there was no such contravention; states that the Supreme Court erred in concluding that the said particulars were inaccurate by using Annexure "A™ to the affidavit of Mr. Ross-Jones of 29 April 1987 as a basis for that conclusion and in regarding that conclusion as relevant in the circumstances; claims that orders should be made under s. 48 of the Act excusing the alleged contravention; and seeks an order that Petroz pay Target's costs of the proceedings in the Supreme Court and of this appeal. 15. It was submitted before this Court by counsel for Target that the Supreme Court had correctly found a contravention by Petroz in not furnishing adequate or correct particulars pursuant to sub-para. 1(c) of Part A of the Schedule; but that the Court should have found that the Part A statement was further defective in not furnishing particulars as to the finance arrangements as required by sub-para. 3(b) of Part A of the Schedule and that the proposed offer document was defective in relation to the minimum acceptance condition. It was also submitted by counsel for Target that s. 47 had no application where the document purported to be a Part A statement, yet failed to comply with one or more of the requirements of Part A of the Schedule. The argument was based on the definition in s. 6 of a Part A statement to which we referred earlier. Since the purported Part A statement in this case had been found to be deficient in one respect, it was argued that it was not, by definition, a Part A statement as that expression, where used in sub-s. 47(1), must bear the defined meaning (there being, so it was submitted, no contrary intention). Hence s. 47 was inapplicable and the Supreme Court had no jurisdiction to make the order which it did. It was conceded on behalf of Target that s. 47 could be relied upon, however, where an offeror, in or about the issue or service of a Part A statement, contravened or did not comply with a provision of the Act provided that the alleged contravention or failure was not said to be non-compliance with Part A of the Schedule itself. 16. The validity of the argument that Petroz failed to comply with the requirements of sub-para. l(c) of Part A of the Schedule rests upon the assumption that the reference in sub-para. 6.3 of the Part A statement to the shares therein mentioned being "held" by the associates of Petroz means that the shares are registered in the name of those associates in the share register of Target. In our opinion that assumption is ill founded. Paragraph 6 of the Part A statement bears the title "SHARES AND MARKETABLE SECURITIES IN THE COMPANY TO WHICH PETROZ IS ALREADY ENTITLED". The paragraph then proceeds to say that, at the date of the statement, Petroz and its associates are entitled, within the meaning of the "Code" (i.e. the Act), to 1,833,000 fully paid shares and to 1,610,000 partly paid shares in the capital of the company (sub-para. 6.1). Sub-paragraph 6.2 provides that Petroz and its associates are not entitled within the meaning of the "Code" to any marketable securities other than the shares referred to in sub-para. 6.1. Sub=-paragraph 6.3 then provides that the shares referred to in sub-para. 6.1 are "held" by the associates of Petroz in the proportions there set out. It may perhaps have been preferable if the Commission's section 58 declaration, which introduced sub-para. 6.3, had been differently phrased by, for example, stating that "the shares referred to in sub-para. 6.1 to which Petroz and its associates are entitled are as follows ..." or something to this effect. But the use of the word "held" in the context of shares being held by a person in the capital of a company does not necessarily connote the notion of registration in the share register of the company, whether as a matter of ordinary English usage or in the language of company lawyers. Expressions such as shares being held or benefically held in the 17. capital of a company or shares to which a person is entitled or beneficially entitled have no precise connotation exclusive of each other and are not infrequently used interchangeably, generally depending upon the context in which the expressions appear. The provisions of sub-para. 6.3 in the Part A statement are simply by way of amplification or further particularisation of the statement in sub-para. 6.1 that Petroz and its associates are entitled within the meaning of the "Code™ to the fully paid shares and partly paid shares therein specified. In addition, the opening words of sub-para. 6.3 are "the shares referred to in sub-paragraph 6.1 above are ...". Sub-paragraph 6.3 contains the names of three companies which are said to be the associates of Petroz with the particular numbers of fully paid and partly paid up shares set opposite the name of each of the three companies. The totals of the two groups are the same as those mentioned in sub-para. 6.1, namely, 1,833,000 fully paid shares and 1,610,000 partly paid shares. There is, therefore, no warrant to interpret the word "held" as used in sub-para. 6.3 other than in the same sense as the word "entitled" is used in sub-paras. 6.1 and 6.2, i.e. "entitled" at law or in equity, and whether registered in the name or names of the associates mentioned in sub-para. 6.3 or not. The purpose of sub-para. l(c) of Part A of the Schedule 'is plain, namely, that the target company and its shareholders should be informed by the offeror fully of the shares in the target company to which the offeror is entitled, a very broad connotation being given to the word "entitled" as used in the Act. Companies may exercise power 18. or dominion over shares in many and diverse ways, whether direct or indirect. The intent of sub-para. 1(c) is to ensure that, by whatever means the offeror is entitled to shares in the target company, full particulars of those shares must be stated in the Part A statement. That a broad connotation of the word "entitled" for the purposes of the Act is intended appears plainly enough from the provisions of the Act defining entitlement to shares as including shares in which the person concerned or an associate of the person concerned has a relevant interest: sub-s. 7(3) of the Act. An "associate" for the purposes of sub-s. 7(3) is defined in broad terms by sub-s. 7(4). It includes, in the case of a corporation, a corporation that is related to the person concerned. The notion of a "relevant interest" is also defined widely by s. 9 of the Act. It is with these considerations in mind that para. 6 of the Part A statement must be interpreted. When it is so interpreted it appears plain that the word "held" in sub-para. 6.3 is not intended to have any connotation that is any different from the word "entitled" where otherwise appearing in para. 6 of the Part A statement. We therefore respectfully differ from the interpretation placed upon para. 6 by the trial Judge. In these circumstances it is not necessary for us to consider the correctness of his Honour's conclusion that the statements in the letter from the solicitors for Target to the solicitors for Petroz of 29 April 1987 as to the contents of Target's share register sufficiently proved the facts stated therein. His Honour relied upon the decision of the High Court in Walker v. Walker (supra). That is a decision which in our experience is frequently invoked by counsel and 19. solicitors as an evidentiary tool in an extraordinarily wide variety of circumstances and frequently, if not in cases of extremis, at least in cases approaching last resort. Although the decision has stood for many years it has not been immune from criticism: see, for example, the note in the Australian Bar Review for August 1985 on "The Status of Hearsay and Other Evidence Submitted Without Objection" by the editor, Mr. J.D. Heydon, who described Walker v. Walker as the "enigmatic decision, though not directly in point, much relied on in the authorities, sometimes to support conflicting points of view". See generally on this question McLellan v. Taylor (1966) 85 W.N. (Part I) (N.S.W.) 525 per Walsh J. at pp. 528-9; Hughes v. National Trustees, Executors and Agency Company of Australasia Limited (1979) 143 C.L.R. 134 per Gibbs J. at pp. 152-3; and Jones v. Sutherland Shire Council [1979] 2 N.S.W.L.R. 206, per Samuels J.A. at pp. 219-220. Although we express no view on the role which Walker v. Walker may play in the present case we would need to be persuaded that it could be called in aid here. We turn to the argument of counsel for Target that the Part A statement fails to comply with the requirements of sub-para. 3(b) of Part A of the Schedule. The genesis of the argument lies in the language of sub-para. 10.3 of the Part A statement which was added by the Commission in its section 58 declaration. It was submitted that the statement in that sub-paragraph that the loan from FAI Insurances Limited is: "subject to a condition that it be secured by a first ranking mortgage over the shares to be acquired by Petroz pursuant to the scheme subject to Petraqz first entering into such further legal documentation as the solicitors for PAI Insurances Limited may reasonably require and that the final draw down must take place before 30 September 1987" 20. contravened the requirements of sub-para. 3(b) of Part A of the Schedule. The contravention was said to arise because sub-para. 3(b) is directed to requiring that the Part A statement set out particulars only of legally binding arrangements by which cash will be provided by a person other than the offeror to enable the shares to be acquired. Sub-paragraph 10.3 was said to confer upon Petroz the benefit of an open-ended provision entitling it to withdraw from the take-over scheme whenever it wished if the solicitors for F.A.I. Insurances Limited required some other document, whether by way of security or otherwise, additional to the first mortgage over the shares to be acquired by Petroz pursuant to the scheme. [It was said that the arrangements between Petroz and F.A.I. Insurances Limited did not create legally binding obligations and therefore that it did not comply with sub-para. 3(b) of Part A of the Schedule. This argument has no substance. The purpose of sub-para. 3(b) of Part A of the Schedule is plain. It is directed to particulars of the arrangements being stated in the Part A statement by which cash will be provided by persons other than the offeror to enable the shares in the target company to be acquired by the offeror. The word "arrangements" is a word of the widest import including arrangements whether legally binding or not. Indeed, in many cases, at the early stage of a take-over scheme, when the Part A statement is being forwarded by the offeror, there would be no legally binding arrangements to provide finance for the acquisition of the shares. Sometimes the arrangements would be fairly advanced and detailed and at other times rather loose and, perhaps, in general terms embodying broad understandings. But, whatever the arrangements may be, the intent of sub-para. 3(b) is clear, namely, that they be set out in the 21. Part A statement so that the target company may comment upon them and, more particularly, so that the shareholders of the target company may consider them when deciding whether to accept the take-over offer or not. This argument fails. The criticism of the form of proposed offer was based on the substitution by the Commission in its section 58 declaration of sub-para. 8.2.2, the terms of which we have already recited. This was said to have created the position whereby Petroz may unilaterally withdraw its offer under the take-over scheme at any time it wishes or "keep its options open" until the last moment. This power vested in Petroz was said to arise from the fact that the shares held by its associates constituted something more than 10% of the issued capital of Target so that, as the offer was conditional upon Petroz receiving acceptances in respect of 90% of the shares, it was at all times within its own power, through its control of its associates, to direct them not to accept the offer if it so wished. This somewhat intricate and subtle argument rested upon more than one foundation, but essentially it founded upon sub-s. 18(2A), the terms of which we have already mentioned. In our opinion the power of the Commission to refuse to register the proposed offer is a true facultative power. The general approach which courts take to this question is illustrated in Julius v. Bishop of Oxford [1880] L.R. 5 A.C. 214; Ward v. Williams (1955) 92 C.L.R. 496; and Finance Facilities Pty. Limited v. The Commissioner of Taxation (1971) 127 C.L.R. 106. There is no warrant for treating the word "may", in the context of sub-s. 18(2A), as bearing the imperative 22. connotation. The argument that the Commission was required by sub-s. 18(2A) to refuse to register the copy of the proposed offer in this case and that, by registering it, the Commission in effect aided a contravention of the Act has no foundation. The extension of this argument to suggest a legislative policy underlying the Act that provisions in Part A statements, of the kind exemplified by sub-para. 8.2.2. of the Part A statement in this case, are contrary to the Act is impermissible. Indeed, sub-s. 18(2A), as we construe it, and other provisions of the Act, directly negate the existence of the alleged policy. We would add that there may be various circumstances in which a proposed offer, subject to a condition the fulfilment of which depends on one or more of the matters mentioned in sub-s. 18(2A), does not necessarily and in every case lead to the refusal of registration by the Commission. There should be no automatic bar to the Commission's refusing to register the copy of the proposed offer in those circumstances. There are, we perceive, sound reasons why the Commission's power to refuse to register under sub-s. 18(2A) is not to be read in any imperative sense. Although sub-ss. 20(2) and (3) of the Act were relied on by counsel for Target in support of this branch of his argument they add nothing to the argument with which we have already dealt in relation to sub-section 18(2A). In our opinion the argument fails. 23. We should say that, although some argument was initially addressed to us on the question of the validity of the Part A statement and proposed offer document based on the form which those documents took before the making by the Commission of its section 58 declaration, the argument in its final form was based upon the form which those documents took as amended by the section 58 declaration. This must be the relevant form. Also, no challenge was made to the finding of the Supreme Court that a declaration of the Commission under s. 58 cannot be challenged other than by appeal to that Court under s. 537 of the Companies Act 1981. We express no view on the correctness of that finding one way or the other. It follows that none of the matters relied upon by Target as grounds for invalidating the Part A statement or proposed take-over offer have been established and that the cross appeal should therefore be allowed. We shall nevertheless deal with the argument that, even if at least one ground of invalidity had been established, s. 47 was not an appropriate vehicle to be invoked by the Supreme Court in the circumstances of this case. Section 47 empowers the Court, where a Part A statement has been served, if the Court is satisfied that a provision of the Act has been contravened or has not been complied with, to "... make such 24. orders as it thinks necessary or expedient to protect the interests of a person affected by the take-over scheme or take-over announcement wee". There follows, in s. 47, a number of specific and wide-ranging powers which the Court may exercise including the power conferred by para. 47(1)(a) to make "an order directing the offeror, the on-market offeror or the target company to supply to the holders of shares in the target company such information as is specified in the order". Section 47 does not in terms empower the Court to amend a Part A statement. Nor can any such power be inferred. The exercise of any power of amendment appears to be confined to the Commission: see s. 58, pursuant to which a declaration has at least the practical effect of amending the Part A statement. Section 47 is, however, an appropriate vehicle for the exercise of a power by the Court to require an offeror to send with a Part A statement some document which, though not amending it, nevertheless contains statements intended to clarify or amplify statements made in it or to remove ambiguities or uncertainties. The evident purpose of the Act is to ensure that the acquisition of shares in companies "takes place in an efficient, competitive and informed market" (s. 59). Section 47 lends itself to a liberal interpretation. It is an enabling provision and is part of (indeed, central to) a statutory scheme designed to streamline and facilitate the making and consideration of take-over offers and the making of informed decisions with respect to them by shareholders, consonant with the public interest requirements of the Act which operate in a commercial environment often volatile and requiring dispatch and efficiency. 25. We do no construe s. 47 as excluding the Court's powers relating to contraventions of the Act which concern the contents of a Part A statement. We agree with the following statement by Connolly J. in Re Rossfield Group Operations Pty. Limited (1980) 5 A.C.L.R. 237 at pp. 242-3: "There are two possible approaches to the construction of s 47 in this situation. The first is to construe it as limited to contraventions of the Act in other respects than those which relate to the contents of the Part A statement. Many considerations tend against this approach. fhe Part A statement is at the heart of the take-over legislation. Section 47 is general in its language and its manifest object is to give the court a wide discretion for the protection of shareholders in a sense which is consonant with the scheme of the Act. The alternative approach to the construction of s 47, which in my opinion should be adopted, is to treat s 47 as one in which, in terms of s 6, a contrary intention appears so that the definition does not deny to what purports to be a Part A statement, the character of such a statement upon which the whole of s 47 is postulated. Indeed cl (a) of the specific powers enables an order to be made directing the offeror or the target company to supply specified information to the shareholders. This is the very type of information the failure to supply which will constitute a breach of both a Part A and a Part B statement. Section 47 thus on its face contemplates relief under its provisions though the statement in question may not have been one in accordance with the Act." A similar approach to the construction of s. 47 was taken by W.B. Campbell J. in Re Evans Deakins Industries Ltd. (No. 2) (1980) 5 A.C.L.R. 322. In our opinion the Part A statement in this case has not been shown to contravene the requirements of Part A of the Schedule. However, if any such contravention had been established, s. 47 would 26. have been an appropriate vehicle for the making of orders of the kind which were made by the Supreme Court in this case. We would dismiss the appeal and allow the cross appeal. Target must pay the costs of Petroz of the appeal and cross appeal. With respect to the costs of the proceedings at first instance the question is not so clear. The trial Judge noted in his reasons that Petroz "indicated its willingness to consent to an order in respect of sub-paragraph l(c) of Part A". Earlier in his reasons his Honour said that Petroz was "prepared to give the further particulars which I had proposed should be given to meet the problem under sub-paragraph l(c) of Part A". Yet, at the same time his Honour noted that Petroz argued that the Part A statement was valid by reason of the effect of the declaration of the Commission under s. 58 which was said to be conclusive of the validity of the Part A statement and the proposed offer. Nor did Petroz seek to challenge the order for costs made by the Supreme Court (that it pay the costs of Target of the proceeding) until argument was well advanced before us and leave was given to Petroz to file its cross appeal in which it sought to upset the Supreme Court's order for costs. The case was obviously conducted before the Supreme Court by Petroz on the basis that, although not technically conceding that the Part A _ statement contravened sub-para. l(c) of Part A of the Schedule, nevertheless it was prepared to furnish any necessary information which might cure any such defect. In all the circumstances the proper order for costs of 27. the proceedings before the Supreme Court is that there be no order as to the costs of either party so that in the result each party shall bear its own costs. I certify that this and the preceding twenty-six (26) pages aema true copy of the Reasons for Judgment herein of the C ian y Associate Dated: 15 May 1987 Counsel and solicitors D. Grieve Q.C. with F.G. Lever for Target Petroleum N.L. instructed by Messrs. Marshall Marks. Counsel and solicitors R.B.S. Macfarlane Q.C. with for Petroz N.L. C.A. Needham instructed by Messrs. Phillips Fox. Date of Hearing: ll May 1987. Date of Judgment: 15 May 1987.