Far West Scallops Industries Pty Ltd v Cambridge Gulf Exploration NL [1995] FCA 419

CATCHWORDS CONTRACT - loan to company to defray prospectus and stock exchange listing expenses - lender having option to be issued shares and options to subscribe for further shares as repayment instead of cash - portion of those shares to be held "in escrow" - whether new agreement entered into - whether representation concerning alternative arrangements misleading or deceptive conduct - no point of principle. Trade Practices Act 1974 (Cth) ss.51A, 52, 82 Fair Trading Act 1987 (W.A.) s.9 FAR WEST SCALLOPS INDUSTRIES PTY LTD v. CAMBRIDGE GULF EXPLORATION NL No. WAG 94 of 1994 CARR J. PERTH 23 JUNE 1995

IN THE FEDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) No. WAG 94 of 1994 DISTRICT REGISTRY ) GENERAL DIVISION ) B E T W E E N: FAR WEST SCALLOPS INDUSTRIES PTY LTD ACN 009 469 390 Applicant and CAMBRIDGE GULF EXPLORATION NL ACN 059 458 374 Respondent CORAM: CARR J. PLACE: PERTH DATE:23 JUNE 1995 MINUTE OF ORDERS THE COURT ORDERS THAT: 1. The application is dismissed. 2. The applicant pay the respondent's costs of the application. NOTE: Settlement and entry of Orders is dealt with in Order 36 of the Federal Court Rules

IN THE FEDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) No. WAG 94 of 1994 DISTRICT REGISTRY ) GENERAL DIVISION ) B E T W E E N: FAR WEST SCALLOPS INDUSTRIES PTY LTD ACN 009 469 390 Applicant and CAMBRIDGE GULF EXPLORATION NL ACN 059 458 374 Respondent CORAM: CARR J. PLACE: PERTH DATE:23 JUNE 1995 REASONS FOR JUDGMENT Introduction In this application Far West Scallops Industries Pty Ltd ("Far West") claims damages from Cambridge Gulf Exploration NL ("Cambridge") for breach of contract or in the alternative under s.52 (when read with ss.51A and s.82) of the Trade Practices Act 1974 (Cth) ("the Act") and s.9 of the Fair Trading Act 1987 (W.A.). The alternative claims are on the basis that Cambridge, by making certain false representations in a facsimile which is said to evidence part of the contract, engaged in misleading or deceptive conduct. The contract concerned a loan from Far West to Cambridge to help defray its expenses in relation to a prospectus and the subsequent listing of certain securities on the Australian Stock Exchange. The prospectus was for an issue of 20 million shares and the same number of options The principal question to be decided is whether under the arrangements between the parties, Far West became contractually entitled to be issued with 400,000 shares in Cambridge together with 400,000 options to subscribe for further shares. The alternative question is - did Cambridge represent that it would issue those securities to Far West and if so, did it thereby engage in misleading or deceptive conduct? Factual matters not in dispute Cambridge was at all material times a corporation within the meaning of the Act. In early 1993 a company by the same name, which subsequently changed its name to Cambridge Gulf Holdings NL ("Holdings") was planning a public issue and stock exchange listing of shares and options over shares in Cambridge. Mr Brian Conway was managing director of both Cambridge and Holdings. The directing mind and will of Far West was that of Mr James Ch'ng. At a meeting in March 1993 between Mr Conway and Mr Ch'ng, Mr Conway explained his plans for Cambridge and asked Mr Ch'ng for a loan of $50,000 to assist in the costs of printing the prospectus for the proposed issue of shares. As a result of that meeting Far West agreed to lend and did in fact lend Holdings $50,000. That transaction was evidenced by a document which was signed by Mr Ch'ng on behalf of Far West and executed under the common seal of Holdings. It was a short document and its terms were as follows: