GIO Australia Holdings Ltd AMP Insurance Investment Holdings Pty Ltd [1998] FCA 1506

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 3172 of 1998

BETWEEN: GIO AUSTRALIA HOLDINGS LIMITED

Applicant

AND: AMP INSURANCE INVESTMENT HOLDINGS PTY LTD

First Respondent

AMP LIMITED

Second Respondent

JUDGE: EMMETT J

DATE: 29 SEPTEMBER 1998

PLACE: SYDNEY

EX TEMPORE REASONS FOR JUDGMENT HIS HONOUR: The applicant, GIO Australia Holdings Limited ("GIO") seeks, amongst other things, a declaration that a Part A statement which has been delivered to it by the respondents ("AMP") does not comply with the requirements of Part A of section 750 of the Corporations Law. One aspect in respect of which that assertion is made concerns alleged failure to comply with section 1022(1) of the Corporations Law. The route whereby that section becomes relevant is not uncomplicated but it is common ground that section 1022 is applicable. That section would require that there be included in the Part A statement such information as investors and their professional advisers would reasonably require and reasonably expect to find in the Part A statement for the purpose of making an informed assessment of (a) the assets and liabilities, financial position, profits and losses and prospects of the corporation and (b) the rights attaching to any relevant securities that might be issued pursuant to the offer. That provision, however, is subject to subsection (2) which makes it clear that the information that is required to be included is such of the information (a) as is known to any person referred in section 1006(2)(b) to (h) or any person who authorised or caused the issue of the Part A statement or as it would be reasonable for such a person to obtain by making inquiries. The specific complaint presently in question is the absence from the Part A statement of any financial forecast on the assumption that the takeover is successful. GIO contends that the Part A statement should contain such a forecast in order to enable the recipients of offers to make an informed assessment of the prospects of AMP in the event that the takeover is successful. It appears that one of the alternatives offered to shareholders of GIO will be a consideration comprising shares in AMP. The response of AMP to that complaint is that such forecasts would not reasonably be required and recipients of the Part A statements and offers would not reasonably expect to find forecasts, having regard to the particular circumstances of GIO. For example, it has been indicated that GIO has announced losses which would make it very difficult for an outsider who did not have access to internal GIO material, to make an assessment or at least a fair assessment of forecasts of GIO that will be necessary in order to give an appropriate forecast for the AMP assuming the takeover is successful. The AMP seeks discovery from GIO of material that would be expected to indicate the judgment made by directors and officers of GIO as to whether it is feasible to make forecasts in respect of the matters in question. As I understand the position, GIO has not in fact made a forecast. AMP contends that it will be relevant for the purposes of determining whether or not professional advisers would reasonably require or reasonably expect to find forecasts to know what the reasoning process of the officers of GIO was in deciding not to make a forecast or in forming an opinion as to whether or not any such forecast might be reasonable or reliable. It may be that expert evidence would be admissible as to the matters that are thrown up by section 1022. It may be that insofar as there is expert material that is within AMP as to those matters, being expert material otherwise than would be privileged, that material could be relevant to the question which is raised. However, insofar as the material sought to be discovered is simply material as to the opinions or the reasoning of the officers of GIO, I do not consider that that is relevant to the question of whether or not professional advisers generally would reasonably require or reasonably expect to find forecasts in the Part A statement or the offers. That question must be judged objectively by reference to the material that is available publicly to professional advisers. Professional advisers could not require or expect that confidential and private information that is available to a target company should be available to the offerer in order to determine the extent of material which should be contained in the part A statement. In the circumstances I would not, as presently informed, be prepared to direct discovery of documents of the category which I have described.