FEDERAL COURT OF AUSTRALIA Resource Surveys Pty Ltd, in the matter of New Hampton Goldfields Ltd v Harmony Gold (Australia) Pty Ltd [2002] FCA 391 CORPORATIONS – compulsory acquisition – validity of notice – failure to summarise statutory provisions – whether price payable "in cash" – whether cash payable "for each security in the class acquired" – time of receipt of notice – deeming provision – whether approved form of notice is misleading WORDS & PHRASES – "in cash" Corporations Act 2001 (Cth) – ss 350, 664B(1), 664C(1), 664C(4) In the matter of New Hampton Goldfields Ltd Resource SURVEYS PTY Ltd v Harmony Gold (Australia) Pty Ltd V 3007 of 2002 FINKELSTEIN J 5 APRIL 2002 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 3007 of 2002 IN THE MATTER OF NEW HAMPTON GOLDFIELDS LTD BETWEEN: RESOURCE SURVEYS PTY LTD Plaintiff AND: HARMONY GOLD (AUSTRALIA) PTY LTD Defendant JUDGE: FINKELSTEIN J DATE OF ORDER: 5 APRIL 2002 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The application be dismissed. 2. The plaintiff pay the defendant's costs of the proceeding. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 3007 of 2002 IN THE MATTER OF NEW HAMPTON GOLDFIELDS LTD BETWEEN: RESOURCE SURVEYS PTY LTD Plaintiff AND: HARMONY GOLD (AUSTRALIA) PTY LTD Defendant JUDGE: FINKELSTEIN J DATE OF ORDER: 5 APRIL 2002 WHERE MADE: MELBOURNE REASONS FOR JUDGMENT 1 The plaintiff, Resource Surveys Pty Ltd, holds 40 million "American call options" entitling it to subscribe for 40 million fully paid ordinary shares in New Hampton Goldfields Ltd. There are three classes of options, each with a different exercise price, $0.27, $0.30 and $0.40. The options were granted to Resource Surveys in consideration for it promising to make Mr Eshuys, a geologist, available to act as managing director and chief executive officer of New Hampton Goldfields. (Mr Eshuys controls the company, which explains why it was able to give the promise). In early 2001 Harmony Gold Mining Co Ltd, through its Australian subsidiary, Harmony Gold (Australia) Pty Ltd, the defendant, made an off-market cash offer to acquire all the shares in New Hampton Goldfields that it did not already own. The offer price was $0.265 (later increased to $0.275) and was therefore at a substantial premium to the closing price of $0.20 on 18 December 2000, the day prior to the announcement of the offer. When the offer closed Harmony Gold had acquired 96.5% of the shares in New Hampton Goldfields. It immediately terminated Mr Eshuys' appointment. It also took steps to compulsorily acquire for $1.00 the options held by Resource Surveys, contending that they were worthless. At issue in this action is whether those steps have been successful. 2 The Corporations Act 2001 (Cth) requires a bidder under a takeover bid who has acquired 90% of a class of securities to offer to buy out the holders of options that are convertible into that class of security: see s 663A(1) together with the definition of "convertible securities" in s 9. To give effect to this obligation the bidder must give written notice to the option holders informing them of their right to be bought out and setting out the terms on which the holders may be bought out, together with an independent expert's report: s 663B. If the holders give the bidder notice requiring the bidder to purchase the options, a contract is formed either on terms as agreed or as determined by the court: s 663C. The Corporations Act also permits a bidder who has acquired 90% of a class of securities to compulsorily acquire the remaining securities: s 664A(3). The securities must be acquired "for a cash sum only and [the bidder] must pay the same amount for each security in the class acquired": s 664B(1). To bring about a compulsory acquisition, s 664C(1) requires the bidder (referred to as "a 90% holder") to prepare a notice in the prescribed form that: "(a) sets out the cash sum for which the 90% holder proposes to acquire the securities; and (b) specifies a period of at least 1 month during which the holders may return the objection forms; and (c) informs the holders about the compulsory acquisition procedure under this Part, including: (i) their right to obtain the names and addresses of the other holders of securities in that class from the company register; and (ii) their right to object to the acquisition by returning the objection form that accompanies the notice within the period specified in the notice; and (d) gives details of the consideration given for any securities in that class that the 90% holder or an associate has purchased within the last 12 months; and (e) discloses any other information that is: (i) known to the 90% holder or any related bodies corporate; and (ii) material to deciding whether to object to the acquisition; and (iii) not disclosed in an expert's report under section 667A." The notice may be given personally or by post. If it is sent by post, the notice "is taken to be given 3 days after it is posted": s 664C(4). As well, the holder of the securities must be given an objection form and an independent expert's report: s 664C(2). The holder of securities who receives a compulsory acquisition notice may object to the compulsory acquisition: s 664E(1). If people who hold at least 10% of the securities to be acquired object to the compulsory acquisition, it will not proceed unless the acquisition is approved by the court: s 664F(1). The court must give its approval if the terms of acquisition in the compulsory acquisition notice "give a fair value for the securities": s 664F(3). The costs of the proceeding to obtain approval must be borne by the 90% holder unless the court is satisfied that the objector has "acted improperly, vexatiously or otherwise unreasonably". The 90% holder must always bear his own costs of the proceeding: s 664F(4). 3 Harmony Gold began its attempt to acquire Resource Surveys' options, with the service of a notice dated 12 September 2001, offering to purchase the options for $1.00. The notice incorrectly stated that Resource Surveys held 100,000 options. The notice was accompanied by an independent expert's report dated 11 September 2001 prepared by Ernst & Young, which was to the effect that the buy-out offer price was fair because the options had no value. The report, with appendices, was 124 pages in length. 4 Mr Eshuys took advice about the notice from the company's solicitors, Mr Lewis, a partner of, and Mr Hibbins an employee at, Gadens Lawyers. Mr Eshuys was told that the notice purported to be an offer to purchase the options and not a notice of compulsory acquisition, which Resource Surveys was free to ignore. He was also advised that the notice was defective because it did not correctly specify the number of options held by Resource Surveys. Nevertheless Mr Eshuys told the solicitors to reject the offer. The next day Mr Hibbins telephoned Mr Elliott of Clayton Utz, who was acting for Harmony Gold, and told him about the defect in the offer notice but that in any case the offer was rejected. 5 This conversation prompted Clayton Utz to clarify the offer. By letter dated 5 October it informed Resource Surveys that Harmony Gold was offering to acquire all of the options (that is 40 million options) for $1.00. The letter which, I suppose, constituted a new offer was ignored. 6 From this background we can move to more important events. On 9 October 2001 Clayton Utz wrote two letters to Resource Surveys, one of which related to its 40 cent options and one of which related to both its 27 cent and its 30 cent options. The letters contained compulsory acquisition notices, objection forms and copies of an independent expert's report dated 8 October 2001. Apart from the reference to different options, the letters and the enclosed documents were in the same terms. Each letter was marked to the attention of the company secretary. It is important to note the letters' contents in full: "We act for Harmony Australia. In accordance with paragraph 664C(2)(b) of the Corporations Act 2001 (the 'Act'), we enclose on behalf of Harmony Australia the following documents: 1. ASIC Form 6024 Notice of compulsory acquisition; 2. a copy of the expert's report under section 667A of the Act; and 3. an objection form, in relation to one class of unlisted options over ordinary shares in New Hampton held by you." 7 The enclosed notice to which each letter refers is headed "Notice of Compulsory Acquisition" and it is identified as "ASIC Form 6024". It is directed to Resource Surveys. The notice, in paragraph 1, advises that Harmony Gold holds at least 90% of the securities in New Hampton Goldfields; in paragraph 2 it identifies the options to which it relates (one of three classes of options held by Resource Surveys); in paragraph 3 it advises that Harmony Gold may compulsorily acquire the options if less than 10% of the holders object to the acquisition or the court approves the acquisition under s 664F; in paragraph 4 it "gives notice that it [the 90% holder] proposes to compulsorily acquire all options that you hold for the cash amount of $1.00 in aggregate"; in paragraph 5 it informs Resource Surveys that it has the right to object to the acquisition by completing and returning the enclosed objection form "within 1 month of receipt of [the] notice" and notes that such objection cannot be withdrawn; in paragraph 6 it gives the information required by s 664C(1)(c); in paragraph 7 it advises that if 10% of the holders object, Harmony Gold may apply to the court for approval of the acquisition; in paragraph 8 it describes the number of securities in New Hampton Goldfields of the same class that Harmony Gold has acquired in the last twelve months; in paragraph 9 it describes the agreements in relation to other classes of unlisted options over ordinary shares the 90% holder has entered into in the last twelve months; and the notice concludes with the statement that "[t]here is no other information that is … material to deciding whether to object to the acquisition" that is known to the 90% holder and that is not disclosed in the expert's report. 8 The enclosed independent expert's report was prepared by Ernst & Young. In many respects it is the same as the report that accompanied the September offer. But there are some differences. The most important difference is that the October report expressly relates to a proposed compulsory acquisition of the options. The sections in which this is apparent include the table of contents, the introductory comments and the whole of section 3.3. Another difference is in the updating of certain information, in particular the financial position of the company and information about certain hedging contracts. The assessment of the fair value of New Hampton Goldfields has changed, mainly due to changes in the gold price in the intervening period. The October report contains a confirmation that Harmony Gold holds at least 90% of the securities in New Hampton Goldfields. It also incorporates an addendum to the previous valuation of New Hampton Goldfields' mineral assets. 9 The notices were posted to Resource Surveys at 239 Alton Road, Mt Macedon. This address is not the registered office of the company, but it is one of the properties where Mr Eshuys lives, usually only on weekends. Accordingly, Mr Eshuys did not see the notices until the weekend beginning 20 October 2001. What Mr Eshuys understood when he looked at the material is highly controversial, and the resolution of that controversy will ultimately be dispositive of this application. So I must consider it in a little detail. 10 Mr Eshuys has filed several affidavits. In two of them he deals with the receipt of the notices and says that when he looked at them he did not appreciate what they were. It will be necessary to refer to these accounts because they differ in some material respects. But first it is necessary to set out some background. Mr Eshuys is an experienced company director. He knows something about the ability of a 90% shareholder to compulsorily acquire shares of a target company after a successful takeover, and about the process with which a bidder must comply to effect the acquisition. In his first affidavit Mr Eshuys explained that when he received the September offer he was aware that Harmony Gold might seek to compulsorily acquire the options. Mr Eshuys said that he knew that this required Harmony Gold to serve a notice of compulsory acquisition on Resource Surveys to which it would be required to object if it wished to avoid the acquisition. 11 Returning to what Mr Eshuys understood when he looked at the material contained in the 9 October letters, his first account is as follows: "I proceeded to open up each envelope …, glanced at the contents and believing these notices were corrections to the errors which had previously been advised to the solicitors for Harmony, and acknowledged by them under cover of the letter dated 5 October, I merely placed the bundle of documents upon a shelf. In particular I noticed that each notice contained an offer of $1.00 for each of the respective classes of the Options and presumed this was the formal correction to the First Notice [a reference to the September offer]. I paid no further heed to the documents and did not advise the solicitors for [the plaintiff] of their receipt." According to this account Mr Eshuys looked at the three notices of compulsory acquisition, at least sufficiently closely to observe that Harmony Gold was proposing to acquire for $1.00 the options to which each notice related. The reason why Mr Eshuys presumed that the notices did no more than correct the error in the original offer, when that error had previously been corrected by the letter from Clayton Utz of 5 October 2001, is not explained. 12 Mr Eshuys gave a different account in his second affidavit. There he deposed: "I recall receiving the Second Notices when I went to the Alton Road property … I did not read the contents of them. I merely glanced at the covering letters and given that it seemed to be of a similar nature to the First Notice received I assumed they were replacements for the First Notice. I placed the bundle of the documents upon a shelf in my study. … At this time, believing the Second Notices were merely a correction of the First, I disposed of the balance of the First Notices by throwing them out." This version differs from the first, principally because Mr Eshuys is now saying that he did not read the notices of compulsory acquisition but only "glanced at the covering letters" from Clayton Utz. Based on the information contained in the covering letters, Mr Eshuys deposes that he thought that the enclosed notices were replacement notices of offer. I interpolate to say that even a cursory examination of the covering letters would not produce that conclusion. 13 Turning to Mr Eshuys' oral evidence, particularly that given in cross-examination, we find yet another version of how Mr Eshuys reached the erroneous view that the notices were not notices of compulsory acquisition. To put the matter in context, Mr Eshuys said that because Resource Surveys had rejected the September offer, his state of mind was that "there would be no further action" taken by Harmony Gold and "on that basis it was clear [the October notices were] not a compulsory acquisition." He believed that "the compulsory offer was in fact the beginning and the end of it". As regards what he read after opening the envelopes, Mr Eshuys said that he did not read the notices but that: "I have commissioned and read a number of independent experts' reports and my focus on receiving the notices was in fact on the independent experts' reports but when I saw that they were in fact a repeat of what had been sent to me earlier, I assumed the whole thing was a repeat of what I had been sent." When it was put to Mr Eshuys that he must have looked at the notices at least sufficiently closely to appreciate that the price that was being offered for the options was $1.00, Mr Eshuys said "I don't recall having read the notices". When it was pointed out that in one of his affidavits he deposed that he read the notices, Mr Eshuys' response was that he had intended to refer to the independent expert's report and not the notices themselves. Thus, he now appears to be saying that he had not read the covering letters. However a few questions later Mr Eshuys was asked in which of the documents had he read the reference to $1.00 and he said: "I can only repeat what I'm saying. I assumed that from reading and glancing at the documents, and particularly the independent expert's report, that it was similar to what had been sent before for which I had been offered a dollar." 14 As Resource Surveys did not object to the acquisition of its options within the required time, Harmony Gold considered that the acquisition had been effected. On 21 November 2001 it wrote to Resource Surveys informing it that its options had been acquired and that the consideration for each class of option ($1.00) was being held in trust, and seeking instructions on how that sum was to be dealt with. Mr Eshuys received this letter probably on 24 November 2001 (a Saturday) for he sent a copy of it to Mr Lewis by facsimile transmission from the airport on 26 November, under cover of a note which read: "Attached is a letter I received from Harmony. Not what I expected, please advise. I'm in the outback till Wednesday, Thursday in Perth; I will call you Thursday am." 15 Although the note said that Mr Eshuys would speak with Mr Lewis on 29 November, they apparently did not speak until 10 December, by which time Mr Eshuys had received Mr Lewis' letter of advice dated 29 November 2001 which recorded that according to the lawyers for Harmony Gold, notices for compulsory acquisition had been forwarded to Resource Surveys on 9 October 2001 and that the cash price for each class of option was $1.00. 16 Mr Eshuys was at his Mt Macedon property on the weekend of 30 and 31 November. He says that he did not look at the documents which he now knows to be the compulsory acquisition notices. He explained this failure as "probably [being due to] a number of family activities at that weekend which had [his] attention". Mr Eshuys said that he only looked at the documents in early December, after he received Mr Lewis' letter. It was then that he realised, for the first time, that the documents were indeed notices of compulsory acquisition, independent expert's reports and notices of objection. Mr Eshuys contacted Mr Lewis on 10 December 2001 and told him that he had received the notices and related documents. Mr Lewis' file note records that he was told that Mr Eshuys "did not realise that they were different to the previous notice" (a reference to the notice of offer). 17 Mr Lewis was instructed to bring an application to obtain an extension of the time within which notices of objection can be lodged. But before considering this issue there is a preliminary matter that must be dealt with. Resource Surveys contends that the notices of compulsory acquisition are invalid and seeks a declaration to that effect. For its part, Harmony Gold denies that there is any invalidity in the notices, but if there is it asks for relief under s 1322. It is necessary to deal with these issues first, for if the notices are invalid there will be no need to grant the extension sought. 18 Two grounds of invalidity are relied upon: (1) that the terms of payment for the options ($1.00 for all the options in each class) do not comply with s 664B(1) and; (2) that the notices do not provide the information that is required by s 664C(1). 19 As to the terms of payment, it will be remembered that s 664B(1) provides that the 90% holder must comply with two conditions. First, the acquisition of the securities must be for a "cash sum only" and, second, the bidder must pay the same amount for each security in the class acquired. There is no difficulty with the first condition: the consideration is expressed to be in the sum of $1.00 and, whether this amount is to be paid in actual currency or by negotiable instrument such as a cheque, the payment will relevantly be in "cash". But it is said that the second condition cannot be complied with when the cash sum to be paid for a number of securities is in an amount that, when one calculates the price that is to be paid for each individual security, is in a denomination which cannot be paid in cash. Take the instant case by way of illustration. Harmony Gold proposes to acquire 20 million 30 cent options for $1.00, which equates to 0.000005 cents for each option. It is said that such an application is not permitted. Another aspect of the argument is that where, as here, it is claimed that the options are of no value, the compulsory acquisition provisions have no application for they assume that there will only be an acquisition of securities which must have a "fair (that is some) value" (see eg s 664F) and securities which have no value must stand outside the regime. 20 It is convenient to deal with this last argument immediately for I can reject it without much ado. If correct it would leave a gaping hole in the legislation. If I can fill that hole by the application of modern principles of statutory construction (or indeed by applying the traditional principles), fill it I will. The Corporations Act proceeds on the sensible assumption that a successful takeover offer will not always result in the acquisition of all the shares the subject of the offer. There will be many reasons for this. For example, it is inevitable that some shareholders will not learn of the offer. And, no matter how attractive a bid may be, there will be shareholders who would prefer not to sell their shares. However, it has long been considered that it is not desirable that a bidder who has been able to acquire 90% of the shares in a company should be left with a small group of dissenters. Indeed, many companies simply would not embark on an acquisition if this were the case. Accordingly, the Companies Acts in England, Australia and Canada have long made provision for the compulsory acquisition of the shares of those dissenters, usually on the same terms as were available under the takeover bid. In some cases this will benefit the minority shareholders who were unable to accept the takeover offer for one reason or another. On all occasions it will advantage the majority shareholder by alleviating the inconvenience and expense of not being able to treat the subsidiary as a wholly owned subsidiary. There is no reason in principle why the compulsory acquisition provisions should not apply to securities that have no value, that is, where their fair value is $0.00. So I do not accept that the relevant provisions are based on the assumption that the securities must have some value before they can be compulsorily acquired. It is true that the 90% holder must pay cash for the securities to be acquired. But there is no reason why the amount should not be a nominal sum in the case where the securities have no value. While this will be more than the securities are worth, it is hardly a reason to deny the operation of the compulsory acquisition provisions to such a case. 21 What of the complaint that this may result in a price for each individual option which is not in a denomination that is capable of being paid? I do not think that this matters much, provided the amount that is to be paid to the holder of the securities for all those that are held can be paid. I accept that the cash amount must be capable of being paid. But because there is no obligation to make a separate payment for each security held in a case where a person holds more than one security, the fact that an arithmetical calculation shows that the purchase price, when attributed to each individual security, is not in a payable sum is irrelevant. 22 I should say that acceptance of Resource Surveys' argument could produce a windfall for the minority shareholders. At present, the lowest denomination of Australian currency is 5 cents (although 1 cent and 2 cents coins are still legal tender, they are no longer in circulation). If this sum were to be paid for each of the 40 million options held by Resource Surveys, Harmony Gold would be required to pay $2 million for the options. This would be an untenable result if the securities were worthless. 23 I turn now to the second ground of attack on the validity of the notice. The contention is that in addition to the matters that the statute provides must specifically be mentioned, the notice must include a summary of all the statutorily prescribed steps and processes involved in a compulsory acquisition, including the making and resolving of an objection. It must be accepted that if that were required, the notices are defective. The consequences flowing from such a conclusion is a different question, which would then have to be considered. First, however, it is necessary to consider whether the assumption that underlies the submission is well founded. 24 According to s 664C(1)(c) a compulsory acquisition notice must "[inform] the holders [of the relevant securities] about the compulsory acquisition procedure under [Part 6A.2]". This is not a requirement that the notice provide a summary of all the provisions in Part 6A.2, which is, in effect, what Resource Surveys says it is. On one view it may require the 90% holder to do no more than give notice about the existence of the compulsory acquisition procedure, together with the information required in sub-pars (i) and (ii). But I would not so limit the obligation. In my opinion the section means that the notice must give enough information about that procedure so that its general effect can be understood. It must be explained that the notice is being given to bring about a compulsory acquisition of securities, that the acquisition may be avoided by the service of the notice of objection within a particular period, and that notwithstanding any objection, the court may approve the acquisition. It seems to me that in general terms, the notice contains sufficient information to explain the effect of a compulsory acquisition. 25 However, there is one aspect of the notice that has the potential to mislead the recipient. Section 664C(1) requires the notice to be in the prescribed form. Section 350 provides that when the Corporations Act requires a notice to be in the prescribed form, that means that it must be in the form prescribed by the regulations, or if the form is not prescribed and Australian Securities and Investments Commission has approved a form for the document, it must be in the approved form. There is an approved form for a notice of company acquisition, namely Form 6024. The approved form was used by Harmony Gold. Paragraph 5 of the approved form reads: "Under section 664E, you (or anyone who acquires the securities during the objection period) have the right to object to the acquisition of your securities by completing and returning the objection form that accompanies this notice within _________ (6) of receipt of this notice. The objection cannot be withdrawn. (6) Insert the period during which holders may return the objection form. The period must be at least one month." In the notices served on Resource Surveys, the words "one month" were inserted in the space provided. The difficulty arises in the following way. Section 664C(1)(b) requires the compulsory acquisition notice to specify "a period of at least 1 month during which the holders may return the objection forms". Although the section does not say so in terms, the period must begin when the notice has been received. For that purpose s 664C(4) provides that if the notice is sent by post, it "is taken to be given 3 days after it is posted". This deeming provision operates notwithstanding the date of actual receipt. However, because the deeming provision is not referred to in the notice, the recipient is likely to assume that time starts running from the date on which he or she actually receives the notice. Thus, depending on when the notice was actually received, there may be a disconformity between when the recipient thinks the time for objecting will expire and the time when it actually does expire. I will illustrate this by an example. Assume the notice was sent on 20 December, but gets caught up in the Christmas post and does not arrive at the recipient's address until 29 December. Because the recipient is told that he has a month in which to return his objection form, he will assume that he has until 29 January to return the form and may not get around to doing so until 27 or 28 January. In fact, because of the operation of the deeming provision, the notice is taken to be given on 23 December and the time for objecting therefore expires on 23 January. The recipient's objection will be out of time. For the sake of completeness I note that the opposite situation may come to pass. That is, if the recipient receives the notice less than three days from posting, he will actually have longer than he thinks in which to object. 26 The operation of the deeming provision may seem to be rather draconian from the point of view of the recipient who, for any number of reasons, may receive the notice later than three days after it is posted. Why then ought the notice not be construed as allowing one month from actual receipt? Obviously the principal answer is that this is what the statute says. But the rationale for this must be understood. It is essential to have some finite end date for the compulsory acquisition process. If the recipient of a notice has a period of time from actual receipt in which to object, the 90% holder will not know when the compulsory acquisition takes place, and other dates in a takeover timetable that follow on from the objection date (eg s 664E(4)) will have no definite starting date. Given the importance of the compulsory acquisition right to the 90% holder, the provisions must be read strictly so as to facilitate the process. 27 There are two further points to note about this timing issue. First, it is doubtful whether a form can be prescribed that is inconsistent with the statutory requirements for that form. Second, the current form can always be amended so that it will conform to the statute, even if those amendments may be substantial. That said, it is clear that the current approved form has the potential to mislead the 90% holder who may insert the period in paragraph 5 of the form without regard to s 664C(4). As events have turned out, this potential has not caused a problem in this case. But there will be cases where it will cause difficulties and for that reason it would be appropriate for ASIC to revise its document. Lest it be thought that I make this suggestion without having given ASIC the opportunity to be heard, I should state that ASIC was in fact given leave to make submissions on the form of its notice. 28 Having disposed of the preliminary issues in favour of the validity of the compulsory acquisition notice, I must now consider whether Resource Surveys should be given an extension of time within which to return its objection. 29 It is plain that the grant of an extension of time is not automatic. The statutory timetable must prima facie be obeyed. To justify the court extending the time within which some procedural step is to be taken, there must be some material upon which the court can exercise its discretion. The court may be asked to exercise its power in s 1322(4)(d) in a variety of circumstances. In some cases the consequences of failing to act within time will be quite serious. Here, for example, if no order is made, there will be a radical interference with Resource Surveys' property rights. So, the injustice that may arise by the failure to make an order must be taken into account. It will also be necessary to ascertain why the applicant did not act within time. The explanation may be forgetfulness, inadvertence, negligence, mistake or some other cause. In each case the question is whether the applicant should be held to the consequences of his conduct, or whether the conduct ought to be excused by granting the extension. In most cases it will be necessary to consider whether any injustice will be occasioned to any other party if the extension be granted. Often a party will organise his affairs in the belief that the time for taking the step in question has passed and that step will not now be taken. Usually it will be unjust to undo that state of affairs. On other occasions prejudice will be suffered merely by the grant of the extension, although nothing has been done by the innocent party. For example, in a takeover situation considerable advantages can be gained by the ability to treat a subsidiary as wholly owned. The advantages may include the accounting treatment of the assets of the subsidiary, and benefits under income tax legislation, as well as significant administrative cost savings. All these factors must also be taken into account. 30 In the present case I need not be concerned with any potential disadvantage to Harmony Gold, for it will not suffer any detriment if an order is made. The only basis upon which it resists the order is that, so it argues, Resource Surveys has not put forward any material which would justify the indulgence that it seeks. In this respect, Harmony Gold says that the explanation for the misunderstanding put forward by Mr Eshuys should not be accepted, and if that be so, there is no other basis upon which the discretion can be founded. 31 I am bound to say that I do not find at all persuasive Mr Eshuys' explanation for failing to appreciate the character of the documents that were served on his company in October. Putting to one side the fact that Mr Eshuys has given inconsistent explanations to account for his misunderstanding, I am not persuaded that upon receipt of the documents Mr Eshuys did not appreciate their contents. As I said earlier, the covering letters made it plain that the enclosed documents related to the compulsory acquisition of Resource Surveys' options. The compulsory acquisition notices are not in any respect ambiguous. The objection notices could not be mistaken for a document that related to an offer to acquire the options. If Mr Eshuys only read the independent expert's reports and, from that source, discovered that the options were to be acquired for $1.00, then he must have read them sufficiently closely to appreciate that they related to a compulsory acquisition. 32 Once I reject, as I must, Mr Eshuys' explanation for his failure to act within time, I am in the position where I simply cannot say why Resource Surveys did not lodge the objection. Various explanations come to mind. It may be that Mr Eshuys initially thought that there was no point in making objection, and then changed his mind. Another possibility is that Mr Eshuys put the papers to one side and simply forgot to take the necessary steps. But these possibilities are mere conjecture on my part. And conjecture is not a sufficient basis to found an order under s 1322. And without some basis for making an order under that section, it would be wrong of me to do so simply because no prejudice would result. 33 The application will be dismissed with costs. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. Associate: Dated: 5 April 2002 Counsel for the Plaintiff: Mr M Derham QC with Mr P Crennan Solicitor for the Plaintiff: Gadens Lawyers Counsel for the Defendant: Mr L Glick SC with Mr S Goodman Solicitor for the Defendant: Clayton Utz Solicitor for Australian Securities and Investment Commission: Mr G Bloch Date of Hearing: 5 March 2002 Date of Judgment: 5 April 2002