Donald Financial Enterprises Pty Ltd v APIR Systems Ltd [2008] FCA 1112

FEDERAL COURT OF AUSTRALIA

Donald Financial Enterprises Pty Ltd v APIR Systems Ltd [2008] FCA 1112

TRADE PRACTICES – misleading or deceptive conduct – applicant claims relief in respect of subscription for 200,000 shares in the first respondent and purchase of 81,904 shares from existing shareholders – whether the first respondent and its directors engaged in misleading or deceptive conduct in failing to disclose the existence and content of the heads of agreement to which the applicant and the executive directors were parties – executive remuneration agreement – where the first respondent and its executive directors disclosed that only 50,000 shares were to be issued between the executive directors when the second heads of agreement contemplated the issue of at least a further 100,000 shares to each - requirement of disclosure in the audited financial statements – whether the first respondent and its executive directors offered the applicant the opportunity to scrutinise and review documents in a folder described as a 'due diligence folder' - accessorial liability and the non-executive directors – the applicable statutory regime under the Corporations Act 2001 (Cth), the Trade Practices Act 1974 (Cth) and the Australian Securities and Investment Commission Act 2001 (Cth) – remedies – share subscription deed declared void ab initio – cross-claim dismissed CONTRACT – formation – intention to contract – the principle in Masters v Cameron – 'subject to contract' – whether the first and second heads of agreement were binding as between the first respondent and the executive directors

Federal Court of Australia Act 1976 (Cth) s 51A Trade Practices Act 1974 (Cth) ss 4, 51AF, 52, 75B, 82, 87 Corporations Act 2001 (Cth) ss 79, 208, 209, 764A, 766A, 766C, 1041E, 1041H, 1041I, 1324, 1325 Australian Securities and Investment Commission Act 2001 (Cth) ss 12BB, 12BAA, 12BAB, 12CA, 12DA, 12GB, 12GH, 12GM Fair Trading Act 1992 (ACT)ss 11, 12, 13, 40, 46 Fair Trading Act 1987 (NSW) ss 42, 43, 61 Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101applied Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 cited Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 cited Bramble Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 applied Cleary & Anor v Australian Co-operative Foods Ltd & Ors (Nos. 2 and 3) (1999) 32 ACSR 701cited Commonwealth v Cornwell (2007) 229 CLR 519distinguished Fox v Percy (2003) 214 CLR 118 cited HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640applied Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 cited Masters v Cameron (1954) 91 CLR 353 applied Murphy v Overton Investments Pty Ltd (2004) 216 CLR 3distinguished Potts v Miller (1940) 64 CLR 282 applied Re NRMA Ltd; Re NRMA Insurance Ltd (2000) 34 ACSR 2cited Sinclair Scott & Co Ltd v Naughton (1929) 43 CLR 310 cited Thompson v White & Ors (2007) NSW Conv R 56-171 applied Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632cited Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 distinguished Yorke v Lucas (1985) 158 CLR 661 applied Elisabeth Peden, JW Carter and GJ Tolhurst, When Three Just Isn't Enough: the Fourth Category of the "Subject to Contract" Cases (2004) 20 JCL 156 DW McLauchlan, In Defence of the Fourth Category of Preliminary Agreements: Or Are There Only Two? (2005) 21 JCL 286 DONALD FINANCIAL ENTERPRISES PTY LIMITED v APIR SYSTEMS LIMITED, ANDREW HUTCHINGS BROSO, ANDREW RILEY, MAUREEN CANE, DAVID MCGREGOR and NOEL WICKS; APIR SYSTEMS LIMITED v DONALD SHARP and DONALD FINANCIAL ENTERPRISES PTY LIMITED AS TRUSTEE FOR THE ELYSUM TRUST