Supreme Court New South Wales Medium Neutral Citation: In the matter of Pendal Group Limited [2022] NSWSC 1575 Hearing dates: 16 November 2022 Date of orders: 17 November 2022 Decision date: 17 November 2022 Jurisdiction: Equity - Corporations List Before: Black J Decision: Court makes order 6AA of the Further Amended Originating Process, inserting the words "or injunctive relief" after the reference to "clause 7.2 of the SID" ; Cross-Summons brought by Perpetual Group Ltd is dismissed; costs reserved. Catchwords: CORPORATIONS – Scheme of arrangement – Construction of Scheme Implementation Deed. Legislation Cited: Corporations Act 2001 (Cth), s 411 Cases Cited: - Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; [2012] HCA 30 - ATG Lank (PBT) Ltd v Safety Mate Pty Ltd [2021] VSC 820 - Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 - Hamilton v Lethbridge (1912) 14 CLR 236 Long v Bowring (1864) 33 Beav 585 - Price v Spoor (2021) 270 CLR 450; [2021] HCA 20 Tay Rah Poon V Chianh Hai Guon (1997) 2 SLR 363 Texts Cited: - Spry, Equitable Remedies, 9th ed, 2014 Category: Principal judgment Parties: Pendal Group Limited (Plaintiff) Perpetual Group Limited (Acquirer) Representation: Counsel: J Williams SC/H Atkin (Plaintiff) J Sheahan KC/K Petch/R Jameson (Acquirer) Solicitors: King & Wood Mallesons (Plaintiff) Herbert Smith Freehills (Bidder) File Number(s): 2022/320227 Judgment Nature of the application and background facts 1. By Further Amended Originating Process filed on 16 November 2022, the Plaintiff, Pendal Group Ltd ("Pendal"), seeks orders under s 411 of the Corporations Act 2001 (Cth) that it convene a meeting of its members to consider and vote upon a proposed scheme of arrangement which provides for the acquisition of its shares by Perpetual Group Ltd ("Perpetual"). Events in respect of the proposed scheme have taken a somewhat unusual turn, after a third party consortium made an unsolicited and non-binding binding expression of interest in acquiring Perpetual shares, conditional on the scheme not proceeding. Pendal now seeks further relief consequential on that development. 2. By paragraph 6AA of its Further Amended Originating Process, Pendal seeks a declaration that, on the proper construction of the Scheme Implementation Deed dated 25 August 2022 ("SID") between Pendal and Perpetual, neither cl 11.8(f) nor cl 13.8 of the SID exclude Pendal's rights at law to seek specific performance of Perpetual's obligations under cl 7.2 of the SID, or injunctive relief, in circumstances where Perpetual has breached the SID or has indicated that it will breach the SID in order to pursue, agree or implement a Perpetual Major Transaction (as defined) or because Perpetual has otherwise determined not to proceed with the scheme. 3. Conversely, by a Cross-Summons filed on 14 November 2022, Perpetual seeks a declaration that: "… (other than for fraud) the maximum liability of Perpetual to Pendal in the event of any breach by Perpetual of the SID at any time prior to the Scheme becoming Effective, committed: a. in order to pursue, agree or implement a Perpetual Major Transaction; or b. because the Perpetual board determines that their fiduciary or statutory duties require that it commit the breach; is $23 million, and all other remedies are excluded, save for Pendal's right to terminate pursuant to clause 16 of the SID." The reference to $23 million in that Cross-Summons is implicitly a reference to the amount of the Reverse Reimbursement Fee (as defined) payable by Perpetual in certain circumstances under the SID, to which I return below. 1. By consent of the parties, I made an order to determine the questions raised by paragraph 6AA of the Further Amended Originating Process and the Cross-Summons as a separate question, prior to and determining other issues raised, which include Pendal's application to convene the scheme meeting and an application for an order for specific performance of Perpetual's qualifications under the SID. I am delivering judgment in relatively short form, orally, on the morning after argument in that application, having regard to the commercial urgency of the matter and the desirability of certainty in the market. Construction of the SID 1. The application involves questions of construction of the SID and I adopt well-established principles of construction to determine it, to which Mr Sheahan (with whom Ms Petch and Mr Jameson appeared for Perpetual) referred in submissions. An objective approach is applied to determine the rights and liabilities of a party to a commercial contract such as the SID, by reference to its text, context and purpose; and the meaning to be given to its terms is determined by reference to what a reasonable businessperson would have understood those terms to mean, having all the background knowledge that would be reasonably available to the contracting parties at the time of the contract, and this requires consideration of the language used in the contract, the surrounding circumstances known to the parties and commercial purposes or objects sought to be secured by the contract: Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35]; Price v Spoor (2021) 270 CLR 450; [2021] HCA 20 at [27] and [42]. 2. The question of construction in dispute between the parties here is, in substance, whether two clauses of the SID exclude any right of Pendal to specific performance or injunctive relief, if Perpetual had breached the SID or indicated that it will do to so to pursue a Perpetual Major Transaction (as defined) or as otherwise determined not to proceed with the scheme. It appears that position has not yet arisen, but there is a real dispute between the parties as to what will occur if that were to arise, and that dispute is properly resolved by declaratory relief made by the Court. 3. Before turning to the applicable provisions of the SID, I should recognise that, as Mr Williams (with whom Mr Atkin appears for Pendal) points out, the transaction in issue is a scheme of arrangement under Pt 5.1 of the Corporations Act, which contemplates the transfer of shares held by Pendal shareholders to Perpetual, by the mechanism provided by s 411 of the Corporations Act, if the transaction is approved by the statutory majorities of Pendal shareholders. This is important context to the SID because it emphasises that, although Pendal is party to the SID, many of its provisions operate for the commercial benefit of its shareholders, by offering the prospect of a transaction for their approval, and they will potentially suffer loss if the scheme does not proceed, depending on the price at which Pendal shares are then trading. Those shareholders are of course not party to the SID, although they would ultimately have the benefit of a Deed Poll executed by Perpetual, once it complies with its obligation under the SID to execute it. 4. Mr Williams also points to the statutory regime applicable to the scheme, including the information to be provided in an explanatory statement for the scheme under reg 5.101 and Pt 3 of Sch 8 of the Corporations Regulations 2001 (Cth), which contemplate that Pendal directors will make a recommendation in respect of the scheme. Mr Williams also notes, in accordance with common practice, that the SID contemplates that an independent expert's report will be made available to shareholders in respect of the scheme. 5. These matters are significant, because they point to a real difference between Pendal's position and Perpetual's position in respect of the scheme generally, and the SID in particular. The directors of Pendal are required to undertake a continuing assessment of the position in respect of the scheme, and may need to change their recommendation depending on developments. I will refer to provisions of the SID which recognise that possibility below. By contrast, and subject to the construction of the SID and the issues to which I refer below, the substantive decision made by Perpetual's directors in respect of the scheme was made at the time they authorised the entry into the SID, and the SID does not contemplate a continued re-assessment by Perpetual as to whether the scheme is, or is not, desirable from the perspective of Perpetual as acquirer. 6. Returning to the relevant provisions of the SID, Recitals A and C to the SID relevantly record that: "Pendal and perpetual have agreed to undertake the Transaction by reasons of a members Scheme of Arrangement under part 5.1 of the Corporations Act... Pendal and Perpetual have agreed to implement the Scheme on the terms and conditions of this document." 1. Clause 2.2 of the SID continues to focus on implementation of the transaction, recording that: "The parties agree to implement the Transaction on the terms and conditions of this document". 1. Clause 1.1 of the SID in turn defines "Transaction" to mean "the acquisition of the shares in Pendal by [a] Perpetual [s]ub[sidiary] through the implementation of the Scheme". 2. Clause 5.1 imposes obligations on each of Pendal and Perpetual and provides that: "Pendal and Perpetual must each: (a) use all reasonable endeavours and commit necessary resources (including management and corporate relations resources and the resources of external advisers); and (b) procure that its officers and advisers work in good faith and in a timely and co-operative fashion with the other party (including by attending meetings and by providing information), to produce the Scheme Booklet and implement the Scheme as soon as reasonably practicable and as far as possible in accordance with the Timetable." 1. Clause 6.1 requires Pendal to procure, subject to cl 6.2, a unanimous board recommendation of the Transaction, in the absence of a Superior Proposal (as defined) and subject to the independent expert concluding that the scheme is in the best interests of Pendal shareholders. That requirement is reinforced by cl 6.2 of the SID which deals with any change of recommendation which is in turn limited by cl 11 of the SID and the requirement that the Pendal board: "… determines in good faith and acting reasonably, having received expert advice in writing from its legal advisers (who must be reputable advisers experienced in transactions of this nature), that they must do so because of their fiduciary or statutory duties to Pendal Shareholders." 1. There is no directly corresponding provision relating to any recommendation or change of recommendation to the Perpetual board, which is not surprising where the Perpetual board does not make a recommendation to Perpetual shareholders in relation to the scheme and has committed Perpetual to the transaction, subject to the terms of the SID, at least by the point that it authorised entry into the SID. 2. Clause 7 in turn imposes implementation obligations on both Pendal and Perpetual. By cl 7.1, Pendal must comply with its obligations set out in Sch 4 to the SID and "take all reasonable steps to implement the Scheme as soon as is reasonably practicable" and by cl 7.2, Perpetual must also comply with specified obligations. 3. Clause 9 is entitled "conduct of business". Clause 9.3(b)(i) provides that nothing in that clause restricts Pendal's ability to respond to a Competing Transaction (as defined) in accordance with cl 11 and cl 9.3(c) provides that nothing in that clause restricts Perpetual's ability to respond to a Perpetual Major Transaction in accordance with cl 11. The term "Perpetual Major Transaction" is defined as: "Perpetual Major Transaction means a transaction which, if completed, would mean a Third Party would (alone or together with its Associates): (a) directly or indirectly acquire an interest or Relevant Interest in or become the holder of 20% or more of the shares in Perpetual (other than as a custodian, nominee or bare trustee); or (b) otherwise acquire (whether directly or indirectly) or have a right to acquire or have an economic interest in all or a substantial part of the business conducted by the Perpetual Group (which for the avoidance of doubt includes, individually, the Perpetual PCT Business, either of the business units which comprise the Perpetual Asset Management Business or the Perpetual Private Business), including by way of sale of assets, sale of shares or joint venture, dual listed company structure or otherwise; or (c) acquire Control of Perpetual; or (d) otherwise acquire or merge (including by a reverse takeover bid, dual listed company structure, scheme of arrangement, capital reduction or other synthetic merger) with Perpetual; or (e) enter into any agreement, arrangement or understanding requiring Perpetual to abandon, or otherwise fail to proceed with, the Transaction." As Mr Williams points out, some of the matters referred to in the definition of Perpetual Major Transaction would not necessarily be inconsistent with the implementation of the Pendal scheme, such as a third party acquiring a 20% or greater interest in Perpetual; but paragraph (e) is plainly directed to an inconsistent transaction, so far as it refers to an agreement, arrangement or understanding "requiring Perpetual to abandon, or otherwise fail to proceed with, the Transaction". 1. Clauses 11.1-11.3 of the SID in turn impose exclusivity provisions on Pendal, dealing with no existing discussions in respect of a Competing Transaction (as defined) and "no shop" and "no talk" provisions, and the "no talk" provision is subject to an exception in respect of a Competing Transaction in specified circumstances. I will return to the scope of that provision, and a broadly corresponding provision in respect of Perpetual, shortly. Clause 11.5 requires notification by Pendal to Perpetual of certain approaches to Pendal, cl 11.6 provides a "matching right" and cl 11.7 requires Pendal to provide specified information to Perpetual. 2. Clause 11.8 then deals, with some similar and some different aspects, with "Perpetual Exclusivity". Clause 11.8(a) deals with no existing discussions in respect of a Perpetual Major Transaction. Clause 11.8(b) is a "no shop" provision and cl 11.8(c) is described as a "no talk" provision and relevantly prohibits Perpetual from taking specified steps as to an actual, proposed or potential Perpetual Major Transaction. Clause 11.8(d) provides an exception to that prohibition, with effect that Perpetual's "no-talk" restriction does not apply to the extent it restricts an actual, proposed or potential bona fide Perpetual Major Transaction, provided that: such a Perpetual Major Transaction has not arisen as a result of a breach of the "no shop" provision by Perpetual; and the Perpetual board in good faith has determined after receiving written legal advice from its reputable external legal advisers that compliance with the "no-talk" provision would or would be reasonably likely to constitute a breach of any fiduciary or statutory duties of Perpetual's directors. 3. There was a dispute between the parties as to the scope of cl 11.8(c) of the SID and the corresponding provision binding upon Pendal in respect of cl 11.3 of the SID. There is force in Mr Williams' submission that the language of cl 11.8(c), read with the corresponding cl 11.3 relating to Pendal, is directed to ancillary or anterior transactions rather than to the entry into the Perpetual Major Transaction or (in the case of Pendal) a Competing Transaction. However, it is not necessary to determine that dispute because, irrespective of the scope of those clauses, the "fiduciary out" to cl 11.8(c) applies if its conditions are satisfied; and, as will emerge below, that "fiduciary out" does not permit Perpetual to terminate the SID or obtain a release from its obligations under it. 4. Given the width of the definition of "Perpetual Major Transaction" in the SID, that result may cause no difficulty, because there may be no inconsistency between a "Perpetual Major Transaction" and the scheme; or any inconsistency may cause no loss to Pendal or its shareholders; or, in some cases, particularly where paragraph (e) of the definition of Perpetual Major Transaction applies, the inconsistency may be fundamental and a loss to Pendal and its shareholders may be substantial. 5. However, whether cl 11.8(c) and the "fiduciary out" in cl 11.8(d) apply to a wider or a narrower range of transactions seems to me to be neutral as to the question of relief that is available to Pendal where inconsistency with the scheme and loss arise, which is to be determined by the specific provisions which address that matter, which are in dispute between the parties. To put that proposition another way, whether the prohibition in cl 11.8(c) is wider or narrower, and whether the "fiduciary out" then operates more widely or more narrowly in consequence, and whether or not it points only to an ancillary or anterior transaction or to a Perpetual Major Transaction itself, has no impact on Perpetual's obligations under the SID, which are not released, and says nothing as to whether the consequence of breach of those obligations would be wider or narrower, larger or smaller, limited to liquidation damages or extending to relief available in equity, including injunctive relief or equitable relief. 6. Returning then to the terms of the SID, cl 11.8(e) in turn provides for notification by Perpetual of certain approaches relating to Perpetual. Clause 11.8(f) is the first of the provisions in dispute between the parties and deals with any breach by Perpetual of the SID in connection with a Perpetual Major Transaction. Clause 12 provides for the payment of a Reimbursement Fee (as defined) by Pendal to Perpetual in specified circumstances that are not presently relevant. Clause 13 deals with a Reverse Reimbursement Fee payable by Perpetual to Pendal in specified circumstances, triggered by Pendal's valid termination of the SID on specified grounds or a failure by Perpetual to pay the scheme consideration. That amount is only payable on demand by Pendal under cl 13.1 and cl 13.7 provides that the amount payable is reduced in specified circumstances. Clause 13.8, which is the next clause in dispute between the parties follows, deals with Perpetual's limitations of liability. Clause 16 deals with termination events and cl 21.6, on which Pendal relies, is a "remedies cumulative" clause in common form. Clause 11.8(f) of the SID 1. As I noted above, cl 11.8(f) of the SID is the first of the provisions in dispute between the parties. It is helpful to break that clause into its elements. It is headed "Breach in connection with Perpetual Major Transaction" and has four parts, as follows: (1) For the avoidance of doubt, Perpetual is not entitled to terminate this document in order to pursue, agree or implement a Perpetual Major Transaction. (2) If Perpetual breaches this document in a manner which causes implementation of the Scheme to become impossible or impracticable, or otherwise materially breaches this document in order to pursue, agree or implement a Perpetual Major Transaction, Perpetual must pay to Pendal the Liquidated Damages Amount by way of liquidated damages, even if Perpetual's Board determined that the breach was required in order to fulfil the fiduciary or statutory duties of the directors of Perpetual. (emphasis added) (3) The parties agree that the loss which would be incurred by Pendal as a result of that breach are of a nature that they cannot be accurately quantified and that the Liquidated Damages Amount is a genuine pre-estimate of that loss. (4) Nothing in this clause limits Pendal's right to terminate this document under clause 16 which might arise as a result of any breach to which this clause relates. 1. Perpetual relies on cl 11.8(f) of the SID as the first of the two clauses which it contends limits its liability to Pendal in the event of a breach of the SID to pursue a Perpetual Major Transaction, or because the Perpetual board determines that its fiduciary or statutory duties requires that Perpetual commits the breach, to the amount of the Reverse Reimbursement Fee. 2. Mr Williams in turn points to academic commentary and authority that the existence of a liquidated damages clause does not, in itself, generally have the result that one party, relevantly, Perpetual, has the option to pay liquidated damages instead of performing; Spry, Equitable Remedies, 9th ed, 2014, 77-79; Long v Bowring (1864) 33 Beav 585 at 588-589; Hamilton v Lethbridge (1912) 14 CLR 236 at 246, 259 and 270; Tay Rah Poon V Chianh Hai Guon (1997) 2 SLR 363 at [18] ("Tay Rah Poon"); Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; [2012] HCA 30 at [80]. I have not neglected Mr Sheahan's submission that these cases, or at least Tay Rah Poon, involve circumstances where specific performance would be more readily available than in respect of the SID. Even if that were correct, they still emphasise that a provision for liquidated damages will not ordinarily, without more, exclude other remedies. I did not understand Mr Sheahan ultimately to contend to the contrary, as distinct from relying from the specific provisions in the SID. 3. Mr Williams also submits, and I accept, that the proposition that a liquidated damages clause would exclude other relief is less likely here, where the amount of liquidated damages payable is specified by reference to the Reverse Reimbursement Fee, which in turn is calculated so as to compensate Pendal itself for its costs incurred in the transaction. The payment of that fee ought, obviously enough, not compensate Pendal shareholders for any loss of opportunity to have their shares acquired at a price they may perceive as attractive under the scheme, and a price which would ordinarily be expected to exceed the market price if the scheme does not proceed. 4. Mr Sheahan in turn points to aspects of the exclusivity provisions in respect of Perpetual, in cl 11.8, that are in parallel with the exclusivity provisions in respect of Pendal in cll 11.1-11.7 of the SID. That submission does not, however, take Perpetual very far, because those provisions are only parallel to the extent that they are not different, and they are different in a critical respect. Pendal has a limited right to terminate the SID to pursue a Superior Transaction (as defined) but Perpetual does not have a corresponding right to terminate the SID to pursue a Perpetual Major Transaction, whether by reference to a fiduciary carve out or otherwise. 5. Mr Williams in turn submits that the whole of cl 11.8 involves a balancing of Perpetual's interest on the one hand and Pendal's and Pendal shareholder interests on the other, and does not prevent Pendal seeking specific performance or injunctive relief in relevant circumstances, particularly where Pendal could otherwise not itself recover the loss suffered by Pendal shareholders as a result of any breach by Perpetual of the SID. Mr Williams draws attention to the whole of cl 11.8 in respect of the balancing, although I have pointed above to the controversy as to the scope of cl 11.8(c) and its relationship with clause 11.3(b) of the SID in that regard. 6. I am here satisfied that cl 11.8(f), on its proper construction and with regard to its context in the SID and the surrounding circumstances, does not have the meaning that Perpetual gives to it. The first element of the clause, expressly stated to be "[f]or the avoidance of doubt", confirms the position that emerges from cl 16 of the SID, which is that Perpetual is not entitled to terminate the SID to pursue or implement a Perpetual Major Transaction. Mr Williams also points to the difference in Perpetual's position from Pendal's position here, where, as I have noted above, Pendal has a limited right to terminate the SID to pursue a Superior Proposal but Perpetual has no such right in respect of a Perpetual Major Transaction. 7. The second part of the clause imposes an obligation on Perpetual to pay the Liquidated Damages Amount (as defined), but only for a particular kind of breach by Perpetual of the SID, namely a breach which (1) causes implementation of the scheme to become impossible or impracticable; or (2) is a material breach, which both parties accepted would be assessed by reference, at least in part, to its consequences; and (3) in each case, is undertaken in order to implement a Perpetual Major Transaction. Plainly, that clause will not trigger that obligation where a breach does have those three characteristics, including where it is intercepted, for example by injunction, before the breach makes the implementation of the scheme impossible or impracticable, or before it has become material by reference to its nature or its consequences. I can see no reason to read that part of the clause as excluding interlocutory or other relief where the breach does not yet have the character that would require the payment of a Liquidated Damages Amount or so as to exclude relief that would in fact prevent it obtaining that character, or in respect of a breach that would not ultimately have that character in any event. 8. Perpetual also puts weight on the language "must pay" in that provision, but that will arguably be limited at least in the situation where Pendal claims payment of the Liquidated Damages Amount in respect of the relevant provisions. Even apart from that potential limitation, that language does not assist Perpetual where the preconditions to a claim for the Liquidated Damages Amount do not arise, again because no impossibility of performance or impracticability of performance of the scheme has arisen or because the materiality of the breach has not yet arisen. 9. Mr Sheahan in turn places substantial weight on the language in that clause: "…even if Perpetual's board determined that the breach was required in order to fulfil the fiduciary or statutory duties of the directors of Perpetual." 1. Mr Sheahan seeks to read that provision as, in effect, an acknowledgement that the Perpetual board can determine that a breach is necessary to fulfil the fiduciary or statutory duties with the director of Perpetual, and that that in some way limits the rights available to Pendal if that occurs. It does not seem to me that the language of that clause supports the weight which Perpetual seeks to put on it. It is directed to a determination of the Perpetual board and seems to do no more than to emphasize that the Liquidated Damages Amount would be payable, if claimed by Pendal, even if the Perpetual Board was justified, from its perspective, in breaching the SID because it believed that breach was required on the specified basis. Whether that would be the case, in fact, would have to be determined in the particular circumstances, including by reference to the obligations assumed by Perpetual in entering into the SID, and the extent that the exposure to Perpetual in breaching it. The position, in that respect, seems to me to be no different, in principle, from a decision reached by Perpetual's directors or management in determining whether Perpetual should comply with any other obligation it may have assumed in any of the other contracts, or breached that contract and expose itself to any consequential remedies. 2. I also do not accept Mr Sheahan's further submission that that places the directors of Perpetual in an impossible position where their position is no different from the position that they would face in determining whether to comply with, or breach, any other substantial contract which may be binding upon Perpetual. The directors' fiduciary or statutory duties will be no different to those which would ordinarily exist, where a company is bound by a contract that it entered into at a previous date, and the question whether to breach that contract and accept any risk of damages can be assessed by reference to, on the one hand, the consequences of breach, and on the other hand, the consequences of compliance. 3. The third element of the clause is an acknowledgment of the basis of liquidated damages and does not exclude other relief. 4. The fourth element of the clause preserves Pendal's "right" to terminate the SID under cl 16 for a breach arising from a Perpetual Major Transaction but, importantly, does not require it to do so or prevent it from affirming the SID and seeking to compel performance. For these reasons, it does not seem to me that cl 11.8(f) read on its own, or together with the other provisions in the SID, supports the position for which Perpetual contends. Clause 13.8. of the SID 1. Clause 13.8 of the SID in turn provides that: "Notwithstanding any other provision of this document: (a) the maximum liability of Perpetual to Pendal under or in connection with this document including in respect of any breach of this document will be the amount of the Reverse Reimbursement Fee; and (b) the payment by Perpetual of the Reverse Reimbursement Fee represents the sole and absolute liability of Perpetual under or in connection with this document and no further damages, fees, expenses or reimbursements of any kind will be payable by Perpetual under or in connection with this document, except that nothing in this clause limits Perpetual's liability for fraud or following the Scheme becoming Effective, a breach of clause 4.1(c) or under the Deed Poll." 1. Mr Williams submits that that clause does not indicate any objective intention to permit Perpetual to choose between, on the one hand, paying the Reverse Reimbursement Fee and, on the other, performing its obligations under the SID, as an alternative means of performance of the contract, as distinct from dealing with the consequences of a "breach" of the SID. 2. Mr Sheahan in turn appears to place primary weight on paragraph (b) rather than paragraph (a) of that clause in supporting the position for which Perpetual contends. To the extent that paragraph (a) were relied on, it seems to me that its references to a "maximum liability" necessarily contemplates a cap on a money payment, and cannot be applied to exclude, for example, the grant of an injunction or an order for specific performance, which do not give rise to a direct monetary liability to which that maximum may apply. 3. So far as paragraph (b) of that clause is concerned, the first difficulty with Perpetual's contention is that, as Mr Williams points out, the provision is directed to "liability", rather than using any concept of "obligation" or "remedy", and I am not persuaded by Mr Sheahan's contention that "liability" refers to the burden of any relief that may be ordered against Perpetual. Second, as Mr Williams also points out, the clause appears to be conditional on payment by Perpetual of the Reverse Reimbursement Fee, and there is no suggestion that that has occurred. Even if it was to occur, and even if that clause is capable of applying if Pendal has not first demanded a payment of the Reverse Reimbursement Fee and, for example, then rejects its tender by Perpetual, it seems to me that the exclusion of any other "liability" does not, on its proper construction, include any other remedy or relief. The grant of other relief is also not inconsistent with the express reference in that clause to further damages, fees, expenses or reimbursements. Third, as Mr Williams points out, cl 13.8 is directed in its terms to Perpetual's liability to Pendal, and does not address compensation to and cannot extinguish any claim for relief for the benefit of Pendal shareholders for loss if the scheme did not proceed, where they are not party to the SID. That loss can potentially be averted by an action by Pendal in specific performance or by injunctive relief, at least in an appropriate case. The academic commentary and the case law recognises that, in a case where one party has a contractual right (relevantly Pendal) and a third party (relevantly, Pendal shareholders) will suffer loss, that is more readily a situation where specific performance would be ordered. It also seems to me to be less readily a situation in which a limitation, or exclusion, of liability of by one party to the other after the Reverse Reimbursement Fee is paid would exclude an action which is directed to recovering the loss suffered by that third party. 4. I note that this conclusion is consistent with the view expressed, in respect of a somewhat similar provision, in ATG Lank (PBT) Ltd v Safety Mate Pty Ltd [2021] VSC 820 at [546], although I recognise that, as Mr Sheahan fairly points out, each clause needs to be construed in accordance with its terms and in the context of the relevant agreement. Clause 21.6 of the SID 1. Pendal in turn points out, and I accept, that the construction which Perpetual gives to cl 11.8(c) is inconsistent with cl 21.6 of the SID, which provides the rights and remedies in the SID are in addition to other rights and remedies given by the law independently of the SID. I recognise that cl 21.6 would not provide an answer to Perpetual's construction of cl 13.8, if it were correct, where cl 13.8 applies notwithstanding any other provision of the SID. However, for the reasons noted above, I do not accept that Perpetual's construction of that clause is correct. Other matters 1. Mr Sheahan also submits that the SID is not an agreement as to which specific performance would readily be ordered. That submission was not directed to asking me to determine that issue at this point, but to a proposition that it would be more likely that such relief was excluded by the clauses on which Perpetual relied, where it was less likely to be granted in any case. I do not consider it is necessary to determine that question, prior to reaching it at any later stage of the proceeding. Even if were difficult to obtain specific performance, a narrower prohibitive injunction or a narrower mandatory injunction, for example as to the execution of the Deed Poll, may be available, and the fact that relief may be difficult to obtain does not seem to me to substantially advance the question whether it is excluded by the provisions which I have addressed above. 2. Mr Williams submits that the position for which Perpetual contended would have a similar effect to a defeating condition in a takeover bid under Ch 6 of the Corporations Act, which would be prohibited under that chapter. There is force in Mr Sheahan's response that this is ultimately the question of contractual construction where schemes of arrangement are concerned, and there may be proper cases where a target company would take the risk of such a provision so as to obtain the benefit of an offer to its shareholders. It is not necessary to determine that question here given the conclusions that I have reached above as to the construction of the SID. 3. I also note that this aspect of the application has only been directed to the declarations sought in cl 6AA of the Further Amended Originating Process and by Perpetual in the Cross-Summons, and that other issues may arise in respect of other aspects of the application. I do not address those other issues where they have not yet arisen. Orders 1. For these reasons, I make order 6AA of the Further Amended Originating Process sought by Pendal, inserting the words "or injunctive relief" after the reference to "clause 7.2 of the SID" in accordance with an amendment made by Pendal in the course of the hearing. The Cross-Summons brought by Perpetual is dismissed. I reserve the question of costs pending any subsequent stages in the application ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 November 2022