Acacia Resources Ltd v Delta Gold NL [1999] VSC 369

5. The application was instituted with urgency in light of the likely dispatch of the offer to shareholders of Acacia on or after 29 September 1999. In summary, Acacia alleges that the Part A Statement and form of offer do not comply with s.750 of the Corporations Law, are materially misleading and omit material matters in breach of s.704 of the Law and are misleading and deceptive in breach of s.995 of the Corporations Law, s.52 of the Trade Practices Act 1974 and s.12DA of the Australian Securities and Investments Commission Act 1989. The application before me was an application for an interlocutory injunction to retrain the dispatch of the Part A Statement and form of offer and, also, subsequent documents prepared by Delta after the Part A Statement, such restraint to operate until the trial of the proceeding or further order.

8. On 2 September 1999 Delta issued an announcement to the Australian Stock Exchange that it intended to make a takeover offer for all of the issued shares in Acacia in consideration of the issue of fully paid ordinary shares in Delta on a one for one basis. The share offer was, therefore, a scrip offer. The announcement of the takeover by Delta referred to the existence of an agreement between Delta and Placer (Granny Smith) Pty Ltd ("Placer") and that agreement is referred to hereafter as "the Placer agreement".

11. It is necessary before turning to the Part A Statement to set out background matters. Near Laverton in Western Australia is located the Sunrise Dam gold mine. At that site there is an open pit mine called "Cleo" operated by Acacia. Material from the Cleo deposit owned by Acacia is mined at the Sunrise Dam gold mine. Adjacent to the Sunrise Dam gold mine is the Sunrise deposit which is owned by Sunrise Mines Limited being a wholly owned subsidiary of Delta. As a result of a joint venture between Delta and Placer that joint venture is entitled to all of the gold ore extracted from the Sunrise deposit. Further, under the joint venture between Placer and Delta there is an area of interest covering tenements within a 35 kilometre radius of the Granny Smith Mill which is operated by Placer and is located approximately 30 kilometres north of the Sunrise Dam. A map of the area produced by Acacia demonstrates an overlapping between Acacia tenements and Placer/Delta tenements in what has been referred to as the 35 kilometre radius (of the Granny Smith Mill).

14. In about October 1995 Acacia and Placer devised a document called a set of "working principles" prepared to guide the development of the Cleo deposit at Sunrise Dam and the Sunrise deposit in order to maximise cooperation and value. Among other matters, the working principles provided for the exchange of geological mining data, design data, access to infrastructure and a framework for cost sharing. Subsequently, in January 1996 Placer and Acacia executed the document known as the "working principles". Thereafter, in accordance with the working principles document and a number of confidentiality arrangements between the parties senior mining personnel of Acacia and Placer exchanged information in relation to the Cleo deposit at the Sunrise Dam and the Sunrise deposit. During 1997 and 1998 discussions occurred between Placer and Acacia representatives with a view to devising a detailed plan for the future of the Granny Smith Mill operation and the Sunrise Dam and Sunrise deposits. The Placer agreement was described in the announcement as being one to negotiate in good faith certain matters in relation to a joint venture gold mine called Sunrise and in relation to Sunrise Dam Goldmine which was 100% owned by Acacia. On 3 September 1999 Acacia requested that Delta inform the market of the terms of the Placer agreement. Delta declined to do so on the basis that the Placer agreement was not material information and that, in any event, Delta considered that the material terms of the Placer agreement had already been disclosed by Delta to the market. Further correspondence ensued between the solicitors for Delta and Acacia and eventually on 6 September 1999 Delta made a further announcement to the Stock Exchange concerning the Placer agreement.

17. From 8 September 1999 onwards correspondence ensued between Acacia and Delta in relation to certain confidentiality arrangements that bound Acacia, Delta and Placer in relation to the Sunrise Dam and the Sunrise Pit. Acacia expressed the view to Delta that there needed to be clarification as to how the joint venture arrangements between Placer and Delta in relation to the Sunrise Pit would operate in relation to the Sunrise Dam if Delta succeeded in securing control of Acacia. Essentially the position of Acacia was that there should be disclosure to the market. On about 15 September 1999 Delta informed Acacia that it considered the Part A Statement contained a proper disclosure of the terms of the Placer Agreement and, in particular, advised "Delta does not believe that further negotiations are warranted until it is in control of Acacia and in possession of all relevant information (so as to be capable of negotiating the detailed arrangements in a fully informed manner). To negotiate any further with Placer at this time may be adverse to the interests of Delta and Acacia shareholders". It is significant at the point of this communication that there was a continual refusal by Delta to disclose a document described as the "Working Principles" or a subsequent deed. Furthermore, despite the statement of Delta to Acacia concerning negotiations with Placer as events transpired, within a week Delta had negotiated an agreement with Placer.

20. In any event, on 14 September 1999 Delta registered the Part A Statement and form of offer with the Australian Securities & Investments Commission ("the Commission"). Acacia received the Part A Statement and offer on 15 September 1999. On 20 September 1999 Acacia through its solicitors informed the solicitors for Delta of the concerns of Acacia with respect to alleged material deficiencies in the Part A Statement. Furthermore, Acacia informed Delta that it considered a shareholder of Acacia could not make an informed assessment of the value of Delta shares offered as consideration for acceptance of the takeover offer or determine the effect of the takeover offer upon a shareholder of Acacia who decided to retain his or her shares. Correspondence was exchanged and on 22 September 1999 Delta rejected the concerns of Acacia but advised that it intended sending out additional information together with a further deed entered into between Delta and Placer to Acacia shareholders. The additional information was to include information in relation to a new deed made between Placer and Delta on 22 September 1999, (hereafter referred to as the "September Placer deed"); the fact of the proposed acquisition of Delta of the 50% interest of North Limited in Kanowna Belle; if negotiations were completed prior to Delta's offers being sent to Acacia shareholders; the commitment of Delta not to waive the minimum acceptance condition in its takeover offer at level of acceptances less than 50.1% of Acacia's issued shares and; finally, information concerning the voting regimes contained in the Granny Smith joint venture agreement. Delta informed Acacia that it intended to dispatch the Part A Statement and offer in its original form to Acacia shareholders on 30 September 1999. Acacia complained to Delta about this proposed course and Delta maintained its position to not make any further disclosure to Acacia shareholders or to withhold the issue of the Part A Statement and the offer. Specifically, despite a request from Acacia, Delta refused to incorporate the supplementary information just outlined to Acacia shareholders in a new Part A Statement. As a result, Acacia instituted these proceedings.

23. In affidavits and summary documents Acacia provided the court with a thorough description of its perceived deficiencies in the Part A Statement as prepared at 13 September 1999. It transpired during the course of the hearing as a result of the service of supplementary documents by Delta upon Acacia that there was additional information available to Delta which Delta indicated its intention to disclose to Acacia shareholders in addition to the Part A Statement and offer in their original form.

26. In terms of the deficiencies alleged by Acacia with respect to the Part A Statement and offer, the alleged deficiencies fall into a number of categories. Firstly, with respect to accounts, it is alleged by Acacia that there is no provision of dividend forecasts and/or earning forecasts for Delta or the merged entity for a two year period, rather, only for a six month period. It is alleged that the limited forecast is unusual and inadequate. It also transpired during the latter part of the second day of the hearing for the interlocutory injunction upon the production of documents on subpoena served by Acacia upon Delta that Delta had prepared private "in-house" forecasts extending as far ahead as a ten year period. These forecasts had not been divulged in the Part A Statement or the offer.

29. The second area of criticism of deficiencies in the original Part A Statement related to the Placer agreement and proposals with respect to the Granny Smith joint venture. It was alleged that there was no disclosure of the working principles document, the precise dealings between Placer and Delta, how it was anticipated the synergies between the two entities would be achieved, non-disclosure of the basis of calculations of alleged savings (despite the existence of in-house analysis and figures subsequently revealed from subpoenaed documents to have been prepared by Delta) and, finally, non-disclosure of the voting arrangements in the Granny Smith joint venture. Acacia has voiced concerns that the rights of Placer under the Granny Smith joint venture agreements are not set out in the joint venture deed between Delta and Placer and are not described in the Part A Statement. As a result, Acacia has concerns that if the merged entity of Acacia and Delta was obliged to offer any new tenements of Acacia to Placer the position of Acacia would be prejudiced.

32. Acacia has concerns that arising from the joint venture and confidentiality arrangements between Placer and Acacia, Delta is in a position of some advantage. It is the belief of Acacia that Delta has intentions that are yet to be disclosed in relation to the Sunrise Dam and Sunrise deposits. As part of these concerns Acacia has significant reservations with respect to the projected cost savings put forward by Delta in the Part A Statement and the offer. Acacia on the basis of evidence and analysis provided on affidavit has concerns that the estimated cash savings of the merged entity of Acacia and Delta said to be in the range of $10.5M does not disclose how that estimate is reached.

35. The third category of complaint with respect to deficiencies in the Part A Statement was concerned with hedging. It was alleged that there was no disclosure of the financial significance of hedging activities to each of Delta and Acacia, no disclosure of intentions or future strategy in relation to the hedging policies for each of Delta and Acacia.

38. The fourth area of concern is information relating to other gold assets. It was alleged that there were gold assets referred to as the Wandoo resource and the Tanami Mines. The complaint of Acacia was that there was no disclosure by Delta concerning its future intentions with respect to these assets. The fifth complaint related to non-gold assets and the complaint essentially was that there was no disclosure by Delta of future intentions relating to such assets. The sixth and final category of complaint with respect to the original Part A Statement and offer was concerned with Kanowna Belle. Acacia complained that there was no disclosure of the state of negotiations with North Limited as at 13 September 1999, the likelihood of a completed transaction, the potential financial impact on the debt position and future dividends of Delta and, finally, it was alleged that there was no disclosure of the provisions of the relevant joint venture dealing with rights of pre-emption or the valuation of the interest to be purchased.

41. Aside from the alleged deficiencies in the Part A Statement and offer Acacia complained that there were misleading and deceptive elements of the statement and offer. These complaints allege that the Part A Statement and the offer did not disclose the fact that the Kanowna Belle acquisition was closer to fruition than represented in the documents, the fact that the disclosure of the Placer agreement without the working principles document created a misleading picture of the true position, that the Part A Statement suggested that shareholders of Acacia would receive a premium when in fact on the basis of Delta's own figures there would be a discount, that the assessment of a lower valuation figure of $1.80 per share artificially boosted profits, that good will was amortised in the Part A Statement and offer over 12 years whereas the life of the assets purchased was estimated to be five to six years and, finally, that the non-disclosure of intentions in relation to the less than 50% scenario or that Delta did not intend to waive the 90% condition unless it received at least 50.1%.

44. The third attack launched by Acacia upon the Part A Statement and offer was that there had been material changes since 13 September 1999 which constituted additional failure to disclose material information. These matters were that the Kanowna Belle acquisition was consummated thereby prompting the need for revised financial figures and accounts for both Delta and the merged entity, the fact that the Placer deed stood in substitution for the earlier Placer agreement, the fact that Delta intended to not waive the 90% minimum acceptance condition unless there was acceptance over 50.1% and, finally, that there had been significant changes in the gold price both actual and forecast, specifically on 27 and 28 September 1999 and which required re-consideration of hedging strategies, earning forecasts and reserves.

47. In addition to evidence on affidavit describing these events and setting out the complaints of Acacia with respect to the Part A Statement and offer there was also evidence provided by Acacia concerning alleged deficiencies in the Part A Statement and offer and which it was said was necessary in order to make a proper assessment of the offer. The evidence consisted of an affidavit by Mr Guy Le Page a corporate adviser specialising in resources. He deposed that in assessing the merits of acquiring share in a mining company such as Delta it is necessary that information be provided concerning cash flow and asset based methods of valuation, comparative valuation and resource, political, management, geological, operating, engineering, commodity, hedging and financial market risks. Mr Le Page deposed as to his opinion that the information in the Part A Statement did not enable an Acacia shareholder to assess the risk with respect to each of these factors. He also criticised the Part A Statement for being deficient with respect to proforma projections and forecasts, benefits and synergies, particular agreements, and hedging. Finally, Mr Le Page with respect to the acquisition of the Kanowna Belle interests from North Limited expressed the opinion that cash flow forecasts and costs savings for Delta or the merged entity would require revision in order to enable Acacia shareholders to make a fully informed judgment as to the merits of the Part A Statement. The expertise of Mr Le Page was challenged on behalf of Delta. However, there was no expert evidence forthcoming on behalf of Delta to rebut the matters deposed to by Mr Le Page. For the purposes of the interlocutory application I am satisfied that the evidence of Mr Le Page is admissible and can be accepted by me for the purposes of determining whether or not Acacia has an arguable case.

50. In addition to the affidavit of Mr Le Page, Acacia filed two affidavits sworn by Mr Wayne Lonergan who was a financial adviser in relation to share investments including valuations of public and private companies and, in particular gold mining companies. Similar to Mr Le Page, Mr Lonergan expressed a number of criticisms with respect to the actual value of the offer by Delta to the shareholders of Acacia. He also expressed his concerns with respect to the dilution of share capital, his reservations with respect to benefits alleged by Delta to Acacia shareholders, concerns with respect to hedging and the asserted economics of the relevant minds, the impact of the Kanowna Belle interest, complaints in relation to the amortisation of good will in the statement and offer and, in particular, the alleged failure of the Part A Statement to include forecast profit and loss accounts up until 30 June 2000 only rather than for future years. Mr Lonergan expressed the opinion that in view of the significant size of the acquisition, that is, an increase in size of 117% and the fact that it was a scrip for scrip offer with no cash component the information he described as necessary would be relevant to Acacia shareholders in determining whether to accept the offer or not. In addition, Mr Lonergan expressed the view that due to the existence of significant forward sales, future revenues could be predicted with a substantial degree of confidence. He considered that costs could be predicted, also, with reasonable accuracy. Ultimately, Mr Lonergan expressed the view that forecasts for a longer period could and should be provided. As events transpired during the course of the hearing such forecasts were shown to have been prepared by Delta but not disclosed in the Part A Statement. Again the evidence of Mr Lonergan was challenged on the basis of his expertise. Similarly to the position of Mr Le Page there was no expert evidence in any form submitted by Delta to rebut the evidence of Mr Lonergan. For the same reasons expressed in relation to the evidence of Mr Le Page, I consider it appropriate for the court to accept the evidence of Mr Lonergan for the purposes of determining whether Acacia has an arguable case.

53. In addition, Mr Lonergan swore a late affidavit deposing that the gold price had risen rapidly and at the time of the application stood at US$305 per ounce. Mr Lonergan expressed the opinion that the increase in world gold prices would have a significant impact on the accuracy and reliability of the information in the Part A Statement particularly its effect on future profitability and impact upon the economics of some mines. He expressed the opinion, also, that the increase in the gold price would change the market to market value of the hedge book and may alter the hedging level. In addition, he considered that the increase in the gold price would have a "significant effect" on the forecast provided in the Part A Statement.

56. Well into the submissions on behalf of Acacia, Delta served an affidavit to which was exhibited a copy of material described as "additional information" and which it was said Delta proposed to send to Acacia shareholders with the Part A Statement and offer. The production of the additional material during the course of argument was the first opportunity Acacia had to consider that material.

59. The additional material consisted of a document entitled "chairman's letter and other information in relation to Delta's offer to acquire all of your ordinary shares in Acacia Resources Limited". For convenience I will hereafter refer to this document as "the chairman's letter". The document was approximately 23 pages in length and consisted of a letter from the chairman of Delta dated 30 September 1999, a description of reasons why Acacia shareholders should accept the offer of Delta, a revised profile of the merged entity of Delta and Acacia description of production and cash costs, a summary of the offer, a description of the acquisition of North's 50% interest in Kanowna Belle, additional financial information, additional forecasts of earnings and cash flow but only up to the period ending 30 June 2000, description of proposed tax reforms, description of arrangements with Placer and the setting out of the actual deed with Placer. In the short time available to it Acacia prepared a comprehensive comparison of the Part A Statement with the chairman's letter. The comparison ran to some pages in length but gave rise to the following conclusive assertions on behalf of Acacia: the consolidated balance sheets for Delta, Acacia and the merged entity are incorrect because they did not take into account the Kanowna Belle acquisition; the assertion that the gearing of the merged entity would be 12% was a "gross" understatement in the context of the Kanowna Belle acquisition; projections and forecasts for the merged entity were incorrect in light of the Kanowna Belle acquisition; the projected share of production of Delta from various mines was incorrect in light of the acquisition of Kanowna Belle; the total gold production, average cash costs and weighted average total production costs were incorrect in light of the Kanowna Belle acquisition; various tables contained in the chairman's letter intended to be substituted for tables in the Part A Statement were incorrect in light of the Kanowna Belle acquisition; discrepancies between the description in the Part A Statement as to the description of terms of the Placer agreement and the actual terms of the Placer deed; various discrepancies in tables and footnotes; that the description of reserves and resources of the merged entity were not updated to allow for the Kanowna Belle acquisition; misstatement as to the cost effectiveness of the Kanowna Belle in view of the increased costs of underground mining; the lack of indication as to whether purported cash savings were one off or projected to be continuous; the implication that the full share price increase between the announcement date and 27 September 1999 was attributable to the offer without appropriate allowance for the impact of the increase in the gold price; alleged misstatement as to forecast hedge pricing; and alleged uncertainty as to voting rights.

62. In summary, in the time available to it arising from the comparison between the Part A Statement and offer and the chairman's letter, Acacia submitted that the chairman's letter contradicted parts of the Part A Statement, included information that was inconsistent and, overall, constituted a document that did not merely update the Part A Statement but in fact purported to amend it.

65. The relevant provisions of the Corporations Law are ss.739, 744, 750 and 1324. Section 739(1) provides that if the court is satisfied that a provision of the Law relating to a takeover has been contravened it may make such orders as necessary or desirable "to protect the interests of a person affected by the takeover scheme or takeover announcement ... ". Section 744(4) empowers the court to make an interim order. Section 1324 of the Law empowers the court to make orders, including the granting of an injunction to restrain a person from engaging in conduct that, inter alia, contravenes the Law.

68. The principal governing provision with respect to Part A Statements is s.750 of the Corporations Law. The section specifies the requirements with which a Part A Statement is to comply. Clause 17 of s.750 is concerned with the provision of "other material information". It provides:

"17. The statement shall set out any other information material to the making of a decision by an offeree whether or not to accept an offer, being information that is known to the offeror and has not previously been disclosed to the holders of shares in the target company".

72. Clause 20 of s.750 is concerned with the offeror's intentions about business, assets and employees of the target company. It provides:

"20(1) The statement shall set out particulars of the offeror's intentions regarding:

(a) the continuation of the business of the target company;

(b) any major changes to be made to the business of the target company, including any re-deployment of the fixed assets of the target company; and

(c) the future employment of the present employees of the target company."

79. Mr Myers QC who appeared with Mr J Beach for Acacia submitted that the proposal to forward the chairman's letter with the Part A Statement and offer to Acacia shareholders constituted an amendment to the Part A Statement and which is unauthorised at law. Secondly, it was submitted that the Part A Statement was, in any event, manifestly inadequate both at 13 September 1999 and subsequently due to events.

82. Mr N Hutley SC who appeared with Mr L Glick for Delta submitted that the Part A Statement "speaks as at its date" and that it provided an accurate and appropriate description of events and circumstances as they stood at 13 September 1999. He submitted that any change in circumstances could not invalidate the Part A Statement and that the reality of the business world, in particular, the mining world were such that circumstances often change rapidly. Mr Hutley submitted that the change may bring about certain circumstances that lead to the Part A Statement ceasing to be accurate at the time of the subsequent events but not at the time of its issue. Mr Hutley submitted that if circumstances change between the date of the issue of the Part A Statement a means must be found to apprise shareholders of the target company of the change of such circumstances. He submitted that the appropriate course was that contemplated by Delta, namely, of submitting together with the Part A Statement the chairman's letter.

85. It has been generally recognised that from the perspective of an offeror the requirements of clause 17 of s.750 of the Law are possibly the most difficult provision with which an offeror has to comply. The offeror must make a judgment as to whether other information is "material" to the decision making process that the offeree must embark upon as a result of the offer. The approach of the courts has been one of not reading down clause 17 in light of the other requirements of s.750 (see Re Cumberland Holdings Limited (1976) 1 ACLR 361, 368-9; Re Evans Deakin Industries Limited (1980) 5 ACLR 322, 324; Ampolex Limited v Mobil Exploration & Producing Australia Pty Ltd (1996) 19 ACSR 354, 381ff; Cultus Petroleum NL v OMV Australia Pty Ltd [1999] NSWSC 422; (1999) 32 ACSR 1, 11-12). The basic principle adopted by the courts is that a matter is material if it might reasonably affect, or tend to affect, the decision of the ordinary investor whether or not to accept the offer: Cackett v Keswick (1902) 2 Ch 456, 464; also, Australian Consolidated Investments Limited v Rossington Holdings Pty Ltd [1992] FCA 163; (1992) 35 FCR 226. It is sufficient that facts that are omitted from disclosure to the shareholder of the target company are such that they would have a significant propensity to affect the shareholder's decision: Cultus Petroleum NL, supra, at 12.

88. On the other hand, the courts have considered that cl. 17 of s.750 should not be interpreted in such a way as to unreasonably impede takeover bids. In Metal Manufacturers Limited v Marsh Electrical Pty Ltd (1998) 29 ACSR 245 at 250, Bryson J stated the approach as follows:

"Materiality to the making of a decision is a subject which does not have definite boundaries. A great many subjects can be woven into more or less defensible arguments that they are material to a decision referred to in cl. 17. It is not consonant with the purpose and policy of the legislation that a very extensive view of materiality should be adopted, or that everything which is not wholly extraneous should be treated as material. Clause 17 is not a proposition from the Logic Schools but is one of the provisions of legislation which regulates takeovers in the contemplation that they are not forbidden or unreasonably impeded and that they actually will take place in an efficient, competitive and informed market and under controls in which that market will function. Other clauses in s. 750 Pt A prescribe in detail the information to be given on stated subjects, and compliance with one of those clauses would ordinarily be sufficient, and the 'other information' on a subject with which one of those clauses dealt would be information which, on an objective view, truly has a relation to the functioning of an efficient competitive and informed market. There can sometimes be compliance with a list of specified disclosures which does not actually reveal a quite important aspect of the subject to which they relate. Clause 17 exists to complement the more detailed specifications. Clause 17 operates when in fact there is some other information material to the making of the decision and compliance with cl 11 and other clauses has not brought it out. Clause 17 does not exist to create difficulties for those attempting to comply or to create a disclosure requirement of a significantly more searching kind than the more detailed specifications. Questions of materiality under cl 17 are to be approached with due regard to the practicalities of a market."

92. This view was an expansion of the view expressed by Bryson J some ten years earlier in ICAL Limited v County Natwest Securities Aust. Ltd & Anor (1988) 13 ACLR 129, at 137:

"Materiality has been treated as a question for the court, although it is conceivable that evidence may be tendered to enable the court to understand why certain matters were material, or why they were not. A condition which on its face is a complete barrier to the availability of finance until it is complied with may be immaterial if other facts show that it can readily be complied with, or that it is not really important and could be withdrawn on request."

96. The relevant principles were conveniently summarised by Tamberlin J. in Pan Continental Mining Limited v Gold Fields Limited [1995] FCA 1182; (1995) 13 ACLC 577, 581-2. I respectfully adopt the general guidelines stated by the learned judge. In particular, Tamberlin J stated (at 581) the following principles that are pertinent in the consideration of the present matter:

1. Firstly, "Materiality is a question for the court although evidence may be tendered to enable the court to understand why certain matters are material or why they are not ... It is a question of mixed fact and law and it depends on the facts and is to be determined on a case by case basis". 2. Secondly, "The underlying policy is the desirability of ensuring that the acquisition of shares in companies takes place in an efficient, competitive and informed market". 3. Thirdly, "The framework of the takeover legislation assumes that criticism of the commercial desirability of the offer will be dealt with in the offeree's Part B Statement". 4. Fourthly, "The disclosure of speculation is not required and indeed is to be avoided". 5. Fifthly, "There is a distinction between information which might be useful and relevant for a shareholder in the offeree company and information which is in fact known to the offeror at the date of the Part A Statement". 6. Sixthly, and I interpolate most relevantly, "The object is to put shareholders in possession of the information required to enable them to make an informed and critical assessment of the offer and an informed decision whether to accept it". 7. Seventhly, "Consideration of a Part A Statement involves a question as to whether full and sufficient information has been given to enable the offeree to make a judgment concerning how valuable the acquisition will be to the offeror and thus of making an informed assessment ... ". 8. Eighthly, "The court when asked to restrain the making of an offer needs to be astute to see that the breech of the Law relied upon is real and of substance". 9. The ninth guideline is stated as being that s.739 whilst empowering the court to require an offeror to send an additional document with a Part A Statement may "clarify or amplify statements" in the Part A but is not one to amend the Part A. 10. The tenth guideline is stated as being that "Materiality of information, where there is a complex proposal, involves difficult questions of commercial judgment and matters of degree ... It is necessary to bear in mind that the Statement should illuminate the issues rather than confuse them". 11. The eleventh guideline is that, the Part A Statement must be read fairly, in its entirety, and not selectively.

100. For the purposes of considering whether or not to grant the relief sought by Acacia the first matter of which I must be satisfied is that there is a serious question to be tried (see Davids Holdings P/L v Byrnes (1987) 71 ALR 251; Nicholas John Holdings P/L & Ors v ANZ Banking Group Ltd & Ors [1992] VicRp 98; (1992) 2 VR 715.

103. On the basis of the unrebutted evidence of the plaintiff I am satisfied that there is a serious question to be tried as to whether the information concerning the working principles, the stage of negotiations with North Limited and the status of the Placer negotiations generally were matters material for the purposes of cl. 11 and ought have been conveyed to the shareholders of Acacia in the Part A Statement in a more expansive and fuller form than was then put forward. In my view it is arguable that a shareholder of Acacia would not have been as fully informed as that individual might have been if the shareholder was provided with all the information on a candid basis rather than on a selective and in some respects potentially misleading basis. As to the status of knowledge of Delta at the time of the issue of the Part A on 13 September 1999 and the materiality of certain matters that were not disclosed, they are issues to be determined at trial. It is only necessary at this point that I be satisfied that there is an arguable case. I am satisfied that there is a serious question to be tried with respect to whether or not there has been material disclosure for the purposes of cl. 17 of s.750.

106. The courts have adopted the approach with respect to cl. 20 and the requirement of an offeror to set out its intentions that the disclosure must be specific and clear and disclose all possible eventualities of the offeror's intentions (see Gantry Acquisition Corp v Parker & Parsley Petroleum Australia Pty Ltd [1994] FCA 1212; (1994) 51 FCR 554, 565-6; Savage Resources Limited v Pasminco Investments Pty Ltd & Ors (1998) 159 ALR 304, 312-315.

109. In addition, there is the issue as to whether or not there has been adequate disclosure by Delta of its intentions for the purposes of cl. 20. I adopt a similar view to that expressed with respect to cl. 17. It is an issue of fact to be determined by a judge at trial as to whether there has been adequate disclosure by Delta of its intentions for the purposes of cl. 20. The entire transaction proposed by Delta vis-à-vis Acacia, Placer and North Limited combined give rise to a serious question to be tried as to whether or not there has been any or any sufficient disclosure for the purposes of cl. 20 as to the intentions of Delta.

112. The next matter I consider is whether in any event the arguable deficiencies in the Part A Statement can be rectified by way of the chairman's letter. Mr Hutley relied upon the observations of Santow J in Cultus Petrol at 13:

"Whether the court is dealing with an interlocutory or a final injunction, the deficiencies in the Part A statement should be 'clear and serious' before an injunction will be granted: see Wesfi Ltd and also Austen & Butta Ltd v Shell Australia Ltd (1992) 10 ACLC 735; 10 ACSR 563; Australian Consolidated Investments Ltd v Rossington Holdings (No 2) [1992] FCA 163; (1992) 35 FCR 226; 106 ALR 221; 7 ACSR 341; 10 ACLC 600; Re Primac Holdings Ltd (1996) 22 ACSR 212 and GIO Australia Holdings Ltd v AMP Insurance Investment Holdings Pty Ltd (1998) 29 ACSR 584. In that context, short of an injunction the court has open to it the capacity to order that supplementary material be sent where this is capable of curing any less serious deficiency. The court should not lend itself to assisting tactical litigation whose real purpose is not to assist shareholders in being informed of all matters material to them, but rather to delay the then unpreferred bidder in the interests of encouraging others. In recent times the courts have moved from a greater readiness to grant injunctions of this kind to a more sceptical approach, as illustrated by the recent cases dealing with merely speculative material in Part A documents."

116. The issue arises as to whether the chairman's letter constituted merely "supplementary material" or in fact constituted an amendment to the Part A. In Ampolex, Sackville J observed at 390 that:

" ... If the offeror seeks to make significant changes ... and those changes cannot be characterised as a clarification or an amplification of what is already in the original statement, it is unlikely that relief will be available under s.739".

120. Section 739 of the Law empowers the court to require the offeror to correct omissions as to matters of substance and importance. However, the courts have also warned against the risks of a correcting statement confusing shareholders (see ICAL v County Natwest, supra, 161-2). I am satisfied that the discrete issue as to whether the matters contained in the chairman's letter constitute supplementary material to the Part A Statement or, alternatively, an amendment to the Part A Statement is of itself a serious question to be tried. I can be so satisfied on the basis of the differences between the two documents highlighted by Acacia. This view supplements the view I have previously formed that there are matters contained in the chairman's letter that potentially conflict with matters contained in the Part A Statement and therefore give rise to an arguable risk that the Acacia shareholders may be confused by a comparison of the two documents.

123. The courts ought always to demonstrate a strong reluctance to facilitate tactical manoeuvring on the part of a target company wishing to achieve a specific purpose by challenging the validity of a Part A Statement in order to take advantage of the time constraints imposed under the takeover and acquisition provisions of the Corporations Law. Doubtlessly there will be occasions when parties for various reasons, such as the presence of a potential third party offeror in the market place or significant changes in the market will wish to delay and set aside a Part A Statement. Indeed, such caution was echoed by Delta in the course of argument. Such concerns are not matters that can be addressed in the course of the present interlocutory application. On the basis of the evidence before the court and the wide ranging complaints made by Acacia against the Part A Statement prepared by Delta, Acacia has demonstrated that it has an arguable case and that there are serious issues to be tried and which ought be determined as soon as possible.

126. I turn now to the balance of convenience. The principle has been stated by the courts as being one of ensuring that the shareholders of the offeree company make a decision on the basis of information which is as full and accurate as practicable and that the convenience to be considered is that of the shareholders of the target company. The principle was conveniently stated by Ryan J in Associated Dairies Ltd v Central Western Dairy Ltd & Ors [1993] FCA 414; (1993) 44 FCR 335, 346:

"The statutory provisions governing the dispatch of Part A Statements are manifestly designed to protect offeree shareholders by ensuring that they make their decision to accept or reject an offer in the light of information which is as full and accurate as practicable about the effect of the takeover on matters which may affect the value of those shares or otherwise touch on the future management of the target company. Accordingly, the convenience which has to be balanced in a case like the present is that of the shareholders in having a prospect that identified deficiencies in the provision of information will be corrected against the convenience of the same shareholders and the offeror in having the offers despatched without delay. A counterveiling detriment to the shareholders is the prospect that if an interlocutory injunction goes, the offer may not proceed at all."

130. Such approach has been followed on a number of occasions (e.g. see Solomon Pacific Resources N/L v Acacia Resources Ltd (1996) 14 ACLC 505, 508). I respectfully agree with and adopt the same approach. Furthermore, there is no evidence put forward on behalf of Delta or indeed any submission made with respect to the balance of convenience falling in any way towards Delta. In my view in light of the matters considered with respect to the serious issues to be tried in this proceeding I consider that the balance of convenience falls entirely one way, namely, in favour of the shareholders of Acacia and their entitlement to be placed in a position to make a fully informed decision with respect to the offer from Delta.

133. Accordingly, I consider that the interlocutory relief sought by Acacia should be granted. The relief sought is that which will restrain Delta from dispatching both the Part A Statement and form of offer dated 13 September 1999 and the chairman's letter dated 30 September 1999 until further order.